Above - Tipstrader.com is no longer operating
Sometimes your case is a winner, but not for the reasons you thought. That's why litigators, much to the frustration of judges, tend to toss the kitchen sink into a complaint. Better to have a grouchy judge and have pleaded at least one winning alternative theory than to lose and have the court say you're too late and should have cooked up an alternative theory earlier.
Such was plaintiff's dilemma in Agora Financial LLC v. Samler, ---- F. Supp.2d ---- 2010 WL 2899036 (D. Md. June 17, 2010).
In Agora, a magistrate judge was called to report and recommend after a defendant had defaulted. The facts: investment newsletter publisher sued website that culled all of its recommendations and published them on Tipstrader.com. Claims? "Hot news misappropriation" and Section 43(a) of the Lanham Act.
A nice, lean complaint, just like they tell us to file. Right? Wrong.
In an interesting decision that explained the "hot news" misappropriation claim, the court ruled that the defendants had not violated the "hot news" exception because the analyst recommendations were opinions, not facts, and thus were protectable under copyright law.
"Hot news" misappropriation:
(i) the plaintiff generates or gathers information at some cost or expense ...; (ii) the value of the information is highly time-sensitive ...; (iii) the defendant's use of the information constitutes free-riding on the plaintiff's costly efforts to generate or collect it ...; (iv) the defendant's use of the information is in direct competition with a product or service offered by the plaintiff ...; and (v) the ability of other parties to free-ride on the efforts of the plaintiff or others would so reduce the incentive to produce the product or service that its existence or quality would be substantially threatened....
Since copyright law preempts equivalent state law claims, the "hot news" misappropriation claim was not available. The Lanham Act claim failed as well.
The court, discussing the U.S. Supreme Court's Feist opinion, which rejected the "sweat of the brow" doctrine and required a modicum of originality to qualify for copyright, found the analyst's opinions to satisfiy the originality test and thus be covered by copyright. So the plaintiff lost the application for a default, but was granted the gift of learning that its activities are protected by copyright law.
In Copyright Litigation Handbook, Chapter 7 "Drafting the Infringement Complaint" gives some thoughts on framing copyright pleadings. Chapter 10: "Removal from State Court and Preemption" reviews problems raised by the preemption doctrine and gives guidance in navigating the differences between state and federal claims in the copyright context.
The 2010 Copyright Litigation Handbook just shipped, so now is a good time to get your copy. This year I greatly expanded my treatment of applications for default judgments, which seems to be a growing area of copyright law.
Westlaw users can access Copyright Litigation Handbook through the COPYLITIG database.
More on preemption here.
More on hot news here.
More on default judgments here.
More on Feist here.
Purchase the 2010 Copyright Litigation Handbook from West here