Last month I reported on a case – Associated Press v. All Headline News Corp. -- in which the U.S. District Court for the Southern District of New York denied defendants motion to dismiss AP’s claim that defendant AHN was liable for “hot news” misappropriation.  That court concluded that the AP’s “hot news” misappropriation claim was not preempted by the copyright law.

 A few weeks later a U.S. district court in Pennsylvania reached the opposite conclusion in Scranton Times v. Wilkes-Barre Publishing, Co..  In this case the judge found that a newspaper publisher that copied a rival newspaper’s obituaries without permission was not liable for hot news misappropriation because the claim was preempted by the Copyright Act.  The judge explained that plaintiff’s misappropriation claim would not be preempted if it could satisfy all five elements of the hot news misappropriation test:   

(i) the plaintiff generates or collects information at some cost or expense; (ii) the value of the information is highly time-sensitive; (iii) the defendant's use of the information constitutes free-riding on the plaintiff's costly efforts to generate or collect it; (iv) the defendant's use of the information is in direct competition with a product or service offered by the plaintiff; (v) the ability of other parties to free-ride on the efforts of the plaintiff would so reduce the incentive to produce the product or service that its existence or quality would be substantially threatened.

The court concluded that the first four prongs of the test were met.  The court held that the information in the obituaries were “time sensitive,” noting that the obituaries included such time sensitive information as the time and place of memorial services.  Next, the court found that the defendant was “free riding” on plaintiff’s efforts in collecting, formatting and distributing the obituaries.  In considering the final factor of the five-part test, the court held that the defendant caused “some actual loss” by copying the obituaries, “along with losses in terms of goodwill, customer loyalty, and business relationships.”  However, the court concluded that the damages caused by defendant’s acts “did not pose a threat to the existence of Plaintiff's publication or the ability of those publications to continue the timely publication of obituaries,” nor did it provide “reduced incentive for Plaintiffs to continue colleting obituaries and printing them for public distribution.”  (The court never discussed prongs one and four because presumably those prongs were clearly met).

It certainly seems that the court incorrectly applied the last prong of the hot news test.  The test is not whether the defendant’s acts of free-riding – standing alone -- would so reduce the incentive to publish the obituaries as to threaten the existence or quality of them.  The test is whether the “the ability of other parties” would reduce the incentive and existence.  “Other parties” here means not only the defendant, but also anyone else who might steal plaintiff’s obits.  By looking only at defendant’s acts and not at the acts of others, the court set the bar so high that virtually no plaintiff in such a circumstance could ever avoid being preempted by the Copyright Act. 

As noted earlier, the court acknowledged that defendant caused “some damage” “along with [other] losses” to plaintiff.  Now imagine if others were to follow defendant’s lead, and individuals began copying obituaries from the Scranton Times and posting them on their Internet list.  Think “Craigslist” with a more morbid tone – perhaps the sites would be called “Deadlist,” “DeathBay” or “Death Watch 2009.”  Wouldn’t “some damage” quickly turn to “lots of damage” – especially when you consider that the stolen obituaries can be published on websites almost simultaneously with the printed Scranton Times.  And wouldn’t that in turn dramatically lessen the incentive for the Scranton Times to continue to publish the obituaries and possibly, reduce in fewer sale of its newspaper.

 

In the days before the Internet, I may have agreed with the court decision here since, at that time, Defendant’s newspaper may have been the only competitor to the Scranton Times and thus, the only party capable of, or interested in, copying the obituaries.  But today, in an environment where it is so easy to copy someone else’s “stuff” and post it on the Internet as a way to make a cheap buck, the court’s analysis here quite simply doesn’t hold up.