from the hot-news-loss dept
"Hot news" was pretty much dead a few years ago. The court-created doctrine, which resulted in a weird quasi-intellectual property on factual information about a century ago, hadn't been used for years and many people had assumed that it was pretty much gone. However, old legal doctrines die hard and, a few years back, some Wall Street firms sought to revive it, claiming that the website theFlyOnTheWall.com
violated their "hot news" rights by accurately reporting on how those Wall Street firms were rating stocks. That's factual information and not protected by copyright, but the firms claimed it undermined their business models via hot news... and the lower court agreed, issuing an injunction.
Thankfully, an appeals court
has dumped all of that, claiming that hot news is preempted by federal copyright law and that there's nothing wrong with reporting on factual information. The court mainly relies on the famous
NBA v. Motorola case, which found that basketball scores and stats were facts and not protected by copyright or hot news. Using the same rules, the court finds that copyright wipes out any "hot news" in this case as well.
We conclude that applying NBA and copyright preemption
principles to the facts of this case, the Firms' claim for "hot
news" misappropriation fails because it is preempted by the
Copyright Act. First, the Firms' reports culminating with the
Recommendations satisfy the "subject matter" requirement because
they are all works "of a type covered by section 102," i.e.,
"original works of authorship fixed in a... tangible medium of
expression." 17 U.S.C. § 102. As discussed above, it is not
determinative for the Copyright Act preemption analysis that the
facts of the Recommendations themselves are not copyrightable.
See NBA, 105 F.3d at 850. Second, the reports together with the
Recommendations fulfill the "general scope" requirement because
the rights "may be abridged by an act which, in and of itself,
would infringe one of the exclusive rights' provided by federal
copyright law," Altai, Inc., 982 F.2d at 716 (citing Harper &
Row, 723 F.2d at 200), i.e., "acts of reproduction, performance,
distribution or display," id. (internal quotation marks omitted).
Third and finally, the Firms' claim is not a so-called
INS-type non-preempted claim because Fly is not, under NBA's
analysis, "free-riding." It is collecting, collating and
disseminating factual information -- the facts that Firms and
others in the securities business have made recommendations with
respect to the value of and the wisdom of purchasing or selling
securities -- and attributing the information to its source. The
Firms are making the news; Fly, despite the Firms' understandable
desire to protect their business model, is breaking it. As the
INS Court explained, long before it would have occurred to the
Court to cite the First Amendment for the proposition:
[T]he news element -- the information
respecting current events contained in the
literary production -- is not the creation of
the writer, but is a report of matters that
ordinarily are publici juris; it is the
history of the day. It is not to be supposed
that the framers of the Constitution, when
they empowered Congress "to promote the
progress of science and useful arts, by
securing for limited times to authors and
inventors the exclusive right to their
respective writings and discoveries" (Const.,
Art I, § 8, par. 8), intended to confer upon
one who might happen to be the first to
report a historic event the exclusive right
for any period to spread the knowledge of it.
The court also distinguishes the classic "hot news" case (INS) by noting that in that case, the competing firm was taking AP news, rewriting it, and pretending it was its own. That's not what's going on here, where ratings are simply being aggregated.
This is an excellent ruling, though I doubt we've seen the end of "hot news" yet. There may still be appeals, and there are a few other such hot news cases out there. But it's nice to see the judges toss this one out.
Filed Under: copyright, facts, first amendment, hot news, reporting
Companies: afp, ap, belo, gannett, mcclatchy, naa, ny times, scripps, theflyonthewall, time, washington post