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

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The trouble began when Nick Welsh, an editor with the Independent, posted a copy of an unpublished News-Press article (obtained from an unknown source) on the Independent's website.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.


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