Intellectual Property Law

Appeals Court Halts ?Hot News? Publishing Order

By David Kravets

A federal appeals court on Thursday lifted a lower court’s order that a well-known financial news aggregator delay publication of prominent financial analysts’ buy and sell recommendations — stock picks that allowed the well-to-do the first crack at capitalizing on that trading research.

The 2nd U.S. Circuit Court of Appeals blocked the lower court’s March injunction against Theflyonthewall. The 3-year-old litigation, brought by Barclays Capital, Merrill Lynch, Morgan Stanley and others, was premised on the so-called “hot news” doctrine the Supreme Court first recognized in a 1918 case concerning the unauthorized and immediate republication of wire service reports.

The appeals court essentially stayed a New York federal judge’s ruling that Theflyonthewall breached the doctrine, which allows suits for re-reporting time sensitive “hot news.” The banks’ research that Theflyonthewall reposted or alluded to on its site was designated for the banks’ clients that earn the various firms at least $50,000 to $100,000 in trading commissions yearly, the banks argued.

Rights holders are invoking the hot news doctrine to counter a swell of news-regurgitation sites. In July, for example, The Associated Press defeated All Headline News in a court battle requiring the aggregator to stop rewriting and publishing AP stories. Dow Jones filed a “hot news” lawsuit against Briefing.com in April.

Theflyonthewall, which has deals with Bloomberg, Thomson Reuters and about 5,000 paying clients in all, claimed it obtained the banks’ research through reporting, by having “hefty relationships with people in the know.” The New Jersey company claimed that, since at least 2006, it was a legitimate media outlet in a case weighing how far researchers can go to block redistribution of their findings and conclusions.

The lower court’s order that was lifted Thursday required that, for research acquired before the market’s 9:30 a.m. Eastern time opening, Theflyonthewall must wait until at least 10 a.m. before it publishes that information. It was also ordered to wait two hours to publish the banks? buy and sell reports it obtains during the intraday trading cycle.

In response to Theflyonthewall’s expedited appeal, the appeals court ordered expedited briefing in the case. Arguments could be held as early as this summer.

Photo: BBCWorldService/Flickr

See Also:

• AP Defeats Online Aggregator That Rewrote Its News
• Rich Get Richer in ‘Hot News’ Stock-Tip Fight
• Murdoch Calls Google, Yahoo Copyright Thieves ? Is He Right?
• Florida News Site To Stream Turnout At The Polls Online
• Firsthand Reports From California Wildfires Pour Through Twitter

Full post as published by Threat Level on May 20, 2010 (boomark / email).