USDC S.D. New York, February 17, 2009

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The Southern District of New York determined that it will hear The Associated Press’s claims that All Headline News is misappropriating “hot news,” but dismissed two of the AP’s claims against AHN.

AHN is an online venture that finds news stories on the internet and prepares them for republication, either rewriting the text or copying the stories in full. AHN does not undertake any original reporting. The AP alleged that AHN was “free riding” on its news articles and unlawfully copied and altered AP news stories in violation of the federal Copyright Act, the Digital Millennium Copyright Act (DMCA), the Lanham Act, and New York common law. AHN moved to dismiss all of the AP’s claims except a claim for copyright infringement.

In ruling on the motion, the district court first addressed AHN’s argument that the case should be considered under Florida law, where AHN is based, and its assertion that Florida has rejected the “hot news” misappropriation cause of action. The “hot news” cause of action has its origin in International News Service v. Associated Press, 248 U.S. 215 (1918), which held that breaking news or “hot news” was the “quasi- property” of a news-gathering organization, and was therefore subject to protection against a competitor’s interference. The court found that New York law governs the case, since the AP is headquartered in New York and suffered the alleged injury there, and AHN is alleged to maintain an office and/or bureau in New York. Having determined what law to apply, the court further held that misappropriation of “hot news” remains viable under New York law and is not preempted by federal law. Accordingly, the court denied the motion to dismiss the misappropriation claim.

The court also denied AHN’s motion to dismiss the AP’s claim that AHN violated the DMCA by removing and/or altering copyright-management information from AP news reports. The DMCA defines “copyright management information” as including “the name of, and other identifying information about, the copyright owner of the work, including the information set forth in a notice of copyright.” 17 U.S.C. § 1202(c)(3). AHN argued that the DMCA should be construed to apply only “to protect copyright management performed by the technological measures of automated systems.” However, the court stated that the cases relied on by AHN relied heavily on the DMCA’s legislative history and found that legislative history should not be considered as a first resort where the statutory language is clear. The court held that AHN cited no textual support for limiting the DMCA’s application to “the technological measures of automated systems,” a phrase that appears nowhere in the statute.

The court granted AHN’s motion to dismiss the AP’s trademark and unfair competition claims under the Lanham Act, finding that both these claims are based on impermissibly conclusory allegations. However, the court declined to dismiss the state law misappropriation claims on preemption grounds because the AP contended that the claim was based on a passing-off theory.