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Second Circuit upholds “hot news” doctrine

July 2nd, 2011 by Joseph William Singer

A recent case replays the conflict in the famous case of INS v. AP (International News Service v. Associated Press), 248 U.S. 215 (1918), which held that a news organization could stop a rival from selling news it had gathered for a short period when the news was still hot. In effect, the doctrine created a property right against a competitor’s use of the information for commercial purposes during the initial sales period. The Second Circuit reaffirmed that doctrine in the case of Barclays Capital Inc. v. Theflyonthewall.com, 2011 WL 2437554 (2d Cir. 2011), while simultaneously clarifying that noncompetitors were perfectly free to transmit the information without limit once it had been made public. The court held that investment banks could not stop a financial Web site from publishing on the Internet the research conclusions of the banks’s analysts once they were released to the public. At the same time, the banks could stop competitors from copying and reselling the information at least for a while. In effect, the hot news doctrine creates a property right against competitors but not against noncompetitors. Although noncompetitors can report the conclusions and reasoning of hte analysts, copyright law prohibits them from simply reprinting the actual language of the reports. The decision reversed the lower court’s ruling which had required defendant website to wait until 10 am to publish news about the financial reports that had been made public before 9:30 am, Read article.

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