Associated Press v. International News Service

245 F. 244, 2 A.L.R. 317, 1917 U.S. App. LEXIS 1475

• Court: Court of Appeals for the Second Circuit
• Decided: June 21, 1917
• Docket: No. 270
• Status: Published

Opinions

HOUGH, Circuit Judge

(after stating the facts as above). Defendant does not admit the facts above staled, as to procuring news from a telegraph machine in the office of a publisher; we think them fairly and fully proven. The evidence adduced for the defense on all the other points above mentioned amounts to an assertion that what defendant is accused of wrongfully doing plaintiff itself does and has done, and it is, indeed, a part of the newsgathering trade. Upon these propositions of fact are rested the conclusions that (1) if the acts are wrong, plaintiff cannot ask relief in equity when its own hands are unclean; and (2) if they are not wrong, i. e., illegal, no ground for relief exists. In our opinion the facts concerning the Cleveland episode are proved as stated; the plaintiff does not and has not copied and sold news from bulletins, etc., of papers using defendant’s service; and the “tip” habit, though discouraged by plaintiff, is incurably journalistic.

[1] If the facts are as we have now found them, no party asserts that the acts restrained by Ihe injunction as issued can be justified, either in law or morals. The right to proceed in equity to restrain inducing to breach of contract we have recognized in American, etc., Co. v. Keitel, 209 Fed. 351, 126 C. C. A. 277; and the inequity of seeking profit by procuring the breach of any confidential relation by an employé is fully considered in Peabody v. Norfolk, 98 Mass. 452, 96 Am. Dec. 664, and Dodge Co. v. Construction, etc., Co., 183 Mass. 62, 66 N. E. 204, 60 L. R. A. 810, 97 Am. St. Rep. 412. The relations (inter sese) of the members of the Associated Press are quite as confidential as those of master and trusted servant; the same reasoning applies. The order, so far as attacked by defendant’s appeal, we consider granted iu the fair exercise of discretion, and therefore proper.

Plaintiff’s appeal, being from a refusal to grant injunction pendente lite, is of an infrequent kind ; hut still more rare is the presentation by such appeal of a clear-cut question of law, upon undisputed facts, largely admitted in the pleadings. These facts enable us to render opinion without danger of even seeming to trench upon discretionary matters. We'are practically requested to act by the District Court itself.

There is no difficulty in discriminating between the utilization of “tips” and the bodily appropriation of another’s labor in accumulating and stating information. As a matter of fact, one who, on hearing a rumor or assertion, investigates and verifies it, whether with much or little effort, acquires knowledge by processes of his own; the result is his. In all the relations of life, most of what most of us say we know is hut the result of verifying “tips,” given, consciously or unconsciously, by those in our environment. As a matter of law or rule, it is impossible to say in advance what measure of investigation or verification must satisfy the censor, and the law does not seek to compel the vain or impossible. Doubtless there have been, and will be again, instances where the asserted or pretended investigation is but an excuse for appropriation, where no reasonable man would believe that any effort had been made, except to conceal the absence of original work, but no' such case is before us.

What is before us, and on the pleadings, is whether it is lawful, and, if unlawful, whether equity affords a remedy, for the admitted practice or habit of appropriating from bulletins and early editions the result of plaintiff’s labors, and selling or otherwise gainfully using the same, either in the plaintiff’s form or after passing it under the hand of a “rewrite” man. This adjective is the trade description of one who changes the language or sequence of some composition of words; his labors do not change the substance, and are immaterial to the present controversy.

Defendant justifies bodily appropriation without independent investigation, because (1) all plaintiff ever has in possession or for communication are facts; (2) all defendant takes are. facts, and (3) there can be no property in facts; but (4) if there be any such property it is lost at the moment any member of plaintiff, in accordance with its own rules, publishes said facts by showing a bulletin or distributing an edition.

Plaintiff replies that it is (a) untrue that facts alone constitute its stock in trade; it deals in news; and (b) in news there is a property right recognized by reason and authority. Further (c) such property right inures to and persists in the plaintiff entity and each one of its members, and (d) is not exhausted by the act of a single member, which act is (e) improperly called by defendant “publication,” a word inappropriate to “news,” which is not literary property. Finally (f) plaintiff complains of defendant’s admitted practices as unfair competition.

[2] (1, 2, a) With the existence of a truth, with physical facts per se, neither plaintiff nor defendant is concerned; for them facts in that absolute sense are but as ore in a mountain or fish in the sea — valueless unless and until by labor mined or caught for use.. Nor are facts, even after ascertainment, news, unless they have that indefinable quality of interest, which attracts public attention. Neither is news always synonymous with facts, in the sense of verity; indeed, much news ultimately proves fictitious, yet it is excellent news notwithstanding. The word means no-more (laying aside hoaxing and intentional falsehood) than apparently authentic reports of current events of interest.

When one copies a statement from a bulletin, he cannot assert himself to be possessed of any certain fact other than that of his own appropriation. The only fact he knows is that the bulletin maker made an assertion ; but he has taken the news, because that is what the bulletin proclaimed, if its maker was skillful in his business.

[3] (3, b) Whether there is or can be any property in facts per se, any more than there is in ideas or mental concepts, is a metaphysical query that can be laid aside; for there is no doubt, either on reason or authority, that there is a property right in news capable of and entitled to legal protection. Property, nomen generalissimum, covers everything that has an exchangeable value (The Slaughter House Cases, 16 Wall. 127, 19 L. Ed. 915); that news possesses the quality stated, seems obvious enough, when it is observed that defendant takes it, in order to exchange it against dollars.

Special or trade news of divers kinds constitute property, as has often been decided (Hunt v. Cotton Exchange, 205 U. S. at 322, 27 Sup. Ct. 529, 51 L. Ed. 821; Dr. Miles Co. v. Park, 220 U. S. at 402, 31 Sup. Ct. 376, 55 L. Ed. 502; Board of Trade v. Christie Co., 198 U. S. 236, 25 Sup. Ct. 637, 49 L. Ed. 1031, affirming Board of Trade v. Kinsey, 130 Fed. 507, 64 C. C. A. 669, 69 L. R. A. 59, and citing with approval National Telegraph, etc., Co. v. Western Union Co., 119 Fed. 294, 56 C. C. A. 198, 60 L. R. A. 805; Dodge Co. v. Construction, etc., Co., 183 Mass. 62, 66 N. E. 204, 60 L. R. A. 810, 97 Am. St. Rep. 412; Exchange, etc., Co. v. Central, etc., Co., 2 Chan. [1897] 48; Kiernan v. Manhattan, etc., Co., 50 How. Prac. [N. Y.] 194; Board of Trade v. Celia, etc., Co., 145 Fed. 28, 76 C. C. A. 28); and the point was assumed as settled by us in Board of Trade v. Tucker, 221 Fed. 305, 137 C. C. A. 255.

There is no distinction entailing a legal difference, between news of the prices of corporate securities or commodities, of sporting events, or opportunities of profitable contracting, and news of current political, social, or national events. Both require labor and expense in acquisition, transmission, and dissemination, both have exchangeable values, and all alike lose by exposure the quality of news, which, when it becomes history, may remain important, but its commercial value has largely gone.

In the National Telegraph Case, 119 Fed. 300, 56 C. C. A. 198, 60 L. R. A. 805, the property rights of the “great news agencies” were referred to as existing for the same reasons as obtained in respect of market quotations, and, as we have indicated, that decision was approvingly cited by the Supreme Court in the decision which we think settled the general proposition that all news as commercially sold is 198 U. S. 236, 25 Sup. Ct. 637, 49 L. Ed. 1031.

Assuming, now, the existence at some time of some property right in plaintiff and to its news, the qualities producing exchangeable value may be noted. Regularity and reliability, the fruits of organization and expenditure, are of course necessary; but all that is vain unless the news is fresh, early, and, if not always first in point of time, as prompt as any. Time is of the essence, and the basic question on this branch of the discussion is: How long does the property quality endure in news ?

[4] (4, c, d, e) Plaintiff is a membership corporation, its members co-operate in newsgathering, and each has in his own locality a several right to and ownership in the results of plaintiff’s labors, viz. the news. The rights of members, whether printing in Duluth or Galveston, New York or San Francisco, are equal, and the aggregate of their rights is the plaintiffs right. If it be admitted that plaintiff’s right of property in its news once existed, such existence was for the benefit of all its members, who, however (owing to the earth’s method of rotation), cannot simultaneously exercise their several rights. Yet all exercise them at the same hour of their several days.

It is sought, if not to limit the doctrine of property in news to the time during which it remains locked up in the breast of its gatherer, to interpret the decisions cited as meaning only that news is “like a trade secret” (198 U. S. 250, 25 Sup. Ct. 637, 49 L. Ed. 1031), lost when divulged in the course of business. Doubtless the analogy of restraining in equity wrongful knowledge of private business methods was very useful in developing the doctrine that the “courts ought to protect in every reasonable way” the “valuable right of property” in information.. Dodge Co. v. Construction, etc., Co., supra. But news is far more than a trade secret, for that must remain private to have its best value, while news is-obtained for publicity alone. The true line of decision is indicated by the conclusion of the court in the Christie Case — that the “information will not become public property until the plaintiff has gained his reward.” 198 U. S. 251, 25 Sup. Ct. 637, 49 L. Ed. 1031. Of course, this means his reasonable reward, and, as in that instance of trade quotations, divulging the same to one patron’s office full of customers did not reasonably terminate plaintiff’s property, so here it is reasonable and just that each member of plaintiff and plaintiff itself should have a property right in its news until tire reasonable reward of each member is received, and that megns (with due allowance for the earth’s rotation) until plaintiff’s most Western member has enjoyed his reward, which is, not to have his local competitor supplied in time for competition with what he has paid for. Surely this is a modest limit of rights.

But the foregoing is thought to be avoided, if not controverted, by dwelling on the word “publication,” and insisting in substance that when (e. g.) a single New York paper (being a member of plaintiff)prints an item and sells a copy of that edition, all the world can copy as it pleases, to any extent and for any purpose, commercial or otherwise, because nothing but copyright protects that paper, and copyright does not cover statements of fact, but merely their literary dress or form.

[6] The argument assumes that what plaintiff is interested in, and is trying to preserve, is literary property, or anything capable of copyright protection. It may be granted that the newspaper first giving out the news in question is copyrighted, that fact statements are not thereby protected as such, and that publication at common law terminated an author’s rights in his manuscript and the fruits of his brain;¹ yet it still remains true that plaintiff’s property in news is not literary at all, that it is not capable of copyright, and that “publication,” as that word is used in the long line of decisions regarding literary rights, has no determinative bearing on this case. No one before ever attributed to publication a sense that would limit a lawful business to a few degrees of longitude. The word is legally very old, and of no one certain meaning. Publication of evidence in equity or admiralty, of banns, of libel, etc.,, bears but remote relation to the act which is thought once to' have terminated an author’s property, and now is a requisite to statutory copyright. The thought, however, running through all the uses of the word, is an advising of the public, a making known of something to them for a purpose. It follows that the crucial inquiry is as to that purpose: Is it lawful?

In all the “quotation” cases, it was held that the purpose of the publicity given was not to let other people sell the quotations, and that that purpose was lawful.² As we put it in the Tucker Case, 221 Fed. 307, 137 C. C. A. 255:

•‘The posting of * * * quotations oil a blackboard * * ~ is not the sort of publication which will terminate complainant’s property right in them.”

Thus it appears that not all publications are alike, and this is true, even under the Copyright Acts. In Werckmeister v. American, etc., Co.. 134 Fed. 321, 69 C. C. A. 553, 68 L. R. A. 591, an opinion by Townsend, J., of which it has been said that it “left little to he added to the discussion” (American Tobacco Co. v. Werckmeister, 207 U. S. 299, 28 Sup. Ct. 72, 52 L. Ed. 208, 12 Ann. Cas. 595), that learned judge said that the use of “publication” without explanation or qualification was unfortunate. “The nature of the property in question in large measure determines the extent of public right.” And it was held that unless there was an “abandonment of copyright or dedication to the public,” the owner of a thing capable of copyright could “expressly or by implication confine the enjoyment of such subject to some occasion or definite purpose.”

We have assumed the newspaper first printing to be copyrighted, and no doubt its publication of its early edition was a general publication; but it could not copyright, abandon, nor destroy what it did not own, and it did not own plaintiff’s property in the news, nor that of its own fellow members in California. It did own the right to print in New York, but we discover no magic in the word “publication” which takes away or terminates the rights of others.

Plaintiff’s purpose in furnishing the (e. g.) New York paper with news was to have a use made of it not inconsistent with its own reasonable reward for its labor from its property and that of all the other members of plaintiff. That measure of use and reward is lawful; defendant deprives plaintiff thereof, and can show no equities; therefore defendant should be enjoined.

[ 5] (f) Unfair competition, like all oft-uttered legal phrases, has acquired rather a narrow use. In McLean v. Fleming, 96 U. S. 251, 24 L. Ed. 828, a decision which is near the foundation of American case law on this subject, it was said that what equity enjoins the wrongdoer from depriving another of is “the advantage of celebrity.” This thought has led to the feeling that what a plaintiff must be robbed of is the good will and business ease resulting from his well-known name, or the attractive dressing, wrapping, or form of his product; that such robbery must be by imitation; and that the test of such imitation is the effect upon the public, or that part thereof likely to require wares such as those in controversy.

But this is not all the law, nor the only sort of unfairness in business methods, practiced by a competitor, and resulting in a continuing tort, for which the law affords no adequate remedy- — that comes under the condemnation of equity. If defendant appropriated from an early edition of a New York paper what it wanted, and sold it, as extracted from said newspaper or as obtained per Associated Press, such action would still be obnoxious to what we have said concerning plaintiff’s property rights in the news procured by itself; but, since no deception would be wrought upon the public, no action for unfair competition would lie along the lines just indicated. When and if such appropriated news is sold as the fruit of defendant’s own efforts, and under its own name, it is a plain case of deception, assuming defendant’s customers to be honorable men, anxious for good wares; an assumption necessarily made, in the absence of evidence to the contrary. Yet an action of such nature would lack the element of imitation, usually relied upon.

Equity, however, is not stayed because a name does not fit, or one is not at hand to accurately describe a wrong of a kind necessarily infrequent. If defendant takes what some one else owns, and sells it as of right, in rivalry with the owner, such competition is more than unfair; it is patently unlawful and the wider term comprises the narrower. But, laying aside the right of property as the ultimate foundation of suit, the business method of selling, in competition with plaintiff and its members, something falsely represented as gathered by defendant otherwise than from bulletins and early editions, is unfair, because it is parasitic and untrue. It is immoral, and that is usually unfair to some one.³

The flexibility of equity in granting relief against unfair methods of business was well stated by Ingraham, J., in Burrow v. Marceau, 124 App. Div. 665, 109 N. Y. Supp. 105 :

“No bard and fast rule can be laid down, * * * where it is clearly-established that an attempt is being made by one person to get the business of another by * * * fraud and deceit a court of equity will” intervene.⁴

And in Weinstock v. Marks, 109 Cal. 529, 42 Pac. 142, 30 L. R. A. 182, 50 Am. St. Rep. 57, it was said:

“Equity does not concern itself about the means by which wrong is done; it deals with the result of the fraud, which moves the arm of the law and strikes down all efforts, where fraud is practiced in securing the trade of a rival dealer.”

To commercially distribute news not gathered by the sender is under the facts shown here an invasion of property rights; to send it out as one’s own labor is marked bjr that dolus which is fraud, and that is the basis of the doctrine of unfair competition in its wide sense.

Since (to summarize the matter) any bodily taking for sale of plaintiff’s news, without other labor than the perception thereof, before the reasonable reward of industry is secured as above indicated, is an unlawful invasion of property rights, and any sale thereof in competition with plaintiff under pretense of individual gathering thereof is a tort of the nature of unfair competition, the plaintiff’s motion for injunction should have been granted substantially as made.

The order appealed from is modified, as indicated, and the cause remanded, with directions to issue injunction against any bodily taking of the words or substance of plaintiff’s news, until its commercial value as news has, in the opinion of the District Court, passed away. The exact form of words to be used, and the insertion or omission of a definite time limit on copying and sale, will be settled in the court below in any manner not inconsistent with this opinion. One bill of costs in this court to plaintiff.

1 This is the general view. Werckmeister v. American, etc., Co., 134 Fed. 321, 69 C. C. A. 553, 68 L. R. A. 591; Tribune Co. v. Associated Press (C. C.) 116 Fed. at 127; Holmes v. Hurst, 174 U. S. 85, 19 Sup. Ct. 606, 43 L. Ed. 904. The opposite opinion is divertingly sustained by Mr. Augustine Birrell in “Authors in Court,” found among “Res Judicatæ.”

2 Board of Trade v. MeDearmott (C. C.) 143 Fed. 188, is probably the most extreme instance of publicity, not amounting to abandonment, i. e., to the kind of “publication” bere contended for.

3 Decisions granting relief from competition without the usual imitation elements, but with the fraud apparent, are Morgan v. Wendover, 43 Fed. 420, 10 L. R. A. 283; American, etc., Co. v. De Lee, 67 Fed. 329; Barnes v. Pierce (C. C.) 164 Fed. 213; Fonotipia Co. v. Bradley (C. C.) 171 Fed. 951; Prest-o-Lite v. Davis (C. C.) 209 Fed. 917, affirmed 215 Fed. 349, 131 C. C. A. 491; Prest-o-Lite v. Heiden, 219 Fed. 845, 135 C. C. A. 515, L. R. A. 1915F, 945.

4 See this principle applied to enjoin a competitor from imitating the fashion of a model gown, bought from plaintiff by pretending to be an intending wearer. Montegut v. Hickson, 164 N. Y. Supp. 858.

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