248 U.S. 215 (1918), 221, International News Service v. Associated Press

Docket Nº:No. 221
Citation:248 U.S. 215, 39 S.Ct. 68, 63 L.Ed. 211
Party Name:International News Service v. Associated Press
Case Date:December 23, 1918
Court:United States Supreme Court
 
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Page 215

248 U.S. 215 (1918)

39 S.Ct. 68, 63 L.Ed. 211

International News Service

v.

Associated Press

No. 221

United States Supreme Court

Dec. 23, 1918

Argued May 2, 3, 1918

CERTIORARI TO THE CIRCUIT COURT OF APPEALS

FOR THE SECOND CIRCUIT

Syllabus

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.

The right to object to the nonjoinder of parties may be treated as

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waived if not made specifically in the courts below. Equity Rules 43, 44. P. 233.

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

As against the public, any special interest of the producer of uncopyrighted news matter is lost upon the first publication. Id.

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.

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.

Upon the pleadings and proofs in this case, held that complainant was not debarred from relief upon the ground of unclean hands by the fact that, following a practice engaged in by the defendant also and by news agencies generally, it had used the defendant's news items, when published, as "tips" for investigations, the results of which it sold. P. 242.

245 F. 244 affirmed.

The case is stated in the opinion.

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PITNEY, J., lead opinion

MR. JUSTICE PITNEY delivered the opinion of the Court.

The parties are competitors in the gathering and distribution of news and its publication for profit in newspapers throughout the United States. The Associated Press, which was complainant in the district court, is a cooperative organization, incorporated under the Membership Corporations Law of the State of New York, its members being individuals who are either proprietors or representatives of about 950 daily newspapers published in all parts of the United States. That a corporation may be organized under that act for the purpose of gathering news for the use and benefit of its members and for publication in newspapers owned or represented by them is recognized by an amendment enacted in 1901 (Laws N.Y.1901, c. 436). Complainant gathers in all parts of the world, by means of various instrumentalities of its own, by exchange with its members, and by other appropriate means, news and intelligence of current and recent events of interest to newspaper readers and distributes it daily to its members for publication in their newspapers. The cost of the service, amounting approximately to $3,500,000 per annum, is assessed upon the members and becomes a part of their costs of operation, to be recouped, presumably with profit, through

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the publication of their several newspapers. Under complainant's bylaws, each member agrees upon assuming membership that news received through complainant's service is received exclusively for publication in a particular newspaper, language, and place specified in the certificate of membership, that no other use of it shall be permitted, and that no member shall furnish or permit anyone in his employ or connected with his newspaper to furnish any of complainant's news in advance of publication to any person not a member. And each member is required to gather the local news of his district and supply it to the Associated Press, and to no one else.

Defendant is a corporation organized under the laws of the State of New Jersey, whose business is the gathering and selling of news to its customers and clients, consisting of newspapers published throughout the United States, under contracts by which they pay certain amounts at stated times for defendant's service. It has widespread news-gathering agencies; the cost of its operations amounts, it is said, to more than $2,000,000 per annum, and it serves about 400 newspapers located in the various cities of the United States and abroad, a few of which are represented, also, in the membership of the Associated Press.

The parties are in the keenest competition between themselves in the distribution of news throughout the United States, and so, as a rule, are the newspapers that they serve, in their several districts.

Complainant in its bill, defendant in its answer, have set forth in almost identical terms the rather obvious circumstances and conditions under which their business is conducted. The value of the service, and of the news furnished, depends upon the promptness of transmission, as well as upon the accuracy and impartiality of the news, it being essential that the news be transmitted to members or subscribers as early or earlier than similar information can be furnished to competing newspapers

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by other news services, and that the news furnished by each agency shall not be furnished to newspapers which do not contribute to the expense of gathering it. And further, to quote from the answer:

Prompt knowledge and publication of worldwide news is essential to the conduct of a modern newspaper, and, by reason of the enormous expense incident to the gathering and distribution of such news, the only practical way in which a proprietor of a newspaper can obtain the same is either through cooperation with a considerable number of other newspaper proprietors in the work of collecting and distributing such news, and the equitable division with them of the expenses thereof, or by the purchase of such news from some existing agency engaged in that business.

The bill was filed to restrain the pirating of complainant's news by defendant in three ways: first, by bribing employees of newspapers published by complainant's members to furnish Associated Press news to defendant before publication, for transmission by telegraph and telephone to defendant's clients for publication by them; second, by [39 S.Ct. 70] inducing Associated Press members to violate its bylaws and permit defendant to obtain news before publication; and, third, by copying news from bulletin boards and from early editions of complainant's newspapers and selling this, either bodily or after rewriting it, to defendant's customers.

The district court, upon consideration of the bill and answer, with voluminous affidavits on both sides, granted a preliminary injunction under the first and second heads, but refused at that stage to restrain the systematic practice, admittedly pursued by defendant, of taking news bodily from the bulletin boards and early editions of complainant's newspapers and selling it as its own. The court expressed itself as satisfied that this practice amounted to unfair trade, but, as the legal question was

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one of first impression, it considered that the allowance of an injunction should await the outcome of an appeal. 240 F. 983, 996. Both parties having appealed, the circuit court of appeals sustained the injunction order so far as it went, and, upon complainant's appeal, modified it and remanded the cause with directions to issue an injunction also against any bodily taking of the words or substance of complainant's news until its commercial value as news had passed away. 245 F. 244, 253. The present writ of certiorari was then allowed. 245 U.S. 644.

The only matter that has been argued before us is whether defendant may lawfully be restrained from appropriating news taken from bulletins issued by complainant or any of its members, or from newspapers published by them, for the purpose of selling it to defendant's clients. Complainant asserts that defendant's admitted course of conduct in this regard both violates complainant's property right in the news and constitutes unfair competition in business. And notwithstanding the case has proceeded only to the stage of a preliminary injunction, we have deemed it proper to consider the underlying questions, since they go to the very merits of the action and are presented upon facts that are not in dispute. As presented in argument, these questions are: (1) whether there is any property in news; (2) whether, if there be property in news collected for the purpose of being published, it survives the instant of its publication...

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