-- WilliamHughes - 24 Oct 2008

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In the years prior to NBA, the courts have adopted a line of reasoning in favor of property rights even for facts as set forth in INS. The INS decision essentially stood for the proposition that those who amassed facts had a right to protect their investment in the gathering of news, particularly against competitors. Essentially, the Supreme Court supported an argument that news was a commodity, and therefore, was property in the form of a valuable business commodity pursuant to 5 key factors: 1)The AP’s significant labor and investment in the news 2) The value of its news for the short period after it was published 3)INS’ free-riding on AP’s investment in the news 4)The competition between AP and INS and 5)The harm INS would cause to AP’s business by such actions. The adoption of these criteria represented a philosophy analogous to that of software companies which would like to expand the boundaries of copyright so as to increase the powers of information ownership. In the context of the “hot news doctrine,” and the passage of the 1976 Copyright Act defining the extent to which copyright law preempted state law intellectual property protections, courts emphasized the element of investment and free-riding (Ekstrand, 155). This doctrine of misappropriation received renewed attention in the 1990s as some businesses looked to profit from new media by using data and information that remained unprotected by copyright law, but at the same time wanted to protect themselves from the perceived increased threat of news media piracy. Emblematic of this trend, the NBA sought a right of ownership in the transmission of its scores that would preclude Motorola from broadcasting them in real-time. As class discussion has indicated, such application of copyright law certainly protects ownership rights, but may contribute to the restriction of opportunities with respect to developing new ideas and goods that adequately capture the consumer desire for increasingly superior goods. Ultimately, the court’s decision in NBA and subsequent cases which have opposed property claims in “hot news” items, demonstrates an implicit recognition of this fact from which broader technological concerns may be considered.

For the first time, in NBA, the courts articulated the elements that would enable an ownership right to apply to hot news items: 1)A plaintiff generates or gathers information at a cost; 2) The information is time-sensitive; 3) A defendant’s use of the information constitutes free-riding on the plaintiff’s efforts; 4) The defendant is in direct competition with a product or service offered by the plaintiffs; and 5) 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 services that its existence or quality would be substantially threatened (NBA 145). Cursory examination of these conditions may indicate the sort of property ownership rights antithetical to the free-flow of ideas and information necessary for development of new technologies. However, in the fifth prong, one notes the need to balance the other considerations with an assessment of whether the “free-rider” threat is actually existent or merely illusory. Class discussion has indicated that such a concern is one presented by many software companies in their efforts to obtain property rights on their ideas and data; however, as it pertains to hot news issues, they are required to demonstrate evidence that the free-rider problem will actually “substantially threaten” their incentive to produce the product or service they are providing. Ultimately, since NBA, the courts have evolved to construe “hot news” claims in a manner which provides great levels of judicial inquiry into the impact of another’s appropriation of the material. Consequently, this places a greater burden upon claimants to demonstrate the actual harm they will incur from such use, as the 1999 case Fred Wehrenberg Circuit of Theatres v Moviefone requires that the actions make the plaintiff “virtually cease to participate” in the business (Wehrenberg 1050). Although the courts have not formally expressed a criticism of the free-rider problem as an argument for granting property rights in such cases, their stringent requirement for evidence of disadvantage appears to serve as a tacit skepticism of the claim.