Don't get Caught Out by Hot News
Those who gather, distribute or aggregate news should bear in mind the 90 year-old "hot news" doctrine which potentially gives a legal right in the US over bare facts.
While many in the news industry are familiar with the issues surrounding copyright, those outside the US may not be familiar with the "hot news" doctrine. This can give protection in the US for the gathering of bare facts where copyright is not engaged. "Hot news" has been in the spotlight in the US recently and it looks as though it will continue to be an issue, in particular with the aggregation or "scraping" of news from publishers' websites.
What is the "hot news" doctrine?
The tort of hot news misappropriation is effectively a sort of property right which gives some protection to factual information for a limited time while it is still "hot news". The tort is distinct to copyright in that it protects bare facts (not protected by copyright) as opposed to the expression of those facts (potentially protected by copyright).
The doctrine originated in 1918 with the US Supreme Court's decision in International News Service v Associated Press. In this case, two competing news services were both reporting on the First World War. Associated Press (AP) was investing in sending reporters around the world to report on the war. International News Service (INS) was obtaining the news from AP, rewriting it and publishing it as its own without attribution. The Supreme Court held that AP had a limited proprietary interest in the news that it had invested in gathering. The right applied, for a limited period of time, against a competitor (but not the public) who attempted to misappropriate the information.
The doctrine was subsequently repealed at a federal level, but it has been retained on the statute books in some states, including New York.
Subsequent case law has set out five essential elements of such a claim. In summary, these are:
- the claimant incurs expense in gathering the information;
- the value of the information is highly time-sensitive;
- the defendant’s use of the information constitutes free-riding on the claimant's investment in gathering it;
- the defendant’s use of the information is in direct competition with a product or service offered by the claimant; and
- the ability of other parties to free ride on the efforts of the claimant would reduce the incentive for the claimant to produce the product or service such that its existence or quality would be substantially threatened.
Recent news aggregation cases
Several news services have recently sought to rely on the "hot news" doctrine against online news aggregators. For example, AP relied on it in an action against All Headline News over its reuse of AP's material. The claim settled in July 2009 before trial.
In a similar ongoing case, Barclays Capital Inc v TheFlyOnTheWall.com, a number of investment banking firms such as Merrill Lynch have brought a claim against a financial news aggregator. The defendant was aggregating equity research recommendations created by the claimants and rapidly reporting them on its website, sometimes before the claimants had opportunity to share the recommendations with their own clients. The Southern District of New York, finding for the claimants, held that this amounted to hot news misappropriation. It ordered the defendant to delay reporting the research for half an hour after stock markets opened or, if the markets were already open, for two hours after the research was published. The decision is currently under appeal.
The future of the "hot news" doctrine is uncertain. Critics have highlighted the tension between the doctrine and the First Amendment which protects, amongst other things, freedom of speech and of the press. Its proponents argue that, like intellectual property rights, it provides an incentive for investment in gathering socially-useful information. While the law remains uncertain, the "hot news" doctrine must remain a potential issue, in particular with news aggregation or "scraping". For example, it may be a live issue for news aggregators based in the UK who "scrape" news from US news sites.
While there is no equivalent right protecting hot news in the UK, if there were, it could prove a valuable right to newspapers wanting to protect "scoops" in which they have invested substantial costs, and indeed could encourage them to invest more in investigating such scoops.
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It will be interesting to see how the US "hot news" doctrine develops during 2011, as news publishers look to protect their online content.
"The tort of hot news misappropriation is effectively a sort of property right which gives some protection to factual information for a limited time while it is still "hot news"."