‘Hot News’ Doctrine Not Looking So Hot After Apppeals Court Ruling

In the past couple years, media companies doing battle with news aggregators—or competitors—began to turn to the little-known legal doctrine of “hot news.” It stems from a 1918 Supreme Court case that found news organizations might have a “quasi-property” right in news they worked hard to report, even if the news was re-worded to avoid copyright implications. But today ‘hot news’ looks much less attractive as a way to control the news flow; an appeals court has ruled in favor of theflyonthewall.com’s right to broadcast the recommendations of financial analysts.

The hot news doctrine has been waved around by Dow Jones and other newspaper companies, The Associated Press, and Deadline.com in recent years.

Even though it has become a lot more popular for media companies to talk about how they were going to use “hot news,” no court in the internet age had actually enforced a hot news claim, until the case of theflyonthewall.com. Now that that’s been overturned on appeal, any media company will be hard pressed to successfully enforce a hot news claim.

Theflyonthewall.com had been publishing the stock recommendations of analysts from various big banks, including Merrill Lynch, Bank of America, and Morgan Stanley. A group of banks sued the site back in 2006, over both copyright and ‘hot news’ claims. The banks claimed that unless flyonthewall was stopped, their business model—of charging clients for exclusive access to reports and recommendations—would fall apart.

The banks won that lawsuit, but theflyonthewall appealed the ‘hot news’ part of its loss; and today, it’s the ultimate victor in the case.

A three-judge panel from the New York-based U.S. Court of Appeals for the 2nd Circuit ruled [PDF] that theflyonthewall.com wasn’t “free riding” on the work of the banks, because it wasn’t really in the same business as the banks. In any case, it had a right to report the facts of the recommendations. In a sense, it was the banks who were creating the news—by issuing the recommendations—and flyonthewall.com was reporting the news.

“In this case, a Firm’s ability to make news—by issuing a Recommendation that is likely to affect the market price of a security—does not give rise to a right for it to control who breaks that news and how,” states the ruling.

Theflyonthewall told Bloomberg that today’s opinion represented “a complete victory in its long-running battle with the investment firms.” None of the plaintiff banks offered immediate comment on the ruling.

The lower court loss included an injunction against theflyonthewall.com forcing it to hold publication until 10 a.m. or two hours after the banks publish their recommendations. Now that injunction is history.

Related

* ‘Hot News’ Has MMC Steaming At TheWrap In Cease-And-Desist Letter
* Briefing.com Admits It Broke Copyright Laws, Pays Dow Jones
* Dow Jones Suing Briefing.com For Headlines “Misappropriation”
* AP, AHN Media Settle Suit; AHN Pays, Admits Some ‘Improper Use’In the past couple years, media companies doing battle with news aggregators—or competitors—began to turn to the little-known legal doctrine of “hot news.” It stems from a 1918 Supreme Court case that found news organizations might have a “quasi-property” right in news they worked hard to report, even if the news was re-worded to avoid copyright implications. But today ‘hot news’ looks much less attractive as a way to control the news flow; an appeals court has ruled in favor of theflyonthewall.com’s right to broadcast the recommendations of financial analysts.

The hot news doctrine has been waved around by Dow Jones and other newspaper companies, The Associated Press, and Deadline.com in recent years.

Even though it has become a lot more popular for media companies to talk about how they were going to use “hot news,” no court in the internet age had actually enforced a hot news claim, until the case of theflyonthewall.com. Now that that’s been overturned on appeal, any media company will be hard pressed to successfully enforce a hot news claim.

Theflyonthewall.com had been publishing the stock recommendations of analysts from various big banks, including Merrill Lynch, Bank of America, and Morgan Stanley. A group of banks sued the site back in 2006, over both copyright and ‘hot news’ claims. The banks claimed that unless flyonthewall was stopped, their business model—of charging clients for exclusive access to reports and recommendations—would fall apart.

The banks won that lawsuit, but theflyonthewall appealed the ‘hot news’ part of its loss; and today, it’s the ultimate victor in the case.

A three-judge panel from the New York-based U.S. Court of Appeals for the 2nd Circuit ruled [PDF] that theflyonthewall.com wasn’t “free riding” on the work of the banks, because it wasn’t really in the same business as the banks. In any case, it had a right to report the facts of the recommendations. In a sense, it was the banks who were creating the news—by issuing the recommendations—and flyonthewall.com was reporting the news.

“In this case, a Firm’s ability to make news—by issuing a Recommendation that is likely to affect the market price of a security—does not give rise to a right for it to control who breaks that news and how,” states the ruling.

Theflyonthewall told Bloomberg that today’s opinion represented “a complete victory in its long-running battle with the investment firms.” None of the plaintiff banks offered immediate comment on the ruling.

The lower court loss included an injunction against theflyonthewall.com forcing it to hold publication until 10 a.m. or two hours after the banks publish their recommendations. Now that injunction is history.

Related

* ‘Hot News’ Has MMC Steaming At TheWrap In Cease-And-Desist Letter
* Briefing.com Admits It Broke Copyright Laws, Pays Dow Jones
* Dow Jones Suing Briefing.com For Headlines “Misappropriation”
* AP, AHN Media Settle Suit; AHN Pays, Admits Some ‘Improper Use’

Original Link: http://feeds.paidcontent.org/~r/pcorg/~3/EJONTw8UV_4/

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