MEMORANDUM DECISIONS

Disposed of AT OCTOBER TERM, 1918

(248 U. S. 215)

INTERNATIONAL NEWS SERVICE v. AS-
SOCIATED PRESS.

7. TRADE-MARKS AND TRADE-NAMES 68-UNFAIR COMPETITION.

What is unfair competition in business must be determined with particular reference to the

(Argued May 2 and 3, 1918. Decided Dec. 23, character and circumstances of the business.

1918.)

No. 221.

1. COURTS 343-FEDERAL COURTS-PARTIES -EQUITY RULES-SUIT BY REPRESENTATIVE OF CLASS.

Under equity rule 38 (33 Sup. Ct. xxix), authorizing one or more to sue for all, where the question is one of common or general interest to a numerous class, an incorporated co-operative organization is a proper party, as representing the interest of its members, to conduct a suit in substance brought for their benefit.

2. COURTS 356-FEDERAL Courts-PARTIES

-DEFECT-OBJECTION BELOW.

Under equity rules 43, 44 (33 Sup. Ct. xxx), as to objection by defendant, before or at the hearing, that suit is defective for want of parties, no specific objection of want of parties having been made below, objection because of suit for benefit of members of incorporated co-operative organization being brought by it, instead of them, will be treated as waived. 8. LITERARY PROPERTY 1- PROPERTY IN NEWS.

In considering the general question of property in news matter, its dual character, distinguishing between the substance of the information and the particular form or collocation of words in which the writer has communicated it, must be recognized.

4. COPYRIGHTS

NEWSPAPER.

16

CONTRIBUTION

ΤΟ

8. LITERARY PROPERTY 1-PROPERTY IN NEWS "QUASI PROPERTY."

News, regarded as the material out of which make profits at the same time and in the same rival news-gathering agencies are seeking to field, when gathered by one, is "quasi property," though posted on bulletins or published in papers of some of its members.

9. TRADE-MARKS AND TRADE-NAMES 67UNFAIR COMPETITION-PROPERTY RIGHTS.

To sustain jurisdiction of equity over the controversy of appropriation by one news-gathering agency of news gathered by another such agency, as unfair competition, no general and absolute property in the news as such need be affirmed; the right to acquire property by honest labor or the conduct of a lawful business being as much entitled to protection as the right to guard property already acquired, and furnishing the basis of jurisdiction in the ordinary case of unfair competition. 10. NEWSPAPERS 7-NEWS AGENCIES-EFFECT OF PUBLICATION.

News furnished by complainant news-gathering agency does not, on publication thereof in newspapers of a portion of its members, become defendant, rival in news-gathering, may take it the common possession of all, to the extent that therefrom and transmit it to papers published in competition with those of other members of complainant, allowing simultaneous publication.

11. TRADE-MARKS AND TRADE-NAMES
UNFAIR COMPETITION-USE OF NEWS.

568

It is unfair competition in business for defendant news-gathering agency to take from A contribution to a newspaper as a literary newspapers, published by members of complainproduct, though it may also convey news, is the ant news-gathering agency, news furnished by subject of copyright, under Act March 4, 1909, complainant, and transmit it to clients of de§§ 4, 5 (Comp. St. 1916, §§ 9520, 9521), author-fendant, enabling them to publish in competiizing copyright as to all writings of an author, tion with, and as soon as papers of, other memand specifically mentioning periodicals, includ- bers of complainant. ing newspapers.

5. COPYRIGHTS 16 CONTRIBUTION
NEWSPAPER-"News."
The "news" element, the information con-
cerning current events contained in a literary
production, is not subject of copyright, under
Const. art. 1, § 8, par. 8, not being the creation
of the writer.

[Ed. Note.-For other definitions, see Words
and Phrases, First and Second Series, News.]
6. TRADE-MARKS AND TRADE-NAMES
UNFAIR COMPETITION-USE OF NEWS.

68—

12. LITERARY PROPERTY

5-NEWSPAPERS 7-NEWS-ABANDONMENT TO PUBLIC. News furnished by complainant news-gathering agency is not abandoned to the public for all purposes, including its use by a rival, on publication in the paper of a single member of complainant; abandonment being a question of intent, and the entire organization of complainant negativing such a purpose.

13. TRADE-MARKS AND TRADE-NAMES CS UNFAIR COMPETITION-USE OF NEWS. Attempt by defendant to palm off his goods

Whether defendant news-gathering agency as those of complainant is not essential to unmay be restrained from appropriating, for sale, fair competition, for which equity will grant news taken from bulletins issued by complain-relief, but it is enough for defendant to appropriate and sell as his own news gathered by ant agency, or any of its members, or from newscomplainant for sale. papers published by any of them, turns on the question of unfair competition in business, which is not dependent on any general right of property analogous to the common-law right of the proprietor of an unpublished work, nor foreclosed by failure to copyright.

14. EQUITY ~65(3)—UNCLEAN HANDS-UNFAIR COMPETITION-USE OF NEWS.

Under present state of pleadings and proof, the practice of complainant news-gathering agency, seeking to enjoin defendant rival from ap

For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes

propriating outright news gathered by it, of tak-, use of it shall be permitted, and that no ing news items published by defendant's sub- member shall furnish or permit any one in scribers as tips to be investigated, and using his employ or connected with his newspaper the news, if verified by investigation, a practice to furnish any of complainant's news in adfollowed by defendant and by news agencies vance of publication to any person not a generally, held not shown to fix on complainant member. And each member is required to gather the local news of his district and sup

the taint of unclean hands.

Mr. Justice Brandeis, dissenting, and Mr. Justice Holmes and Mr. Justice McKenna, dis-ply it to the Associated Press and to no one

senting in part.

On Writ of Certiorari to the United States Circuit Court of Appeals for the Second Circuit.

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, consist

Suit in equity by the Associated Pressing of newspapers published throughout the United States, under contracts by which against the International News Service. An order of the District Court, granting a pre- for defendant's service. It has widespread they pay certain amounts at stated times liminary injunction (240 Fed. 983), was modi-news-gathering agencies; the cost of its opfied by the Circuit Court of Appeals (245 Fed. 244, 157 C. C. A. 436), and defendant brings

certiorari. Affirmed.

Messrs. Samuel Untermyer, of New York City, Hiram W. Johnson, of San Francisco, Cal., and Henry A. Wise and William A. De Ford, both of New York City, for petitioner. Mr. Frederic W. Lehmann, of St. Louis, Mo., for respondent.

erations 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,

*Mr. Justice PITNEY delivered the opin- in their several districts. ion of the Court.

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 *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:

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 co-operative 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 "Prompt knowledge and publication of worldN. Y. 1901, c. 436). Complainant gathers in wide news is essential to the conduct of a modall parts of the world, by means of various ern newspaper, and by reason of the enormous instrumentalities of its own, by exchange expense incident to the gathering and distriwith its members, and by other appropriate bution of such news, the only practical way in which a proprietor of a newspaper can obtain means, news and intelligence of current and recent events of interest to newspaper read-considerable number of other newspaper prothe same is, either through co-operation with a ers and distributes it daily to its members prietors in the work of collecting and distributfor publication in their newspapers. The ing such news, and the equitable division with cost of the service, amounting approximate them of the expenses thereof, or by the purly to $3,500,000 per annum, is assessed upon chase of such news from some existing agency the members and becomes a part of their engaged in that business." costs of operation, to be recouped, presumably with profit, through the publication of The bill was filed to restrain the pirating their several newspapers. Under complain-of complainant's news by defendant in three ant's by-laws 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

ways: First, by bribing employés 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

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in its news, it can be maintained (unless the copyright act be complied with) only by being kept secret and confidential, and that upon the publication with complainant's consent of uncopyrighted news of any of complainant's members in a newspaper or upon a bulletin board, the right of property is lost, and the subsequent use of the news by the public or by defendant for any purpose whatever becomes lawful.

Inducing Associated Press members to vio-ed. It is said that it could not, in practice, late its by-laws and permit defendant to be copyrighted, because of the large number obtain news before publication; and, third, of dispatches that are sent daily; and, acby copying news from bulletin boards and cording to complainant's contention, news is from early editions of complainant's news- not within the operation of the copyright papers and selling this, either bodily or aft-act. Defendant, while apparently conceding er rewriting it, to defendant's customers. this, nevertheless invokes the analogies of The District Court, upon consideration of the law of literary property and copyright, the bill and answer, with voluminous affi- | insisting as its principal contention that, asdavits on both sides, granted a preliminary suming complainant has a right of property 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 one of first impression it considered that the allowance of an injunction should await the outcome [1, 2] A preliminary objection to the form of an appeal. 240 Fed. 983, 996. Both par- in which the suit is brought may be disties having appealed, the Circuit Court of posed of at the outset. It is said that the Appeals sustained the injunction order so Circuit Court of Appeals granted relief upon far as it went, and upon complainant's ap- considerations applicable to particular mempeal modified it and remanded the cause,bers of the Associated Press, and that this with directions to issue an injunction also was erroneous because the suit was brought against any bodily taking of the words or by complainant as a corporate entity, and substance of complainant's news until its not by its members; the argument being that commercial value as news had passed away. their interests cannot be protected in this 245 Fed. 244, 253, 157 C. C. A. 436. proceeding any more than the individual present writ of certiorari was then allowed. rights of a stockholder can be enforced in 245 U. S. 644, 38 Sup. Ct. 10, 62 L. Ed. 528. an action brought by the corporation. From The only matter that has been argued the averments of the bill, however, it is plain before us is whether defendant may lawfully that the suit in substance was brought for be restrained from appropriating news taken the benefit of complainant's members, and from bulletins issued by complainant or any that they would be proper parties, and, exof its members, or from newspapers publish- cept for their numbers, perhaps necessary ed by them, for the purpose of selling it to parties. Complainant is a proper party to defendant's clients. Complainant asserts conduct the suit as representing their interthat defendant's admitted course of conduct est; and since no specific objection, based in this regard both violates complainant's upon the want of parties, appears to have property right in the news and constitutes been made below, we will treat the objection unfair competition in business. And not- as waived. See Equity Rules 38, 43, 44 (33 withstanding the case has proceeded only Sup. Ct. xxix, xxx). 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 up-between the substance of the information on 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 in the first newspaper to which it is communicated by the news-gatherer; and (3) whether defendant's admitted course of conduct in appropriating for commercial use matter taken from bulletins or early editions of Associated Press publications constitutes unfair competition in trade.

The

[3] In considering the general question of property in news matter, it is necessary to recognize its dual character, distinguishing

and the particular form or collocation of words in which the writer has communicated it.

[4] No doubt news articles often possess a literary quality, and are the subject of literary property at the common law; nor do we question that such an article, as a literary production, is the subject of copyright by the terms of the act as it now stands. In an early case at the circuit Mr. Justice Thompson held in effect that a newspaper was not within the protection of the copyright acts of 1790 (1 Stat. 124) and 1802 (2 Stat. 171). The federal jurisdiction was invoked be- Clayton v. Stone, 2 Paine, 382, Fed. Cas. No. cause of diversity of citizenship, not upon 2,872. But the present act is broader; it the ground that the suit arose under the provides that the works for which copyright copyright or other laws of the United States. may be secured shall include "all the writComplainant's news matter is not copyright-ings of an author," and specifically men

tions "periodicals, including newspapers." The parties are competitors in this field; and, Act of March 4, 1909, c. 320, §§ 4 and 5, 35 on fundamental principles, applicable here Stat. 1075, 1076 (Comp. St. 1916, §§ 9520, as elsewhere, when the rights or privileges of 9521). Evidently this admits to copyright the one are liable to conflict with those of a contribution to a newspaper, notwithstand- | the other, each party is under a duty so to, ing it also may convey news; and such is the conduct its own business as not unnecessaripractice of the copyright office, as the news- ly or unfairly to injure *that of the other. papers of the day bear witness. See Copy-Hitchman Coal & Coke Co. v. Mitchell, 245 right Office Bulletin No. 15 (1917) pp. 7, 14, U. S. 229, 254, 38 Sup. Ct. 65, 62 L. Ed. 260, 16, 17. L. R. A. 1918C, 497, Ann. Cas. 1918B, 461. [5] But the news element-the informa[7, 8] Obviously, the question of what is tion respecting current events contained in unfair competition in business must be deterthe literary production-is not the creation mined with particular reference to the char of the writer, but is a report of matters acter and circumstances of the business. that ordinarily are publici juris; it is the The question here is not so much the rights history of the day. It is not to be supposed of either party as against the public but their that the framers of the Constitution, when rights as between themselves. See Morison they empowered Congress "to promote the v. Moat, 9 Hare, 241, 258. And, although we progress of science and useful arts, by se- may and do assume that neither party has curing for limited times to authors and in- any remaining property interest as against ventors the exclusive right to their respec- the public in uncopyrighted news matter afttive writings and discoveries" (Const. art. er the moment of its first publication, it by 1, 8, par. 8), intended to confer upon one no means follows that there is no remaining who might happen to be the first to report property interest in it as between themselves. a historic event the exclusive right for any For, to both of them alike, news matter, howperiod to spread the knowledge of it. ever little susceptible of ownership or dominion in the absolute sense, is stock in trade, to be gathered at the cost of enterprise, organization, skill, labor, and money, and to be distributed and sold to those who will pay money for it, as for any other merchandise. Regarding the news, therefore, as but the material out of which both parties are seeking to make profits at the same time and in the same field, we hardly can fail to recognize that for this purpose, and as between them, it must be regarded as quasi property, irrespective of the rights of either as against the public.

[6] We need spend no time, however, upon the general question of property in news matter at common law, or the application of the copyright act, since it seems to us the case must turn upon the question of unfair competition in business. And, in our opinion, this does not depend upon any general right of property analogous to the common-law right of the proprietor of an unpublished work to prevent its publication without his consent; nor is it foreclosed by showing that the benefits of the copyright act have been waived. We are dealing here not with restrictions upon publication but with the very facilities and processes of publication. The peculiar value of news is in the spreading of it while it is fresh; and it is evident that a valuable property interest in the news, as news, cannot be maintained by keeping it secret. Besides, except for matters improperly disclosed, or published in breach of trust or confidence, or in violation of law, none of which is involved in this branch of the case, the news of current events may be regarded as common property. What we are concerned with is the business of making it known to the world, in which both parties to the present suit are engaged. That business consists in maintaining a prompt, sure, steady, and reliable service designed to place

[9] In order to sustain the jurisdiction of equity over the controversy, we need not affirm any general and absolute property in the news as such. The rule that a court of equity concerns itself only in the protection of property rights treats any civil right of a pecuniary nature as a property right (In re Sawyer, 124 U. S. 200, 210, 8 Sup. Ct. 482, 31 L. Ed. 402; In re Debs, 158 U. S. 564, 593, 15 Sup. Ct. 900, 39 L. Ed. 1092); and the right to acquire property by honest labor or the conduct of a lawful business is as much entitled to protection as the right to guard property already acquired (Truax v. Raich, 239 U. S. 33, 37-38, 36 Sup. Ct. 7, 60 L. Ed. 131, L. R. A. 1916D, 545, Ann. Cas. 1917B, 283; Brennan v. United Hatters, 73 N.

the daily events of the world at the break-J. Law, 729, 742, 65 Atl. 165, 9 L. R. A. [N.

fast table of the millions at a price that, while of trifling moment to each reader, is sufficient in the aggregate to afford compensation for the cost of gathering and distributing it, with the added profit so necessary as an incentive to effective action in the commercial world. The service thus performed for newspaper readers is not only innocent but extremely useful in itself, and Indubitably constitutes a legitimate business.

S.] 254, 118 Am. St. Rep. 727, 9 Ann. Cas. 698; *Barr v. Essex Trades Council, 53 N. J. Eq. 101, 30 Atl. 881). It is this right that furnishes the basis of the jurisdiction in the ordinary case of unfair competition.

The question, whether one who has gathered general information or news at pains and expense for the purpose of subsequent publication through the press has such an inter