Acquisition by Creation

• Author: Christian Turner
• Pages: 291-604

3. Acquisition by Creation

3.1. Unfair Competition

International News Service v. Associated Press, 248

U.S. 215 (1918)

Messrs. Samuel Untermyer, of New York City, Hiram W.

Johnson, of San Francisco, Cal., and Henry A. Wise and

William A De Ford, both of New York City, for petitioner.

Mr. Frederic W. Lehmann, of St. Louis, Mo., for respondent.

MR. JUSTICE PITNEY delivered the opinion of the Court.

The parties are competitors in the gathering and

distribution of news and its publication for profit in

newspapers throughout the United States. The Associated

Press, which was complainant in the District Court, is a co -

operative organization, incorporated under the

Membership Corporations Law of the state of New York,

its members being individuals who are either proprietors or

representatives of about 950 daily newspapers published in

all parts of the United States. That a corporation may be

organized under that act for the purpose of gathering news

for the use and benefit of its members and for publication

in newspapers owned or represented by them, is recognized

by an amendment enacted in 1901 (Laws N. Y. 1901, c.

436). Complainant gathers in all parts of the world, by

means of various instrumentalities of its own, by exchange

with its members, and by other appropriate means, news

and intelligence of current and recent events of interest to

newspaper readers and distributes it daily to its members

for publication in their newspapers. The cost of the service,

amounting approximately to $3,500,000 per annum, is

assessed upon the members and becomes a part of their

costs of operation, to be recouped, presumably with profit,

through the publication of their several newspapers. Under

complainant’s by-laws each member agrees upon assuming

membership that news received through complainant’s

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service is received exclusively for publication in a particular

newspaper, language, and place specified in the certificate

of membership, that no other use of it shall be permitted,

and that no member shall furnish or permit any one in his

employ or connected with his newspaper to furnish any of

complainant’s news in advance of publication to any person

not a member. And each member is required to gather the

local news of his district and supply it to the Associated

Press and to no one else.

Defendant is a corporation organized under the laws of the

state of New Jersey, whose business is the gathering and

selling of news to its customers and clients, consisting of

newspapers published throughout the United States, under

contracts by which they pay certain amounts at stated times

for defendant’s service. It has widespread news-gathering

agencies; the cost of its operations amounts, it is said, to

more than $2,000,000 per annum; and it serves about 400

newspapers located in the various cities of the United

States and abroad, a few of which are represented, also, in

the membership of the Associated Press.

The parties are in the keenest competition between

themselves in the distribution of news throughout the

United States; and so, as a rule, are the newspapers that

they serve, in their several districts.

Complainant in its bill, defendant in its answer, have set

forth in almost identical terms the rather obvious

circumstances and conditions under which their business is

conducted. The value of the service, and of the news

furnished, depends upon the promptness of transmission,

as well as upon the accuracy and impartiality of the news; it

being essential that the news be transmitted to members or

subscribers as early or earlier than similar information can

be furnished to competing newspapers by other news

services, and that the news furnished by each agency shall

not be furnished to newspapers which do not contribute to

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the expense of gathering it. And further, to quote from the

answer:

Prompt knowledge and publication of

worldwide news is essential to the

conduct of a modern newspaper, and

by reason of the enormous expense

incident to the gathering and

distribution of such news, the only

practical way in which a proprietor of

a newspaper can obtain the same is,

either through co-operation with a

considerable number of other

newspaper proprietors in the work of

collecting and distributing such news,

and the equitable division with them

of the expenses thereof, or by the

purchase of such news from some

existing agency engaged in that

business.

The bill was filed to restrain the pirating of complainant’s

news by defendant in three ways: First, by bribing employes

of newspapers published by complainant’s members to

furnish Associated Press news to defendant before

publication, for transmission by telegraph and telephone to

defendant’s clients for publication by them; second, by

inducing Associated Press members to violate its by-laws

and permit defendant to obtain news before publication;

and, third, by 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.

The District Court, upon consideration of the bill and

answer, with voluminous affidavits on both sides, granted a

preliminary injunction under the first and second heads, but

refused at that stage to restrain the systematic practice

admittedly pursued by defendant, of taking news bodily

from the bulletin boards and early editions of complainant’s