(The opinions expressed here are those of Alison Frankel, a
columnist for Reuters.)
By Alison Frankel
NEW YORK Jan 27 Can corporations use copyright
laws to block news organizations from publishing their own
information about themselves?
Not according to a ruling Monday from the 2nd Circuit Court
of Appeals in an intriguing case called Swatch v. Bloomberg. The
appeals court said that Bloomberg was entitled to publish an
audiotape of an invitation-only analyst call with Swatch
officials, even though Swatch held a U.S. copyright on the
recording and told analysts who participated in the call that
the audio could not be published or broadcast.
The 2nd Circuit's extremely broad view of the media's fair
use of copyrighted corporate information - which gives primacy
to the investing public's interest in financial reports and data
- is good news indeed for financial news reporters and their
employers. In combination with the appeals court's 2011 holding
in Barclays v. Theflyonthewall, the Swatch opinion makes it
clear that when a corporation's statements constitute news, the
corporation doesn't have the right to control how that news gets
Under Monday's decision, that's true even when a news
organization uses the copyrighted material for commercial
purposes - and even when the information isn't transformed in
any way before publication. The investing public's right to
know, according to the 2nd Circuit, can't be trumped by
"Whether one describes Bloomberg's activities as 'news
reporting,' 'data delivery,' or any other turn of phrase, there
can be no doubt that Bloomberg's purpose in obtaining and
disseminating the recording at issue was to make important
financial information about Swatch Group available to American
investors and analysts," wrote Chief Judge Robert Katzmann for a
panel that also included Judges Amalya Kearse and Richard
Wesley. "Bloomberg's overriding purpose here was not to 'scoop'
Swatch...but rather simply to deliver newsworthy financial
information to American investors and analysts. That kind of
activity, whose protection lies at the core of the First
Amendment, would be crippled if the news media and similar
organizations were limited to authorized sources of
Pretty resounding language, and that's despite good
arguments by Swatch and its lawyers at Collen IP that
Bloomberg's publication of the audiotape didn't amount to fair
use. I've written before about the unusual facts of the case,
but here's a brief recap.
Foreign-based companies like Swatch aren't subject to the
same disclosure requirements as U.S. corporations, so when
Swatch released its 2010 earnings in February 2011, it organized
an invitation-only call with analysts who track the stock.
Reporters were not invited to participate, but very shortly
after the conclusion of the 132-minute call, Bloomberg posted an
audiotape and transcript to subscribers of its financial
research service. When Swatch found out, it demanded that
Bloomberg take down the materials; when the news organization
refused, Swatch obtained a copyright on its executives'
statements during the earnings call and sued Bloomberg for
U.S. District Judge Alvin Hellerstein of Manhattan ruled in
August 2011 that Swatch could proceed with its case, denying a
motion to dismiss by Bloomberg's lawyers at Willkie Farr &
Gallagher. But in May 2012, after listening to the audiotape,
Hellerstein changed his mind about Swatch's infringement claims.
The judge granted Bloomberg's motion for judgment on the
pleadings, ruling that the news company made fair use of the
"(Bloomberg's) work as a prominent gatherer and publisher of
business and financial information serves an important public
interest, for the public is served by the full, timely and
accurate dissemination of business and financial news,"
COURT NOT SWAYED
On appeal, Swatch argued (with not a little justification)
that several of the considerations judges must weigh in fair use
analysis actually tilted in its favor. Bloomberg wrongfully
obtained the audiotape, Swatch asserted, and published it
despite an admonition against distribution at the beginning of
the call. There was no educational purpose for the publication;
Bloomberg makes money from its research service. Nor could the
audiotape be fairly described as reporting, according to Swatch,
because Bloomberg posted the entire audiotape and transcript,
without any transformative editing, additions or commentary.
Swatch argued that at the very least, it should have been
permitted to conduct discovery on Bloomberg's profit motive.
The 2nd Circuit was not at all swayed.
"A use of copyrighted material that serves (a) public
purpose is very closely analogous to 'news reporting,' which is
indicative of fair use," the appeals court said. "We agree with
the district court, moreover, that this important public purpose
underlying Bloomberg's use overcomes the countervailing weight
we would otherwise give to Bloomberg's clandestine methods and
the commercial, nontransformative nature of its use." (As an
aside, this opinion deserves plaudits for its clarity and
readability; even if you disagree with Katzmann's conclusions,
you have to admire his writing.)
The 2nd Circuit said it didn't have jurisdiction to consider
Bloomberg's counterargument that corporate calls with analysts
shouldn't be entitled to copyright protection. But the judges
clearly didn't regard Swatch's creative use of copyright as a
viable model for shielding corporate information.
"The through-and-through factual nature of the earnings call
places it at the very edge of copyright's protective purposes,"
the court said, noting that, unlike ordinary copyright holders
such as writers and musicians, Swatch had no commercial purpose
of its own in protecting the recording. "At most, Bloomberg's
use had the effect of depriving Swatch Group of the ability to
know and control precisely who heard the call," the court said.
"But whatever cognizable interest Swatch Group has in
maintaining that ability, it is far outweighed by the public
interest in the dissemination of important financial
THE OTHER WAY
The opinion is particularly helpful as media companies
transform themselves into one-stop information providers,
offering subscribers data and source materials alongside news
reporting. This ruling explicitly holds that when a news
organization makes corporate data of any sort publicly
available, it's making fair use of the information.
Just imagine if the decision had gone the other way: U.S.
corporations are subject to disclosure rules set forth by the
Securities and Exchange Commission, but what if foreign
companies could control the release of their financial data by
copyrighting annual reports?
So, cheers to the 2nd Circuit for refusing to get trapped in
the thicket of fair use analysis. The news business has enough
problems. The last thing we need to deal with is copyrighted
conference calls and earning reports.
At oral argument, Swatch was represented by Joshua Paul of
Collen, who declined to comment. Bloomberg was represented by
John DiMatteo of Willkie, who referred me to a Bloomberg
representative. In an email, he said, "We believe - as the court
concluded - that the investing public benefits from knowing when
a public company discloses financial performance to a select
group of analysts. We'll continue to provide transcripts and
recordings from analyst calls to our audiences to bring more
transparency and fairness to the markets."
(Reporting by Alison Frankel; Editing by Ted Botha)