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February 17 2011

18:30

How public is public data? With Public Engines v. ReportSee, new access standards could emerge

A recently settled federal court case out in Utah may affect the way news organizations and citizens get access to crime data.

Public Engines, a company that publishes crime statistics for law enforcement agencies, sued ReportSee, which provides similar services, for misappropriating crime data ReportSee makes available on CrimeReports.com. In the settlement, ReportSee is barred from using data from Public Engines, as well as from asking for data from agencies that work with Public Engines.

At first glance, the companies seem virtually identical, right down to their similar mapping sites CrimeReport.com (Public Engines) and SpotCrime.com (ReportSee). The notable exception is that Public Engines contracts with police and sheriff departments for its data and provides tools to manage information. ReportSee, on the other hand, relies on publicly available feeds.

In the settlement between the two websites, a new question arises: Just what constitutes publicly available data? Is it raw statistics or refined numbers presented by a third party? Governments regularly farm out their data to companies that prepare and package records, but what stands out in this case is that Public Engines effectively laid claimed to the information provided to it by law enforcement. This could be problematic to news organizations, developers, and citizens looking to get their hands on data. While still open and available to the public, the information (and the timing of its release) could potentially be dictated by a private company.

“The value in this kind of crime data is distributing it as quickly as possible so the public can interact with it,” Colin Drane, the founder of SpotCrime, told me.

In its news release on the settlement, Public Engine notes that it works with more than 1,600 law enforcement agencies in the US. Greg Whisenant, CEO of Public Engines, said in the statement that the company is pleased with the outcome of the case, concluding, “The settlement ushers in a new era of transparency and accessibility for the general public. It clearly validates our perspective that law enforcement agencies should retain the right to manage and control the data they decide to share.”

Naturally, Drane sees things differently. “I just don’t think people recognize that the data is being, essentially, privatized,” he said.

That may be a slight exaggeration, evidenced by the fact that SpotCrime is still operating. Instead of signing contracts with law enforcement agencies, SpotCrime requests data that is available for free and runs ads on its map pages. The company also partners with local media to run crime maps on news sites.

Through Drane sought to create a business through data mapping, his methods are largely similar to those of news organizations, relying on open data and free mapping tools. And just like news organizations, Drane finds that the hardest part of the job can be negotiating to get records.

“The technology has been here for years, but the willingness to use it is just starting for many cities,” Drane said.

The open data movement has certainly exploded in recent years, from property and tax records at the municipal level all the way up to Data.gov. As a result, news organizations are not only doing data-backed reporting, but also building online features and news apps. And news organizations are not alone, as developers and entrepreneurs like Drane are mining open datasets to try to create tools and fill information needs within communities.

I asked David Ardia of the Citizen Media Law Project whether this case could hinder development of more data products or have broader ramifications for journalists and citizens. The short answer is no, he said, since no ruling was issued. But Public Engines could be emboldened to take action against competitors, Ardia noted — and, as a result, developers looking to do something similar to what Drane has done may think twice about using public data.

“This is just the tip of the iceberg,” Ardia said. “There are tremendous amounts of money to be made in government information and data.”

In this case, Public Engines saw crime data as a proprietary product — and Dane’s company as infringing on their contract. It also claimed misappropriation of the hot news doctrine, arguing that it gathers and publishes information in a timely manner as part of its business. (An interesting link Ardia points out: On its FAQ page, CrimeReports.com says it does not make crime data downloadable “to the general public for financial and legal reasons.”)

Ardia said the larger question is twofold: first, whether government agencies will let third parties exert control over public data, and, second, who can access that data. As more local and state departments use outside companies to process records, tax dollars that go towards managing data are essentially paid to limit access to the public. Drane and his company were barred from using or asking to use public crime data in certain cities: If crime data is the property of a third party, the police department could either direct people to CrimeReports.com or, Ardia worries, say that it’s not free to make the information available to others.

“This is a problematic trend as governments adapt to and adopt these technologies that improve their use and analysis of information,” Ardia said.

Obviously all of this runs counter to established practice for public records and data in journalism, and Ardia said that it’s likely the issue won’t be settled until a case similar to Public Engines v. ReportSee makes its way to the courts. (We should have a better view of how the hot news doctrine holds up overall, though, after an appeals court rules on the FlyOnTheWall case.) But a better option could be to adapt current open records laws to reflect changes in how data is stored, processed, and accessed, Ardia said. Businesses and developers should be able to build products on a layer of public data, he said, but not exclusively — or at the expense of greater access for the broader public.

“We don’t have to wait for the courts to resolve this. Part of this can be addressed through changes in open records laws,” Ardia said. “Put the onus on agencies to make this data available when they sign agreements with third parties.”

December 28 2010

16:40

Top 3 New Media Legal Battles of 2010

This year's been a big one. Spain won the World Cup. Lindsay Lohan went to jail. Don Draper married his secretary. And, of course, the federal courts waded into some of the thorniest legal issues affecting new media.

Three cases stand out from the rest of 2010's docket. Each one shook up the law in a significant way. Below are summaries of the major developments, condensed in the spirit of CliffsNotes, with some commentary about the implications for people and organizations using new media.

Viacom v. YouTube

In June, a federal district court judge ruled on Viacom Int'l Inc. v. YouTube, Inc., a case testing the limits of the Digital Millenium Copyright Act. The ruling came after three years of pre-trial litigation. Viacom claimed that thousands of its copyrighted works had been uploaded to YouTube (e.g., clips of "The Daily Show with Jon Stewart"), in violation of the DMCA, which governs online copyright infringement.

At the heart of the case was the DMCA's safe-harbor provision. It allows service providers in certain circumstances to host user-generated content without assuming copyright liability for that content. The key element is a notice-and-takedown scheme that immunizes the provider if it "responds expeditiously" when notified of specific infringements. That notification can come in two forms.

First, the provider could have actual knowledge of an infringement. This occurs when a valid takedown request has been received. Second, the provider could be "aware of facts or circumstances from which infringing activity is apparent." This operates like a red flag, and the idea is that the provider can't claim the safe harbor if it ignored one.

Viacom argued essentially that YouTube ignored a red flag, because it was well known in general that there was a great deal of "infringing activity" on the site. The judge, however, didn't agree. He sided with YouTube and held that the "facts and circumstances" raising the red flag must be "specific and identifiable infringements of particular items." In other words, it was not enough for YouTube to be aware in general that there was "infringing activity" on the site.

Although some have questioned the importance of the decision, it does spell out just how aggressively YouTube and others must police their user-generated content. Among other things, the decision affirms that the burden of identifying and documenting infringing content is on the copyright holder, rather than the service provider, and it makes clear that if the provider is aware only in general that there is infringing activity on the site, then the safe harbor still will be available.

Earlier this month, Viacom appealed [PDF] the case to the U.S. Court of Appeals for the Second Circuit, bringing in Theodore Olson, a former U.S. Solicitor General, to handle the oral argument. This is a sign that Viacom is very serious about winning. YouTube has not yet filed its reply brief.

Barclays v. Theflyonthewall.com

barclays_logo.gifThis case required a federal district court judge to apply the "hot news" misappropriation doctrine, first recognized in 1918, to a news aggregation website. Barclays and two other financial firms produced regular research reports, to be distributed to clients for a fee, about stocks. They often released them before the New York Stock Exchange (NYSE) opened for the day, and although the firms took precautions to ensure the reports went only to paying clients, some did leak out.

Enter Theflyonthewall.com (Fly), an online subscription news service that picked up and published those reports on its own news feed, updated continuously every day between 5 a.m. and 7 p.m. It featured an average of 600 headlines per day, some of them about the research reports.

In 2006, Barclays and two other firms got fed up and filed suit against Fly, claiming that their reports were "hot news" and that the redistribution of them constituted misappropriation, a violation of New York state law. Misappropriation is a fancy way of saying that an organization used your property impermissibly for its own benefit. This is where the old collides with the new.

The "hot news" doctrine, as noted above, was developed in 1918, in the Supreme Court case International News Service v. Associated Press. INS and the AP were competing news services during World War I that transmitted articles by wire to member newspapers. Speed and accuracy got them their daily bread. For various reasons, INS began collecting AP stories that ran on the East Coast and rewriting them for INS subscribers on the West Coast. Finding that the AP had a "quasi-property right" in the news content it gathered, the Supreme Court held that INS's conduct constituted misappropriation. INS was, the Court said, "endeavoring to reap what it had not sewn."

The policy justification anchoring that decision was the same one running through the Barclays decision: The content producer invested substantial time, labor and money in its publication process, and those investments should be protected; because if they're not, the producer loses the economic incentive to continue producing, depriving the public of a valuable benefit.

The judge, accordingly, ruled for Barclays. She issued an injunction requiring Fly to delay its publication of stories about the research reports. Notably, the delay was just long enough to allow Barclays and the other firms to monetize the reports by distributing them to clients before they appeared on any news aggregation site.

Fly quickly countered that decision, however, by asking a federal appeals court to stay the injunction, i.e., to relieve Fly of its obligation to comply with it. The court granted the stay and agreed to expedite its full review of the appeal, which is pending as of this writing.

Comcast v. FCC

Last but not least comes the determination in April by a federal appeals court that the FCC has limited power to regulate the Internet. Comcast Corp. v. FCC [PDF] arose because of complaints in 2008 that Comcast, a service provider, was interfering with its customers' use of peer-to-peer networking applications.

mediashift_legal small.jpg

In response to those complaints, the FCC issued an order concluding that it had jurisdiction over the matter and that Comcast's method of bandwidth management "contravene[d] ... federal policy." Comcast complied with the order, but later asked the appeals court to review it, objecting on three grounds. The court began and ended its inquiry by finding that the FCC failed to establish jurisdiction.

For its part, the FCC conceded to the court that it did not have express authority to regulate network management practices, but argued that it had ancillary authority under the Communications Act of 1934 [PDF]. It empowered the FCC to "perform any and all acts, make such rules and regulations, and issue such orders ... as may be necessary in the execution of its functions."

The court didn't buy the argument and said the FCC, relying heavily on policy statements and unhelpful statutory provisions, failed to prove that its Comcast order was "reasonably ancillary to the ... effective performance of its statutorily mandated responsibilities."

The decision prompted many commentators to wonder about its implications for Net neutrality, the idea that all online content and applications should be treated equally by service providers. David Post in April summed up the thinking over at the Volokh Conspiracy: "So what does this portend for Net neutrality rules? Can the Commission proceed with its rulemaking efforts ... or does it need some additional statutory authorization from Congress before it can do so?"

Since then, the FCC has been trying to answer those questions. It promulgated last Tuesday a set of rules that functionally creates two classes of Internet access, one for fixed-line providers and one for wireless providers. The rules are tied to the FCC's Section 706 authority, which directs the commission to "encourage on a reasonable and timely basis the deployment of advanced telecommunications services to all Americans," purportedly including broadband services. This means the FCC would have to show that the Net neutrality rules are ancillary to 706's mandate, a difficult task because the FCC itself concluded in the 1990s that that section is not an independent grant of authority.

Despite all the uncertainty, two things are certain: The rules will be challenged in the courts, and they will be challenged by Republicans in Congress.

The Year Ahead

Next year promises to bring big developments in the law affecting new media. A federal appeals court will decide both the Viacom and Barclays appeals, and the Net neutrality rules surely will be challenged. WikiLeaks will continue to dominate the news and very likely will head to court to test the uneasy balance between free speech and national security. And at the Supreme Court, the justices will hand down Schwarzenegger v. Entertainment Merchants Association, which addresses whether the First Amendment permits any limits on offensive content in violent videogames sold to minors.

Jonathan Peters is a lawyer and the Frank Martin Fellow at the Missouri School of Journalism, where he's working on his Ph.D. and specializing in the First Amendment. An award-winning freelancer, he has written on legal issues for a variety of newspapers and magazines. He can be reached at jonathan.w.peters@gmail.com.

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September 28 2010

14:00

September 08 2010

14:30

June 03 2010

21:31

June 01 2010

17:00

Aggregators, curators, and indexers: There’s a difference, and it matters

Aggregation. Curation. Indexing. They’re all the same, aren’t they? Ask any serious online journalist or new media entrepreneur, and the answer will be quick and obvious: of course not! But in the public debate over the future of journalism — especially the debate as framed by legal analysts and public officials — the words often get thrown around as if they are identical. Ordinarily, such word quibbling would seem a little sad. But in the current context, where every aspect of journalism is up for grabs and concepts like “the hot news doctrine” are discussed in serious tones, words and definitions mean a great deal. So I thought it might be worth a little time thinking about what we mean by aggregation, by curation, and by indexing. In other words: if you’re an “aggregator,” what is it, exactly, that you do?

To get a sense of how I thought these terms were being increasingly lumped together, and some of the problems this might cause, I wanted to highlight the first couple paragraphs from the written materials distributed at the Online Media Legal Network’sJournalism’s Digital Transition,” which was a conference I attended at Harvard a few weeks ago. The conference, by the way, was great, and I don’t mean to pick on the OLMN. But I did think that the discussion of aggregation included in their CLE (Continuing Legal Education) materials really summed up the issues that I wanted to get at in this post. In the document “News Aggregation and Copyright Fair Use,” conference attendees read:

One of the hottest topics in copyright law these days is the rise of the news aggregator, from Google News to the Huffington Post … debate arises when third-parties get into the act [of] reselling and profiting from information generated by traditional media organizations.

Of course, building a business model around monetizing another’s website content isn’t novel, and methods for doing so have been around for almost as long as the Internet has been considered a viable commercial entity. Consider the practice of framing, or superimposing ads, onto linked websites … News aggregators, which take information from multiple websites and display it on a single page, providing a convenient one-stop resource for readers, are merely the latest flavor-of-the-week.

Though Google News may be the most well known commercial news aggregator, there are many others, such as the Huffington Post and Newser.com. Some use only headlines and links, others copy full (or nearly full) articles and photos. Nearly all receive ad revenue, many based on page views that, copyright owners allege, are being diverted from websites that originate the content.

Are Google News, Huffington Post, and Newser.com the same? How about the other online organizations traditionally tossed into the mix, such as Gawker? If you view the online news ecosystem as basically bifurcated into two categories — content originators and content reusers — than this view of the world might make sense. In the above model, the primary issue isn’t what these sites actually do all day, but the fact that they “receive ad revenue, many based on page views that, copyright owners allege, are being diverted from websites that originate the content.” And yet, as soon as you start to conceptually differentiate between Google News and the Huffington Post, it becomes clear that there’s a much more complex news ecosystem out there.

So what’s actually going on online? I thought it might be interesting to take one of our very own Lab posts, Mark Coddington’s all around smashing This Week in Review, and parse out how the ways that Mark engages in both what I’d call “aggregation” and “curation.” In essence, I think the upper sections of This Week in Review are fundamentally different from the bottom, concluding section, and the differences between the two sections point to different ways of doing online newswork.

The first dozen paragraphs of TWIR are usually broken down into three or four “hot topics” that are big in the future of journalism world that week. As Mark told me when I emailed him and asked him to explain his thinking behind This Week in Review, the upper sections

explore a discussion — a news development with commentary surrounding it, or ideas that spark responses and thus launch (or, usually, continue) a conversation. With those sections, I see myself as mapping out a discussion — explaining who’s on what side, what each person is saying and where that places them in relation to everyone else…If I see some substantive discourse coalescing around an article, that’s more likely to merit its own section because there are several connections I feel I need to explain (i.e. Person A said this, Person B responded with this, and Person C and D reminded both A and B of this and this).

Let’s take one recent TWIR as an example. The hot topics picked by Mark involved (1) the continuing controversy over Facebook, (2) a discussion of iPad apps, (3) New York Times and Wall Street Journal paywalls, and (4) finally, a good overview of recent pieces on new digital news experiments. I’d call this first, lengthiest section of the Week in Review “content aggregation and analysis.” In the old days I would have just called it “blogging.”

  • The topics Mark discusses in This Week in Review emerge from a deep immersion in the conversation about the future of journalism, and a lengthy period of active listening to what people are saying. I follow future-of-journalism news pretty closely, and I’ve almost never disagreed with Mark’s analysis about what the important topics of the week are. In short, I trust his judgment. But it’s a judgment that stems from deep, active engagement in the topic at hand.
  • The way Mark highlights the contours of the debate is through linking back to his original sources. The discussion of Facebook contains 17 links in four paragraphs.
  • Mark occasionally (but not often) weighs in on one of the debates, but he does it pretty subtly, and the bulk of This Week in Review is definitely taken up with summarizing and translating what others are saying.

The second part of TWIR — and it’s usually just a few paragraphs — is called “Reading Roundup.” I’d call this part of This Week in Review “curation,” and it strikes me as pretty different from the rest of the piece. It’s not as centered around debates, and the links tend to go to online content which is more “think-piecey.” In this section, Mark seems to be listening a little bit less, and exercising a bit more personal judgment. I hear him telling me: “Hey! You’ve followed the piece to the end, which tells me you really care about this issue. Since I think we share similar interests, you might like these pieces too!” Or as Mark put it when I quizzed him about the difference:

You’re right — there is a difference between the “reading roundup” and the rest of the weekly review posts…with the reading roundups, I’m merely pointing the reader toward an interesting link without substantively explaining its connection to the rest of the journalism-in-transition world. Essentially, the reading roundup is like me inviting you to a party, while the main sections are like me walking you through a room at that party, introducing you to people, explaining who’s who, and giving you a sense of who you might enjoy talking to.

Finally, compare both of these forms of writing to something like Google News, which uses complex algorithms to determine what the hot topics of the minute are, what counts as a spotlight story, and how to rank stories in order of originality and importance. If Google News looks like anything, it’s a phone book — or one of those yearly news indexes in the big green binders you used to encounter in libraries, just more up to date. There isn’t the same sense of “listening,” the process of judgment seems different, and most importantly, there isn’t the same kind of interstitial commentary surrounding the links. For me, what Google News and other sites do might productively be called “indexing.”

Because this blog post is already over 1,300 words, I’m not going to get into the question posed by Ken Doctor: Can’t we just call all this stuff “content arbitrage“? Maybe that’s the subject for another post, but the short answer is I don’t think you can. I think we need to begin to compare the new forms of journalistic work that exist online, not just to some imaginary ideal of “content creation” versus an evil “repurposing,” but to each other.

Ultimately, why does all this matter? Is there an ultimate upshot of all this linguistic parsing?

For me, the lesson is simple. Anytime you hear someone talk about Google News, The Huffington Post, Gawker, blogging, aggregating, curation, and indexing as if they are the same phenomenon, ignore them. And if they attach that discussion to a set of policy recommendations, without acknowledging the full complexity of what it is people actually do when they aggregate, curate, and index information — well, then you should put your fingers in your ears and run in the other direction.

March 26 2010

14:00

This Week in Review: Anonymous news comments, two big media law cases, and a health coverage critique

[Every Friday, Mark Coddington sums up the week’s top stories about the future of news and the debates that grew up around them. —Josh]

Anonymity, community and commenting: We saw an unusually lively conversation over the weekend on an issue that virtually every news organization has dealt with over the past few years: anonymous comments. It started with the news that Peer News, a new Hawaii-based news organization edited by former Rocky Mountain News chief John Temple, would not allow comments. His rationale was that commenting anonymity fosters a lack of responsibility, which leads to “racism, hate and ugliness.”

That touched off a spirited Twitter debate between two former newspaper guys, Mathew Ingram (Globe and Mail, now with GigaOm) and Howard Owens (GateHouse, now runs The Batavian). Afterward, Ingram wrote a fair summary of the discussion — he was pro-anonymous comments, Owens was opposed — and elaborated on his position.

Essentially, Owens argued that it’s unethical for news sites (particularly community-based ones) to allow anonymous comments because “readers and participants have a fundamental right to know who is posting what.” And Ingram makes two main points in his blog post: That many online communities have anonymous comments and very healthy community, and that it’s virtually impossible to pin down someone’s real identity online, so pretty much all commenting online is anonymous anyway.

Several other folks chimed in with various ideas for news commenting. Steve Buttry, who’s working on a fledgling as-yet-unnamed Washington news site wondered whether news orgs could find ways to create two tiers of commenting — one for ID’d, the other for anonymous. Steve Yelvington, who dipped into Ingram and Owens’ debate, extolled the values of leadership, as opposed to management, in fostering great commenting community. The Cincinnati Enquirer’s Mandy Jenkins offered similar thoughts, saying that anonymity doesn’t matter nearly as much as an active, personable moderator.

J-prof and news futurist Jeff Jarvis and French journalist Bruno Boutot zoom out on the issue a bit, with Jarvis arguing that commenting is an insulting, inferior form of communication for news organizations to offer, and they should instead initiate more interactive, empowering communication earlier in the journalistic process. Boutot builds on that to say that newspapers need to invite readers into the process to build trust and survive, and outlines a limited place for anonymity in that goal. Finally, if you’re interested in going deeper down the rabbit hole of anonymous commenting, Jack Lail has an amazingly comprehensive list of links on the subject.

The iPad and magazines: The iPad will be officially released next Saturday, so expect to see the steady stream of articles and posts about it will or won’t save publishers and journalism to swell over the next couple of weeks. This week, a comScore survey found that 34 percent of their respondents would be likely to read newspapers or magazines if they owned an iPad — not nearly the percentage of people who said they’d browse the internet or check email with it, but actually more than I had expected. PaidContent takes a look at 15 magazines’ plans for adapting to tablets like the iPad, and The Wall Street Journal examines the tacks they’re taking with tablet advertising.

At least two people aren’t impressed with some of those proposals. Blogger and media critic Jason Fry says he expects many publishers to embrace a closed, controlled iPad format, which he argues is wearing thin because it doesn’t mesh well with the web. “With Web content, publishers aren’t going to be able to exercise the control that print gave them and they hope iPad will return to them,” he writes. And British j-prof Paul Bradshaw calls last week’s VIV Mag demo “lovely but pointless.” Meanwhile, Wired’s Steven Levy looks at whether the iPad or Google’s Chrome OS will be instrumental in shaping the future of computing.

Aggregation and media ownership in the courts: In the past week or so, we’ve seen developments in two relatively outside-the-spotlight court cases, both of which were good news for larger, traditional media outlets. First, a New York judge ruled that a web-based financial news site can’t report on the stock recommendations of analysts from major Wall Street firms until after each day’s opening bell. The Citizen Media Law Project’s Sam Bayard has a fantastic analysis of the case, explaining why the ruling is a blow to online news aggregators: It’s an affirmation of the “hot news” principle, which gives the reporting of certain facts similar protections to intellectual property, despite the fact that facts are in the public domain.

Meanwhile, the Lab’s C.W. Anderson analyzed the statements of several news orgs’ counsel at an FTC hearing earlier this month, finding in them a blueprint for how they plan to protect (or control) their content online. Some of those arguments include the hot news doctrine, as well as a concept of aggregation as an opt-in system. Both Anderson’s and Bayard’s pieces are lucid explanations of what’s sure to be a critical area of media law over the next couple of years.

And in another case, a federal appeals judge at least temporarily lifted the FCC’s cross-ownership ban that prevents media companies from owning a newspaper and TV station in the same outlet. Here’s the AP story on the ruling, and just in time, we got a great summary by Molly Kaplan of the New America Foundation of the “what” and “so what” of media concentration based on a Columbia University panel earlier this month.

Health care coverage taken to task: Health care reform, arguably the American news media’s biggest story of the past year, culminated this week with the passage of a reform bill. Washington Post media critic Howard Kurtz was among the first to take a crack at a postmortem on the media’s performance on the story, chiding the press in a generally critical column for focusing too much (as usual) on the political and procedural aspects of health care reform, rather than the substance of the proposals. The news media produced enough data and analysis to satisfy policy junkies, Kurtz said, but “in the end, the subject may simply have been too dense for the media to fully digest…For a busy electrician who plugs in and out of the news, the jousting and the jargon may have seemed bewildering.”

Kurtz was sympathetic, though, to what he saw as the reasons for that failure: The story was complicated, long, bewildering, and at times tedious, and the press was driven by the constant need to produce new copy and fill airtime. Those excuses didn’t fly with C.W. Anderson, who contended that Kurtz “is basically admitting the press has no meaningful role in our democracy.” If the press can’t handle meaningful stuff like health care reform, he asked, what good is it? And Rex Hammock used Kurtz’s critique as an example of why we need another form of context-oriented journalism to complement the day-to-day grind of information.

Google pulls an end-around on China: This isn’t particularly journalism-related, so I won’t dwell on it much, but it’s huge news for the global web, so it deserves a quick summary. Google announced this week that it’s stopping its censorship of Chinese search by using its servers in nearby Hong Kong, and two days later, a Google exec also told Congress that the United States needs to take online censorship seriously elsewhere in the world, too.

The New York Times‘ and the Guardian’s interviews with Sergey Brin and James Fallows’ interview with David Drummond give us more insight into the details of the decision and Google’s rationale, and Mathew Ingram has a good backgrounder on Google-China relations. Not surprisingly, not everyone’s wowed by Google’s move: Search Engine Land’s Danny Sullivan says it’s curiously late for Google to start caring about Chinese censorship. Finally, China- and media-watcher Rebecca MacKinnon explains why the ball is now in China’s court.

Reading roundup: I’ve got a bunch of cool bits and pieces for you this week. We’ll try to run through them quickly.

— Jacob Weisberg, chairman of the Slate Group, gives a brief but illuminating interview with paidContent’s Staci Kramer that’s largely about, well, paid content. Weisberg explains why Slate’s early experiment with a paywall was a disaster, but says media outlets need to charge for mobile news, since that’s a charge not for content, but for a convenient form of delivery.

— Since we’ve highlighted the launch and open-sourcing of Google’s Living Stories, it’s only fair to note an obvious downside: Florida j-prof Mindy McAdams points out that it’s been a month since it was updated. Google has acknowledged that fact with a note, and Joey Baker notes that he guessed last month that Google was open-sourcing the project because the Washington Post and New York Times weren’t using it well.

— Like ships passing in the night: USC j-prof Robert Hernandez argues that for many young or minority communities in cities, their local paper isn’t just dying; it’s long been dead because it’s consciously ignored them. Meanwhile, Gawker’s Ravi Somaiya notes that with the rise of Twitter and Facebook, big-time blogging is becoming more fact-driven, professionally written and definitive — in other words, more like those dead and dying newspapers.

— Colin Schultz has some great tips for current and aspiring science journalists, though several of them are transferable to just about any form of journalism.

— Finally, I haven’t read it yet, but I’m willing to bet that this spring’s issue of Nieman Reports on visual journalism is chock full of great stuff. Photojournalism prof Ken Kobre gives you a few good places to start.

Mask photo by Thirteen of Clubs used under a Creative Commons license.

March 25 2010

15:00

The Barclays case: Will “hot news” limit the right to aggregate news?

[Sam Bayard, one of our friends down the street at the Citizen Media Law Project, has written the most detailed analysis I've seen of the Barclays v. TheFlyOnTheWall.com case. While focused on the work of financial analysts, the case could have serious impact on the ability of websites to aggregate and curate content. It also invokes the "hot news" doctrine that some news organizations have argued limits the kinds of linking other sites can do to their content. We're reprinting Sam's piece below; it's worth a read for anyone interested in how the new news ecosystem is evolving. —Josh]

In 2003, prolific legal scholar and 7th Circuit Judge Richard Posner published a law review article entitled "Misappropriation: A Dirge," which discussed — among other things — the continued viability of "hot news" misappropriation, a theory of unfair competition that dates back to the Supreme Court’s 1918 case, International News Service v. Associated Press, 248 U.S. 215 (1918), which involved unauthorized re-publication of wire service reports. Contrary to what Posner’s title might suggest, the article didn’t outright announce the death of the hot news doctrine, but it did paint a picture of a legal doctrine on the ropes — disdained by noted jurists, unwise as a matter of policy, and limited in practical significance. For better or worse, a decision issued last Thursday shows the doctrine to be very much alive and relevant. In fact, the case raises some disturbing prospects for news aggregation and sharing of information on the Internet more generally.

In Barclays Capital Inc. v. TheFlyOnTheWall.com, 06 Civ. 4908 (S.D.N.Y. Mar. 18, 2010), Judge Denise Cote of the United States District Court for the Southern District of New York issued a permanent injunction requiring the Internet-based financial news site FlyOnTheWall.com ("Fly") to delay its reporting of the stock recommendations of research analysts from three prominent Wall Street firms, Barclays Capital Inc., Merrill Lynch, and Morgan Stanley. The injunction requires Fly to wait until 10 a.m. E.S.T. before publishing the facts associated with analyst research released before the market opens, and to postpone publication for at least two hours for research issued after the opening bell.

The injunction is based on Judge Cote’s finding, after a bench trial, that Fly engaged in hot news misappropriation, "free-riding activity that is directly competitive with the Firms’ production of time-sensitive information, thereby substantially threatening their incentive to continue in the business." Barclays, slip op., at 87. Morgan Stanley and Barclays also succeeded on copyright infringement claims relating to Fly’s unauthorized copying and distribution of excerpts from their research reports for a few weeks in 2005, but the court awarded relatively minor damages on these claims and this doesn’t impact Fly’s current business practices, which no longer involve verbatim reproductions or close paraphrases of analyst research.

Background

Like other Wall Street firms, Barclays, Merrill Lynch, and Morgan Stanley produce analyst research reports on stocks. The firms distribute these reports for a fee to their clients, usually large institutional investors. The firms often release these reports before the NYSE opens for the day, and the reports contain recommendations (buy/sell/hold) that, according to the firms, often spur investors into making trades, usually through the firm that issued the report. As a result, the release of a report often has a significant impact on the market price for the stock in question.

The firms’ paying clients gain access to the reports through several means, including the firms’ password-protected websites, licensed third-party distributors like Bloomberg and Thomson Reuters (presumably also using some sort of password protection), and email messages. In addition, the firms host private conference calls or webcasts in which their analysts discuss their research reports and recommendations with clients. Access to these calls and webcasts is restricted to those with the required passcode or login.

The firms take various precautions to ensure that the reports go only to paying clients. For example, they forbid employees from sharing the reports, their licensing agreements purport to forbid the clients from redistributing the research content, and licensed distributors like Bloomberg and Reuters contractually agree to maintain a "firewall" so that their media arms can’t obtain information from their research arms.

Inevitably, though, the research reports and the recommendations contained in them leak out, and Fly pioneered the business model of publishing this information for its own clients on a newsfeed over the Internet. The model has caught on, and, according to the court, presently "there is a crowded marketplace with small internet companies and major news organizations reporting the Firms’ Recommendations before and after the market opens." Barclays, slip op. at 35.

According to Judge Cote’s opinion, it looks like Fly’s operations have changed significantly over the last few years, largely in response to the firms’ lawsuit. Before 2005, Fly relied primarily on employees at the firms who emailed research reports to Fly after they were released to clients (this was pretty clearly a violation of the employees’ duties of loyalty and confidentiality to the firms). At that time, Fly staff would type the recommendation as a headline, sometimes accompanied by a verbatim reproduction or close paraphrase of a passage from the report explaining the basis for the recommendation. Id. at 32. Hence the copyright claims for Fly’s conduct in 2005.

As a result of the lawsuit, however, Fly apparently changed its information-gathering process. According to testimony from Ron Etergino, Fly’s president and majority owner, he "no longer feels free to look at the research reports, even if someone should send them to him," id. at 33, and he now gathers information about the firms’ reports from other sources:

According to Etergino, he checks first to see what Recommendations have been reported on Bloomberg Market News. Then he checks Dow Jones, Thomson Reuters, and Fly’s competitors such as TTN, StreetAcount.com, and Briefing.com. Next, he visits chat rooms to which he has been invited to participate by the moderator. . . . Etergino also receives "blast IMs" through the Bloomberg, Thomson Reuters, or IMTrader messaging services that may go to dozens or hundreds of individuals. Finally, Etergino exchanges IMs, emails, and more rarely telephone calls with individual traders at hedge funds, money managers, and other contacts on Wall Street.

Id. at 34. In other words, Fly acquires information about the reports through a process that looks a whole lot like good-old fashioned journalism. And it largely relies on information that is publicly available through mainstream and Internet media reports, IM blasts, and what appear to be open chat rooms. The result is a headline like this: "EQIX: Equinox initiated with a Buy at FofA/Merrill. Target $110." Id. at 27.

Hot News and Copyright Law

As noted, the main dispute in the Barclays case was not about verbatim copying, but about Fly publishing time-sensitive facts from the firms’ research reports — essentially, the buy/sell recommendations. Facts are not protected by copyright law. Feist Publ’ns, Inc. v. Rural Telephone Service Co., Inc., 499 U.S. 340, 345 (1991). While the firms’ recommendations aren’t exactly facts in the same way as "hard news," the firms appeared to concede that they couldn’t stop Fly’s current reporting practices through resort to copyright law. Enter the hot news misappropriation doctrine, which is controversial precisely because it provides IP-like protection to facts despite copyright law’s bedrock policy that facts are in the public domain.

In International News Service v. Associated Press, 248 U.S. 215 (1918), the Supreme Court created the hot news misappropriation doctrine as a matter of federal common law, and some state courts, like those in New York, adopted it as part of state unfair competition law. The INS case arose after British and French censors barred INS from sending war dispatches to the United States because Hearst had offended the British and French by siding with Germany at the outset of WWI. See Posner, at 627. INS employees got around this problem by paraphrasing AP dispatches published in east coast newspapers and sending them by telegraph to the west coast for publication in Hearst newspapers. See INS, 248 U.S. at 231-32 (at issue was INS’ practice of "copying news from bulletin boards and from early editions of complainant’s newspapers and selling this, either bodily or after rewriting it, to defendant’s customers"); id. at 259-60 (Brandeis, J., dissenting) ("The means by which the International News Service obtains news gathered by the Associated Press is also clearly unobjectionable. It is taken from papers bought in the open market or from bulletins publicly posted.").

The INS Court acknowledged that AP had no copyright claim because it had failed to register and/or place notice on its news reports (no longer a requirement under U.S. copyright law), and because copyright law did not extend to the facts in the reports. But, the Court nonetheless enjoined INS from using AP’s news reports in direct competition with the news service, finding that the INS’s free riding "speaks for itself and a court of equity ought not to hesitate long in characterizing it as unfair competition in business." Id. at 240. Justices Holmes and Brandeis wrote powerful dissents, decrying the majority’s opinion as unprecedented, unnecessary, and unwise.

The main policy justification advanced by the majority, which remains the motivating principle behind hot news doctrine today, is that protecting hot-news-type information is necessary to preserve the incentives that drive economic actors to make the substantial investment required to produce a socially valuable product or service in the first place. Posner characterizes this policy impulse as protecting against the danger of "killing the goose that laid the golden eggs." Posner, at 628.

In the Barclays case, the idea is that Wall Street research reports are a social good — they help disseminate information important to the proper functioning of the securities markets that otherwise would not be produced. This may be a disputable proposition, but it’s one the court accepted. And, the theory goes, Wall Street firms like Barclays and Merrill Lynch won’t go to the expense of producing these socially valuable reports if companies like Fly can free ride off of them and undermine the money-making potential of the practice. Again, it’s disputable whether Fly’s conduct rather than other economic factors (like international economic meltdown) has hurt demand for the firms’ reports, but Judge Cote found as a matter of fact that Fly’s activities did create a substantial disincentive.

I’ll leave to the economists the question of whether or not all this is wise economic policy. But from a legal perspective, the hot news doctrine creates an obvious tension with copyright law because, as noted above, it creates a pseudo property right in facts that copyright law says are in the public domain. This raises the specter of preemption: that is, a situation where federal law displaces inconsistent state law under the Supremacy Clause. Judge Cote’s opinion in Barclays does a very thorough job on this issue and determines — rightly, in my view — that federal copyright law does not preempt hot news misappropriation, or at least a narrow version of it. This result was a foregone conclusion for Judge Cote because the Second Circuit Court of Appeals had already said as much in National Basketball Association v. Motorola, Inc., 105 F.3d 841 (2d Cir. 1997), which is controlling precedent in the Southern District of New York.

Under NBA, the narrow version of hot news misappropriation that survives copyright preemption has the following elements:

(i) a plaintiff generates or gathers information at a cost; (ii) the information is time-sensitive; (iii) a defendant’s use of the information constitutes free riding on the plaintiff’s efforts; (iv) the defendant is in direct competition with a product or service offered by the plaintiffs; and (v) 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 service that its existence or quality would be substantially threatened.

Barclays, slip op. at 55 (quoting NBA, 105 F.3d at 845). Posner says that the "meat" of the test is in element (v), with (i) through (iv) describing a situation where (v) is likely to be satisfied. Posner, at 632. Therefore, "[t]he criterion appears to mean that states can protect fact gathering without running afoul of the preemption provision in the federal copyright statute only when unauthorized copying of the facts is likely to deter the plaintiff or others similarly situated from gathering and disseminating the facts that the defendant has copied." Id. The test is "alarmingly fuzzy once the extreme position of creating a legal right against all free riding is rejected, as it must be." Id. at 638.

In other words, hot news doctrine presents an inherently subjective and necessarily fact-specific standard, and one would expect courts to be cautious in finding it met, if for no other reason than to avoid the potential conflict with copyright law and to promote the public’s access to information. In Barclays, the firms convinced Judge Cote at trial that each element was satisfied, showing that, while it may take a unique set of facts, it’s not an impossible task.

What About the First Amendment?

Notably lacking from Judge Cote’s very thorough opinion is any discussion of how hot news misappropriation interacts with the First Amendment. This could be because Fly didn’t argue the point, at least not directly. While this post suggests that Fly’s lawyers "played the free speech card," it is hard for me to believe that Judge Cote would fail to address such an important argument if it were raised directly in the briefs. We have a student looking through the documents on PACER, which are pretty extensive, but so far we haven’t turned up any direct invocation of the First Amendment, except for an affirmative defense in the answer. As we’ll see below, though, Fly undoubtedly raised factual arguments that bear on the question.

The First Amendment issue is an important one because the Supreme Court didn’t address it in INS. Justice Brandeis’s dissent gives us a First Amendment tingle in his famous statement, "[t]he general rule of law is, that the noblest of human productions — knowledge, truths ascertained, conceptions, and ideas — become, after voluntary communication to others, free as the air to common use," 248 U.S. at 250 (Brandeis, J., dissenting), but even he didn’t seem to appreciate the constitutional implications of the case. It’s also an important question because First Amendment doctrine has developed considerably since 1918, and free speech concerns of which the Justices had only a vague inkling now have become an accepted part of the constitutional landscape.

The First Amendment issue raised by the case is one I’ve addressed before. A long line of Supreme Court cases hold that the First Amendment protects truthful speech on matters of public concern. See, e.g., Bartnicki v. Vopper, 532 U.S. 514, 527-28, 533-35 (2001) (First Amendment barred imposition of civil damages under wiretapping law for publishing contents of conversation relevant to matter of public concern); Florida Star v. B.J.F., 491 U.S. 524, 534 (1989) (First Amendment barred imposition of civil damages on newspaper for publishing rape victim’s name); Smith v. Daily Mail Publ’g Co., 443 U.S. 97, 103-06 (1979) (First Amendment barred prosecution under state statute for publishing names of juvenile offenders without permission of court); Landmark Communications, Inc. v. Virginia, 435 U.S. 829, 841-42 (1978) (First Amendment barred criminal prosecution for disclosing information from a confidential judicial discipline proceeding). Therefore, “if a newspaper lawfully obtains truthful information about a matter of public significance then state officials may not constitutionally punish publication of the information, absent a need to further a state interest of the highest order.” Smith, 443 U.S. at 103; accord Bartnicki, 532 U.S. at 527-28.

In Bartnicki v. Vopper, members of a teachers union sued a radio announcer under state and federal wiretapping laws after he played an unlawfully recorded telephone conversation on the air. The radio show host had received the recording from a third party who himself had received the tape in the mail from an anonymous source. The Supreme Court held that the First Amendment prohibited the recovery of damages against the radio show host for publishing the tape, explaining that “a stranger’s illegal conduct does not suffice to remove the First Amendment shield from speech about a matter of public concern.” Id. at 535. The constitutional principle in Bartnicki and other Supreme Court cases is not limited to traditional forms of media like newspapers and radio broadcasters. See Mary T. Jean v. Massachusetts State Police, 492 F.3d 24 (1st Cir. 2007) (First Amendment barred criminal prosecution for posting illegally recorded video online when recording made by third party, even if knowing receipt of the recording constituted a crime under Massachusetts law).

In Barclays, Judge Cote considered it unimportant that Fly obtained the information it published from other news services that were publishing the firms’ recommendations on the Internet in advance of Fly’s own publication. The court said that "the conduct of third parties is simply of no moment in finding Fly liable for hot-news misappropriation," and "it is not a defense to misappropriation that a Recommendation is already in the public domain by the time Fly reports it." Barclay, slip op. at 61. This may be a faithful application of the INS case itself — recall that INS involved taking facts from publicly available bulletin boards and published newspaper accounts — but INS never considered the First Amendment, so it can’t resolve the issue.

Under Bartnicki and the cases mentioned above, if Fly obtained the information in question through lawful means, then the First Amendment protects its right to publish that information. There is nothing inherently unlawful about Fly reading about a stock recommendation on a newsfeed provided by another news service or participating in a public chat room where Wall Street "rumors" are discussed (accessing a passcode-protected conference call would be another matter). The court says that Fly has engaged in "illegal conduct" by publishing the information it did, Barclays, slip op. at 61, but this label begs the question — that is, whether the state may constitutionally penalize publication of truthful information relating to a matter of public concern that was not obtained in violation of any other applicable laws.

To be sure, the person who originally leaks a firm research report to a news service or chat room participant may violate a legal duty owed to one of the firms, but "a stranger’s illegal conduct" is not sufficient to remove First Amendment protection under Bartnicki. The question is closer for Fly’s pre-lawsuit-era publication of reports received directly from firm employees who violated a duty of loyalty and confidentiality. It might be independently "unlawful" in the constitutional sense to knowingly induce a breach of these duties, but even in the trade secrets sphere this question has not been resolved with any clarity. Furthermore, I’m not aware on anything that would make it "unlawful" for Fly to communicate by email or telephone with firm clients who are willing to convey the substance of the recommendations, though this probably violates the client’s license agreement. Regrettably, the court did not differentiate between Fly’s different information-gathering tactics, and it enjoined publication of information obtained through at least some practices that clearly aren’t "unlawful" in any meaningful sense.

The court might well respond to all this by arguing that the firms’ reports are not facts related to a matter of public concern like ordinary news, but rather "subjective judgments based on complex and imperfect evidence." Id. at 78. There may well be a constitutionally significant distinction between reporting the subjective recommendations generated by these Wall Street firms and objective, external facts that are discovered "out there" in the world. On the other hand, these subjective judgments have objective, real-world consequences, and the announcement of a recommendation is itself a newsworthy event because it may cause a change in a stock’s price. It strikes me as difficult, and potentially hazardous, to try to distinguish between reporting the "subjective" recommendations versus reporting the "objective" fact that they were made, especially when the publication in question looks like this: "EQIX: Equinox initiated with a Buy at FofA/Merrill. Target $110."

The court may have ameliorated some of the First Amendment concerns by clarifying that the scope of its injunction, like the scope of hot news misappropriation, is narrow:

[T]o the extent Fly alters its business and begins to engage in actual analysis of market movements, and refers on occasion after the market opens in New York to one of the Firms’ Recommendations in the context of independent analytical reporting on a significant market movement that has already occurred that same day, such conduct will not run afoul of the injunction.

Id. at 87-88. But, this description of speech activity (the court doesn’t frame it in terms of speech) that won’t be enjoined displays an obvious preference for original/sweat of the brow/"analytical" content-creation over the free transmission of facts and information, which is a lot of what happens on the Internet. This is a preference that hot news doctrine’s anti-free-riding purpose surely calls for, but I don’t believe the First Amendment shares this ideal. (Copyright sure doesn’t. See Feist, 499 U.S. at 359-60.) As I’ll touch on more below, the court’s logic here also has foreboding connotations for news aggregators and others who supposedly "free ride" by transmitting information to others over the Internet without engaging in "independent analytical reporting."

News Aggregators, Bloggers, and the Like

The $75,000 question is what the Barclays case means for other online news aggregators, as well as social media more generally. Will the major newspapers be able to use this case to revive a robust hot news misappropriation doctrine that will kill the news aggregators and lock down facts on the Internet? I have no doubt that AP lawyers are smiling to themselves this week, but I don’t think this decision spells doom for the Internet as we know it.

The bad news for aggregators, bloggers, and those who like to share news is that this is a detailed, thoroughly reasoned (with the First Amendment exception noted above) decision from a respected judge in one of the most prestigious federal district courts in the nation. And, the decision is the product of a full-blown trial, giving it a concreteness and specificity that other, Internet-related hot news decisions, like Associated Press v. All Headline News, 608 F. Supp. 2d 454, 458-61 (S.D.N.Y. 2009), lack. This will give the decision credibility and make it useful in the hands of future judges looking for direction.

Worse, there are moments when reading the opinion where one feels like Judge Cote might as well be talking about news aggregators or bloggers free riding on "original reporting" instead of equity research. The court’s concept of free riding (element iii of the NBA test) certainly sounds like it would apply to news aggregation or acts of curation more generally:

To the extent that Fly adds value through its collection and aggregation of information, however, the value reflected in that act of aggregation does not controvert the fact that Fly expends no effort to produce the Recommendations and does not contribute to the underlying research and analysis process.

Barclays, slip op. at 60. It’s not a huge logical jump to say that all news aggregators are "free-riding" because they "expend no effort" to produce original reporting, and therefore "do not contribute to the underlying [journalistic] process." But this logic vastly understates the social benefit contributed by news aggregators, as well as bloggers who curate and comment on the news without expending effort to create it, and it automatically tilts the scales in favor of content producers at the expense of informational services and commentary, without any real justification.

Also potentially troubling is the court’s willingness to attribute the firms’ disincentive to produce equity research to Fly’s online activities as opposed to global financial meltdown, a willingness we can only hope won’t be reproduced when it comes to evaluating the alleged contribution of news aggregators and social media to newspapers’ current financial plight. Courts need to take a very close look at what is causing newspapers to suffer hard times; increased competition and loss of monopoly advertising rents explain a lot more than headlines and ledes with a link back, but that’s a topic for another day.

In any event, on the all-important fifth element (killing the golden goose), the Barclays case is easily distinguishable because the firms made a good (if not bullet-proof) case that production of high-quality equity research implicates a special need for time-sensitive exclusivity so that firm clients can feel they uniquely benefit from the recommendations and so that these clients can place trades with the firms based on them. Most regular news doesn’t share this rivalrous character, and it may be extremely difficult for newspapers to show that news aggregation or blog commentary ultimately hurts their bottom lines.

As for blogs, Twitter, and other types of social media, Barclays is further distinguishable because of the direct and obvious competition between Fly and the firms, which will be lacking in all but the most unusual cases. When it comes to Google News, which may be a real competitor, the ability of news organizations to opt out using robots.txt makes it extremely difficult to argue that Google is free riding, much less that it is destroying all incentive to engage in original reporting.

Finally, I suspect that the move from the financial sector to the general news sector will brighten and clarify the First Amendment issue discussed above, making it harder for courts to ignore that hot news doctrine plainly contemplates restricting the publication of truthful information on matters of public concern, regardless of how that information is required.

March 22 2010

14:00
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