propriating outright news gathered by it, of tak-, use of it shall be permitted, and that no ing news items published by defendant's sub- member shall furnish or permit any one in scribers as tips to be investigated, and using his employ or connected with his newspaper the news, if verified by investigation, a practice to furnish any of complainant's news in adfollowed by defendant and by news agencies generally, held not shown to fix on complainant member. And each member is required to vance of publication to any person not a gather the local news of his district and sup

the taint of unclean hands.

Mr. Justice Brandeis, dissenting, and Mr.

Justice Holmes and Mr. Justice McKenna, dis-ply it to the Associated Press and to no one

else.

senting in part.

On Writ of Certiorari to the United States Circuit Court of Appeals for the Second Circuit.

Suit in equity by the Associated Press against the International News Service. An order of the District Court, granting a preliminary injunction (240 Fed. 983), was modified by the Circuit Court of Appeals (245 Fed. 244, 157 C. C. A. 436), and defendant brings

certiorari. Affirmed.

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.

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,

*Mr. Justice PITNEY delivered the opin- in their several districts.

ion of the Court.

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

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 ers and distributes it daily to its members for publication in their newspapers. The cost of the service, amounting approximate ly 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 The bill was filed to restrain the pirating their several newspapers. Under complain-of complainant's news by defendant in three ant's by-laws each member agrees upon as- ways: First, by bribing employés of newssuming membership that news received papers published by complainant's members through complainant's service is received ex- to furnish Associated Press news to defendclusively for publication in a particular ant before publication, for transmission by newspaper, language, and place specified in telegraph and telephone to defendant's clithe certificate of membership, that no other ents for publication by them; second, by

"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 read-considerable number of other newspaper prothe same is, either through co-operation with a prietors 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."

232

Inducing Associated Press members to vio-ed. It is said that it could not, in practice, late its by-laws and permit defendant to be copyrighted, because of the large number obtain news before publication; and, third, of dispatches that are sent daily; and, acby copying news from bulletin boards and cording to complainant's contention, news is from early editions of complainant's news- not within the operation of the copyright papers and selling this, either bodily or aft- act. Defendant, while apparently conceding er rewriting it, to defendant's customers. this, nevertheless invokes the analogies of the law of literary property and copyright, | insisting as its principal contention that, assuming complainant has a right of property in its news, it can be maintained (unless the copyright act be complied with) only by being kept secret and confidential, and that upon the publication with complainant's consent of uncopyrighted news of any of complainant's members in a newspaper or upon a bulletin board, the right of property is lost, and the subsequent use of the news by the public or by defendant for any purpose whatever becomes lawful.

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 newspapers and selling it as its own. The court expressed itself as satisfied that this practice amounted to unfair trade, but as the legal question was one of first impression it considered that the allowance of an injunction should await the outcome of an appeal. 240 Fed. 983, 996. Both parties having appealed, the Circuit Court of Appeals sustained the injunction order so far as it went, and upon complainant's appeal modified it and remanded the cause, with directions to issue an injunction also against any bodily taking of the words or substance of complainant's news until its commercial value as news had passed away. 245 Fed. 244, 253, 157 C. C. A. 436. The present writ of certiorari was then allowed. | 245 U. S. 644, 38 Sup. Ct. 10, 62 L. Ed. 528. The only matter that has been argued before us is whether defendant may lawfully be restrained from appropriating news taken from bulletins issued by complainant or any of its members, or from newspapers published by them, for the purpose of selling it to defendant's clients. Complainant asserts that defendant's admitted course of conduct in this regard both violates complainant's property right in the news and constitutes unfair competition in business. And notwithstanding the case has proceeded only to the stage of a preliminary injunction, we [3] *In considering the general question of have deemed it proper to consider the un- property in news matter, it is necessary to derlying questions, since they go to the very recognize its dual character, distinguishing merits of the action and are presented up-between the substance of the information on facts that are not in dispute. As pre- and the particular form or collocation of sented in argument, these questions are: words in which the writer has communicat(1) Whether there is any property in news; ed it. (2) whether, if there be property in news collected for the purpose of being published, it survives the instant of its publication in the first newspaper to which it is communicated by the news-gatherer; and (3) whether defendant's admitted course of conduct in appropriating for commercial use matter taken from bulletins or early editions of Associated Press publications constitutes unfair competition in trade.

[1, 2] A preliminary objection to the form in which the suit is brought may be disposed of at the outset. It is said that the Circuit Court of Appeals granted relief upon considerations applicable to particular members of the Associated Press, and that this was erroneous because the suit was brought by complainant as a corporate entity, and not by its members; the argument being that their interests cannot be protected in this proceeding any more than the individual rights of a stockholder can be enforced in an action brought by the corporation. From the averments of the bill, however, it is plain that the suit in substance was brought for the benefit of complainant's members, and that they would be proper parties, and, except for their numbers, perhaps necessary parties. Complainant is a proper party to conduct the suit as representing their interest; and since no specific objection, based upon the want of parties, appears to have been made below, we will treat the objection as waived. See Equity Rules 38, 43, 44 (33 Sup. Ct. xxix, xxx).

[4] No doubt news articles often possess a literary quality, and are the subject of literary property at the common law; nor do we question that such an article, as a literary production, is the subject of copyright by the terms of the act as it now stands. In an early case at the circuit Mr. Justice Thompson held in effect that a newspaper was not within the protection of the copyright acts of 1790 (1 Stat. 124) and 1802 (2 Stat. 171). The federal jurisdiction was invoked be- Clayton v. Stone, 2 Paine, 382, Fed. Cas. No. cause of diversity of citizenship, not upon 2,872. But the present act is broader; it the ground that the suit arose under the provides that the works for which copyright copyright or other laws of the United States. may be secured shall include "all the writComplainant's news matter is not copyright-ings of an author," and specifically men

|

*234

tions "periodicals, including newspapers." The parties are competitors in this field; and, Act of March 4, 1909, c. 320, §§ 4 and 5, 35 Stat. 1075, 1076 (Comp. St. 1916, §§ 9520, 9521). Evidently this admits to copyright a contribution to a newspaper, notwithstanding it also may convey news; and such is the practice of the copyright office, as the newspapers of the day bear witness. See Copyright Office Bulletin No. 15 (1917) pp. 7, 14, 16, 17.

on fundamental principles, applicable here as elsewhere, when the rights or privileges of the one are liable to conflict with those of the other, each party is under a duty so to. conduct its own business as not unnecessarily or unfairly to injure that of the other. Hitchman Coal & Coke Co. v. Mitchell, 245 U. S. 229, 254, 38 Sup. Ct. 65, 62 L. Ed. 280, L. R. A. 1918C, 497, Ann. Cas. 1918B, 461.

est in its publication as may be protected due to the earth's rotation, the distribution from interference, has been raised many of news matter throughout the country is times, although never, perhaps, in the pre- principally from east to west; and, since in cise form in which it is now presented. speed the telegraph and telephone easily outstrip the rotation of the earth, it is a simple matter for defendant to take complainant's news from bulletins or early editions of complainant's members in the eastern cities and at the mere cost of telegraphic transmission cause it to be published in western papers issued at least as early as those served by complainant. Besides this, and irrespective of time differentials, irregularities in telegraphic transmission on different lines, and the normal consumption of time in printing and distributing the newspaper, result in permitting pirated news to be placed in the hands of defendant's readers sometimes simultaneously with the service *of competing Associated! Press papers, occasionally even earlier.

Board of Trade v. Christie Grain & Stock Co., 198 U. S. 236, 250, 25 Sup. Ct. 637, 49 L. Ed. 1031, related to the distribution of quotations of prices on dealings upon a board of trade, which were collected by plaintiff and communicated on confidential terms to numerous persons under a contract not to make them public. This court held that, apart from certain special objections that were overruled, plaintiff's collection of quo tations was entitled to the protection of the law; that, like a trade secret, plaintiff might keep to itself the work done at its expense, and did not lose its right by communicating the result to persons, even if many, in confidential relations to itself, under a contract not to make it public; and that strangers should be restrained from getting at the knowledge by inducing a breach of trust.

*239

Defendant insists that when, with the sanction and approval of complainant, and as the result of the use of its news for the very purpose for which it is distributed, a portion of complainant's members communicate it to the general public by posting it upon bulletin boards so that all may read, or by issuing it to newspapers and distributing it indiscriminately, complainant no longer has the right to control the use to be made of it; that when it thus reaches the light of day it becomes the common possession of all to whom it is accessible; and that any purchaser of a newspaper has the right to communicate the intelligence which it contains to anybody and for any purpose, even for the purpose of selling it for profit to newspapers published for profit in competition with complainant's members.

The fault in the reasoning lies in applying as a test the right of the complainant as against the public, instead of considering the rights of complainant and defendant, competitors in business, as between themselves. The right of the purchaser of a single newspaper to spread knowledge of its contents gratuitously, for any legitimate purpose not unreasonably interfering with complainant's right to make merchandise of it, may be admitted; but to transmit that news for commercial use, in competition with complainant-which is what defendant has done and seeks to justify-is a very different matter. In doing this defendant, by its very act, admits that it is taking material that has [10, 11] The peculiar features of the case been acquired by complainant as the result of arise from the fact that, while novelty and organization and the expenditure of labor, freshness form so important an element in the skill, and money, and which is salable by success of the business, the very processes of complainant for money, and that defendant distribution and publication necessarily oc-in appropriating it and selling it as its own cupy a good deal of time. Complainant's is endeavoring to reap where it has not sown, service, as well as defendant's, is a daily serv- and by disposing of it to newspapers that are, ice to daily newspapers; most of the foreign competitors of complainant's members is apnews reaches this country at the Atlantic propriating to itself the harvest *of those who seaboard, principally at the city of New York, have sown. Stripped of all disguises, the and because of this, and of time differentials process amounts to an unauthorized interfer

In National Tel. News Co. v. Western Union Tel. Co., 119 Fed. 294, 56 C. C. A. 198, 60 L. R. A. 805, the Circuit Court of Appeals for the Seventh Circuit dealt with news matter gathered and transmitted by a telegraph company, and consisting merely of a notation of current events having but a transient value due to quick transmission and distribution; and, while declaring that this was not copyrightable although printed on a tape by tickers in the offices of the recipients, and that it was a commercial not a literary product, nevertheless held that the business of gathering and communicating the news-the service of purveying it-was a legitimate business, meeting a distinctive commercial want and adding to the facilities of the business *world, and partaking of the nature of property in a sense that entitled it to the protection of a court of equity against piracy.

Other cases are cited, but none that we deem it necessary to mention.

Not only do the acquisition and transmission of news require elaborate organization and a large expenditure of money, skill, and effort; not only has it an exchange value to the gatherer, dependent chiefly upon its novelty and freshness, the regularity of the service, its reputed reliability and thoroughness, and its adaptability to the public needs; but also, as is evident, the news has an exchange value to one who can misappropriate it.

ence with the normal operation of complain-, members of their reasonable opportunity to ant's legitimate business precisely at the obtain just returns for their expenditures. point where the profit is to be reaped, in or- It is to be observed that the view we adopt der to divert a material portion of the profit does not result in giving to complainant the from those who have earned it to those who right to monopolize either the gathering or have not; with special advantage to defend- the distribution of the news, or, without ant in the competition because of the fact complying with the copyright act, to prevent that it is not burdened with any part of the the reproduction of its news articles, but only expense of gathering the news. The trans- postpones participation by complainant's action speaks for itself and a court of equity competitor in the processes of distribution ought not to hesitate long in characterizing and reproduction of news that it has not it as unfair competition in business. gathered, and only to the extent necessary to prevent that competitor from reaping the fruits of complainant's efforts and expenditure, to the partial exclusion of complainant, and in violation of the principle that underlies the maxim "sic utere tuo," etc.

The underlying principle is much the same as that which lies at the base of the equitable theory of consideration in the law of trusts that he who has fairly paid the price should have the beneficial use of the property. Pom. Eq. Jur. § 981. It is no answer to say that complainant spends its money for that which is too fugitive or evanescent to be the subject of property. That might, and for the purposes of the discussion we are assuming that it would furnish an answer in a common-law controversy. But in a court of equity, where the question is one of unfair competition, if that which complainant has acquired fairly at substantial cost may be sold fairly at substantial profit, a competitor who is misappropriating it for the purpose of disposing of it to his own profit and to the disadvantage of complainant cannot be heard to say that it is too fugitive or evanescent to be regarded as property. It has all the attributes of property necessary for determining that a misappropriation of it by a competitor is unfair competition because contrary to good conscience.

[13] It is said that the elements of unfair competition are lacking because there is no attempt by defendant to palm off its goods as those of the complainant, characteristic of the most familiar, if not the most typical, cases of unfair competition. Howe Scale Co. v. Wyckoff, Seamans, etc., 198 U. S. 118, 140,, 25 Sup. Ct. 609, 49 L. Ed. 972. But we cannot concede that the right to equitable relief is confined to that class of cases. In the present case the fraud upon complainant's rights is more direct and obvious. Regarding news matter as the mere material from which these two competing parties are endeavoring to make money, and treating it, therefore, as quasi property for the purposes of their business because they are both selling it as such, defendant's conduct differs from the ordinary case of unfair competition in trade principally in this that, instead of selling its own goods as those of complainant, it substitutes misappropriation in the place of misrepresentation, and sells complainant's goods as its own.

Besides the misappropriation, there are elements of imitation, of false pretense, in defendant's practices. The device of rewriting complainant's news articles, frequently resorted to, carries its own comment. The habitual failure to give credit to complainant for that which is taken is significant. Indeed, the entire system of appropriating

[12] The contention that the news is abandoned to the public for all purposes when published in the first newspaper is untenable. Abandonment is a question of intent, and the entire organization of the Associated Press negatives such a purpose. The cost of the service would be prohibited if the reward were to be so limited. No single *newspaper, no small group of newspapers, could sustain the expenditure. Indeed, it is one of the most obvious results of defendant's theory that, by permitting indiscriminate publication by anybody and everybody for purposes complainant's news and transmitting it as a of profit in competition with the news-gath-commercial product to defendant's clients erer, it would render publication profitless, and patrons amounts to a false representaor so little profitable as in effect to cut off tion to them and to their newspaper readers the service by rendering the cost prohibitive that the news transmitted is the result of in comparison with the return. The practi- defendant's own investigation in the field. cal needs and requirements of the business But these elements, although accentuating are reflected in complainant's by-laws which the wrong, are not the essence of it. It is have been referred to. Their effect is that something more than the advantage of celebpublication by each member must be deemed rity of which complainant is being deprived. not by any means an abandonment of the news to the world for any and all purposes, but a publication for limited purposes; for the benefit of the readers of the bulletin or the newspaper as such; not for the purpose of making merchandise of it as news, with

[14] The doctrine of unclean hands is invoked as a bar to relief; it being insisted that defendant's practices against which complainant seeks an injunction are not different from the practice attributed to complainant, of utilizing defendant's news published by the result of depriving complainant's other its subscribers. At this point it becomes