Publisher Claims Sources Are 'Trade Secrets'

By: Jim Rosenberg A judge on Wednesday will hear a motion to dismiss an unlikely lawsuit that would affect the practice of journalism and the business of publishing. It asserts that a competing publisher's use of sources cultivated by its reporters while employed elsewhere amounts to misappropriation of trade secrets from the reporters' former employer.

The matter arose earlier this summer when pulp-and-paper-industry publisher and trade-show producer Paperloop.com Inc. complained that forest-products industry trade publisher ForestWeb Inc. was unfairly competing by benefiting from relationships with sources that Paperloop claims as its own.

San Francisco-based Paperloop, which publishes the monthly Pulp & Paper magazine, the Pulp & Paper Week newsletter, and the paperloop.com Web site, argues in a suit that Los Angeles-based ForestWeb, its publisher, and reporters use information supplied by the same persons who were their sources while the defendants worked for Paperloop or its predecessor, Miller Freeman Inc. The suit was prepared by attorney, Laurence A. Weiss of the firm Heller, Ehrman, Weiss & McAuliffe.

Paperloop asked the court to restrain ForestWeb from contacting the sources and to award damages and legal costs.

ForestWeb has moved for dismissal, arguing the suit seeks to use the court to crush competition by interfering with First Amendment rights, according to defendants' attorney Philip Maltin of the Los Angeles office of Konowiecki & Rank. That firm brought in longtime San Francisco media lawyer Neal Shapiro, said ForestWeb reporter Diane Keaton, "because he's such a First Amendment expert."

"I'm talking about both" freedom of speech and freedom of the press, said Shapiro. "To say [defendants] can't talk to anybody is a prior restraint," he said, adding that it also violates the "concomitant right" to gather and publish information.

"We're not trying to restrain anyone's free-speech or free-press rights," insisted Weiss, stating the suit is not about restaining competition either. Relationships with sources established while working for Paperloop belong to Paperloop, he said, and a competing publisher should not be able "to take advantage of Paperloop's hard work."

After 12 years at the California Newspaper Publishers Association, "It's the first time this has come up," said General Counsel Tom Newton, who added that no members have asked the group to "weigh in one way or the other" on the matter.

"It's not surprising that no court's ever dealt with the issue," Shapiro remarked. "No one's ever made the argument" that a publication owns access to sources or relationships with them.

Newton said Shapiro's motion "should succeed" because he doesn't see how a court could restrain use of sources. "It's up to the source [to decide] to whom he or she speaks," said Shapiro.

To be heard Wednesday, his motion relies on a procedural provision barring Strategic Lawsuits Against Public Participation (SLAPP), which are filed to silence competitive voices. Though he allowed there is "a very slight chance" the judge will want the matter resolved at trial, Shapiro said the SLAPP statute allows for immediate appeal when such a motion is rejected.

Pointing to the sensitive nature of confidential sources, Paperloop's complaint argues that a new publication aware of its established competitor's sources "would unfairly benefit" from the original efforts devoted to cultivating relationships with those sources.

During the discovery process, said Shapiro, Paperloop sought disclosure of even confidential sources, but the anti-SLAPP motion immediately stops all discovery.

In matters of fact, Shapiro said neither Keaton nor her publisher, Ola Jane Gow, use sources gained from employment at Paperloop because Keaton never reported for Paperloop, having left Miller Freeman for ForestWeb about the time Paperloop was formed, and that Gow never worked there as a reporter.

Shapiro also said Paperloop's employee handbook is virtually the same as that of Miller Freeman's, and that sworn statements from two longtime Miller Freeman managers show the company never claimed exclusive benefit of relationships with sources. Paperloop cites the handbooks' instruction that "certain information, including trade secrets ... , is to remain confidential even after termination of ... employment."