Presentation by Ben Marks, Weil Gotshal & Manges

1. Introductory Remarks on Newspublishing
and Fair Use
Benjamin E. Marks
Copyright & Technology 2010
py g gy
New York, NY
June 17, 2010
Weil, Gotshal & Manges LLP

2. Protecting News Content
 Copyright Law
 Federal law
 Protects expression, but not facts or ideas
 Tension with First Amendment resolved by the Fair Use
doctrine
 Statutory damages & attorneys fees available
 The “Hot News” Misappropriation Doctrine
 State-law judge-made offshoot of the general law of
State law, judge made
unfair competition
 Can be used to protect facts but only for a very limited
window
i d
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3. Fair Use
 Fair use is an affirmative defense to copyright
infringement
 Nonexclusive list of factors to be considered in
determining whether copying was fair:
 purpose and character of the use
 nature of the copyrighted work
t f th i ht d k
 amount and substantiality of the portion used
 effect of the use upon the potential market for or value
of the copyrighted work
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4. New York Misappropriation Law
 Usually invoked by a plaintiff who has what she considers
something of commercial value used or usurped b
thi f i l l d d by
another without compensation
 Used by courts to fill in some of the gaps between other,
more specific forms of IP protection
 Highly fact-specific and dependent on fact-finder’s view of
“fairness”
“f i ”
 Valuable (but unreliable) source of protection for
information ge e ated by labor, s , and investment o
o at o generated abo , skill, a d est e t of
resources
 Some types of misappropriation are preempted by Section
301 or th C
the Copyright A t
i ht Act
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5. Elements of a “Hot News” Claim
Hot News
 The Second Circuit has articulated a five-part test that “hot
news” claims must satisfy t survive copyright preemption:
” l i t ti f to i i ht ti
 a plaintiff generates or gathers information at a cost
 the information is time-sensitive
time sensitive
 a defendant’s use of the information constitutes free-riding on
the plaintiff’s efforts
 the defendant is in direct competition with a product or
service offered by the plaintiffs
 the ability of others to free-ride on the efforts of the plaintiff or
others would so reduce th i
th ld d the incentive t produce th product
ti to d the d t
or service that its existence or quality would be substantially
threatened
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6. Application of the “Hot News” Doctrine
Hot News
 The landmark case: INS v. AP, 248 U.S. 215 (1918)
 There have been relatively few true “hot news” cases
since INS
 Only one “hot news case tried to a decision on
hot news”
equitable remedies:
 Barclays Capital Inc. et al v. Theflyonthewall.com, __ F.
Supp.2d __, 2010 WL 1005160 (S D N Y M 18 2010)
S 2d (S.D.N.Y. Mar. 18,
(appeal pending)
 Other noteworthy recent cases:
 Associated Press v. All Headline News Corp., 2009 WL
382690 (S.D.N.Y. Feb. 17, 2009)
 Dow Jones & Co. v. Briefing.com, No. 10 Civ. __ (S.D.N.Y.)
(filed April 20, 2010)
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7. Barclays Capital Inc. et al v. Theflyonthewall.com, __ F.
Supp.2d
Supp 2d __, 2010 WL 1005160 (S.D.N.Y. Mar 18 2010)*
(S D N Y Mar. 18, 2010)
 Barclays Capital, Merrill Lynch, & Morgan Stanley sued Fly
for copyright infringement and “hot news” misappropriation
hot news
arising out of Fly’s distribution of plaintiffs’ equity research
recommendations.
 Fl ’ prior practice h d b
Fly’s i ti had been t publish verbatim or near-
to bli h b ti
verbatim excerpts of research reports.
 Fly’s continuing practice through trial was to publish
“headlines” of the research recommendations.
 Cross-motions for summary judgment denied.
 Bench trial before Judge Cote in March 2010
2010.
______________________________
*Speaker is counsel for Plaintiffs-Appellees
Speaker Plaintiffs Appellees
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8. Barclays Capital Inc. et al v. Theflyonthewall.com
(cont.)
(cont )
 Copyright Infringement Claims
 Liability conceded shortly before trial
 Fly’s litigation position on infringement claims was
“objectively unreasonable” Slip Op. at 45 (citing
Wainwright Secs., Inc. v. Wall Street Transcript
Corp., 558 F.2d 91 (2d Cir. 1977))
p, ( ))
 Relief
 permanent injunction
 statutory damages
 prejudgment interest
 attorneys f
fees
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9. Barclays Capital Inc. et al v. Theflyonthewall.com
(cont.)
(cont )
 Hot News Misappropriation Claims
 The Record Evidence
 Plaintiffs generate information at a cost
 Time-sensitivity
y
 Free-riding
 Direct competition
 Substantial threat to the existence or quality of the product
 Principal Defenses
 First Amendment
 No free riding
free-riding
 No competition (Fly not an investment bank)
 Insufficient proof of actual, quantifiable damage caused directly
by Fly (hey others do it too)
(hey,
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10. Barclays Capital Inc. et al v. Theflyonthewall.com
(cont.)
(cont )
 Scope of Injunctive Relief Against Misappropriation
 Carefully crafted and narrow
 Limited period of exclusivity for plaintiffs to disseminate their
recommendations
 pre-market open recommendations: until 10am or half-hour
after NYSE opens
 mid-day recommendations: two hours after release by clients
y y
 Exception for “non-systematic, contextual reporting after the
market opens”
 Possible reevaluation after one year if Fly can demonstrate
that plaintiffs have not taken reasonable steps to restrain
similar activity by others
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11. What Does the Future Hold?
 More “hot news” litigation
 Appeal in Barclays Capital
 Numerous amici weighing in including, among others, the
Associated Press the New York Times the Washington
Press, Times,
Post, the Newspaper Association of America, Dow
Jones, Google, and Twitter
 Dow Jones & Co v. Briefing.com
v Briefing com
 Proposed legislative remedies
 federal “hot news” tort
hot news
 amendment of Copyright Act
 Ongoing search for business solutions
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