It’s My Source and I’ll Sue If I Want To   

You can go, but the Rolodex stays.

That, essentially, is what a California trade media company is telling three former employees who left voluntarily and now work for a competitor. In a lawsuit that could open the door to a whole new view of the relationship between journalist and source, San Francisco-based Paperloop.com claims it owns the confidential sources its reporters inherit when they start a beat and those they develop while on the job.

And despite the derision with which many have greeted that idea, an attorney who works on First Amendment and intellectual property cases in California says that at least some of those sources could, as Paperloop claims, be considered proprietary.

The suit, filed June 8 in San Francisco County Superior Court, names a former editor/reporter, a former executive editor, a former publisher and Los Angeles-based Forestweb. It alleges unfair competition and misappropriation of trade secrets. Both Paperloop and Forestweb cover the pulp and paper industries. Forestweb had asked a judge to rule that the suit is an illegal attempt to stifle competition. The judge declined to do so, saying that there is a possibility Paperloop could win the case.

"I have never seen a case that a source's identity is a trade secret," says Forestweb attorney Neil Shapiro, who has spent nearly all of his 30-year law career in defamation and publishing. "It seems alien to the entire concept of newsgathering and news dissemination that if a reporter leaves one newspaper, he can no longer talk to a source."

Paperloop attorney Laurence Weiss says the company's position "is that we are not trying to restrict either free speech or competition. Our proprietary information is important, and we're trying to protect it."

Can an organization lay a claim of ownership on a source? Lucy Dalglish, executive director of the Reporters Committee for Freedom of the Press, calls the suit "one of the dumber things I've heard of lately." She says, "You cannot prevent or restrain [the journalists] from talking to an entire universe of people."

But "where did these sources originate?" asks Megan E. Gray, First Amendment and intellectual property attorney for Baker & Hostetler in Los Angeles and a former reporter. "If it really was a very clear case of a working reporter came on board and the trade publication said, 'Here is a super-secret list, don't tell anybody that you have this, don't tell any other reporters...I could see how that might constitute a protectable trade secret."

That is exactly what occurred, Paperloop says.

Forestweb hired Diane Keaton away from her associate editor job at Pulp & Paper Week in January 2000 and made her an editor. Forestweb is a two-and-a-half-year-old dotcom with 15 employees that provides news and information about the forest products industry. Pulp & Paper Week is one of more than 90 publications owned by Paperloop, a 120-person company. Newspaper company executives read the weekly newsletter to find out which way newsprint prices are headed.

Keaton brought to her new job 24 years of experience as a journalist, both print and broadcast, and industry contacts cultivated during six years at Pulp & Paper Week, which was then owned solely by Miller Freeman.

(Since a joint venture between its parent company and Pegasus Capital Advisors was approved in October 2000, Miller Freeman's paper group media and conference properties have belonged to the newly formed Paperloop.)

In January 2001, Ola Jane Gow, former group publisher for about 30 of Paperloop's titles, joined Forestweb as publisher. Two months after that, James McLaren, former executive editor of Pulp & Paper Week, came on board as an editor. Both Gow and McLaren had quit their jobs before being hired by Forestweb; both had spent more than 10 years with their previous employer. Gow has never worked as a reporter, though she says she has maintained contacts acquired in her former job.

Forestweb announced in March it would be launching a new online service, PriceBeat, that tracks prices of pulp, paper, timber and wood products in real time--an initiative that Paperloop's complaint notes "will be in direct competition with Plaintiff's pricing and industry trends newsletter."

After an April 19 letter failed to get Keaton and McLaren to stop contacting sources they had used while at Paperloop, the company filed its complaint.

Paperloop's suit says that when its reporters get a new beat, they are given names of confidential sources and told to keep them secret, even from coworkers. "When Paperloop reporters contact these sources and help develop new sources, they do so within the scope of their employment with Paperloop. The sources, therefore, belong to Paperloop."

"No one [at Miller Freeman] ever mentioned that concept to Keaton, ever," says Shapiro. "When Gow and McLaren left, no one said word one to them about source ID. No one ever said these are trade secrets."

Paperloop's suit asks for injunctions preventing Keaton, Gow and McLaren from contacting the sources, plus damages and an amount "necessary to prevent the unjust enrichment" of Forestweb.

"While we invite the competition, we don't think others should be able to reap the benefit of the hard work of Paperloop and its predecessor, Miller Freeman," Weiss says. "That's really all that this is about."

Forestweb had responded with a "special motion to strike," allowed under California law against "SLAPP" suits, which, the motion said, " 'are generally meritless suits'...to block smaller defendants with less resources from exercising First Amendment rights." SLAPP stands for Strategic Lawsuits Against Public Participation. The motion said Paperloop's real goal is to silence its competition. That request, however, was denied.

"The only person who controls a reporter-source relationship is the source," says Shapiro. "Nobody else has power in that relationship, and certainly the publisher doesn't own it."

And in the niche world of pulp and paper news, says Keaton, "there's a finite number of potential sources who have the information that we need."

But at a time when media organizations are looking for additional ways to protect their turf and increase profits, a ruling in favor of Paperloop could have ramifications for other journalists, Gray says. "I would predict other media companies [would] try and stake out that turf for themselves."