Appeals Court Realizes Hot News Makes No Sense; Dumps Injunction On TheFlyOnTheWall

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

Newspapers To Court: We Don't Care About TheFlyOnTheWall, But Please Don't Take Away Our Hot News

from the they-will-regret-this dept

Yesterday we wrote about Google and Twitter's amicus brief in the infamous FlyOnTheWall hot news case, and the folks over at the Associated Press were kind enough to send over a link to the amicus brief from a huge coalition of newspapers. Basically, every big US newspaper or newspaper organization signed on to this one, including the Associated Press, AFP, the NY Times, the Washington Post, Gannett, McClatchy, Belo, Scripps, Time, and the Newspaper Association of America (just to catch everyone else). Considering that the AP has been leading the charge to bring back hot news, you can probably guess where this one is going: The short summary? "We don't care about TheFlyOnTheWall or Barclays or this specific case, but we're scared to death that you might make a ruling that says the hot news doctrine should go away."

I'm still sort of amazed that any serious news organization supports the hot news doctrine, because it's almost guaranteed to come back and bite them if it is regularly used again. All of the newspapers above rely on rewriting news from other publications to some extent, whether they admit it or not. If they really support this, they're going to run into trouble themselves, even if they're apparently unwilling to admit it. It's incredibly short-sighted.

Also weird is the claim that these newspapers "rely" on hot news today. They don't. Sure, the hot news doctrine has technically been around for about a century, but it's barely been used at all in the last few decades. It was, for all intents and purposes, a dead doctrine that many considered not worth keeping around (pdf). To claim that these organizations have relied on the hot news doctrine is ridiculous, because it's barely been showing up in court until recently.

Either way, it looks like lots of parties who are concerned about "hot news" have realized that TheFlyOnTheWall case has become ground zero for whether or not "hot news" is actually allowed.

Filed Under: hot news
Companies: afp, ap, belo, gannett, mcclatchy, naa, ny times, scripps, theflyonthewall, time, washington post

Hot News Is Back: Court Blocks Website From Reporting The News

from the first-amendment? dept

In the last few years, there's been a push by some companies to bring back the immensely troubling "hot news doctrine," that appears to violate everything we know about the First Amendment and copyright law. Basically, the "hot news doctrine" says that if someone reports on a story, others are not allowed to report on their reporting for some period of time -- on the theory that it somehow undermines the incentive to do that original reporting. Last year, we wrote about the very troubling implications of allowing the hot news concept to stand. Beyond the free speech implications, it also has the troubling quality of effectively creating a copyright on facts -- which are quite clearly not covered by copyright. On top of that, it's not necessary in the slightest. As anyone who is actually in the online news business knows, getting a scoop gets you traffic -- even if others report the same thing minutes later. Being first gets you the attention. You don't need to artificially block others from reporting the news.

Unfortunately, with various publications struggling, some have picked up on the hot news doctrine as a way to somehow block competition. Tragically, it looks like a court has now adopted the hot news doctrine in one case. Paul Alan Levy alerts us to the news that a judge issuing an injunction against TheFlyOnTheWall.com, a website that would publish summaries of Wall Street research. The Wall Street firms said this undermined their business model -- and the court agreed. It passed an injunction saying that TheFlyOnTheWall had to hold off publishing any news about any Wall Street research report until either 10am (if the report is released early in the morning) or for two hours after it's released if it comes out during the day.

These totally arbitrary restrictions are highly troubling from a free speech standpoint and seem effectively random. This seems like yet another case of a company being upset by interference with its business model, which should be a reason to change the business model -- not run to the courts.

But what's most troubling of all is that now all the publishers who have been salivating over the hot news doctrine have a legal ruling to point to. Can you imagine how the world would work if you couldn't blog about or mention a particular piece of news for a few hours because the Associated Press got to it first? It's hard to see how this could possibly stand up to a First Amendment analysis, and it's quite troubling that the judge found the way she did.

Filed Under: copyright, facts, first amendment, hot news, reporting
Companies: theflyonthewall