Nice try, Dow Jones, but your “hot news” case is doomed — the news is everywhere now

Paperboy

News used to be a relatively rare commodity, dispensed by a handful of special outlets — printed on paper, etc. and delivered by the postman or via a dedicated terminal. Now the news is everywhere, almost instantly, to the point where a study by the Pew Research Center found a surprisingly large proportion of news consumers didn’t even remember where the news they saw originally came from.

This may be good for news consumers, but it isn’t good for news outlets at all, which is why they keep moaning about the activities of aggregators, and trying to find legal ways of shutting them down or forcing them to pay — even though trying to stuff the democratization of distribution genie back into the bottle is arguably a fool’s errand, thanks to Twitter and the social web.

In the latest example of this trend, Dow Jones & Co. — which runs a business wire and also owns the Wall Street Journalfiled a lawsuit against a British service called Real-Time Analysis and News or Ransquawk. According to DJ, the service routinely broadcasts the same news within seconds of it appearing on the Dow Jones wire (there are a number of similar services, which get their name from the “squawk boxes” that brokerage firms used to get updates from the trading floor).

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One interesting thing about the Ransquawk case is that Dow Jones isn’t alleging a breach of copyright — even though it accuses the British company multiple times in its statement of claim (which is embedded below) of repeating “verbatim, or nearly verbatim” versions of its news. So why not make the case about copyright infringement? Because U.S. copyright law doesn’t apply to short phrases such as headlines or news briefs, and it also doesn’t apply to facts.

As a result, Dow Jones has fallen back on an antiquated principle in U.S. common law known as the “hot news misappropriation doctrine,” which dates back to World War I. In a case launched (coincidentally enough) by another wire service in 1918, Associated Press argued that a competing wire called the International News Service was mis-appropriating its European news and selling it to newspapers before the AP’s updates could arrive.

The Supreme Court ultimately found that the INS was guilty because what it was taking consisted of “hot news” — the kind whose value rapidly diminishes over time — and therefore it was infringing on AP’s livelihood by “free riding” on its journalistic labor (although one dissenting judge noted that all the service had done was read news reports that AP had already made freely available).

Ever since that ruling, news companies have been trying to use the “hot news” principle to go after other news providers who either aggregate or provide similar breaking-news services. In 2006, a number of leading brokerage firms sued (PDF link) a business-news site called Flyonthewall.com for misappropriation of news, and won a judgement that forced the service to delay re-publishing news for as much as two hours — but an appeals court disagreed, saying:

“The Firms are making news; Fly, despite the Firms’ understandable desire to protect their business model, is breaking it.”

Breaking news is more or less broken

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Like the brokerage firms, Dow Jones is trying to piggyback on the original “hot news” ruling by making its claim in New York state, which adopted aspects of the doctrine as part of state law — despite the criticisms made by legal scholars that enshrining a form of property right in factual statements contravenes federal copyright law. In its claim, Dow Jones goes to some lengths to argue that Ransquawk does business in New York and/or is hurting the wire service’s business prospects in that state.

It’s true that seconds can matter when it comes to financial news in particular (Reuters charges certain clients thousands of dollars a month to get labor statistics just two seconds before they are released to the rest of its business customers). But it’s also true that sources of information are everywhere — and if anything, they are multiplying faster than Dow Jones or the court can count them.

For example, part of the Dow Jones claim states that Ransquawk reproduced within seconds the wire service’s “scoop” that Twitter had filed securities documents in preparation for an initial public offering or IPO. But that ignores the fact that literally hundreds of Twitter users — both wire services and individuals — did exactly the same thing within seconds of the filing.

The reality, as I’ve argued before, is that Twitter is the news-wire for a growing number of people now, and the life-span of a so-called news “scoop” continues to dwindle rapidly. Dow Jones may not want to believe it, but there are plenty of legal ways that Ransquawk — or anyone else, for that matter — can find out market-moving information within seconds or minutes of Dow Jones moving it on the wire. Suing every provider like Ransquawk is like closing the barn door after the horse has long since moved on to greener pastures.

Thumbnail photos courtesy of Shutterstock / Dayna More and Shutterstock / mtkang

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