By Alison Frankel
The views expressed are her own.
On its face, Monday’s ruling by the U.S. Court of Appeals for the Second Circuit in Barclays v. Theflyonthewall.com seems like a win for the folks who republish the news.
The Second Circuit, in an 88-page ruling (including a majority opinion written by Judge Robert Sack for himself and Judge Rosemary Pooler and a concurring opinion by Judge Reena Raggi) found that a financial news website called Theflyonthewall had not engaged in “hot news” misappropriation when it ran headlines about stock recommendations by Barclays, Merrill Lynch, and Morgan Stanley. (The rarely-invoked hot news doctrine provides copyright holders a cause of action outside of copyright law.) As Jon Stempel reported for Reuters, that’s undoubtedly a loss for the banks and their lawyers at Weil, Gotshal & Manges, who had won a lower-court injunction against Fly’s reporting by arguing that the banks were losing trading commission revenue as a result of Fly’s misappropriation. The ruling is great news for Fly, which no longer has to fear a bar on its reporting of analyst recommendations, and for Fly’s longtime counsel, Glenn Ostrager of Ostrager Chong Flaherty & Broitman.
Google and Twitter also claimed victory. The companies had supported Fly with a joint amicus brief, and their lawyer, Kathleen Sullivan of Quinn Emanuel Urquhart & Sullivan told The New York Times that the Second Circuit’s ruling “acknowledges the reality of new media,” she said. “It’s a great decision for the free flow of information in the new media age.”
Perhaps, but the Second Circuit’s decision is certainly not a free pass for aggregators to appropriate headlines and blurbs from journalism companies without fear of liability for misappropriation. The Second Circuit opinion leaves the hot news doctrine in place. And more importantly, it pays great heed to the craft of reporting and breaking news-which is exactly what you’d expect in a decision written by Judge Sack, a onetime media lawyer who represented Dow Jones and Times Mirror when he was in private practice at Gibson, Dunn & Crutcher.
The majority opinion draws a distinction between making news and breaking it. When a bank issues a stock recommendation, the Second Circuit found, the fact of that recommendation is news. Theflyonthewall doesn’t have the right to republish the underlying analysis that led to the recommendation; Fly actually conceded copyright infringement for cribbing from analysts’ reports before the case reached the Second Circuit. But according to the Second Circuit, Fly has the right to uncover and report on the fact that a bank has issued a stock recommendation, even if Fly’s reporting means the bank loses commission revenue.