Sunday, July 26, 2009

A way for newspapers to make sure others don’t unfairly profit from their work - without erecting a pay wall

OK, let me warn you. This post may be complicated. But I think it’s important, so I hope you’ll bear with me. In part because what I’m going to write reflects a reversal of my initial position on an important issue - a possible change to copyright law - and in part because how I changed my mind is a lesson in the strengths of Internet journalism. I’ll explain both points in what follows.

The issue is timely. We’ve just seen the Associated Press take a hard line that news articles should not turn up on search engines and Web sites without permission. My view is that instead of trying to negate the benefits of the Internet by requiring a license to even post a headline and link, the AP would do well to explore the possible merits of the proposal I initially rejected.

Let me start at the beginning, with what I now see as a flawed but well-meaning attempt by Cleveland Plain Dealer columnist Connie Schultz to put forward a plan that she said could save newspapers. Her column on tightening copyright law was based on the work of lawyer David Marburger and his economist brother, Dan.

Schultz’s column, which is best summarized by the paragraph below, seemed misguided to me. In general, I think it’s a mistake for newspaper people to look for salvation by attacking others.

“The Marburgers propose a change in federal law that would allow originators of news to exploit the commercial value of their product,” she wrote. “Ideally, news originators’ stories would be available on only their Web sites for the first 24 hours.”

While the first sentence is accurate (and might offer help to the newspapers that own AP), the second sentence gives the impression that the Marburgers want Congress to pass a law that bars reporting on what the originator of a news story has reported for 24 hours. (They don’t.)

But clearly the confusion wasn’t all Schultz’s fault. While the Marburgers had written a lengthy tome on this topic, it wasn’t as clear as it could have been and it deals with complex legal concepts that aren’t familiar to laymen, or most journalists. That’s why I say this case is a lesson in the strengths of Internet journalism, where writers can refine their work repeatedly in response to questions, criticism and suggestions from others. Which is what the Marburgers have done. I doubt that would ever have happened without online interaction. At the bottom of this post you’ll find a lengthy, point-by-point response to questions about their thinking. I think it’s worth reading in its entirety for anybody truly interested in this issue.

The idea of a publishing moratorium suggested by Schultz is so inflammatory that I was one of the ones who initially criticized the thinking of the Marburgers. In my first post on June 30 about Schultz’s column, I wrote: “this approach seems to be another misdirected attempt to right the newspaper ship.” Others, such as Jeff Jarvis of Buzz Machine also went on the attack. The debate quickly got off track, becoming personal. So I wrote another post on July 6 taking on Schultz’s argument in a second column that the criticism must mean she was on to something because she was being attacked personally. I don’t believe I have to explain why that kind of thinking is just plain wrong. Then I discovered there was a gap between what Schultz wrote and what the Marburgers believe. So I posted another item on July 9. In that post, for the first time, the Marburgers spoke out. They stated:

“1. We do not advocate a statutory 24-hour moratorium on rewriting news reports originated by others. Like you, we'd vigorously oppose that.
2. We do not think that linking to originators' news sites, as Google News does, is bad; on balance, we think it's good for any news originator.
3. We oppose the "pay wall" concept that many newspaper publishers endorse. For reasons that we summarize in our analyses, we think that it would be futile in the long run.”

I was still skeptical, but at least I understood that they weren’t nuts. I then wrote a fourth post in which the Marburgers explained how they thought the confusion may have occurred. I ended that column by writing: “I apologize for any confusion I may have created over this issue, but I think ultimately my exchanges with (David) Marburger are leading to more clarity on their thinking on how to help newspapers through these difficult times.” In that post, I included a link to all their writings on this topic, which I published on Mediafire.

We followed that post with numerous e-mails and conversations - the Marburgers, especially David, are anything but reluctant to engage in debate - and now I’d like to take a stab at explaining why I think the core of their proposal is worthy of further serious discussion, including by Congress.

Basically, they’re not against a link economy; they see its benefits and support it. But they believe that to survive newspapers need a solid foundation that allows them the opportunity to profit from their own work without “free-riders” taking it from them without a cost. They need a way to get compensation from those who use their work to act as a substitute for the real thing. It’s one thing to link without paying any fee. It’s another to replace a site, without paying the originator for its work. Those sites that do the latter drive down ad rates (they don’t have to support reporting or even advertising staffs) and damage newspapers’ ability to make enough money to be profitable. (I’m still concerned that there’s a need for better data on the extent of this problem and the cost. But I believe their economic theory has to be correct, that free-riders do hurt the originating news sites if they act as a substitute for them.)

In an unpublished op-ed, they explain how their proposal is based on common law that was brought to an abrupt halt by a decision of Congress in 1976.

“Copyright doesn’t protect any factual information that appears in news reports, despite a journalist’s hard work and resourcefulness in discovering those facts. It protects only the way that the report’s author describes the facts.

“But in 1918, the Supreme Court decided that the International News Service, a news dispatch service, could not compete directly against the Associated Press by rewriting AP’s coverage of World War I. The INS apparently rewrote AP stories from early editions of New York newspapers, and sold telegraphed rewrites to California papers. The rewrites reached California papers at about the same time that AP’s stories reached its California newspaper clients. So INS was competing against AP on the west coast essentially with AP’s own stories.

“Because copyright didn’t protect the facts that AP reported, AP won based on unfair competition at common law. Common law is a body of legal principles that come from appellate court rulings in law suits. AP got an order barring INS from rewriting AP’s stories, but only for the brief time that the stories had commercial value – typically one day. Over time, most legal scholars and many courts disagreed with the court’s ruling, fearing that it treated the facts reported by AP as AP’s “property.”

“Then, in 1976, Congress decided to add a clause to the copyright law that abolished all other laws that functioned like copyright. Initially, Congress was going to make an exception for the common-law unfair competition of the AP case – allowing it to remain viable -- but the Justice Dept. objected. Congress then dropped the exception.”

Today, the Marburgers say, the copyright law allows newspapers’ direct competitors to do essentially the same thing INS did to AP, only by using the Internet. News organizations that try to protect their copyright have very limited protection. In my 11 years as editor of a metropolitan newspaper, I never once tried to pursue a copyright action in court. And my company was not reluctant to assert its rights. The problem is that copyright protects only a nonfiction writer’s choice of words. (So, for example, I could call and get individuals to stop republishing an article we had written because they had published it in its entirety in a newsletter without our permission. But I had only persuasive power to resort to when somebody excerpted an article from my newspaper that I thought used too much of our work without permission.)

To remedy this problem, the Marburgers say, Congress should restore the exception. They want to lift the ban on applying common-law rights against unfair competition and unjust enrichment in the case of news that was established by the INS vs. AP case. They would like a single sentence added to the copyright act. This is what they think it should say: “The copyright act does not abolish statutory or common law unfair competition and unjust enrichment regardless of whether the contested publication infringes copyright.”

Then the issue would not be whether copyright has been violated. Instead it would be whether an aggregator is free-riding on the work of another, essentially taking it and making its own version a substitute for the consumer, diminishing the value of any link it might include to the original. They’re not saying that other commercial sites would be “required” to pay the originator of an article. Their proposal would create the opportunity for newspapers to get a court to order “competing commercial free-riders to pay compensation.” And I hope by now it’s clear that they don’t believe all aggregators are “free-riders.” Clearly, there are economic benefits to the originator of content from links to it that don’t go so far as to substitute for the original.

They see their proposal giving newspapers “some bargaining power that the law unwittingly has taken away from them, and that they need.”

The idea isn't to go around suing people; it's to bargain with them. But you can't bargain if you don't have any rights with which to bargain. Going to court would not be a newspaper’s first option. First, a newspaper would try to negotiate a voluntary agreement with a competitor it thought was unfairly benefiting from the newspaper’s work. If it failed, it would decide whether it would be worth going to court.

If a newspaper chose to sue a competitor, here’s a scenario the Marburgers paint:

An attorney for the newspaper would tell the judge that X web site persists in rewriting the newspaper’s news stories, posting them online at about the same time as the newspaper does, and making money off the stories by selling ads around them. The newspaper lawyer would argue that this allows the competitor to use the newspaper’s services to compete against it for advertising and undercut its rates because the competitor doesn’t have to pay for the journalists who produced the original work. “They are competing against us with our own news reports,” the lawyer would say.

Of course, a lawyer for the competitor would also be there, before the judge, to argue why the newspaper’s claims were unfounded. But if the judge agreed with the facts as presented by the newspaper lawyer, and the common-law gave the newspaper rights against what the competitor was doing (hence their call to revise the copyright act), the judge could issue an injunction ordering the competitor to postpone publishing its rewrites for a certain time and might even require the competitor to give up to the newspaper ad revenue it earned from the newspaper’s stories. Of course, the decision could be appealed. A decision on appeal would help shape the common law. And, of course, the possibility of such an action would be an incentive, at least in some cases, for a competitor to negotiate a mutually beneficial agreement and avoid court.

But to be clear, there would be no new statute requiring a waiting period or payment for linking to content. As David Marburger wrote me: “We fear the inflexible excessive empowerment that statutes often endow.”

The Marburgers say that if the exception were restored, a newspaper’s legal rights would be enforceable only under discrete circumstances. Those, they say, are: “against direct competitors who use the core of your news reports to compete directly against you if the competitor’s taking of your report provides a close substitute in the marketplace for your original report at the height of your report’s commercial value. Your legal right wouldn’t be enforceable otherwise.”

This does not mean a news organization would “own” the facts it reports, even though it may have discovered them and reported them first. The information is not the news organization’s property. But what it would mean is that the newspaper has the right to seek the help of a court when it believes there is unfair competition or that a competitor is unjustly enriching itself from the newspaper’s work, just as people have the legal right to keep somebody they perceive as threatening a certain distance away from them if they won't stay away voluntarily. That legal right would give newspapers bargaining power they don’t have today.

While this proposal is not the panacea for the newspaper industry, I do think the AP/INS analogy is relevant and I think reasonable people can agree that there may be cases where aggregators go too far. This could be one step that might help the newspaper industry. Without it, the Marburgers argue, the industry has lost the fight. I’m not sure they’ve convinced me of that. But they have convinced me that with it, the industry has a better chance of being successful. This way, if newspapers follow the path I hope they pursue and develop innovative content models that work for both users and advertisers, they should be able to be confident that they’ll be able to profit from their work. Otherwise, the Marburgers say, “the law currently compels the newspaper to allow competitors to take it (the content) and use it to compete directly with the newspaper in real time.”

Finally, I think they’re right that justice calls for people to pay for the work of others - when they really do take that work. Then the question becomes where the tipping point lies. That would be up to the courts.

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The following is a response to critics by David and Dan Marburger, published with their permission.

We’ve surveyed some of the criticisms of our analyses of the effect of aggregators on the news business, and our proposal to restore common-law unfair competition principles to the news business. We offer these responses:


1st criticism – hot news: The INS v. AP species of unfair competition carries severe 1st amendment risks, says the critic. Suppose, for example, the critic explains, TMZ is interviewing Michael Jackson at Neverland Ranch. Jackson drops dead during the interview from an apparent heart attack. TMZ reports that fact on its website right away. Does that mean that only TMZ can report that fact for a period of time, say 24 hours?

Short answer: No.

____________________________________

Response to 1st criticism:

First: Understand the difference between statutes and the common law. This Michael Jackson hypothetical is a good example for contrasting the effect of a statute against the effect of the common law. We oppose the notion of a statute decreeing a moratorium on publishing an originator’s news for any fixed period of time.

In our hypothetical, if a statute barred anyone but TMZ from publishing the Michael Jackson death for 24 hours, our critic would have a powerfully valid point. Statutes are inflexible and don’t admit of any exceptions unless the legislature specifies express exceptions.

Judges aren’t supposed to craft their own exceptions to statutes, and usually they don’t. Judges can interpret the constitution to trump a statute or to modify a statute. But, otherwise, judges are bound to the letter of what the legislature decreed. Because of that, definitive statutes can empower people more than they should be empowered. We oppose that, just as our critics do.

We advocate instead restoring common-law unfair competition principles to the news business. Those principles applied to the news business in 1918. They are effectively absent now. Their absence is helping to drive the originators of written news reports out of business.

We advocate restoring those common-law principles simply by changing the copyright act to say that it does not pre-empt common-law unfair competition, and specifically does not pre-empt the species of unfair competition that underlies the United States Supreme Court opinion in International News Service v. Associated Press (1918).

We endorse the common-law analysis of Professor Callmann in his 1942 Harvard Law Review article, which our analysis cites. [Rudolph Callmann, He Who Reaps Where He has Not Sown: Unjust Enrichment in the Law of Unfair Competition, 55 Harv. L. Rev. 595, 599 (1942).]

The common law is markedly more flexible than any statute ever could be. If judges are working with common law, they have the flexibility to apply legal reasoning and precedents to achieve just results under the specific circumstances presented to them. They can adjust the common law incrementally to conform to the most persuasive legal arguments that competing adversaries provide in the context of the real-life predicament presented to the judges. Computers don’t decide cases, people do.

Also, statutes almost never state the reasons for their usually rigid rules, which enhances their rigidity. Appellate courts, however, virtually always state their reasons for their rulings. An effect of those stated reasons is to give future litigants the opportunity to present new circumstances and new rationales that might cause appellate courts to adapt the common law to new circumstances and new arguments.

Second: Depending on the context, competitors don’t necessarily free-ride in the unfair-competition sense by reporting that “TMZ reports that Michael Jackson is dead.”

Suppose that, 30 minutes after TMZ reported on its website that Michael Jackson is dead, the LA Times reported on its website: “TMZ reports that Michael Jackson collapsed during a private interview with a TMZ reporter at Neverland, and died. The Times is working to confirm that story.”

In that context, the LA Times report probably does not function primarily as a substitute for the TMZ report. That’s because the content of the LA Times report is so truncated that it functions as a headline for the TMZ report. Until the Times reports more information, saying only that TMZ reports that Michael Jackson died suddenly during an interview likely will drive a large proportion of the readers of the LA Times to TMZ. It probably won’t function as a substitute for TMZ.

In that sense, the LA Times report analogizes to what pure aggregators do. Pure aggregators provide headlines that describe more substantive reports on originators’ websites, driving reader traffic to those sites.

But, if the LA Times were to continue to summarize only what TMZ reports, adding more and more information gleaned from TMZ’s website as the story unfolds, the LA Times’ role would change. The Times would evolve into that of a parasitic aggregator, as we explain next.

Third: Under what circumstances would the LA Times become a free-rider on TMZ’s journalistic services under common-law unfair competition theory?

Suppose that the LA Times decided not to use any of its journalistic resources to try to verify the TMZ story about Michael Jackson’s death. Instead, the LA Times chose to rewrite on its site the essence of TMZ’s original reporting as it appears on TMZ’s site.

And suppose that the LA Times continues to do that as long as it decides that the TMZ stories are newsworthy, and, of course, the LA Times sells display ad space around its stories. Even if the Times adds a link to TMZ, that is free-riding, and common-law unfair competition theory that we endorse would create civil liability for that practice.

Suppose that the LA Times deploys its own journalists to try to verify TMZ’s report, while publishing on its own site: “TMZ reports that Michael Jackson collapsed during a private interview with a TMZ reporter, and died. The Times is working to confirm that story.”

And suppose that the Times eventually confirms the story with its own journalists, reports its confirmation, and maybe adds new information. That is not free-riding, and common-law unfair competition principles won’t create liability. In fact, the U.S. Supreme Court said as much in INS v. AP.

Can we instantly know who is a tortious free-rider and who is not? Sometimes we can; sometimes it’s debatable. We address that later in this response.

Fourth: Generalities that you can derive from our hypotheticals.

When the substance of an aggregator’s for-profit, contemporaneous rewrite of an originator’s news report functions as a headline that moves reader traffic to the originator, the common-law theory that we advocate would not create any liability for the aggregator. Headlines attract interested readers to stories; for those readers, headlines don’t typically supplant the story.

But when those for-profit, contemporaneous rewrites include enough extra substance from the originators’ report to function chiefly as a close substitute for the originator’s report, the aggregator becomes a parasitic free rider. Our theory would subject that aggregator to civil liability as an unfair competitor that has unjustly enriched itself by commercially exploiting the journalistic investments of the originator.

That would not be true, however, if the aggregator used its own journalistic resources to confirm the report or to build on it by discovering and reporting new information.

Is there a gray area? Certainly, but, as a practical matter, that does not mean that common-law unfair competition cannot work or should never apply to the news business. There are plenty of gray areas in law. Common-law libel, common-law fraud, common-law wrongful death, and even common-law negligence have gray areas, but those common-law principles have survived and evolved and benefited American and English societies for centuries.

Does the aggregator who rewrites originators’ news for profit have no choice but to go out of business? No. That aggregator has six choices. They are:

1. Use its own resources to confirm or expand upon the facts uncovered and reported by the originator.



2. Contract with the originator to carry contemporaneous rewrites.




3. Become a for-profit pure aggregator by reporting the originator’s headlines and linking to the originator’s report -- for free and without a contract.




4. Postpone the for-profit free-riding until the bulk of the commercial life of the original news report has elapsed.




5. Stop using contemporaneous rewrites to compete commercially online with the originators.




6. Continue doing business as a parasitic aggregator and wait to see if you get sued.






Fifth: Under common-law unfair competition, what happens to the for-profit aggregator whose rewrites become substitutes for the originator’s report?

If common-law unfair competition principles applied to a free-riding aggregator, that aggregator would have civil liability to the originator if the originator chose to spend the money to sue the aggregator.

The common-law remedies for the originator would be for the court to require the parasitic aggregator to disgorge unjustly received ad revenue and an injunction barring the aggregator from free-riding during the bulk of the short commercial life of the originator’s news reports.

The details of all of that would be sorted out in the court case with adversarial arguments, cross-examination, and the usual judicial mechanisms to try to establish the truth and the best answer. That’s how every common-law case works, from injury cases to libel cases to fraud cases (all of which are common law).

The remedies of disgorging unjust enrichment and injunction already exist at common law for other species of unfair competition. They would extend automatically to a restored INS v. AP species of common-law unfair competition.

The loser in the court case may appeal to an appellate court, which means that at least three judges will review the case. Their ruling will create a flexible precedent that will greatly influence, but not mandate, what should happen in analogous future situations.

For example, if every county in your state withholds 911 tapes, insisting that they are not public record, you need to sue only one county over one withheld 911 tape to change the law statewide. If that suit yields an appellate opinion ruling that the 911 tape that you wanted is public, that court’s stated reason typically would have the effect of causing all of the counties in your state to release all 911 tapes.

The appellate opinion in the 911 suit might not declare that all 911 tapes are public under all circumstances, but the reason that the court gives for rejecting the county’s argument will have a ripple effect. Other counties may see from the court’s opinion that they have no better arguments for withholding their 911 tapes. So they release their tapes, seeing that withholding them would be futile.


That is the common law – a body of analogical reasoning based on principles of law that an appellate court announces in its opinion as the court’s rationale for deciding the case the way that it did. The rationales explained by the appellate courts influentially guide courts and people in deciding what to do in similar future circumstances, but the courts’ opinions don’t usually mandate what everyone must do in all future circumstances.

Sixth: The economic realities of litigation make the gray areas in discerning parasitic free-riders less important.

Two competing interests converge when mixing law with real life.

First competing interest: Businesses pay lawyers by the hour to sue, and legal fees for a single case can mount up. Rational businessmen and women have no economic motive to expend $90,000 or more to prosecute cases that test the limits of their common-law rights if doing so runs a high risk of creating a precedent that might undermine those rights in the future.

That is because of the common-law’s flexibility. Judges can adjust the common-law incrementally to move toward the most persuasive legal arguments based on the particular predicaments that litigants ask them to resolve. They can do that if their professional judgment tells them that reaching a just result requires a modest or even abrupt departure from existing precedent.

So originators of news usually would have little incentive to test their common-law rights in close cases. They prefer clear cases – especially in an area where the parameters of common-law rights are fluid enough to enhance the risk of creating “bad” precedent. Recall that the copyright holder of the Zapruder film of President Kennedy’s assassination lost in litigation to enforce that copyright against alleged unauthorized use of the film. What judge wants to rule that only one person can control for decades all public access to that historically unique and valuable record? Again, computers don’t decide cases, people do.

Second competing interest: No one conforms all of their conduct to avoid common-law civil liability all of the time. Common-law libel is an example. Everyday, large metropolitan newspapers and major market TV stations publish reports that technically amount to libels.

Here’s a commonplace example. A man carrying a concealed handgun enters a convenience store during the day, robs the cashier at gunpoint, and flees. The police release to the press and to TV a photo of the man taken by the store’s security camera when the man entered the store. The newspapers and the TV news organizations report that police want the pictured man for the alleged robbery, and accompany those reports with the photo.

That is libel in many states, including Ohio. In many states, there’s no privilege that protects a report like that when there’s been no arrest and no formal criminal charge. And, you can be sure that no journalist independently investigated whether the man in the photo actually committed the robbery. Yet, news organizations routinely publish such stories.

Editors often make news judgments so automatically that they are not consciously playing out their rationales. Editors publish those technical libels because they perceive the importance of the story to outweigh the liability risk substantially. And they are right. There is theoretical liability, but as a practical matter, those fugitives don’t sue. And those stories are important to the public.

The upshot of those two competing interests converging. The practical reality of restoring common-law unfair competition to the news business is this:

To avoid common-law liability, the aggregators will rein-in their most flagrant free-riding when competing directly with originators of daily news stories, and the originators will tend to sue only the most flagrant free-riding competitors that remain -- assessed by the degree to which the free-riding directly competes with the originator for readers and advertising.

Most free-riders will opt to become pure aggregators without contracts, to postpone free-riding for a day, or to contract with the originator of news reports to carry contemporaneous rewrites.

Some free-riders may opt to go non-profit, as do some bloggers. Our theory probably would not subject non-profit free-riders to any civil liability unless they charged a fee to advertisers, readers, or both.

So, the hypothetical of the free-riders being afraid of common-law liability if they report that TMZ says that Michael Jackson has died is a fringe case that won’t yield litigation or self-censorship. To avoid creating a bad precedent, the originator won’t sue the free-riders, and the free-riders will take the risk of reporting that extraordinary story even if the originator had the common-law right to prevent it.

Moral: Free-market minded Alexander Hamilton once wrote: “If the abuses of a beneficial thing are to determine its condemnation, there is scarcely a source of public prosperity which will not speedily be closed.”

Alexander Hamilton’s words are especially apt here. It is ludicrous to speculate by citing fringe examples that the sky will fall if common-law unfair competition principles return to the news business. The sky is falling today. The status quo is helping to kill the news business now. No speculating is needed. Common-law unfair competition is nothing radical; it enforces free-market principles of being able to reap what you sow; and it enables the free market in ideas to exist beyond the vacuous vocalizing of uninformed opinions.

Common-law unfair competition used to apply to the news business, and the law must restore it or there won’t be a news business.

2nd criticism – commentary about the news: The INS v. AP species of unfair competition theory carries other severe 1st amendment risks, says the critic. The critic posits: Suppose the Columbia, South Carolina newspaper breaks the story about Governor Sanford and his paramour through the newspaper’s own investigative efforts. Does that mean, the critic asks, the no one can comment about the story for some period of time because doing so would free-ride on the journalistic services of the South Carolina paper?

Short answer: No.

____________________________________

Two grounds overlap.

1st ground: blogging and columns are remote substitutes for the news story.

Reading a column or blog to learn the news is much like walking into a movie one-hour after the movie began and then trying to figure out what happened during the part that you missed. There usually is not enough factual context or raw factual information in a blog or column to substitute for the underlying news story unless you’ve already read it.

For example, Gail Collins recently wrote a column that included commentary about the e-mails between Governor Sanford and his paramour. If you never read any reports that describe the contents of the e-mails, you would find Collins’ column to be a poor substitute for getting a more direct report about them. In fact, her column may cause you to search the New York Times website to find a news report about the e-mails. That is because her column expects that the reader already knows the basic facts about the e-mails’ contents.

2nd overlapping ground: transforming facts into comment. An overlapping reason that our common-law theory would not apply to many columns and blogs is that the typical column or blog transforms the factual report into something different.

The commentary is organically different from the underlying facts. The commentary is not really substituting for the factual report; it is developing or transforming the factual report into something different that does not really compete unfairly with the factual report.

And, that something “different,” may cause readers to seek out the underlying factual report to better appreciate the commentary, much as visitors to Google News click on a headline to find out more information from the original source.

What about adding comment as a pretext for free-riding? Adding commentary as a pretext for free-riding is not an automatic free pass to drive a competitor out of business. If a blogger persists in rewriting for profit the heart of originators’ daily news reports, but adds a sentence or two of comment, the comment is no problem.

But the common law will ask whether the blogger consistently presents so much of the originator’s factual information as to cause typical readers to substitute the blogger’s summary of the facts for the originator’s report at the time when the originator’s report is at the height of its brief commercial life and on the same medium (online). The common law won’t inhibit the commentary, but in those circumstances it could inhibit the extent of the blogger’s timely for-profit rewrites of the originator’s facts.

Common-law reasoning gives judges and appeals courts the flexibility to resolve those kinds of difficult issues if any come before them. The United States Supreme Court ruling in Valentine v. Chrestensen is an example. 316 U.S. 52 (1942).

When the Court decided Valentine, the First Amendment didn’t apply to advertising. New York City had an ordinance that barred people from distributing handbills if they were “advertising matter.” A man who owned a submarine moored at a pier passed out handbills to passersby. One side of the handbill advertised tours of his submarine for an admission price. The other side was a protest against the city for refusing to allow him to moor his submarine indefinitely for exhibition.

Authorities cited the submarine owner for violating the ordinance. He argued that his handbill was as much noncommercial speech as advertising.

The Court ruled, however, that the facts “justify the conclusion that the affixing of the protest . . . to the advertising circular was with the intent, and for the purpose, of evading the prohibition of the ordinance.” The Court added: “If that evasion were successful, every merchant who desires to broadcast advertising leaflets in the streets need only append a civil appeal, or a moral platitude, to achieve immunity from the law’s command.”





3rd criticism: Your theory threatens the First Amendment right to report news to the public that someone else discovered.

Short answer: No it doesn’t.

_________________________________________

The First Amendment guarantees that you can speak freely, but it does not compel you to give away your speech for free.

Obviously, the First Amendment does not compel one news organization to subsidize a competitor with free journalistic services. Yet that is what the copyright act effectively compels today.

For example, the First Amendment protects nonfiction books, but it doesn’t require Borders Books to give half of its nonfiction book inventory to Barnes & Noble so that Barnes & Noble can compete against Borders by selling contemporaneous abridged versions of those books for 90% below Borders’ prices.

Here’s a twist on an actual case to illustrate the point further. Pretend that the law does not give anyone a property right in the factual circumstances that unfold in playing a major league baseball game.

Suppose that the Pittsburgh Pirates baseball club contracts with Pittsburgh radio station KDKA to broadcast live play-by-play of all Pirate games. The Pirates supply the announcers. The Pirates and KDKA negotiated the contract price that KDKA must pay. In gauging how much it was willing to pay, KDKA estimated how much revenue it would receive from selling air time for commercials during the play-by-play.

A competing Pittsburgh radio station, KQV, sends one of its sportscasters to the roof of a building near Forbes Field, where the Pirates play their home games. Walls surround Forbes Field, but there is no roof.

From the roof of the nearby building, the sportscaster has an unobstructed view of the game and is close enough to describe what’s happening. With binoculars, the sportscaster can see the numbers on the players’ jerseys. So the station has its sportscaster give real-time play-by-play of the Pirate home games from the roof of the building.

Another competing Pittsburgh radio station, WWSW, decides to do the same thing with one of its sportscasters from a balcony on another nearby building.

The competing stations’ sportscasters use their own words to describe the facts that they see as the game unfolds. All three stations compete for advertisers and listeners. Because the other stations didn’t pay anything to the Pirates, the other stations can sell ad time profitably at lower rates than can KDKA. They attract advertising money away from KDKA, and KDKA cannot match their ad rates profitably.

The Pirates and KDKA sue the other two radio stations for unfair competition and unjust enrichment under common law. Even though the first amendment applies to the various sportscasters’ real-time descriptions of the facts taking place on the baseball field, the first amendment probably will not interfere with the asserted common-law rights of the Pirates and KDKA. They will probably get a court order to force the other stations to stop the real-time play-by-play or to disgorge their ad revenue, and an appellate court probably would affirm that order, rejecting the radio stations’ first amendment defense.

But if KDKA and the Pirates sued to bar KQV and WWSW from broadcasting a post-game summary of what happened, the first amendment would intervene and defeat the suit. Generally, the first amendment will respect valid legal interests that interfere with speech until the force of those interests diminishes.

As we explained in response to the 1st criticism, there are a variety of options available to those who wish to rewrite others’ news stories for profit. The for-profit aggregator can wait to free-ride until most of the commercial life of the initial news story has dissipated. For most news reports, that is probably about a day.

Or the aggregator can contract to carry contemporaneous rewrites of an originator’s story, or the aggregator can become a pure aggregator without a contract or paying money, or the aggregator can expend its own resources to verify the report or to discover and write about new information.








4th criticism: Your theory would allow the discoverer of news to own it.

Short answer: No it wouldn’t.

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Our unfair competition theory would not grant an originator of a news report any property interest in the facts that they uncover and report, and we oppose granting them any property right in the factual substance of news.

We propose restoring what the law calls a “relational” interest. It is an interest against an unfair competitor commercially exploiting my journalistic services in competition with me without compensating me, but it is not a property right.

Here’s an example. Pretend that all players, coaches, and general managers for all National Football League teams are employees at will – they have no employment or personal services contracts.

Suppose that Rupert Murdoch started a league of pro football teams in the United States to compete directly with the NFL, but Murdoch’s league had no one experienced in running the pro football business, and no experienced players or coaches.

Murdoch needs his league to be good right away to attract television viewers and attending fans. So Murdoch systematically and quickly hires away the most experience NFL business, coaching, and player talent.

Does the NFL own those business people, coaches, or players? Of course not. The 13th amendment outlaws slavery.

Can the NFL get a court order enjoining its employees from jumping to Murdoch’s league? No.

Can the NFL get a court order barring Murdoch from raiding the NFL of its best employees without compensating the NFL? Yes.

Even though the NFL doesn’t own its employees and can’t stop them from going to Murdoch, the NFL has a relational interest with its direct competitor – Murdoch – that gives the NFL a common-law right to require Murdoch to compensate the NFL for the sudden and systematic draining of the NFL’s human resources, or to require Murdoch to stop the wholesale raiding of talent that the NFL developed and using them to compete directly against the NFL.












5th criticism: Your proposal will generate lots of litigation; a statute would be better because everyone would know the rules, thus leading to less litigation.

Short answer: That is a myth.

____________________________________

First: It takes as much litigation to enforce statutory rights as it does common-law rights. People don’t obey civil statutes simply because they are there. If you want people to obey your statutory rights, you usually have to sue them. Also, people sue over what statutes mean just as often as they sue in common-law situations.

Second: Suing over statutes can engender especially wasteful litigation. Litigants pay tens-of-thousands of dollars in legal fees fighting about what statutory words mean. They even fight over whether a statute’s silence about a circumstance has meaning, and they fight about what that meaning is.

At common-law, however, the legal fees are spent to obtain rulings to establish whether a particular activity is wrongful or okay under real-life circumstances. Often, that produces more useful results than spending legal dollars to prove what a statute’s words mean.

The upshot: Both statutes and the common-law engender equal volumes of litigation, but litigating common-law rights is a more efficient and effective use of those legal dollars.

Third: Suppose that in your state, landowners had common-law rights to sue trespassers on their land. Then, the legislature abolished all common-law trespass rights. That made it legal to trespass on all private property. And suppose that it became commonplace and even traditional during most of a century for passersby to walk across and even encamp on each others’ land. Then, the legislature restored common-law rights to sue for trespass. Would that generate litigation? Of course it would. Does that mean that restoring private property rights against trespass shouldn’t happen?

When the legislature outlawed drunken driving, that yielded litigation, too. Does our distaste for litigation mean that we shouldn’t outlaw drunken driving?

4 comments:

  1. John,

    I appreciate your willingness to rethink this; but I still think you (and the Marburgers) are deeply wrong. What you are basically arguing is that common law should be used to dramatically reshape the current structure of the web in order to create a situation in which paid liscensing, rather than linking to, content would be the web-default.

    This change would be made to basically benefit incumbent players in the news industry (newspapers) that have failed for more than two decades to understand what the web is and what it does well; rather than understanding and adapting, you are advocating the forcible restructuring of an entire media ecosystem in order to benefit dying monopolies.

    The fundamental problem is that the economics of the web are based on basic content abundance, rather than content scarcity, especially when it comes to the kind of banal content newspapers have traditionally reported. The Marburgers (confined by their economics and legal backgrounds which incline them to *only understand* scarcity) are trying to recreate scarcity online.

    You'l see why many of us, including those you criticize in the opening paragraphs of this post, still think that would be a very bad idea. All the lawerly hedging and hemming and hawing about "copyright" versus "unfair competition" is just window dressing.

    I've actually posted a few very basic thoughts on what I think would be a better strategy here, one that would build on what the web is rather than try to rewire it for dying monopolies.

    http://journalismschool.wordpress.com/2009/07/24/what-would-fair-use-look-like-in-an-online-era

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  2. All I can say is, "DUH!" Copyright is there to protect the First Amendment and those who use it to promulgate original content. Expanded comments at www.lftwings.blogspot.com

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  3. John,

    This debate is not really new. Your predecessors tried to shut down radio news 80 years ago. It didn't work.

    Media at War: Radio's Challenge to the Newspapers, 1924-1939
    By Gwenyth L. Jackaway

    "Fought when radio was first introduced, the Press-Radio war was an attempt on the part of print journalists to block the emergence of radio news... Far more than a battle to protect profits, media wars are fights to preserve the institutional power that derive from controlling the channels of communications."

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  4. You are an excellent writter. I read the third post of your blog and it is just fantastic to read it as others. Good on you.



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