Opinion

Alison Frankel

Transcript, tape of analyst call fair game for news org

By Alison Frankel
December 16, 2011

Bloomberg LP’s lawyers at Willkie Farr & Gallagher got more than they asked for this week from U.S. District Judge Alvin Hellerstein of Manhattan federal court. The lawyers had asked Hellerstein to wait until they’d developed a fact record before ruling whether the financial-news agency infringed Swatch’s purported copyright on a recording of its February 2011 earnings call with a select group of analysts. Instead, Hellerstein reversed his own reasoning from a ruling in August and granted Bloomberg a preliminary judgment on the pleadings. (Hat tip: Jeff John Roberts at paidContent.)

In a one-page ruling that should be a boon to news organizations, Hellerstein concluded that even if Bloomberg infringed Swatch’s copyright when it offered subscribers access to a recording and transcript of the analyst call, its actions are “protected as fair use.” That’s a big shift from Hellerstein’s August decision denying Bloomberg’s motion to dismiss Swatch’s case, when the judge said he couldn’t decide the fair-use question on the basis only of the pleadings.

So what happened between August and December? Hellerstein actually read the transcript of the earnings call and considered its content in light of Bloomberg’s argument that by publishing the recording and transcript it was disseminating material financial information. “American investors trade in Swatch American Depository Receipts over U.S. exchanges,” the Bloomberg brief said. “Those investors are entitled to access to the same material information that Swatch’s favored analysts received, and Bloomberg discharges its role as the ‘eyes and ears of the public’ in providing that access.” That Bloomberg makes money by doing so, the Willkie lawyers argued, doesn’t affect its First Amendment right to publish the news.

Swatch, represented by Collen LP, had initially contended that Bloomberg secretly recorded the earnings call, which the news organization was not invited to participate in. Bloomberg responded that it obtained the recording and transcript from an invited participant who had hired an unidentified transcript service to record the session. (That’s an important consideration; Bloomberg’s fair-use defense would have been seriously compromised if it hacked into Swatch’s call or got hold of the recording through illicit means.)

Swatch argued in an October motion for judgment on the pleadings that Hellerstein’s August ruling had essentially decided the case. In denying Bloomberg’s motion to dismiss, Swatch said, the judge had concluded that Swatch executives’ spoken words were entitled to copyright protection. And according to Swatch, Bloomberg infringed that copyright when it published the transcript. “As the sufficiency of the plaintiff’s claims, including the validity of plaintiff’s copyright, has already been determined by this court, law of the case governs,” the Swatch brief said. Bloomberg’s fair-use defense, Swatch added, didn’t apply because the news organization had “appropriated 100 percent of [Swatch's] expression,” which, according to Swatch, is unreasonable use of the call and transcript.

In this week’s denial of Swatch’s motion and preliminary judgment for Bloomberg, Hellerstein ordered Swatch to submit by January 20 a brief on whether there are any triable issues with respect to Bloomberg’s fair-use defense.

Bloomberg counsel John DiMatteo of Willkie referred me to a Bloomberg spokesman, who didn’t return my call. I left a message for Swatch counsel Jess Collen but didn’t hear back.

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Swatch sued Bloomberg LP for copyright infringement when the financial-news agency offered subscribers access to a recording and transcript of the watchmaker’s February 2011 earnings call with analysts. A Manhattan federal judge refused to dismiss the suit in August, but this week, after reading the Swatch transcript, the judge granted Bloomberg judgment on the pleadings

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