Quick Summary
The Associated Press (plaintiff) and International News Service (defendant) were rival news agencies embroiled in a legal dispute. The AP accused the INS of stealing its news content and selling it as its own, thereby engaging in unfair competition.
The Supreme Court held that while news may not be traditional property, it is ‘quasi-property’ within the business context, and its misappropriation by a competitor like INS constitutes unfair competition. The Court affirmed an injunction preventing INS from further misappropriation.
Facts of the Case
The Associated Press (AP) (plaintiff) and International News Service (INS) (defendant) are rival news services that gather and distribute news to newspapers across the United States. AP operates on a cooperative model, serving around 950 newspapers, while INS serves approximately 400 newspapers.
The dispute arose when AP accused INS of engaging in several unethical practices to obtain AP’s news content without authorization or compensation. Specifically, AP claimed that INS bribed AP employees, induced AP members to violate by-laws, and copied AP’s news from bulletin boards and early editions of newspapers.
The case was brought to court after AP sought an injunction to stop INS from these practices, alleging that INS was unfairly competing by selling AP’s news as its own.
Procedural Posture and History
- Associated Press filed suit against International News Service seeking an injunction.
- The trial court granted a preliminary injunction on the first two allegations but not on the third.
- The appellate court sustained the injunction and extended it to include the third allegation against INS.
- The case was then brought before the Supreme Court of the United States on certiorari.
I.R.A.C. Format
Issue
Whether the International News Service may be lawfully restrained from appropriating news content from the Associated Press for commercial use in competition with it.
Rule of Law
The value of news lies in its timeliness and accuracy, and it becomes quasi-property when used as stock in trade. Competitors in the business of news distribution must conduct their operations without unfairly damaging each other’s business interests. Unfair competition can be determined by considering the parties’ rights between themselves, not merely their rights against the public.
Reasoning and Analysis
The Supreme Court emphasized the dual nature of news as both information and a commercial product. The Court recognized that while news itself may not be copyrightable or a traditional form of property, it becomes a form of ‘quasi-property’ when gathered for commercial purposes.
As such, it is subject to protection from unfair competition, which includes unauthorized use by competitors. The Court reasoned that INS’s conduct constituted unfair competition because it involved taking AP’s news—gathered at significant cost—and selling it as its own.
This deprived AP of the opportunity to recoup its investment and earn a profit from its own efforts. The Court found that such actions interfered with AP’s business operations and violated principles of fair competition.
Conclusion
The Supreme Court affirmed the decision of the Circuit Court of Appeals, upholding the injunction against International News Service from using Associated Press’s news in a manner that constitutes unfair competition.
Key Takeaways
- News can be considered ‘quasi-property’ when used for commercial purposes in the news distribution industry.
- Competitors must act fairly and may not misappropriate each other’s commercially valuable news content.
- Unfair competition includes activities that undermine a company’s ability to profit from its own labor and investments.
Relevant FAQs of this case
What constitutes unfair competition in the context of trade secrets?
Unfair competition occurs when a business gains an advantage through dishonest or fraudulent conduct, which often includes the misappropriation or theft of trade secrets. This can involve industrial espionage, breach of confidence, or inducing employees to reveal confidential information.
- For example: A former employee starts a competing business using a secret recipe stolen from their previous employer’s restaurant. This act undermines the original business and profits unfairly from the stolen trade secret.
How does the transformation of information into 'quasi-property' affect its legal protection?
Information becomes ‘quasi-property’ when it is collected and used for commerce, thus qualifying for legal protection from misappropriation. As quasi-property, information gains some of the rights akin to physical property, like prevention against theft and unfair use by competitors.
- For example: A financial analyst compiles proprietary market research intended for subscription-based clients. If a competitor unlawfully distributes this information for free, they’re infringing on its status as ‘quasi-property’ and can be held liable.
When does copying become actionable under unfair competition laws?
Copying becomes actionable under unfair competition laws when it involves misappropriation of effort, such as duplicating a product or content that has been developed through significant investment and labor, thereby causing economic harm to the originator.
- For example: If a software company reverse-engineers and copies the unique code of a rival’s app without adding any substantial independent value, this could be considered unfair competition.
References
Was this case brief helpful?