iCopyright Sues Associated Press For Breach of Contract, Unfair Competition

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iCopyright's two-year-old deal with The Associated Press to license the use of its excerpts online has unraveled, landing the companies in federal court where iCopyright is suing for breach of contract and unfair competition.

In a complaint filed late last month in federal district court in New York, iCopyright alleges that The AP didn't fulfill its promise to promote iCopyright's service. Additionally, iCopyright alleges that the AP was developing its own licensing service, or "news registry" while it "had access to and knowledge of iCopyright's confidential information."

The AP said in a statement that the lawsuit was "meritless."

The news organization added in court papers that it terminated iCopyright's contract because it had not paid the AP an agreed-upon minimum $15,000 per month since March. The AP also said that it developed its news registry independently of iCopyright.

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The companies' business arrangement dates to April of 2008, when the AP tapped iCopyright to monetize AP articles online by charging online publishers for reposting excerpts. iCopyright's automated platform allows online publishers to insert text from AP stories by cutting and pasting it, and then charges based on how much is used. Rates for AP stories range from $17.50 for up to 50 words to $100 for more than 251 words, according to iCopyright's Web site.

The arrangement appears to have fallen apart this spring, at around the same time that the Department of Justice's antitrust division cleared the AP's news registry, stating that it "is not likely to reduce competition among news content owners and could provide procompetitive benefits to both participating content owners and content users."

The AP says in its court papers that it terminated iCopyright's contract because the company was $130,000 in arrears, having failed to pay the AP the minimum $15,000 monthly fee since March.

The AP also said in court papers that it has long been developing its own registry. "AP did not need iCopyright to teach it about the risks and revenue opportunities presented by Internet use of news content, or the need for new technological approaches," the wire service argues. "One of these solutions is the AP News Registry, which is a technological platform intended (among other things) to monitor and report on what news content is being published online by whom, when, where, and for how long, and to determine what rights and licensing rules are being followed (or not followed)."

iCopyright alleges in its lawsuit that it was informed in a Nov. 15 email that its service was being terminated. Shortly afterward, it was denied access to the AP's servers, according to the complaint. In addition, iCopyright alleges, the AP misappropriated iCopyright's labors, skills, expenditures, and goodwill" to create an AP registry.

iCopyright is seeking monetary damages and an injunction requiring the AP to fulfill the contract.

U.S. District Court Judge Naomi Reice Buchwald denied iCopyright's request for an emergency restraining order, but will still consider whether to issue an injunction in the next several weeks.

Among the lawyers representing iCopyright are the same antitrust team from Cadwalader, Wickersham & Taft that is currently taking on Google in two cases.

Long before this lawsuit, some observers had questioned the iCopyright deal, saying that Web publishers don't necessarily need to license brief excerpts, given that people have the right to make fair use of copyrighted material -- which generally includes reprinting brief portions of articles.

iCopyright's platform was called into question last year by New York Law School professor James Grimmelmann, who reported on his blog that he paid the AP $12 to license a 26-word Thomas Jefferson quote, which has long been in the public domain.

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