Law in the Internet Society

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WilliamHughes2ndDraft 1 - 24 Nov 2008 - Main.WilliamHughes
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Discreetly Moving Toward a New Information/Data Protection Regime?

In the 21st century, ideas are recognized for their indispensable role as the foundation for innovative processes. As such, they have assumed the identity of a new form of currency, essential for the acquisition of wealth and authority. The entertainment industry has recognized this dichotomy, making the development of ideas the central component for establishing the reputation essential for garnering wealth. Naturally, the development of a reputation is dependent upon a consumer base vested with the power to decide which ideas to devote their attention and resources. Faced with the reality of this “market for eyeballs,” the industry seeks to acquire the attention of the public while at the same time restricting the permissible uses. One area in which the tension between distribution of ideas and controlling their use exists is copyright law, particularly with respect to its application in “hot news” stories.

Since the groundbreaking case International News Service (INS) v Associated Press (AP) in 1918, the courts have struggled to balance what they perceive as the need to protect certain works and ideas with a desire to prevent the establishment of a system which gives creators property rights in information dedicated to the public domain (whether this perception is legitimate or misguided is beyond the scope of this particular writing). The seminal case of the modern era interpreting INS, NBA v Motorola, lays a framework within which to consider the data protection initiatives embraced by industries and subsequently observe that in the “market for eyeballs,” as it pertains to the hot news arena, the judiciary requires great showing of harm before granting a misappropriation claim. The result is that although NBA adopts little more than a re-phrased version of INS, the burden of proof it requires seems to indicate that the courts of the modern era are moving toward the recognition that information ownership rights are unwarranted.

In the years prior to NBA, the courts adopted a line of reasoning which closely resembled a liability regime for the expression of facts as set forth in INS. Essentially, the Supreme Court supported an argument that news was a form of a valuable business commodity pursuant to 5 key factors which placed news in a liability construct: 1)Significant labor and investment in the news 2) The value of news for the short period after it was published 3) Free-riding on investment in the news 4)Competition and 5)Harm to Defendant. With the passage of the Copyright Act of 1976, Congress seemed to have attempted to more effectively award protections to developing technologies by protecting any “original work fixed in a tangible medium of expression.” The information businesses, in particular, looked to profit from new media by using data and information which they knew remained unprotected by copyright law, but hoped could be protected through reliance on INS’ standard that threats of news media piracy would merit a misappropriation claim (Standard & Poor’s Corp v. Commodity Exchange,683 F.2d 704 (2d Cir. 1982), Board of Trade v Dow Jones & Co (98 Ill2d (1983)). The reality, however, was that courts struggled to reconcile the need to protect the investment in the looming technological databases of the 1980s and 1990s, with the legal requirement that facts and data remain open to reuse pursuant to the Feist v Rural Telephone (499 S. 340 (1991)) clarification that facts could not be owned. This is the climate which existed, therefore when the NBA sought a right of ownership in the transmission of its scores that would preclude Motorola from broadcasting them in real-time. Ultimately, the court’s decision in NBA and subsequent cases which have opposed property claims in “hot news” items, demonstrates an implicit recognition of the fact that restrictions on distribution may contribute to the constraints of opportunities with respect to developing new ideas and services that adequately capture the consumer desire for increasingly superior goods.

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). At once, these “extra elements” articulated in NBA seem no different than the liability regime established in INS; however, the indication of the judiciary’s tacit recognition that restrictions on information distribution are not suited to the 21st century in which non-profit Wikipedia entries report news more effectively than traditional media outlets, lies in the court’s application of the prongs.

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 and 2006 cases Fred Wehrenberg Circuit of Theatres v Moviefone (E.D.MO, 1999) and Storage Technology Corp. v. Custom Hardware Engineering & Consulting, Ltd (D.Mass., 2006), respectively, require that the actions make the plaintiff “virtually cease to participate” in the business. Likewise, in McKevitt? v Pallasch (73 F.3d 530 (7th Cir. 2003)) the court dismisses a claim of misappropriation on the basis that a showing must be made that abandonment of the project would be required unless the claim were granted. 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 severe disadvantage appears to serve as a means by which they have implicitly adopted a framework which in practice cuts against a quasi-property conception of data distribution.

Revision 1r1 - 24 Nov 2008 - 02:56:44 - WilliamHughes
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