Court throws out freelance writers' settlement

NEW YORK (Reuters) - A federal appeals court on Thursday set aside a settlement between freelance writers and a group of publishers, including New York Times Co and Thomson Corp, in a copyright case involving work posted online or in databases.

The decision reopens an issue that was settled in 2005 after years of negotiations over claims by freelance writers that their contracts did not allow for publication of their work electronically.

Other defendants in the case included Dow Jones & Co, ProQuest Co, Knight Ridder Inc and Dow Jones Reuters Business Interactive LLC. Dow Jones subsequently bought Reuters Group Plc's stake in Dow Jones Reuters Business Interactive, which is now known as Factiva.

In a 2-1 decision on Thursday, a panel of judges on the U.S. Court of Appeals for the Second Circuit vacated a lower court order approving the settlement of the writers' copyright infringement claims, saying the district court lacked the power to approve the settlement.

"The overwhelming majority of claims within the certified class arise from the infringement of unregistered copyrights," Circuit Judge Chester Straub wrote for the majority.

"We have held, albeit outside the class-action context, that district courts lack statutory subject matter jurisdiction over infringement claims arising from unregistered copyrights."

The writers had sued the publishers and electronic database services, saying their contracts did not grant the publishers the right to electronically reproduce their work or license it for others to do so.

The settlement, which was worth as much as $18 million, was given final approval by U.S. District Judge George Daniels in Manhattan in September 2005.

One of the three judges on the appellate panel, John Walker, dissented in a separate opinion, saying he "would not dismiss the settlement on jurisdictional grounds."

(Reporting by Paritosh Bansal; Editing by Brian Moss)