Hot News Misappropriation and Copyright Law

In Associated Press v. All Headline News Corp., 2009 WL 382690 (S.D.N.Y. Feb. 17, 2009), Judge Castel considered a Rule 12(b)(6) motion to dismiss AP's complaint alleging (1) violations of the Copyright Act 17 U.S.C. 106 (2) violations of the DMCA 17 U.S.C. 1202, the Lanham Act Sections 1114 and 1125(a) and New York common law.

AHN, found here was sued by AP, found here. It was alleged that poorly-paid Florida employees took AP content, removed copyright notices, reworked it and republished it as their own.

The court denied the bulk of the motion to dismiss, finding that AP's claims for misappropriation and unfair competition under New York law are not preempted by the Copyright Act. The court dismissed the Lanham Act claims, finding that AHN did not infringe AP's trademark by wrongfully deleting its trademark from its news reports.

The decision finds the "hot news" misappropriation theory under New York law still viable. Along the way, the court performs a nice conflict of laws analysis between Florida and New York law. Quoting NBA v. Motorola, Inc., 105 F.3d 841 (2d Cir. 1997) the court found:

under New York law, a valid, non-preempted claim for misappropriation arises when:
(i) a plaintiff generates or gathers information at a cost; (ii) the information is time-sensitive; (iii) a defendant's use of the information constitutes free riding on the plaintiff's efforts; (iv) the defendant is in direct competition with a product or service offered by the plaintiffs; and (v) the ability of other parties to free-ride on the efforts of the plaintiff or others would so reduce the incentive to produce the product or service that its existence or quality would be substantially threatened.

The court applied New York - the law of the "place of injury" - that is, the place where the plaintiff suffered economic loss because of the misappropriation of its ideas.

The court also permitted the DMCA claim to proceed - holding that removing copyright notices from published articles violates the statute's clear language and rejecting the defendants' arguments that DMCA violations are limited to removing encryption and other digital coding.

This is a case that is likely to be cited for its conflict of laws analysis.