Can corporations use copyright laws to block news organizations from publishing their own information about themselves? Not according to a ruling Monday from the 2nd Circuit Court of Appeals in an intriguing case called Swatch v. Bloomberg. The appeals court said that Bloomberg was entitled to publish an audiotape of an invitation-only analyst call with Swatch officials, even though Swatch held a U.S. copyright on the recording and told analysts who participated in the call that the audio could not be published or broadcast. The 2nd Circuit’s extremely broad view of the media’s fair use of copyrighted corporate information – which gives primacy to the investing public’s interest in financial reports and data – is good news indeed for financial news reporters and their employers. In combination with the appeals court’s 2011 holding in Barclays v. Theflyonthewall, the Swatch opinion makes it clear that when a corporation’s statements constitute news, the corporation doesn’t have the right to control how that news gets out.
Under Monday’s decision, that’s true even when a news organization uses the copyrighted material for commercial purposes – and even when the information isn’t transformed in any way before publication. The investing public’s right to know, according to the 2nd Circuit, can’t be trumped by corporate copyrights. “Whether one describes Bloomberg’s activities as ‘news reporting,’ ‘data delivery,’ or any other turn of phrase, there can be no doubt that Bloomberg’s purpose in obtaining and disseminating the recording at issue was to make important financial information about Swatch Group available to American investors and analysts,” wrote Chief Judge Robert Katzmann for a panel that also included Judges Amalya Kearse and Richard Wesley. “Bloomberg’s overriding purpose here was not to ‘scoop’ Swatch…but rather simply to deliver newsworthy financial information to American investors and analysts. That kind of activity, whose protection lies at the core of the First Amendment, would be crippled if the news media and similar organizations were limited to authorized sources of information.”
Pretty resounding language, and that’s despite good arguments by Swatch and its lawyers at Collen IP that Bloomberg’s publication of the audiotape didn’t amount to fair use. I’ve written before about the unusual facts of the case, but here’s a brief recap. Foreign-based companies like Swatch aren’t subject to the same disclosure requirements as U.S. corporations, so when Swatch released its 2010 earnings in February 2011, it organized an invitation-only call with analysts who track the stock. Reporters were not invited to participate, but very shortly after the conclusion of the 132-minute call, Bloomberg posted an audiotape and transcript to subscribers of its financial research service. When Swatch found out, it demanded that Bloomberg take down the materials; when the news organization refused, Swatch obtained a copyright on its executives’ statements during the earnings call and sued Bloomberg for infringement.
U.S. District Judge Alvin Hellerstein of Manhattan ruled in August 2011 that Swatch could proceed with its case, denying a motion to dismiss by Bloomberg’s lawyers at Willkie Farr & Gallagher. But in May 2012, after listening to the audiotape, Hellerstein changed his mind about Swatch’s infringement claims. The judge granted Bloomberg’s motion for judgment on the pleadings, ruling that the news company made fair use of the copyrighted material. “(Bloomberg’s) work as a prominent gatherer and publisher of business and financial information serves an important public interest, for the public is served by the full, timely and accurate dissemination of business and financial news,” Hellerstein said.
On appeal, Swatch argued (with not a little justification) that several of the considerations judges must weigh in fair use analysis actually tilted in its favor. Bloomberg wrongfully obtained the audiotape, Swatch asserted, and published it despite an admonition against distribution at the beginning of the call. There was no educational purpose for the publication; Bloomberg makes money from its research service. Nor could the audiotape be fairly described as reporting, according to Swatch, because Bloomberg posted the entire audiotape and transcript, without any transformative editing, additions or commentary. Swatch argued that at the very least, it should have been permitted to conduct discovery on Bloomberg’s profit motive.