• by Wendy Davis  @wendyndavis, July 14, 2009

News aggregator All Headline News has agreed to pay damages to The Associated Press to settle a lawsuit for allegedly misappropriating "hot news."

All Headline News also agreed that it won't "make competitive use of content or expression" from the AP, according to a joint statement on the AP's Web site. The aggregator also acknowledged it had improperly used AP's content without the wire service's consent, but didn't elaborate.

While the settlement doesn't have set any formal precedent, the concessions made by All Headline News could informally spell trouble for other sites that aggregate original stories, says Sam Bayard, assistant director at the Citizen Media Law Project. "It's not terribly good news for aggregators," Bayard says. "It looks like it settled on favorable terms to the AP, with All Headline News admitting they had done something wrong and agreeing not to do it any more. That sends a message that the AP has a relatively strong legal claim."

The AP sued All Headline News last year, alleging that the aggregator was "free-riding" on AP's news by summarizing reports online. The AP argued that rewriting its stories constituted a misappropriation of "hot news" -- a doctrine that dates back to 1918, when the AP successfully sued a rival, International News Service, for allegedly rewriting and distributing early versions of AP stories.

All Headline News responded that modern legal doctrine doesn't allow a news publisher to claim ownership in facts published on public Web sites and asked U.S. District Court Judge Kevin Castel in New York to dismiss the case before trial.

Castel declined to do so, ruling that the AP should have the opportunity to prove in court that All Headline News had improperly summarized AP stories.

"A cause of action for misappropriation of hot news remains viable under New York law," Castel ruled in February. He indicated that the AP would have to prove that All Headline News was "free riding" on "time-sensitive" information to prevail.

But had the case proceeded to trial, it's not clear who would have prevailed. For one thing, proving that facts are "time-sensitive" might be extremely difficult in the digital era, where news routinely spreads within minutes, Bayard says. "The idea of what was time-sensitive in 1918 is much different than what is time-sensitive now," Bayard says.

Additionally, the AP might have had trouble proving that All Headline News copied AP stories as opposed to reports from numerous other blogs and publications.

While the AP included examples with its the legal papers, those examples don't specify when and where the news first broke. For instance, the AP called the court's attention to an Oct. 15, 2007 story about upcoming job cuts at AOL. A date stamp on the AP's story indicates that one version went out on the wire at 11:29 EST (though it's possible that the AP sent out a different iteration of the story earlier than that).

But other publications also reported the news that day. Kara Swisher at All Things Digital (owned by Dow Jones) posted the memo in its entirety at 11:07 a.m. EST. Numerous other blogs and mainstream media outlets also wrote about the layoffs that morning, according to Techmeme.

All Headline News ran a story time-stamped 12:47 p.m. EST, according to the AP's court papers. That story credited Dow Jones publication The Wall Street Journal with obtaining the memo.