International News Service v. Associated Press

INTERNATIONAL NEWS SERVICE v. THE ASSOCIATED PRESS.

Certiorari to the Circuit Court of Appeals for the Second Circuit.

No. 221. Argued May 2, 3, 1918 — Decided December 23, 1918.

245 Fed. Rep. 244, affirmed. The case is stated in the opinion.

Opinion of the Court by Mr. Justice Pitney. Mr. Justice Clarke took no part in the consideration or decision of the case. Mr. Justice Holmes delivered a separate opinion, in which Mr. Justice McKenna concurred. Mr. Justice Brandeis dissenting.

Mr. Samuel Untermyer and Mr. Hiram W. Johnson, with whom Mr. Louis Marshall, Mr. William A. DeFord and Mr. Henry A. Wise were on the briefs, for petitioner. Mr. Frederick W. Lehmann, with whom Mr. Frederic B. Jennings, Mr. Winfred T. Denison and Mr. Peter S. Grosscup were on the briefs, for respondent.

The report occupies pages 215 through 268 of volume 248 of the United States Reports. The opinion of the Court is printed at pages 229 through 246; the separate opinion of Mr. Justice Holmes at pages 246 through 248; and the dissenting opinion of Mr. Justice Brandeis at pages 248 through 267.

[248 U.S. 215] “An incorporated association of proprietors and representatives of many newspapers, engaged in gathering news and distributing it to its members for publication, is a proper party to represent them in a suit to protect their interests in news so collected against the illegal acts of a rival organization. Equity Rule, 38. P. 233.”

[248 U.S. 216] “A news article in a newspaper may be copyrighted under the Act of March 4, 1909, but news, as such, is not copyrightable. P. 234.”

[248 U.S. 216] “As against the public, any special interest of the producer of uncopyrighted news matter is lost upon the first publication.”

[248 U.S. 216] “But one who gathers news, at pains and expense, for the purpose of lucrative publication, may be said to have a quasi property in the results of his enterprise, as against a rival in the same business, and the appropriation of those results at the expense and to the damage of the one and for the profit of the other is unfair competition against which equity will afford relief. P. 236.”

[248 U.S. 216] “An incorporated association of newspaper publishers gathered news, at pains and expense, and without applying for copyright telegraphed it daily to its members throughout the country, for their exclusive use in publication, they paying assessments therefor; a rival corporation, serving other newspapers for pecuniary returns, made a practice of obtaining this news through early publications in newspapers and on bulletins of the first company's members, and of sending it by telegraph, either as so taken or in rewritten form, to its own customers, thus enabling them to compete with the newspapers of the first company in the prompt publication of news obtained for the benefit of the latter by their exclusive agency and at their expense. Held, that the first company, and its members, as against the second company, had an equitable quasi property in the news, even after the early publications; that the use made of it by the second company, not as a mere basis for independent investigation but by substantial appropriation, for its own gain and at the expense and to the damage of their enterprise, amounted to unfair competition which should be enjoined, irrespective of the false pretense involved in rewriting articles and in distributing the news without mentioning the source; for this, while accentuating the wrong, was not of its essence. Pp. 237, et seq.; 242.”

[248 U.S. 236] “Obviously, the question of what is unfair competition in business must be determined with particular reference to the character and circumstances of the business. The question here is not so much the rights of either party as against the public but their rights as between themselves. See Morison v. Moat, 9 Hare, 241, 258. And although we may and do assume that neither party has any remaining property interest as against the public in uncopyrighted news matter after the moment of its first publication, it by no means follows that there is no remaining property interest in it as between themselves.”

[248 U.S. 236] “For, to both of them alike, news matter, however little susceptible of ownership or dominion in the absolute sense, is stock in trade, to be gathered at the cost of enterprise, organization, skill, labor, and money, and to be distributed and sold to those who will pay money for it, as for any other merchandise. Regarding the news, therefore, as but the material out of which both parties are seeking to make profits at the same time and in the same field, we hardly can fail to recognize that for this purpose, and as between them, it must be regarded as quasi property, irrespective of the rights of either as against the public.”

[248 U.S. 239] “The fault in the reasoning lies in applying as a test the right of the complainant as against the public, instead of considering the rights of complainant and defendant, competitors in business, as between themselves. The right of the purchaser of a single newspaper to spread knowledge of its contents gratuitously, for any legitimate purpose not unreasonably interfering with complainant's right to make merchandise of it, may be admitted; but to transmit that news for commercial use, in competition with complainant — which is what defendant has done and seeks to justify — is a very different matter.”

[248 U.S. 239] “In doing this defendant, by its very act, admits that it is taking material that has been acquired by complainant as the result of organization and the expenditure of labor, skill, and money, and which is salable by complainant for money, and that defendant in appropriating it and selling it as its own is endeavoring to reap where it has not sown, and by disposing of it to newspapers that are competitors of complainant's members is appropriating to itself the harvest [248 U.S. 240] of those who have sown.”

[248 U.S. 240] “Stripped of all disguises, the process amounts to an unauthorized interference with the normal operation of complainant's legitimate business precisely at the point where the profit is to be reaped, in order to divert a material portion of the profit from those who have earned it to those who have not; with special advantage to defendant in the competition because of the fact that it is not burdened with any part of the expense of gathering the news. The transaction speaks for itself, and a court of equity ought not to hesitate long in characterizing it as unfair competition in business.”

[248 U.S. 246] “The decree of the Circuit Court of Appeals will be Affirmed.”

[248 U.S. 246] “Mr. Justice Clarke took no part in the consideration or decision of this case.”

[248 U.S. 246] “When an uncopyrighted combination of words is published there is no general right to forbid other people repeating them — in other words there is no property in the combination or in the thoughts or facts that the words express. Property, a creation of law, does not arise from value, although exchangeable — a matter of fact.”

Editorial note. Justice Holmes concluded that the wrong lay not in the copying itself but in the misappropriation of the AP's labour through the implicit representation that the news distributed was gathered by the defendant. He would therefore have granted a narrower injunction, limited to preventing the defendant from publishing the news gathered by the AP as its own, requiring express acknowledgement of source for a specified period after publication.

Editorial note. The dissent maintained that knowledge, truths ascertained, conceptions, and ideas — after voluntary communication to others — are free as the air. The law has recognised property rights in the products of mental labour only where they are expressed in a form which the law will protect, and Congress has legislated comprehensively on the subject through copyright.

Editorial note. Justice Brandeis regarded the creation of a new species of quasi-property in uncopyrighted published news as a matter for the legislature rather than the courts, warning that the case-by-case creation of exclusive rights over information would obstruct the free flow of intelligence that the Court had otherwise been careful to protect.

Editorial note. This record is a research edition, not a substitute for the official reporter. It reproduces the Reporter of Decisions apparatus in a full syllabus extract and reproduces the Court's own text in extended verbatim passages anchored to the printed pages of United States Reports on which they appear. Passages set without quotation marks are Society prose describing the Court's reasoning; every quotation mark encloses the Court's or the Reporter's words.

Editorial note. The Court-authored sections are SELECTED EXCERPTS. They present the central passages on quasi-property between competitors, on “reaping where one has not sown,” and the concluding disposition, together with the opening statement of Mr. Justice Holmes's separate opinion. Justice Pitney's account of the record and of the practical operation of the two news services at pages 229 through 235, and his discussion of the form of the injunction at pages 244 through 246, are summarised in the editorial apparatus rather than quoted at length.

Editorial note. Three limitations are declared. First, the numbered footnotes and the enumerated argument headings of counsel are not reproduced. Second, the remainder of Mr. Justice Holmes's separate opinion (after its opening statement) and the whole of Mr. Justice Brandeis's dissent are described in editorial summary and are not reproduced. Third, obvious typographic and scanning defects in the digitised bound volume (for example the broken renderings of “Brandeis” and of counsel's names) have been silently corrected against the surrounding text; no substantive word has been altered, modernised, or paraphrased inside a quotation.

Editorial note. For any purpose requiring the complete official text, including the footnotes, the arguments of counsel, and the full separate and dissenting opinions, consult the bound volume through the canonical source recorded with this authority.

Editorial note. The Associated Press, a co-operative membership corporation of some 950 daily newspapers, gathered news at large expense and distributed it by telegraph to its members for exclusive use in their newspapers. International News Service, a competing agency serving other newspapers, systematically obtained AP news from bulletin boards and early editions of AP members' papers on the eastern seaboard and re-transmitted it, sometimes bodily and sometimes in rewritten form, to its own subscribers in time for competing publication further west.

Editorial note. The Associated Press sued in the District Court for the Southern District of New York for an injunction. A preliminary injunction issued, and the Circuit Court of Appeals for the Second Circuit affirmed, 245 Fed. 244. The Supreme Court granted certiorari and affirmed.

Editorial note. Between competitors in the gathering and distribution of news, freshly acquired news is quasi-property; the wholesale appropriation and commercial resale of a rival's news for the period during which it retains commercial value is unfair competition which equity will enjoin, notwithstanding that the news, once published, may be freely used by the public.

Editorial note. The Court accepted that the news itself is not copyrightable and that no exclusive right against the public survives publication. The gravamen of the wrong lay, rather, in the relation of the parties as competitors: the defendant reaped where the plaintiff had sown, appropriating precisely the point at which the plaintiff's expenditure of enterprise, organisation, skill, labour, and money became profitable. The public interest in the free flow of information is not implicated because the injunction restrains only competitive commercial exploitation of the plaintiff's freshly gathered news, not its dissemination in the ordinary channels of public communication.

Editorial note. International News Service is the classical American statement of the misappropriation branch of unfair competition. Its recognition of relative, competitor-facing property in the fruits of costly enterprise supplies the intellectual foundation of the modern hot-news doctrine and of state-law misappropriation actions in databases, sports scores, financial data, and analogous fields. Erie Railroad Co. v. Tompkins, 304 U.S. 64 (1938), by ending general federal common law in diversity cases, removed the federal common-law footing on which the decision was rendered, but the substantive rule continues to be applied by state courts and by federal courts sitting in state-law cases.

Editorial note. The federal common-law foundation of the decision was displaced by Erie Railroad Co. v. Tompkins, 304 U.S. 64 (1938). The substantive doctrine has been narrowed and channelled by later cases construing federal preemption and state unfair-competition law (notably National Basketball Association v. Motorola, Inc., 105 F.3d 841 (2d Cir. 1997)). Ruckelshaus v. Monsanto Co., 467 U.S. 986 (1984), later recognised intangible commercial information as property for takings purposes without disturbing the misappropriation rule.

Editorial note. Read with Erie Railroad Co. v. Tompkins, 304 U.S. 64 (1938), and Ruckelshaus v. Monsanto Co., 467 U.S. 986 (1984).