The “hot news” doctrine is full of hot air.

The “hot news” doctrine is full of hot air.

Recently, the United States Court of Appeals for the Second Circuit held in Barclays Capital v.¬†(“Flyonthewall“) that while federal copyright law preempted the “hot news” doctrine in that particular case, Defendant¬†Theflyonthewall could be held liable for infringing the copyright to Barclay’s and other Plaintiff banks buy/sell recommendations, notwithstanding First Amendment concerns. The Second Circuit should have gone father by abolishing the doctrine as preempted by the Copyright Act.

The “hot news” originated in International News Service v. Associated Press, a U.S. Supreme Court case decided in 1918. International News involved alleged free riding by International News Service (“INS”) on the Associated Press (“AP”). INS would obtain news from AP, sometimes illegally from a reporter like one on the left, on the East Coast. INS would then distribute the news on the West Coast. The Court held that such news was protected even in the absence of copying or a contractual obligation by INS to AP.

Similarly, in Flyonethewall, the Plaintiff banks had released by/sell recommendations concerning stock. Think of these recommendations as a wine rating you would see on Wine Spectator. Theflyonthewall not only divulges the banks recommendations before they got to their intended audience, but also copied some of the content verbatim on its site. As a result, Theflyonthewall was rightly found liable for copyright infringement. But the Second Circuit reversed the “hot news” claim as preempted in this particular case by the Copyright Act. Notably, the Court did not repudiate the doctrine all together as preempted completely by the Copyright Act. It should have.

The problem with the “hot news” doctrine is that there are no rational bounds on where it can be stopped. In the case where one newspaper copies text from another, you have a copyright violation. Where a reporter has a confidentiality contract with a newspaper but divulges news to another competitor, there may be a tortious interference claim. Or if one newspaper uses illegal means to get information from another, as in International News, an unfair competition claim exists. But “hot news” theory can be expanded to all sorts of ideas and information that are not otherwise obtained illegally or protected by copyright, patent, or contract. It in essence is relies then on a “sweat of the brow” theory. Without such bounds, the “hot news” doctrine expands intellectual property rights beyond the bounds Congress intended, revealing itself to be, in the end, full of hot air.

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