Associated Press v. KVOS, Inc.

• Decision Date: 18 December 1934
• Docket Number: No. 1087.,1087.
• Citation: 9 F. Supp. 279
• Parties: ASSOCIATED PRESS v. KVOS, Inc.
• Court: U.S. District Court — Western District of Washington

9 F. Supp. 279

ASSOCIATED PRESS v. KVOS, Inc.

No. 1087.

District Court, W. D. Washington, N. D.

December 18, 1934.

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Howard & Kindall, of Bellingham, Wash., for complainant.

Kenneth C. Davis, of Seattle, Wash., and William H. Pemberton, of Olympia, Wash., for defendant.

BOWEN, District Judge (after stating the facts as above).

The rule is that a motion to dismiss in equity must be judged solely by plaintiff's pleadings, and for the purposes of the motion all facts well pleaded are taken as true. The question raised in defendant's motion that in fact the amount in controversy does not exceed the sum of $3,000 is, by that rule, disposed of adversely to the defendant.

The question raised, also, in the motion to dismiss that there is a defect of parties complainant, in that the Bellingham Herald was not joined, must likewise be resolved against defendant, upon the authority of Federal Equity Rule 38 (28 USCA § 723), Hopkins (6th Ed.) p. 226, which provides: "When the question is one of common or general interest to many persons constituting a class so numerous as to make it impracticable to bring them all before the court, one or more may sue or defend for the whole," and upon the authority of Merchants' & Manufacturers' Traffic Ass'n v. U. S. (D. C.) 231 F. 292, 294, where the court said: "We see no objection to classes of persons similarly situated being represented by an association or other organization and coming into the controversy under the common name. This, we think, brings this case within the well-known rule that bills may be filed in the name of an unincorporated association, and by parties on behalf of others similarly situated," and in view of the further fact that it is alleged in complainant's bill (paragraph 5, p. 2) "that complainant has more than 1200 members, each owning or representing a daily newspaper in the United States," and as stated elsewhere in the bill in effect that those members are similarly situated.

The foregoing leaves to be disposed of only the remaining question, also raised by the motion to dismiss, as to whether the bill states a cause of action in equity or any facts entitling complainant to the relief now sought.

Responding to complainant's bill and affidavits alleging that defendant obtains copies of morning editions of complainant's member newspapers and systematically reads therefrom over the radio to defendant's radio listeners the news reports in question, the statements in the affidavit of L. H. Darwin on behalf of defendant categorically deny those allegations on behalf of complainant and set forth many news sources, other than complainant's news service, available to affiant by reason of his previous experience as a newspaper man and public official and of his broad acquaintanceship.

Affiant Rogan Jones, in this affidavit on behalf of defendant, states in effect that as to the general news reports used in such radio news broadcasts, the same are obtained by the defendant under its contract with Radio News Association of New York City, which is a radio news service maintained for radio broadcasting stations which contract for that service, and that such news reports are broadcast from New York by that association to defendant and others entitled to them, by short wave length, three or more times daily, from 6 to 7 a. m., 9:30 to 10:30 a. m., 2 to 3 p. m., and 5:30 to 6 p. m., Pacific Standard Time; that such news is copyrighted and is received by KVOS in Continental Code by a licensed operator on a special high-grade and expensive apparatus in Bellingham over an antennæ arranged, located, and designed especially for this news feature, after long and expensive experimentation by defendant's station. The statements in complainant's affidavits that defendant has in many specific instances read general and local news items claimed to belong to complainant's news service, or substantial portions of such items, are clear and convincing, and, when considered in connection with the less specific statements in defendant's affidavits as to defendant's sources of general and local news information, compel the conclusion, and the court so finds, that defendant has in its radio news broadcasts taken and "pirated" local and general news dispatches in some specific instances as charged by complainant, but not until after such news items were published and distributed to the public in the regular public editions of the newspapers of complainant's members.

Complainant does not assert any rights under a statute or the copyright laws. It is not contended that the defendant procured the questioned information through a breach of contract between complainant and its member newspapers or through some surreptitious or dishonest conduct or from a private or confidential source before the news reports were published and distributed to the public in a member newspaper. The bill charges unfair competition by the defendant, and in its brief complainant argues, in addition to that charge, that it has a property right in the news items in question, and that such property rights have been and are being violated by the defendant. In the argument before the court, counsel for complainant stressed its claim of unfair competition rather than its asserted property rights in the news reports. Complainant claims it has such property right in the news reports for at least twenty-four hours after first publication thereof in one of the newspapers of complainant's members, but that defendant has customarily broadcast the reports many hours before the expiration of such twenty-four hour period.

As upholding such property right, complainant cites The Associated Press v. Sioux Falls Broadcast Association,¹ decided by Judge Jas. D. Elliott of the United States District Court of South Dakota at Sioux Falls, on March 4, 1933, being cause No. 377 S. D. Eq., and International News Service v. Associated Press, 248 U. S. 215, 39 S. Ct. 68, 63 L. Ed. 211, 2 A. L. R. 293. Complainant insists that the South Dakota case, upholding complainant's alleged property rights, is supported by the authority of the International News Service Case. A certified copy of the findings and conclusions of the South Dakota case, supplied to this court by complainant, discloses that Judge Elliott ruled that complainant and its members have "what a court of equity will treat as a property right in news gathered and disseminated by complainant and also so called local news gathered by members of complainant and which members of complainant are obligated to transmit to complainant"; but a careful review of the International News Service Case fails to disclose a statement by the Supreme Court to the effect that complainant in that case acquired or had an absolute property right as such in news gathered by it and supplied to its member newspapers for any time after distribution to the public, or indeed for any time whatever, either before or after such publication. There seems to be no room for question that the true construction of the rule of the majority decision in that case is confined to the actual holding on the particular facts there involved and that the case turns on the point that the pirating news agency was guilty of unfair competition, in view of the opinion of Justice Pitney speaking for the majority (at page 241 of 248 U. S., 39 S. Ct. 68, 73), as follows: "It is said that the elements of unfair competition are lacking because there is no attempt by defendant to palm off its goods as those of the complainant, characteristic of the most familiar, if not the most typical, cases of unfair competition. Citing. But we cannot concede that the right to equitable relief is confined to that class of cases. In the present case the fraud upon complainant's rights is more direct and obvious. Regarding news matter as the mere material from which these two competing parties are endeavoring to make money, and treating it, therefore, as quasi property for the purposes of their business because they are both selling it as such, defendant's conduct differs from the ordinary case of unfair competition in trade principally in this that, instead of selling its own goods as those of complainant, it substitutes misappropriation in the place of misrepresentation, and sells complainant's goods as its own."

At page 240 of 248 U. S., 39 S. Ct. 68, 73, Justice Pitney further says: "But in a court of equity, where the question is one of unfair competition, if that which complainant has acquired fairly at substantial cost may be sold fairly at substantial profit, a competitor who is misappropriating it for the purpose of disposing of it to his own profit and to the disadvantage of complainant cannot be heard to say that it is too fugitive or evanescent to be regarded as property. It has all the attributes of property necessary for determining that a misappropriation of it by a competitor is unfair competition because contrary to good conscience."

Thus, the most that can be said of the majority rule in that case is that the majority reasons on an issue of unfair competition between news agencies in business for profit, that the complainant, whose labor and facilities have developed the news report up to the point at which the profit could first be realized, might be said to have a quasi...