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AP's Copyright Lawsuit: Legitimate or Frivolous?

Yesterday's news that the Associated Press is suing Moreover Technologies (a news aggregator service that was acquired by Verisign for $30 million in 2005) seems to have been met with general eye-rolling from the 'sphere.

I particularly enjoyed Rich Ord's perspective in "AP Suing Moreover Like It's 1999." As the founder of news aggregation site NewsLinx all the way back in 1996 (I guess what you'd call the Cenozoic Era of the Internet), Ord was one of the earliest recipients of cease-and-desist warnings from publishers (for linking to their news). Ord notes:

"I remember getting personal calls and emails from virtually every site I linked to including the Wall Street Journal, Time Warner, L.A. Times and many others. The calls and emails usually started with the question, 'Do you have permission to link to our articles?" Old media legal departments were clearly very green with the Internet. My typical response was, 'No, we don't have permission and if you would like us to stop linking and driving traffic to your site just let me know. However, we feel we have every right to link to your articles without permission because the Internet itself is based on the concept of linking.'
The article includes some interesting analysis of the case that the AP lawyers are building, casts some doubt on their merit ... and concludes with a warning of the negative implications that a ruling in favor of AP would have for the Internet.

Thomas Wilburn's piece highlights the difference between this AP copyright suit (versus similar between Google and Agence France-Press) ... and isn't quite so dismissive of the merits of AP's case:

"There are a few differences between past suits and the AP's complaint, however. For one thing, both parties are based in the US, which means that the case will fall under the jurisdiction of US courts. For another, while Moreover displays AP headlines and excerpts for free on a page with ads (similar to Google News, except for the ads), the stories are reproduced in their entirety on Moreover's fee-based service, and full reproduction for commercial gain falls outside of the boundaries of fair use.
It's tempting to see this lawsuit as just another content provider that doesn't understand the Internet, or an attempt to stifle the open exchange of information. But it's telling that the plaintiffs in these cases are wire services, which make their income by selling reporting to other outlets, such as newspapers and broadcast media, instead of to the public. Indeed, AP stories are the backbone of many major news sources. But as mere content providers, AP and other wire services don't see any benefit from ad revenue and incoming link traffic to their clients. If they don't jealously guard their content, the organizations reason, many clients will simply acquire it secondhand from ultrafast aggregation services, instead of directly from the newswire. If that happens, the licensing revenue stream could dry up, taking AP with it."
Any argument against the right to liberally link to and / or excerpt from anything on the Internet seems like an uphill battle (per Ord's rationale that "the Internet itself is based on the concept of linking"). But (whether it's currently "illegal" or not), when third party news aggregators can inherit the benefits (eyeballs / revenue) of the AP's stories (without the AP getting any sort of benefits), is it reasonable to consider new legislation that better protects publishers' revenue streams?