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Copyright and public records don’t mix
A new decision by Judge I’Ashea L. Myles denying access to records from the Covenant School shooting investigation is the first time a Tennessee court has held that copyright law trumps the state’s public records act.
AP Photo/George Walker IV.A recent court decision denying access to public records related to Nashville’s Covenant School massacre used a novel legal theory that could have wide-ranging implications for other public records requests.
Chancery Court Judge I’Ashea L. Myles’ decision prevented the release of the Covenant School shooter’s manifesto and other writings, artwork, and video to journalists at The Tennessean newspaper and others on the grounds that the release would violate federal copyright law. It’s the first decision in Tennessee concluding that copyright law trumps the state’s public records act.
As the United States faces a seemingly endless plague of mass shootings at homes, schools, grocery stores, and places of worship, some argue that it’s better to keep the vile rantings of the perpetrator a secret, while others maintain that public access to these records is necessary for government accountability and stopping future violence. News outlets should be free to make their own decisions on the matter, based on the judgment of editors, not judges.
But the copyright theory relied upon by the court in the Covenant School shooting case doesn’t hinge on anything unique to violent manifestos. It would apply equally to copyrightable records that have nothing to do with killings or criminal cases.
In fact, many public records that have important information about what the government is up to could be subject to copyright. Under this decision, they would be totally exempt from disclosure to the public and the press.
Take emails, for instance. Emails between government employees and people outside of government — obtained using public records requests — are often essential to news reports.
Journalists at the nonprofit research group U.S. Right to Know, for example, used public records laws to ask for emails between public employees and food and pesticide companies. Those emails revealed how companies like Monsanto and others have “aggressively recruited” academics at public universities to defend genetically modified foods or how Coca-Cola has tried to influence health officials.
But emails are also copyrightable under federal law. What if these large corporations could block our right to know about their attempts to sway the government and the public by claiming their emails with public officials are copyrighted and must be kept confidential? Under the recent Tennessee decision, it’s possible.
And what about emails and other written records by public officials themselves? While works created by the federal government are automatically in the public domain, that’s not the case in many states, where even government-created works are considered copyrightable.
We’ve seen how bad-faith actors already misuse copyright law to try to block reporting they dislike.
State public records laws should be considered authorization to copy and disclose government-created works, even if they’re copyrighted. But we’ve seen how bad-faith actors already misuse copyright law to try to block reporting they dislike. It’s not hard to imagine a government employee with something to hide trying to deny a records request for a government record like an internal memo or police bodycam footage based on copyright. Even if the employee ultimately loses, the cost and delay they can impose by raising copyright as an objection to releasing records will inhibit reporting.
Tennessee isn’t alone in holding that copyright law trumps state public records law; the court’s decision in the Covenant School case cites cases from a few other states. But other courts have reached the opposite conclusion.
Under the federal Freedom of Information Act, for instance, courts have held that copyrighted works aren’t automatically exempt from disclosure. Other state courts have relied on copyright’s protection for “fair use” to allow disclosure of public records that may also be copyrighted — an argument that Myles refused to even consider in her recent decision.
Myles’ decision is sure to be appealed, and the higher courts in Tennessee should take note of these decisions, as well as the potentially disastrous consequences of letting copyright defeat public records laws. Copyright makes writings and other works private property, but public records belong to the public. The two simply don’t mix.
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Trump Media Made a Deal That Could Secure a Major Financial Windfall for the GOP Candidate
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After markets closed the day before the Fourth of July holiday, former President Donald Trump’s social media company made a disclosure that got little notice.
“The Company entered into the Standby Equity Purchase Agreement,” Trump Media & Technology Group, the company behind Trump’s Truth Social platform, said in a filing.
The jargon represented a major development that allows Trump Media to create and sell up to $2.5 billion worth of new shares. The plan, securities experts said, is a way for the company to convert its astronomical value on paper into actual cash. That could secure a windfall for Trump, who owns a majority of the company. Even if excitement for the stock deflates, his company might still retain billions in cash value.
Trump Media has seen its value on paper skyrocket into the billions despite losing money and having almost no revenue, thanks to enthusiasm from Trump supporters who are betting the former president will return to the White House.
Trump’s nearly 60% stake in the company represents the majority of his personal fortune, according to Forbes’ estimate.
Any sale of shares by the company could help the former president solve two problems that stand in the way of transforming what is now a $4 billion stake on paper in the company into something more tangible, experts said. A so-called “lockup” agreement prevents Trump from personally selling his shares in the company until late September. Even after that point, many observers believe a move by Trump to sell shares could be interpreted as a vote of no confidence in the company by its owner and namesake, spooking other investors and sparking a sell-off that would crash the company’s share price.
Trump Media declined to answer detailed questions from ProPublica, including whether the company intended to limit public attention by announcing the agreement after hours before the holiday.
“These outlandish and nonsensical conspiracy theories about TMTG’s routine, transparent business practices constitute legally actionable defamation, and we will take legal action in response,” a Trump Media spokesperson said in a statement.
The spokesperson did not immediately respond to a follow-up question about the statement.
Shares of a company are essentially slices of a pie. If a company wants to raise cash, it can re-slice the pie, creating more slices but making existing slices smaller. The percentage stake of the company represented by each share shrinks.
There are a number of ways a company can raise money by selling shares. A traditional version involves the company hiring an investment bank such as J.P. Morgan to play middleman. The bank finds big investors like pension funds to buy the new shares of the company.
Trump Media has chosen a different route, one more common with small, high-risk “penny stock” companies as well as “meme stock” companies, whose shares are the subject of Reddit-fueled hype and speculation by retail traders, experts said.
This alternative route is attractive to companies that might be seen as too risky by top investment banks or that believe that the demand for their stock will be driven by a fan base of retail traders.
Instead of hiring J.P. Morgan or another bank, Trump Media has entered into a deal to sell stock with a small New Jersey financial firm called Yorkville Advisors.
The firm has done similar deals with a number of small biotech companies, such as a firm trying to develop “cannabinoid pharmaceuticals” to treat autism and Alzheimer’s. In 2021 it inked a high-profile deal with a meme stock electric vehicle startup called Lordstown Motors, whose stock has crashed from a peak of more than $400 to under $2 today.
Companies like Yorkville that offer such deals are not typically intending to hold on to the stock, experts said. They are playing a version of the middleman role, allowing Trump Media to easily sell shares when it wants to. The basic arrangement works like this: Trump Media has the option to sell Yorkville shares of itself up to $2.5 billion, a significant chunk of its current market value. Yorkville was paid a fee up front, and if Trump Media decides to sell shares, Yorkville will also get a discount — 2.75% — off the market price. Yorkville typically would turn around and immediately sell those shares to other buyers, pocketing the difference.
In the July 3 press release announcing the deal, Trump Media CEO Devin Nunes, the Republican former congressman, suggested any share sale would be used to buy assets to build the company’s business. “We've secured a great deal to guarantee access to additional capital, if necessary, to pursue big strategic opportunities as we look to build out our portfolio by acquiring assets and technologies in the Patriot economy,” he said.
Xavier Kowalski, a securities lawyer who teaches at the University of Florida, said even if Trump Media didn’t spend the cash it raised building its social media business, “you could think of it as a diversification strategy: diversifying away from Truth Social and into just being a pot of cash.”
The company would have no obligation to spend the money purchasing an asset. It could distribute cash to shareholders — including Trump — in the form of a dividend, for example.
Kowalski and other experts said Trump Media would be following other meme stocks if it moves forward with a share sale. “Is this what I would expect for a company that is losing money and a stock that most people think is overvalued? Yes,” he said.
Yorkville did not immediately respond to a request for comment.
The deal’s ultimate impact on existing shareholders is unclear. The creation of new shares means their shares represent a smaller percentage stake of the company. But if Trump Media uses the money to, for example, buy a company that brings in significant profits, that could create stability for the value of Trump Media long term.
Other meme stocks have taken similar approaches, with mixed results. The CEO of AMC, the theater chain whose shares soared during the pandemic because of a Reddit-fueled buying spree, defended issuing new shares: “Now, if you thought — well, dilution is bad. Then, you were wrong, because foolish dilution is bad. Smart dilution is smart. And our share price went up.”
But frequently deals that dilute shares hurt existing shareholders. In its filing announcing the deal, Trump Media acknowledged as much: “There are substantial risks to stockholders as a result of the sale and issuance of shares to Yorkville. … These risks include the potential for substantial dilution and significant declines in the share price of the Company’s securities."
At least in the short term, the deal seems to have had that effect. The company made another filing about the deal Monday, and this one seems to have caught investors’ attention, with shares falling about 10% in after-hours trading immediately after Monday’s announcement.
Alex Mierjeski contributed research.
Do you have any information about Trump Media that we should know? Justin Elliott can be reached by email at justin@propublica.org or by Signal or WhatsApp at 774-826-6240. Robert Faturechi can be reached by email at robert.faturechi@propublica.org and by Signal or WhatsApp at 213-271-7217.
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Washington University Transgender Center
Washington University’s Pediatric Care Clinic is reportedly closing. The former employee who drew national attention with allegations against the University’s Transgender Center at STL Children’s Hospital says the pediatric care clinic will close permanently. In an op-ed submitted yesterday (TUES) to the Post Dispatch, Jamie Reed said the closing was quietly announced last week. Reed acknowledged…
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