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Keywords

contractbreach of contractequityinjunctioncorporation
contractbreach of contractplaintiffdefendantstatuteequityinjunctionappealcorporationlevy

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Associated Press v. International News Service, 245 F. 244, 2 A.L.R. 317, 157 C.C.A. 436

Facts

The Associated Press is a membership corporation that gathers and disseminates news to its members, who are primarily newspaper owners. The International News Service, a rival corporation, was accused of inducing employees of AP members to provide them with news, which they then sold to their customers. The AP sought an injunction to prevent the INS from using news obtained through these means, arguing that such actions constituted unfair competition and a breach of contract.

Plaintiff is chartered by New York, under a general statute known as the Membership Corporation Law (Consol. Laws, c. 35); an act used for the organization of clubs and the like. It has no capital stock, its membership is selective, its business is the gathering of news all over the world, and the very great expense of such acquisition and transmission of information is borne by ratable levy or assessment upon its ‘members.‘

Issue

The main legal issue is whether the International News Service's actions in appropriating news gathered by the Associated Press constitute unfair competition and whether the AP is entitled to an injunction against such practices.

The writ in question (reduced to its lowest terms) restrains defendant from (1) procuring any agent or employe of plaintiff, or any of its members, to give or permit defendant to take, for a consideration or otherwise, any ‘news‘ received from or gathered for plaintiff, and from using or selling ‘any news so obtained.‘

Rule

The court applied principles of equity to determine that the appropriation of news without permission constitutes unfair competition, and that the Associated Press has a property right in the news it gathers, which is entitled to legal protection.

The right to proceed in equity to restrain inducing to breach of contract we have recognized in American, etc., Co. v. Keitel, 209 Fed. 351, 126 C.C.A. 277; and the inequity of seeking profit by procuring the breach of any confidential relation by an employe is fully considered in Peabody v. Norfolk, 98 Mass. 452, 96 Am.Dec. 664, and Dodge Co. v. Construction, etc., Co., 183 Mass. 62, 66 N.E. 204, 60 L.R.A. 810, 97 Am.St.Rep. 412.

Analysis

The court found that the INS's actions in obtaining news from AP members without authorization were unlawful and constituted unfair competition. The court emphasized that the AP's members have a collective property right in the news gathered, and that the INS's practices undermined the AP's business model and the rights of its members. The court distinguished between the legitimate use of 'tips' and the outright appropriation of news, concluding that the latter was not permissible.

The material facts on which plaintiff moved for such injunctive relief as was refused below are undisputed and as follows: The natural place for receiving news from Europe (and indeed beyond) is the Atlantic seaboard, and especially New York. Bulletins and early editions, put out by members of plaintiff in the seaboard cities, are read by agents of defendant's and the substance thereof transmitted by wire westward, sold to defendant's customers, and by them printed, perhaps without any knowledge on their part that the origin of and sole basis for defendant's dispatch is (e.g.) a bulletin posted in New York by a member of plaintiff, as the result of plaintiff's efforts, and certainly without any such information given them by defendant.

Conclusion

The court modified the injunction to prevent the INS from appropriating news gathered by the AP until the commercial value of that news had passed. The court affirmed the AP's rights to protect its news from unfair competition.

The order, so far as attacked by defendant's appeal, we consider granted in the fair exercise of discretion, and therefore proper.

Who won?

The Associated Press prevailed in this case as the court upheld its rights to protect its news from being appropriated by the International News Service, recognizing the unfairness of the INS's practices.

The order appealed from is modified, as indicated, and the cause remanded, with directions to issue injunction against any bodily taking of the words or substance of plaintiff's news, until its commercial value as news has, in the opinion of the District Court, passed away.

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