Ironically, this is a topic of special interest to bloggers.
Some may recall that the Associated Press (AP) sent a few ill-considered letters last year to some bloggers to complain about excerpts of their articles published online without permission. In this regard, AP also proposed a fee schedule for excerpts of as little as 5 words. There was a HUGE online backlash amongst bloggers - some complained that AP's behaviour threatened their rights to "fair use" and "free speech" , some threatened to send invoices to AP for quoting their own articles and some determined to "boycott" AP by refusing to cite AP as a source or to link to AP articles on their blogs. [Note that not all of these complaints would apply in Canada as we have different standards for "fair dealing" and "freedom of expression"].
Although AP apparently never withdrew the initial "demand letter" that started all the fuss, it did subsequently announce that it was reconsidering its position with respect to blogs and it is my understanding that the proposed fee schedule was therefore withdrawn. Nevertheless, their position appears to be that it is more appropriate for blogs to use short summaries of articles written by others instead of direct quotations, even short ones, and then provide a hyperlink so that readers can view the original article in context.
It appears that AP has now refined its approach. It has reportedly launched a lawsuit in New York State against a so-called on-line news aggregator, All Headline News (AHN), alleging that AHN had improperly copied its articles and/or simply rewritten its articles for publication via its online news service. In doing so, AP is relying on copyright and an obscure US legal doctrine known as "hot news misappropriation". This legal doctrine apparently recognizes a "quasi-property" right in time-sensitive facts reported by one publisher where they are gathered at a cost to the publisher and "copied" by a competitor. There is some interesting commentary by other bloggers on this case here and here.
At the end of the day, the real issue is whether and how "real" news gatherers like AP can continue to pay journalists to gather such news for publication and make a profit if a competitor can simply "rewrite" it at minimal cost. Frankly, I suspect that AP would like to sell its headlines and articles to news aggregation services, but it can't sell what seems to be free.
The New York Times had an interesting article on March 2, 2009 about the issues and options facing the newspaper industry in this regard. [I understand that The New York Times is a member of AP].
Update: April 13, 2009
The New York Times has published a further article on this issue and the concerns of the Associated Press about news aggregators on the Internet.
Update: July 20, 2009
AP and AHN have reportedly settled this dispute out of court for an undisclosed sum and consent to an injunction against copying/summarizing AP articles in future.