Obsolete Hot News Doctrine Back In The News As Bloomberg Is Sued For Reporting Too Quickly

It's been a few years since we've really talked about the Hot News doctrine, which was a mostly obsolete and, frankly, bizarre attempt to turn the idea of publishing a similar news story too quickly after the original reporters broke the story into a form of "misappropriation." It stems from the International News Service v. Associated Press case from a century ago (literally: 1918), in which the AP argued that even though there is no copyright in facts, having INS release a similar story too quickly to AP's articles was a form of "misappropriation" of its "hot news." Incredibly, the court agreed. However, multiple later cases, plus the entire rewriting of copyright law in 1976 had most people believing that the entire concept of "hot news" was obsolete and effectively dead.

Indeed, in 2003, Judge Richard Posner suggested that the entire concept "can be jettisoned" and he later committed to that in some of his rulings. However, around 2010, a variety of hot news cases popped up, and yet basically all of them have been losers (the one exception I can think of being a default judgment where the defendant didn't even show up).

Still, over the last few years it felt as though we were back to the general feeling that "hot news" was a dead letter. Except... DC news organization Capitol Forum is now suing Bloomberg under the Hot News doctrine, in yet another attempt to revive the silly concept. The complaint makes a valiant effort, but one that seems likely to fall way short. The lawsuit also argues copyright infringement, and we'll get to that in a second, but the attempt at crying "hot news" seems particularly week:

In addition to violating Capitol Forum's copyright protection, Bloomberg'sconduct also violates Capitol Forum's proprietary rights under the common law tort of "hotnews" misappropriation. This doctrine prohibits free riding by competitors. It prohibits a direct competitor from acquiring and republishing time-sensitive news and analysis generated by itscompetitor and intended only for its competitor's subscribers and authorized recipients.

The timeliness of business and financial news reporting is essential to CapitolForum's subscribers. Bloomberg competes directly with Capitol Forum for subscriptions byend-users, and Capitol Forum and Bloomberg's products are marketed and sold to the samecustomer base. Bloomberg's conduct in this regard necessarily diverts business opportunitiesfrom Capitol Forum.

This free riding on Capitol Forum's reports impairs Plaintiff's incentive toprovide that reporting as an exclusive service to its existing subscribers and to potential newclients. To the extent that Plaintiff is deprived of the intended exclusivity of its reports as aresult of its being made available by Bloomberg, such conduct by Bloomberg reduces the valueof the reports to Capitol Forum's subscribers. It has already caused Capitol Forum subscribers tocancel their subscriptions because they can obtain the same Capitol Forum news and analysisfrom Bloomberg's First Word service. If left undisturbed, Bloomberg's conduct inevitably will,among other things, adversely affect Capitol Forum's willingness to continue to make substantialinvestments in generating and distributing such reports

This argument may have been successful in the 1920s, but given all of the precedent against this kind of thing between now and then, it seems like quite a stretch to think that courts will be willing to bring back Hot News -- especially given the 1976 Copyright Act, which more or less pre-empts any state law attempts to create copyright-like regulations.

So what about the copyright claims in the lawsuit? That may come down to specifics, but from Capitol Forum's own description of what is happening, it seems like a difficult case to make:

On numerous occasions, Bloomberg has impermissibly solicited and obtainedPlaintiff's proprietary reports, has copied and quoted the most creative and original aspects of thereports, has published its own summary or abstract of the content of the reports in the form a"news alert," and has distributed these "news alerts" to its own subscribers on its "First Word"news service. While Bloomberg cites Capitol Forum as the source of its summaries andabstracts, it does not undertake creative or journalistic efforts of its own to transform Plaintiff'swork into something new or different from Capitol Forum's original report. Other thanincluding a current market price or a reference to a past article, Bloomberg does not add any ofits own analysis or contribute any meaningful reporting to Plaintiff's work. Bloomberg's "newsalerts" simply extract the key information from Plaintiff's reports, and repackage CapitolForum's work in a bullet-point form for a quick read. The purpose of Capitol Forum's reportsand Bloomberg's "news alerts" are precisely the same: to inform their subscribers of CapitolForum's copyrighted and proprietary reporting. Bloomberg's conduct constitutes directinfringement of Plaintiff's exclusive right under the Copyright Act to reproduce, use, and controlits copyrighted works.

The filing, notably, provides no actual examples of the copying. And from this description, it certainly sounds quite possible that Bloomberg is not infringing at all. Quoting other sources is likely to be fair use, and repackaging their work "in bullet-point form for a quick read" could certainly be seen as transformative in a fair use analysis. Indeed, Capitol Forum flat out admits above that Bloomberg has "published its own summary of the content, which again suggests fair use and not infringement. The whole thing seems to be a situation of Capitol News trying to plead a hot news claim under copyright law (which isn't going to fly at all). Of course, specific examples might result in a different analysis, but if the infringement argument was strong, you'd think the actual complaint would demonstrate it much more clearly (including identifying actual examples of the copyright-covered content being copied).

There are two other elements in the filing that seem worth commenting on. First, in an attempt to claim that this infringement is "willful" Capitol Forum points to an important fair use case (also filed against Bloomberg) in which the 2nd Circuit ruled that Bloomberg reposting an entire earnings call was fair use (i.e., a win for Bloomberg). However, Capitol Forum is pointing to Bloomberg's filings in that case saying that there the company "conceded that the fair use exception does not apply when the copyrighted material is based on an analysis-and is not just reporting 'facts.'" That... seems unlikely to be a fair or accurate statement of Bloomberg's position. There are many cases in which fair use applies to analysis and not just facts.

There's also this:

Bloomberg's knowledge is also demonstrated by Bloomberg BNA's copyrightguideline, which states that it is a copyright violation to summarize a Bloomberg article.

And the simple response there is that Bloomberg BNA's internal guidelines are (a) legally meaningless and (b) bullshit. That's not an accurate statement regarding copyright law. It is not a copyright violation to summarize anyone's articles.

The other interesting element of the filing is the claim of vicarious infringement, in that Capitol Forum argues that a Bloomberg employee, Joshua Fineman, induced a Capitol Forum subscriber to pass along its news alerts.

For example, commencing around December 2016, andcontinuing through December 2017, Joshua Fineman of Bloomberg's First Word news serviceinduced one of Capitol Forum's subscribers, a West Coast hedge fund, to provide him withCapitol Forum reports in exchange for providing the hedge fund with market information that itdid not possess. This arrangement continued until Capitol Forum learned of its subscriber'sactions and demanded that they stop. The hedge fund informed Mr. Fineman that it would nolonger agree to trade information with him. In response, Mr. Fineman acknowledged that theiractions were illegal and stated that he would not put the hedge fund in that position again.Despite this recognition of illegality, Mr. Fineman continues his infringing activities with respectto other Capitol Forum subscribers. Mr. Fineman continues to induce and encourage otherCapitol Forum subscribers to directly infringe Capitol Forum's copyright protections bysoliciting those subscribers to send Capitol Forum copyrighted articles to him.

As such, Mr. Fineman and Bloomberg have induced, caused, encouraged, andmaterially contributed to the direct infringement by Capitol Forum's subscribers. Mr. Finemanand Bloomberg are aware that the Capitol Forum material is copyrighted and that Capitol Forumsubscribers who transmit these reports violate Plaintiff's copyright by sending them toBloomberg.

It is possible that this part of the filing might create a bit more of a headache for Bloomberg. Even if the practice of forwarding such emails is not just standard across industry, but practically second nature to almost everyone, it might still be seen as infringing. Still, it does seem like Capitol Forum's bigger issue, then, would be with the subscribers who are infringing on their works directly by distributing its alerts, but (not surprisingly) the company probably is less interested in suing its own customers -- especially when they likely have smaller pockets that Bloomberg.

No matter what, this will be an interesting case to follow, but hopefully not one that gets very far, especially in its attempt to revive "Hot News."