Guest Post: Dow Jones and MSM Resurrect the Hot News Doctrine

Thomas J. Vallianeth brings us his third guest post in our SpicyIP Fellowship series with this post on the Hot News doctrine. In this post Thomas looks over a recent suit filed by Dow Jones & Co for hot news misappropriation and concludes comparing it with the on going proceedings between Akuate Internet Services and MSM Satellite. You can view his previous posts here.

Dow Jones and MSM Resurrect the Hot News Doctrine

Dow Jones & Co., the financial information company that owns publications like the Wall Street Journal, is suing Ransquawk, a London based news aggregating company for the tort of “hot news” misappropriation (read here and here). The complaint states that DJ Dominant, a service run by Dow Jones provides “exclusive real-time news and analysis” to subscribers, before it is published anywhere else, including, on Dow Jones’ other publications. It claims that this information is time sensitive and charges customers a fee for this information. The subscribers enter into agreements with Dow Jones that prevent them from reproducing, distributing or selling this information. The complaint also alleges that Ransquawk is in the business of providing audio content (and a transcript of the same) based on information that they gather from Dow Jones, among other providers, often seconds after it was first published on the DJ services.

It is very important to note here that this is not a copyright infringement claim and creativity considerations therefore ought not to play a role in the adjudication of the dispute. It is purely a tortious claim for the misappropriation of “hot news”. This doctrine, created by the United States Supreme Court in International News Services v. Associated Press, sought to address the enrichment that an entity receives by publishing information gathered by a direct competitor. It is now governed by two cases from the 2^nd Circuit – National Basketball Association v. Motorola Inc. (“NBA”) and The Flyonthewall.com Inc. v Barclays Capital Inc.  (“FOTW”).

The court in NBA dealt with the transmission of basketball scores onto pager like devices, provided at a cost. This information was generated by employees of Motorola watching the games through Television or Radio broadcast. The court in this case narrowed the applicability of the “hot news” doctrine and laid down five principles which would determine whether “hot news” misappropriation had taken place. These are: (i) a plaintiff gathers information at cost; (ii) the information is time-sensitive; (iii) a defendant’s use of the information constitutes free-riding (iv) the defendant is in direct competition with the plaintiffs; and (v) reduction or threat to the incentive to produce, or the quality of, the product or service. The FOTW court was presented with a similar factual situation as the Dow Jones suit. Barclays had issued summary recommendations based on securities trading to its customers. Theflyonthewall.com provided this information to its subscribers, but attributed the source of this information to be Barclays. The court in narrowing down the “hot news” doctrine laid down that in order to prove such a claim, evidence of passing off (factor (iii) of the NBA court) and evidence of direct competition must be demonstrated in the particular product or services (factor (iv) of the NBA court). The court in this case, effectively raised the threshold of the application of these factors. I shall consider the application of these factors in the Dow Jones suit.

Passing off

This will probably be the factor upon which the case will ultimately turn. Dow Jones raises allegations that although Ransquawk attributes its news to “various news sources”, it does not specifically mention Dow Jones & Co. as being the source. In reply to the cease and desist notice issued by Dow Jones (find annexed here), Ransquawk claims that the attribution is not specific to the provider as it is impossible to ascertain where exactly this news comes from. This seems plausible, because the content is often posted with just a five second delay after the original Dow Jones content. However, it remains to be determined whether the course of conduct in such a scenario would have been to delay the content till such attribution is possible, or whether specific attribution is necessary. The answers to these questions would determine the suit.

Direct Competition

In the NBA case, the court ruled that unless the specific activity (in that case, the transmission of sports scores) directly competed with activities undertaken by the plaintiff, the direct competition element would not be met (Justice Bhat seems to apply this element in this form in Akuate v. Star). In the Dow Jones suit the service provided by Ransquawk is a squawk service, which are essentially audio feeds. Dow Jones & Co. does not appear to have a similar service at all. In such a situation, direct competition seems near impossible for Dow Jones to establish. This element is clearly in the favour of Ransquawk.

The reason to observe this case is that Akuate Internet Services has been sued yet again, this time by MSM Satellite (that runs SONY SIX and SET MAX) for, inter alia, dissemination of live score updates of the ongoing New Zealand-India series. The Delhi High Court has granted interim relief, compelling them and other services such as Cricinfo to delay score updates. While the claims raised are that of violation of “media rights”, in effect it amounts to a “hot news misappropriation” claim because MSM seeks to protect exclusive rights in time sensitive information like scores and ball by ball updates. The factors as I have analysed above will therefore apply to this dispute as well. However, much needed clarity on the law in India will hopefully be provided by the Supreme Court in STAR India’s appeal of the DB ruling in Akuate v. STAR.