Business Torts

Crazy Legal Battle Between Newspapers Settles, But Leaves Worrisome Fair Use Decision Intact

Sam Bayard — Wed, 07 May 2008 22:49:31 -0400

Many readers are probably familiar with the meltdown of the Santa Barbara News-Press, a local daily newspaper in Santa Barbara, California. Starting in 2006, reporters and editors of the newspaper clashed with now-infamous Wendy McCaw, controlling shareholder of Ampersand Publishing LLC, which owns the paper. Tensions swirled around McCaw's perceived intervention in editorial and reporting judgments, traditionally left to the paper's professional staff. The controversy resulted in a slew of resignations and firings, chronicled in the documentary film, Citizen McCaw. The brouhaha spurred a bizarre lawsuit over copyright infringement, which pitted the News-Press against another local paper, the Santa Barbara Independent. According to the Independent, the defendant in the lawsuit, the case recently settled. While this might come as a relief to the Independent, it leaves a questionable fair use decision on the books.

The trouble began when Nick Welsh, an editor with the Independent, posted a copy of an unpublished News-Press article (obtained from an unknown source) on the Independent's website. The draft article, written by former News-Press reporter Scott Hadley, provided a fact-based account of the resignations of several key News-Press staffers. When the News-Press declined to publish Hadley's article and instead published a "note to readers" from Wendy McCaw, Hadley resigned in protest. Approximately a week later, the draft article showed up mysteriously at the Independent's office, and Nick Welsh used it to write a critical blost post -- Angry Poodle: The Poodle Barks Again. The post commented on Hadley's resignation and criticized the News-Press for publishing McCaw's "note to readers" instead of Hadley's article. Welsh included a hyperlink in the post that led to a scanned PDF copy of the entire Hadley draft hosted on the Independent site. According to Welsh, he posted the draft in order to expose and criticize what he saw as the censorship of an unflattering article.

Ampersand Publishing sued the Independent in federal court in California, claiming that Welsh's posting of the draft article constituted copyright infringement. The complaint included other legal claims, including a crazy theory that the Independent had misappropriated the News-Press's trade secrets by acquiring and publishing the draft article. For details on the lawsuit and links to court documents, see our database entry, Ampersand Publishing v. Santa Barbara Independent. The most interesting legal issue in the case is fair use, and the Independent asked the court back in September to grant it summary judgment on that ground. At the same time, the News-Press moved for summary judgment as well, arguing that Welsh's use was not fair as a matter of law. Despite the newsworthiness of the very existence of the draft article itself, and the clearly critical bent of Welsh's use of it, the court held in a November 2007 decision that it was not fair use, essentially handing a victory to the News-Press on its copyright claim. I would have blogged about this decision earlier if I had known about it, but I just found it today, so here goes.

On the first fair use factor -- the purpose and character of the use -- the court found that the Independent's use of the draft article for purposes of criticism was "transformative," but found that it used more of the article than was necessary to achieve its critical purpose. The court noted that another local paper, the Santa Barbara Nexus, had also published an account of the resignations relying on the draft article, but had only summarized the article's contents and selected a few quotes, without publishing it in its entirety. The court's reasoning, while not wholly unreasonable, disregards the fact that Welsh's objective in using the article may have been different from that of the Nexus. He wasn't simply reporting on the resignations. He was criticizing the paper for publishing "defensive editorializing" (his lawyers' words) rather than Hadley's unflattering factual account. If we credit the Independent's argument, as the court was obliged to do on a motion for summary judgment, Welsh used the article to set up a contrast between two drastically different accounts, and it is not clear that he could have achieved this contrast effectively without using the entire Hadley draft. At least in this author's view, it is dangerous to have a court taking such a narrow view of what is and is not necessary for successful criticism. The court's conclusion on this first factor also poisoined its analysis of the third fair use factor -- the amount and substantiality of the portion used.

Perhaps the greater blunder was the court's analysis of the fourth fair use factor -- the effect of the use upon the potential market for or value of the copyrighted work. Here, it is hard to get past the obvious conclusion that the Independent's use could not have harmed the market for the draft article because there was not, and never could be, a market for a draft article that the News-Press had decided not to publish. Moreover, the news content in the draft article was stale -- the local and national press had already covered the events referred to in it. And, because of its critical character, Welsh's use of the draft did not function as a substitute for the original work, which is the type of economic harm that copyright law protects against. The court danced around these issues, relying on what looks to me like formalist reasoning wholly divorced from the actual economic realities at stake.

Admittedly, other courts have held that a plaintiff's decision not to publish a work does not mean there is no harm to the "potential market" for it, and the Supreme Court has indicated that fair use has a narrower scope when it comes to unpublished works. But those cases involved unpublished works that possess great economic potential (e.g., J.D. Salinger's unpublished letters, which would go for millions) or works on their way to publication (like Time's interview with President Ford). Here, even if the News-Press changed its mind and decided to publish Hadley's draft article, it would be worthless from an economic standpoint (and was already largely worthless at the time Hersh posted it). This case looks more like Online Policy Group v. Diebold, Inc., 337 F. Supp. 2d 1195 (N.D. Cal. 2004), where the court held that Internet posting of unpublished Diebold emails was fair use, in part because of the critical purpose of the use and in part because there was no conceivable market for the emails. In addition, in this case, as in Diebold, it is apparent that the reason the copyright owner was asserting copyright was to suppress criticism and commentary, not to protect its economic interests from a substitive use.

So, the lawsuit is over and the newspapers can go back to their business. But, because there will be no appeal to the Ninth Circuit on the fair use ruling, we're left with what I fear may be a dangerous precedent for cases involving critical uses of copyrighted materials on the Internet. Maybe the facts are too unique to make this case cause for much concern. I don't know, I'm still digesting it.

Anthony Ciolli, former AutoAdmit Defendant, Sues Everyone

Sam Bayard — Wed, 05 Mar 2008 16:46:56 -0500

Breaking news from Above the Law: Anthony Ciolli, former defendant in the controversial AutoAdmit case, has filed a lawsuit in Pennsylvania state court against the two plaintiffs in that case, their lawyers, ReputationDefender and one of its employees, and the shadowy "T14 Talent." He alleges wrongful initiation of civil proceedings, abuse of process, libel, slander, false light invasion of privacy, tortious interference with contract, and unauthorized use of name or likeness. It looks like Ciolli has outed one of the pseudonymous defendants in the AutoAdmit case -- "pauliewalnuts."

Here's the complaint -- we're still digesting it.

Update: I didn't mean to be snarky about this lawsuit. Assuming that his allegations are true, I have a lot of sympathy for Ciolli, and he appears to have some actionable claims. Marc Randazza, his attorney in the AutoAdmit case, has a thoughtful post on the new lawsuit.

Krinsky v. Doe 6: New Decision from California Provides Strong Protection for Anonymous Speech

Sam Bayard — Thu, 07 Feb 2008 19:18:19 -0500

A California appellate court issued a new anonymity decision yesterday in Krinsky v. Doe 6, H030767 (Cal. Ct. App. Feb. 6, 2008). (For background on the facts of the case, see the CMLP database entry, Krinsky v. Doe 6.) In line with the recent trend towards increased protection for anonymous speech online, the California court came out with a test that puts a significant evidentiary burden on a plaintiff before allowing disclosure of an anonymous Internet speaker's identity.

The court explicitly rejected the lenient "good faith" standard applied in In re Subpoena Duces Tecum to America Online, 2000 WL 1210372 (Vir. Cir. Ct. Jan. 31, 2000), indicating that this test "offers no practical, reliable way to determine the plaintiff's good faith and leaves the speaker with little protection." Interestingly, however, the court also declined to follow Doe v. Cahill, 884 A.2d 451 (Del. 2005), arguing that the "summary judgment" terminology used in that case is "unnecessary and potentially confusing."

Nevertheless, the Krinksy test functions a lot like the Cahill test, with different language used to describe what's going on. Krinsky requires a plaintiff to make a "prima facie showing" that he or she has a valid legal claim against the anonymous speaker before allowing disclosure of the speaker's identity. The court made it clear that the prima facie showing required Krinsky to bring forward evidence (not just allegations) to support each element of her claims, except for those elements that were beyond her control or dependent on the identity of the defendant. Because this test requires evidence, appears to offer the defendant the opportunity to introduce counter-arguments and evidence, and includes a softening of the test for elements outside the plaintiff's control, it's hard to pinpoint how this is different from the operative part of the Cahill test.

Applying it to the evidence before it, the court came to the wholly justified conclusion that your average bit of forum "flaming" and "juvenile name-calling" cannot reasonably be understood as stating actual facts about a person, and thus it is opinion protected by the First Amendment. The court's language is quite compelling (at least if you buy in to U.S.-style protection for speech or you're a forum troll that wants to go about your business relatively unfettered):

We likewise conclude that the language of Doe 6's post, together with the surrounding circumstances -- including the recent public attention to SFBC's practices and the entire "SFBC" message-board discussion over a two-month period -- compels the conclusion that the statements of which plaintiff complains are not actionable. Rather, they fall into the category of crude, satirical hyperbole which, while reflecting the immaturity of the speaker, constitute protected opinion under the First Amendment. It hardly need be said that this conclusion should not be interpreted to condone Doe 6's rude and childish posts; indeed, his intemperate, insulting, and often disgusting remarks understandably offended plaintiff and possibly many other readers. Nevertheless, "the fact that society may find speech offensive is not a sufficient reason for suppressing it. Indeed, if it is the speaker's opinion that gives offense, that consequence is a reason for according it constitutional protection."

Aren't you just dying to know what Doe 6 (aka "Senor_Pinche_Wey") actually said? Well, I'm not going to get into that. If you're too lazy to wade through the court opinion, Ars Technica has the juicy details.

New School of Orlando v. McSween: Florida School Sues Blogging Parent for Defamation

Sam Bayard — Tue, 20 Nov 2007 18:03:54 -0500

On October 26, 2007, the New School of Orlando sued Sonjia McSween, the parent of a former student, in Florida state court, asserting claims of libel, slander, and tortious interference with business relations.

According to the New School's complaint, McSween started a blog called "Say NO to New School of Orlando" (no longer active) after withdrawing her daughter from the school during her first grade year. On the blog, McSween criticized the school's treatment of students and described her family's negative experience with the school. Attached to the complaint are copies of the relevant pages from McSween's blog. Some of the statements described as defamatory in the New School's complaint include:

Who should choose New School of Orlando?
If your child is a mini Stepford Wife, this may very well be the school for you. If your child thrives under extreme stress and dictatorial conditions, this may well be the school for you. If your child doesn't mind being belittled, this may be the school for you. If your child loves to have work belittled because letters are not perfectly formed, this may be the school for you. If your child doesn't mind not having his/her emotional needs met, this may very well be the school for you.
Who shouldn't choose New School of Orlando?:
If your child needs love, in the form of hugs or even just genuine praise for a job well done, this isn't the school for you. If your child becomes anxious under undue stress, this isn't the school for you. If your child has any emotional, learning or physical problems (even minor such as ADD, ADHD) this isn't the school for you. If your child doesn't fit into a perfect mold, this isn't the school for you. If you as a parent do not appreciate being told how to run your home when your child isn't at school, then this definitely isn't the school for you.

The complaint also objects to a statement speculating that the New School might have been receiving "kick-backs" from a school psychologist in return for student referrals.

In response to complaints from the school, McSween moved the disputed statements first to another blog, and then to her MySpace page. (For more details, please see the CMLP's related database entries, New School of Orlando v. McSween and New School of Orlando Preparatory v. McSween (Letters).)

On first glance, most of McSween's statements do not appear to make or imply factual statements that can be proven true or false. What exactly are "dictatorial conditions" and who's to say when a child is under "extreme stress"? How can the school show that it meets the emotional needs of its students? Plus, the "If your child" refrain contributes to an overall sense of hyperbole rather than to assertions of concrete fact.

The statement about "kick-backs" is potentially a different matter. This sounds like a statement of fact, and a damaging one at that. But look at the statement in context (excerpted from attachments to the New School's complaint):

The 2006-2007 school year brought new questions as pieces started to fall into place. Was it possible that New School of Orlando was receiving kick-backs from Dr. Collier for these referrals? Why was the school so adamant that the parents use Dr. Collier's services? And why were 95% of the children referred for testing from homes New School calls "Problem Homes" - children of single parents, children of divorced parents and mixed race children? From my point-of-view these children were all bright and VERY NORMAL.

To be sure, putting a question mark at the end of her sentences doesn't insulate McSween from liability. On the other hand, she expresses the "kick-backs" statement as speculation or opinion based on underlying facts -- that the school was "adamant" about using those services; that 95% of children referred were from "problem homes," but were otherwise normal. If these underlying factual assertions are true, then McSween might be entitled to state her opinion even if it's wrong or unreasonable, but this is certainly not an easy call.

One last point: some of the news reports (here, here, and here) are indicating that the school sued McSween "to stop her from publishing and talking about the school . . . ." Stated this way, the lawsuit seems a more outrageous infringement on free speech than it really is. Like many complaints in defamation actions, the New School complaint requests an injunction prohibiting McSween from "making any further defamatory, libelous, slanderous, and/or disparaging statements regarding New School, on or through any media, and such other and further relief as the Court may deem proper." Courts rarely grant these kinds of injunctions, even if narrowed to apply only to statements found defamatory after trial. But see Balboa Island Village Inn, Inc. v. Lemen, 156 P.3d 339 (Cal. 2007) (injunction barring speech that trial court found defamatory not invalid prior restraint, but overbroad to extent it prohibited defendant from presenting her grievances to government officials). In any event, this is a far cry from seeking an injunction barring McSween from "publishing and talking about the school."