Blown To Bits

HWCKL #3: The Resurgence of “Hot News Misappropriation”

Sunday, March 28th, 2010 by Harry Lewis

Facts can’t be copyrighted. So if I know something is true, in general I can publish it, no matter how I learned it. But there are limits. Publishing “hot news” that was gathered by professional journalists is freeloading on the labor of others, and can be illegal as a matter of unfair competition. Sam Bayard has an excellent run-down on the legal history of “hot news misappropriation,” which he describes as a doctrine that was in decline only a few years ago, scorned by jurists and nearly useless in practice. But the Internet has given the concept new life. News organizations, faced with bloggers’ newfound ability to skim the cream off a variety of sources and publish the gist almost instantly, are being sued by the original news gatherers. And, in at least one recent case, winning on the basis of hot news misappropriation.

The case involves a site called Fly on the Wall, which was sued by Barclays Capital, Inc. Fly’s creator, Ron Etergino, claims he does not simply steal the news coming passed on to him by Barclay’s clients. Instead,

According to Etergino, he checks first to see what Recommendations have been reported on Bloomberg Market News.  Then he checks Dow Jones, Thomson Reuters, and Fly’s competitors such as TTN,, and  Next, he visits chat rooms to which he has been invited to participate by the moderator. . . . Etergino also receives “blast IMs” through the Bloomberg, Thomson Reuters, or IMTrader messaging services that may go to dozens or hundreds of individuals.  Finally, Etergino exchanges IMs, emails, and more rarely telephone calls with individual traders at hedge funds, money managers, and other contacts on Wall Street.

As Sam says, that “looks a whole lot like good-old fashioned journalism.  And it largely relies on information that is publicly available through mainstream and Internet media reports, IM blasts, and what appear to be open chat rooms.”

A federal judge has nonetheless required Fly to delay publication for long enough to give clients of Barclays and the other market researchers a head start. And what could be wrong with that?

What could be wrong with that is that it is another way for owners of knowledge, already well protected by copyright laws, to prevent others from publishing the truth. Barclays would have used the simple expedient of a DMCA takedown against Fly if it had been available, but the facts Fly reports can’t be copyrighted. As Bayard says, the hot news misappropriation doctrine “creates a pseudo property right in facts that copyright law says are in the public domain.”

And the problem with that is Google News and its kin, “news aggregator” sites that link to a variety of primary news sites. These have been contentious as newspapers continue to decline, since the ad revenue on the aggregator sites goes to the aggregator, not the news organizations themselves. And when you click on a link at Google News and get directed to the St Louis Post-Dispatch or some other newspaper site, you are unlikely to pay much attention to the ads there, much less to wander into other parts of the newspaper.

All of which argues for sympathy with the beleaguered organizations that create, in the words of Alex Jones’s stirring book Losing the News, “the iron core” of the news, the hard facts that are costly to dig out and for which the news organizations need compensation. But using the hot news misappropriation against the aggregators raises serious First Amendment issues, since as Bayard quotes a relevant precedent, “if a newspaper lawfully obtains truthful information about a matter of public significance then state officials may not constitutionally punish publication of the information, absent a need to further a state interest of the highest order.”

I don’t know exactly where the balance should be struck, but every time I see a plaintiff win a reasonable-sounding judgment against a publisher by means of a creative application of a legal principle that was meant to cover a different situation, I cringe to think how that principle will be used in the future to curtail the free flow of knowledge.

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