Letter from AmeriKat - Hot News - too hot to handle?

The AmeriKat spent Saturday clearing away her belongings from bookshelves and tables in preparation of the painting that will take place in her flat next week. Readers may recall that in May, her flat was flooded after a neighbor's pipe burst turning her flat into Noah's Ark. Two months later and the painters are finally due to cover up the water-stained ceiling and resulting fissures in the walls. (picture, left, the AmeriKat taking a paw to painting) A fresh coat of paint can do wonders to a room - transforming a once dull and fading space, to a new and brightened environment. But despite attempts to freshen or fix some things in life, their inherent flaws will always show through no matter how many coats of paint you apply.

Hot News - So Hot Google can't touch it?

An industry and profession who have been inventing new ways to mask the cracks in their failing business model is the newspaper industry. A month ago the Federal Trade Commission published a "Discussion Draft" paper that against a backdrop of their importance to a democratic society, discussed the dire state of the newspaper industry, citing a loss of 45% of their advertising revenue since 2000. The paper proposed that additional intellectual property rights be employed to support claims from the traditional press against news aggregators. Readers may recall that last June Judge Posner also suggested that copyright law could be employed to rescue the newspaper industry (see previous AmeriKat post here).

News aggregators, for those unfamiliar with the term, aggregate links, headlines, and introductory sentences of newspaper articles in a one-stop style shop. The user clicks on their chosen link directing them to the original source material. For example, when you type in "Paul octopus World Cup" in Google News, it will aggregate or list all news articles that refer to those keywords. Some say that news aggregators infringe copyright, while others suggest that the doctrine of fair use rescues aggregators from a finding of copyright infringement. Although not a case strictly involving a news aggregator, a 9th Circuit federal court held that Google's use by way of the reproduction, distribution and display of thumbnail images and headings from copyright works was fair use in the Perfect 10 case. The four fair use factors were employed, but the court placed special reliance on the first factor, i.e., the purpose and character of the use, including whether the use is commercial or non-profit in nature. It seems odd that for the court to place so much reliance on this because surely, Google, as a commercial entity driven by ad revenue, could not rely solely on this factor. The court, however, said that the thumbnails were "highly transformative" because "a search engine provides social benefit by incorporating an original work into a new work, namely, an electronic reference tool." Although arguably highly transformative, says the AmeriKat, surely the commercial nature of the use trumps the transformative nature? Unfortunately, besides the Perfect 10 case, there has yet be a case to have reached judgment of a US court that deals head-on with the issue of whether a news aggregator's use is infringing or falls within the ambit of fair use.

If this story took place in the UK, that is where the story would end. However, in the US, the doctrine of "hot news" muddies the intellectual property waters. Copyright protects the expression of facts or ideas, not the facts or ideas themselves. However, the hot news doctrine in the US actually protects the facts of news. The 1918 Supreme Court case of International News Services v Associated Press originated this doctrine based on common law misappropriation principles in that breaking news was to be considered a "quasi property" right. Justice Pitney, in giving the majority decision, developed the doctrine of misappropriation in the news. According to his judgment a news organization has gathered news “at the cost of enterprise, organization, skill, labor and money” and therefore has a limited proprietary interest in it against a competitor.

Despite that the original federal common law that underlies the 1918 Supreme Court decision is no longer binding, several subsequent cases have reformulated the hot news doctrine. The result has meant that although federal copyright law does not recognize protection of "hot news", state law can protect "hot news". The Second Circuit Court of Appeals did not define the limits of the protection, but nevertheless restated the elements of the hot news doctrine in the NBA v Motorola case in 1998 as the following:

1. The claimant generates or collects information at cost or expense
2. The value of said information is highly time-sensitive
3. The defendant's use of the information free-rides off the claimant's efforts in collecting it
4. The defendant's use of the information is in direct competition with the claimant's use of it
5. The ability of other parties to free-ride off the claimant's efforts would reduce the incentive to produce it or the quality of the information would be threatened.

Now, with newspaper revenues dwindling and a reported loss of more than 40,000 jobs to the US newspaper industry in 2009, it is unsurprising that proponents of the hot news doctrine are demanding that the doctrine be enshrined in the Copyright Act. Proposals have included the encouragement of the development of state law doctrines, one one end, to the enshrinement of protection in the Copyright Act, at the other extreme. The reasoning for both proposals being that with the enshrinement of the protection in state and federal laws would result in the newspaper industry's content being protected and the industry thus be saved.

However, hasty measures and amendments to a centuries-old copyright system that itself was derived from the UK's Statute of Anne, makes the AmeriKat's fur bristle. At the extreme, by amending the Copyright Act one must necessarily be incredibly cautious in drafting a provision that protects news (something that will inevitably be in the public domain in a matter of minutes/days), but also allows for competition from competing news organizations. Without a perfectly drafted provision, costs of litigation and related disputes will rise. And its the very issue of costs, be it in production, overheads or libel litigation, that is thorn in the newspaper industry's paw. Surely, this is not the solution the industry could then possibly support?

Another suggestion in the report was that the fair use doctrine be narrowed so that "routine copying of original content done by a search engine in order to conduct a search (caching) is copyright infringement not protected by fair use." Other suggestions were that, at the very minimum, the way in which the fair use doctrine applies to aggregators should be clarified. But following such a suggestion through, if news aggregation did not benefit from the fair use defence and was thus copyright infringement, the way in which we search for news would radically change. The AmeriKat herself is a keen user of Google News. For example, searching for articles on this very topic resulted in a variety of sources from WSJ, New York Times, BBC, etc by way of the Google News tab - a news aggregator. A normal Google search of this topic resulted in a hodge-podge of topical, as well as irrelevant sources. Thus, a key question recognized by the FTC report was whether a limit on the fair use doctrine would necessarily restrict "the public's ability to find and access information on the web without comprehensive search engines".

The final suggestion in the IP section of the proposal was that of a more extensive licensing system, including statutory or compulsory licensing scheme, such as the ones that operate for phonorecords or jukeboxes (the Copyright Act is dating itself here), be employed. One of the FTC's workshop participants suggested that the federal copyright law be amended to create a "content licence fee" to be paid by every ISP on each customer account it provides. The copyright owners would then submit data of their site downloads and hits to the Copyright Office who would then be in charge of distributing the licence fees. (picture, left - the type of machine the Copyright Office may use to calculate license royalties) But a compulsory licence system in effect taxes access to information. Not only does a tax sits uneasily with the First Amendment, but its practical implications could be too complicated as to be practical.

Last week, Google, wrote a 20 page response to the FTC draft proposals. The AmeriKat is admittedly critical of Google in the field of copyright, however, she agrees with their response. Like Google, the AmeriKat is unsure how the cause of the failing business model of the traditional print media became the responsibility of copyright laws. Are news aggregators really to blame? The AmeriKat thinks not and neither does Google. As Google wrote:

"[T]he current challenges faced by the news industry are business problems, not legal problems, and can only be addressed effectively with business solutions"

Google then quotes the former editor of the now defunct Rocky Mountain News - John Temple (picture, below) - who stated last year:

"Being a great newspaper isn't enough in the Internet era. You have to know what business you're in. We thought we were in the newspaper business. . . If newspapers would spend more time trying to understand their customers instead of focused on their own internal issues...they're more likely to be successful. That's a hard switch for traditional manufacturing operations like newspapers to make"

The AmeriKat could not agree more. The FTC's and some traditional media outlets proposals are not proposals to save journalism, but are instead proposals to save the newspaper industry - an industry whose business model is entrenched in a different era. Copyright laws are not built and should not be manipulated to protect the very thing they were never meant to be protect, ie., facts, in a last-ditch attempt to save an outmoded business model. If anyone assumes that it is fierce proprietary protection, be it through pay-walls or copyright laws, that will inevitably save the newspaper industry, one need only point to the Times loss of 66% of its online readership following its disappearance behind the pay-wall. But if it is a business problem that is killing our traditional press, what is the Internet solution that will inevitably save it?