If Financial Ratings Are Opinions, Would Reporting On Those Opinions Be Factual?

from the have-fun-with-this-one dept

Ray Dowd, over at the Copyright Litigation blog points us to a fascinating ruling on questions related to hot news and copyright. As we've been covering quite a bit lately, "hot news" claims have become popular again recently, despite having been considered a "mostly dead" legal theory. Hot news suggests that, while factual information cannot be covered by copyright, it can be covered by a copyright-like concept of "hot news," based on common law misappropriation and unfair competition theories. The problem is that the defining case in hot news, from nearly a century ago, never even looked at the First Amendment issues related to hot news. Sooner or later (perhaps sooner), we're going to have a case that raises those issues, but for now it's an open question.

In this latest case, there appear to be some similarities to the leading "hot news" case this year, the theflyonthewall.com case. A bunch of financial firms sued a site called TipsTrader.com claiming both a hot news violation and a trademark violation, because TipsTrader would list out and record various analyst recommendations, and then measure the performance of the related financial instrument. Frankly, this sounds like a pretty useful service. However, the financial firms felt that it was a violation of their intellectual property rights. For whatever reason, TipsTrader never responded to the lawsuit, and thus the financial firms asked for default judgment. While some courts seem to almost automatically grant default judgments in such cases, it's really quite nice to see the court decide to do an analsysis anyway, and determine that neither the hot news nor the trademark claim stands up, and to recommend against default judgment. But where it gets really interesting is why the court found there was no hot news claim. After going through a rather excellent historical look at hot news, it notes that the court rulings and legislative history make it clear that hot news only applies to factual information. That is, hot news can only apply to areas where copyright does not. In other words, if something can be covered by copyright, hot news is meaningless. The problem, for the financial firms, is that they had to make the case that their ratings are not covered by copyright. They argued that the ratings are factual information, but the court disagreed, saying that the ratings are "original works," using "judgment" and "creativity."

That seems like it really could go either way when you think about it. I mean, it's good to see a hot news claim fail, because I think hot news is a terrible concept, but then claiming that a rating is copyrightable seems almost equally problematic. Also, it raises the following tricky question: if a rating given to a financial insrument is copyrightable, couldn't you still claim that reporting on what the rating is would be factual information? I could imagine someone also making a fair use claim, but even before getting to a fair use analysis, it seems like there's a reasonable legal question here. Is it possible both for the content to be covered by copyright when given... but then in the process of reporting to others what it is, the reporter is presenting it as factual information? I'm sure some of the legal scholars out there can chime in on whether or not that makes any sense.

Filed Under: copyright, facts, financial ratings, hot news, opinion