Also known as: hot-news tort · hot news doctrine · hot news misappropriation · misappropriation · INS doctrine
Written by attorneys — see sources below.
A common-law doctrine that protects time-sensitive news or information from misappropriation by competitors who free-ride on the originator's efforts to gather and distribute it. The doctrine requires proof that the information is time-sensitive, that the defendant is free-riding on the plaintiff's investment, and that the conduct threatens the plaintiff's incentive to produce the information.
Horizon Realty gathers market data on commercial properties and posts it on a paid subscriber feed with a two-hour embargo. A competitor copies the data from the feed and immediately redistributes it to its own clients without permission. The originator sues under the hot news tort, claiming the copying destroys the value of its timely reports.
Harbor National Bank compiles confidential merger rumors and sends them to select clients under strict timing rules. A rival firm learns the rumors from the bank's feed and forwards them to its own clients hours ahead of the embargo. The bank claims the rival's conduct constitutes hot news misappropriation that undermines its investment in timely intelligence.
Heritage Trust operates a real-time sports scoring service that subscribers pay to receive within minutes of each play. A competing service copies the scores from the trust's public website and sells them to its own users before the trust's paying subscribers receive them. The trust sues, alleging the copying free-rides on its costly collection efforts.
Hunter Hughes's news cooperative gathers breaking financial stories on the East Coast and transmits them to members under a strict publication schedule. A rival service copies the stories from early editions and wires them to West Coast clients for immediate use. The cooperative claims the copying misappropriates its hot news and destroys the commercial value of its timely reports.
The Associated Press is a cooperative organization incorporated under New York law. Its members are proprietors or representatives of about 950 daily newspapers. It gathers news worldwide through its own correspondents, exchanges with members, and other means at an annual cost of approximately $3,500,000 assessed upon the members. Each member agrees that news received through the service is for exclusive publication in a designated newspaper and place. No other use is permitted. No member shall furnish the news in advance of publication to any non-member. Each member also supplies its local news exclusively to the Associated Press. International News Service is a New Jersey corporation engaged in gathering and selling news to approximately 400 subscribing newspapers under contracts. Its annual operating cost exceeds $2,000,000. The two organizations compete directly in the distribution of news throughout the United States. The newspapers they serve likewise compete in their respective districts. International News Service obtained Associated Press news by copying from bulletin boards and early editions of newspapers published by Associated Press members on the East Coast. It transmitted the material by telegraph to its own western subscribers for publication. It sometimes rewrote the dispatches while using the same facts. It also obtained news before publication by bribing employees of Associated Press member newspapers and by inducing members to violate the by-laws. The bill was filed in the District Court for the Southern District of New York. The District Court granted a preliminary injunction against bribing employees and inducing by-law violations. It declined to enjoin the copying from bulletins and early editions. The Circuit Court of Appeals sustained the existing injunction. On the complainant's appeal, it modified the decree to add an injunction against bodily taking of the news until its commercial value as news had passed. The Supreme Court granted certiorari.
View caseHakeem Harris's brokerage issues time-sensitive stock recommendations to paying clients under a short embargo. A financial blog obtains the recommendations and emails them to its subscribers before the brokerage's clients can act. The brokerage sues for hot news misappropriation, arguing the blog's conduct threatens the value of its research investment.
Hannah Hughes operates a paid celebrity photo service that releases images under a strict timing window. A gossip blog copies the photos from the service's feed and posts them immediately to attract traffic. The service claims the copying constitutes hot news misappropriation that undermines its ability to sell timely exclusives.
The Second Circuit summarized the elements as time-sensitive information, the defendant's free-riding on the plaintiff's costly efforts, and a threat to the plaintiff's incentive to produce the information. Courts also consider whether the information is generated at significant expense and whether the defendant's conduct is unfair competition.
The precedential value of the original federal decision was abrogated by Erie, but state courts have adopted the doctrine as a matter of state common law. New York courts continue to recognize the tort when the elements are satisfied.
The hot news tort protects the labor and investment in gathering time-sensitive facts even when the facts themselves are not copyrightable. Copyright protects original expression, while hot news addresses the misappropriation of the commercial value of timely information before it becomes generally available.
Rewriting does not necessarily defeat a hot news claim when the defendant still free-rides on the plaintiff's investment in timely collection and distribution. The focus is on the appropriation of the commercial value of the fresh news rather than verbatim copying.
…has the characteristics of quasi-property as between competitors, sufficient to support an action for unfair competition by misappropriation. 2. The injunction against INS’s appropriation of AP’s fresh news is affirmed. 3. INS may not use the AP’s news as the source of its own news while the news retains commercial value,…