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The plaintiffs’ claim against the defendant for ‘hot news’ misappropriation of the plaintiff financial firms’ recommendations to clients and prospective clients as to trading in corporate securities is preempted by federal copyright law.

We conclude that in this case, a firm’s ability to make news — by issuing a recommendation that is likely to affect the market price of a security — does not give rise to a right for it to control who breaks that news and how.

Robert Sack, U.S. Circuit Judge, writing in the joint opinion of a three judge panel, via Bloomberg. The opinion does not impact Judge Cote’s findings of copyright violations by Flyonthewall, it does undermine New York’s hot news doctrine and the enduring notion of property rights for the news.

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The facts do not owe their origin to an act of authorship.
Justice Sandra Day O’Connor (Feist v Rural Telephone, 1991)

But does the hunt, the research, the interviews? Or perhaps its organization into a story for the dissemination to a reading public? And can these be made exclusive? These questions have bubbled up as the newspaper industry wrestles with what the internet is doing to their business.

The Cleveland Plain Dealer’s Connie Schultz has argued fervently about the rights of authors and their newspapers to capitalize on their product. She came out against “the aggregators” as though they were a malfeasant band of marauders bent on destroying the institution of journalism and by extension democracy. Citing Daniel and David Marburger, she claimed, “parasitic aggregators reprint or rewrite newspaper stories, making the originator redundant and drawing ad revenue away from newspapers at rates the publishers can’t match.”

James Moroney, publisher and CEO of the Dallas Morning News takes a similar approach. He invokes the ‘hot news’ doctrine and asks congress to apply it to the internet. Says Moroney, “perhaps it is time for congress to establish a principle of ‘consent for content’ for breaking news–similar to the ‘hot news’ doctrine recognized by a few states.”

Copyright law sufficed to protect the written word, fixed in a medium, but these claims demand remedy for a larger issue. They aim to protect the investment required to collect the facts and write a story, when it might easily be re-written and distributed by another. But they ask for monopoly control of the story itself — indeed, ownership of the collection of facts and ideas that might make up a breaking story on government corruption, for example. Justice O’Connor, however, finishes with little support for these views: “The distinction is between one of creation and one of discovery.” And discovery is not subject to property rights.

The viewpoints of Moroney, Schultz and the Marburgers have their origin in the nature of print. Print leads to a confusion between controlling the medium and controlling the content – that is, the mistaken idea that breaking a story equates to owning it. The Supreme Court compounded the confusion in 1918 with its decision to augment copyright protection with “quasi-property rights” for the facts and events that make up a news story — the hot news doctrine. It was a legal solution for the disruptive impact of a new technology: newswires. News was paper, and these rights formalized the metaphor. They derived from the physical qualities of the paper, attached property rights to the news and would provide a legal basis from which to make, in this case, the AP’s news exclusive. Theoretically, the AP could then exclude people from learning of it or reprinting it without permission. They wouldn’t just report the news, they would own the news. Read the rest of this entry »

News reporting always has been a complex ecosystem, where what is ‘news’ is often driven by certain influential news organizations, with others republishing or broadcasting those facts — all to the benefit of the public…How, for example, would a court pick a time period during which facts about the recent Times Square bombing attempt would be non-reportable by others?

Brief by Google and Twitter, arguing against the practicality of enforcement and the benefit to society of the hot news doctrine: via Reuters

Dow Jones invests considerable resources to produce timely and trusted news and business information. Briefing.com has been brazenly taking a free ride on the reputation of our publications and on the investment Dow Jones makes in quality, real-time journalism….Dow Jones respects and defends the rights of other news organizations to report on news events in a timely manner. Here, however, Briefing.com did not use its own resources to uncover, verify and describe news events. It waited for Dow Jones to do all the work, and then simply copied the content. In order to continue to offer the quality news and business information customers expect and count on, Dow Jones will take action to stop the misappropriation of its content.

Mark H. Jackson, general counsel for Dow Jones: via BusinessWire

Breifing.com has been free-riding on Dow Jones’ substantial investments in gathering and reporting timely news

The Complaint

It’s produced a river of gold, but those words are being taken mostly from the newspapers. I think they ought to stop it, that the newspapers ought to stand up and let them do their own reporting.

Rupert Murdoch, speaking at a taping of “The Kalb Report” at the National Press Club in Washington on April 6: via Bloomberg

There are those who think they have a right to take our news content and use it for their own purpose without contributing a penny to its production. Content creators bear all the costs, while aggregators enjoy many of the benefits. In the long term, this is untenable…It’s not fair use. To be impolite, it’s theft.

Rupert Murdoch, speaking at the U.S. Federal Trade Commission’s workshop in December: via Bloomberg, BusinessWeek

Each firm has lost business in, and has reduced investment in and output of United States equity research as a result of the free riding by Fly and other services. This is a bread-and-butter case of hot-news appropriation.

Benjamin Marks to US District Judge Denise Cote: via Bloomberg.

The case of Barclays v. Theflyonthewall.com provides a recent test of the hot news doctrine in the investment research industry. Claims that Fly on the Wall was just reporting the news from the free marketplace of ideas would not protect them. Instead, Judge Denise Cote’s findings of facts and conclusions of law following the March 8-11 bench trial would institute an injunction that embargoed recent headlines and materials from the plaintiffs from publication by Fly on the Wall. The news of her decision has lathered the industry into froth over whether Thomson/Reuters and Bloomberg may be next. But its application may be greater than that. Though the opinion ruled in an industry that is traditionally seen as different than the news industry – investment research – can its application in the broader news industry be far behind? Read the rest of this entry »

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