Spring/Summer 2009

New York Federal Court Allows AP to Proceed With Claim for Misappropriation of "Hot News"

Holland & Knight Newsletter
Judith M. Mercier

Under a recent ruling by the U.S. District Court for the Southern District of New York, The Associated Press (AP) can proceed with its claim for misappropriation of “hot news” against All Headline News Corp. (AHN), a Florida online venture that disseminates news reports to subscribers. The district court also denied the defendants’ motion to dismiss claims for alleged violations of the Digital Millennium Copyright Act (DMCA) and unfair competition.

AP alleged that AHN took AP’s original news articles, removed or altered reference to AP as the author or copyright holder of the articles, and distributed the articles as if originating with AHN. The amended complaint alleges that AHN does not do any original reporting, but rather rewrites or copies news articles it finds on the Internet and republishes and distributes them under the AHN banner to paying clients. AP’s claims included misappropriation of “hot news,” copyright infringement, violations of the DMCA, trademark infringement, and unfair competition under both the Lanham Act and common law. AHN moved to dismiss all but the copyright infringement claim.

As grounds for dismissing the misappropriation of “hot news” claim, AHN argued that: (1) Florida law governed and Florida does not recognize the cause of action; and (2) the claim is preempted by the DMCA. The district court rejected these arguments. It held that New York law applied because the lawsuit alleges that “the property of a New York newsgathering organization has been misappropriated.” Further, the district court acknowledged that it is well-settled in the Second Circuit that the DMCA does not preempt “hot news” misappropriation.

The district court similarly rejected AHN’s argument that AP’s claim for violation of the DMCA should be dismissed because “the DMCA should be construed to apply only ‘to protect copyright management performed by the technological measures of automated systems.’” The district court did, however, dismiss AP’s claims for trademark infringement and unfair competition under the Lanham Act as it found that the allegations in the amended complaint were conclusory and lacked factual support.

Finally, the district court denied the motion to dismiss AP’s claim for common law unfair competition under New York law. Although the DMCA preempts certain common law unfair competition claims, the Second Circuit has held that “federal law does not preempt misappropriation claims that a defendant ‘passed off’ copies made by one creator as those of another.”

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