Reaping and Sowing Copyrights: Second Circuit Finds "Hot News" Misappropriation Claim Preempted By Copyright Act

 In Barclay's Capital Inc. v. TheFlyontheWall.com, (10-1372-CV June 20, 2011), the Second Circuit found that publishing brief factual summaries of investment recommendations was not the basis for a misappropriation claim under New York law.

The defendant had already been enjoined from republishing investment reports in their entirety, this issue was not part of the appeal. The defendant continued, however, to publish very brief factual summaries of the recommendations in the investment reports. The district court's injunction blocked republication of this information for a period ranging from 30 minutes to several hours. The investment banks claimed that the information was valuable only for the morning trading and that its proprietary nature incentivated their respective clients to trade through the firm issuing the report.

Google and Twitter appeared as amici and asked the Second Circuit to repudiate the "hot news" misappropriation tort in its entirety. The Second Circuit declined to do so expressly, but reached a similar result by applying the preemption doctrine.

We conclude that in this case, a Firm's ability to make news -- by issuing a Recommendation that is likely to affect the market price of a security -- does not give rise to a right for it to control who breaks that news and how. We therefore reverse the judgment of the district court to that extent and remand with instructions to dismiss the Firms' misappropriation claim.


The case is a very important one for the future of the internet and such services as Google and Twitter. It also has strong philosophical implications with a section on the "moral dimensions" of the question replete with footnotes about the bible's competing views on reaping where one has not sown, and on the other hand, being forbidden to reap even where one has sown (see P 43 and FN 27 in the embedded opinion below).
Barclays v wall 10-1372_both

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