AP Lawsuit Accuses Meltwater of Copyright Infringement, “Hot News” Misappropriation

The Associated Press (AP) filed a copyright lawsuit in federal court this morning against the Meltwater Group over the company’s Meltwater News product, charging that the competing site collects, stores, translates, and redistributes AP content to paid subscribers, but without paying the 165-year-old company a penny. Other online news aggregators like Google, Yahoo, and AOL pay licensing fees to use AP content, as do local and national newspapers and media sites.

According to the lawsuit, Meltwater generated more than $100 million in revenue in 2010, in part because it doesn’t pay a thing for content:

Meltwater’s business model is the fact that it incurs no expense to create or license the content it delivers, allowing it to reap substantial subscription fees with minium expenses while undercutting its competitors.

Instead, Meltwater charges clients a fee of at least $5,000 to $10,000 a month to use its news monitoring product, the suit alleges, incorporating copyrighted works form AP and others, but without paying for it.

AP charges that Meltwater’s “fully integrated closed system” takes web traffic away from legitimate sites that license AP content for a fee. Decreased traffic translates into fewer page views and lower ad revenue for media Web sites.

Meltwater issued a response through its public relations agent at Edelman, saying that “Meltwater respects copyright.” Without address AP’s storage claims, the defendant alleges that it “operates a complementary service that directs users to publisher websites.”

AP filed another lawsuit against “hot news” aggregator All Headline News in 2008. That lawsuit was apparently settled in 2009, the terms of which were not undisclosed.

However, AP is not without accusers who suggest that the company has unclean hands. Search Engine Land’s Danny Sullivan criticized AP for not fully disclosing how it came to source a story that he himself broke, and failing to give hm credit.

News aggregation services are here to stay. Although the phrase “hot news aggregation” seems like it was coined during the rise of the Web, that’s not the case according to lawyers at Davis Wright Tremaine, LLP.

They cite the 1918 U.S. Supreme Court case of International News Service v. Associated Press where the court ruled for AP in a case where a rival was accused of rewriting APs own content for redistribution on its competing wire service.

…one who gathers news at pains and expense, for the purpose of lucrative publication, may be said to have a quasi-property in the results of his enterprise as against a rival in the same business, and the appropriation of those results at the expense and to the damage of the one and for the profit of the other is unfair competition against which equity will afford relief.

This “quasi-property” theory could prove a hurdle for Meltwater. The company’s response today strongly hints at settlement talks, however, saying that it “hope[s] to be able to resolve this [lawsuit] through dialogue with AP.”

The AP retained Davis Wright Tremaine to prosecute its case. Lawyers representing AP include Elizabeth McNamara, Linda Steinman, and Alison B. Schary.

You can read AP’s lawsuit against Meltwater below:

Complaint (The Associated Press v. Meltwater U.S. Holdings, Inc., et al.)