MANHATTAN (CN) - Bloomberg's unauthorized distribution of a recorded conference call about Swatch earnings constituted fair use, the 2nd Circuit ruled Monday.
Minutes after Swatch Group Ltd. ended a conference call with financial analysts discussing the Swiss watch maker's financial performance, Bloomberg distributed an audio recording and transcript of the call to subscribers of its Bloomberg Professional research service, according to Swatch's lawsuit against the financial news service.
Bloomberg was not invited to participate in the call.
Swatch Group Management Services filed a copyright infringement lawsuit after Bloomberg refused to remove the recording from its website.
The New York-based federal appeals court upheld a federal judge's ruling for Bloomberg, saying the news company's use of the recording qualifies as fair use.
"We ... hold that where a financial research service obtains and disseminates important financial information about a foreign company in order to make that information available to American investors and analysts, that purpose supports a finding of fair use," Chief Judge Robert Katzmann wrote for the three-judge panel.
In its appeal, Swatch had argued that the recording qualifies as data and not news, and that Bloomberg knowingly flouted its instruction at the beginning of the call that: "This call must not be recorded for publication or broadcast."
But the panel called these arguments "unpersuasive."
"To begin with, whether one describes Bloomberg's activities as 'news reporting,' 'data delivery,' or any other turn of phrase, there can be no doubt that Bloomberg's purpose in obtaining and disseminating the recording at issue was to make important financial information about Swatch Group available to American investors and analysts," Katzmann wrote.
"That kind of information is of critical importance to American securities markets," he added. "Indeed, as Bloomberg points out, the Securities and Exchange Commission has mandated that when American companies disclose this kind of material nonpublic information, they must make it available to the public immediately."
Use of copyrighted material that serves this purpose is "very closely analogous to 'news reporting,' which is indicative of fair use," Katzmann wrote.
"Bloomberg's overriding purpose here was not to 'scoop' Swatch or 'supplant the copyright holder's commercially valuable right of first publication,' but rather simply to deliver newsworthy financial information to American investors and analysts," the panel concluded, quoting the U.S. Supreme Court's 1985 decision in Harper v. Row. "That kind of activity, whose protection lies at the core of the First Amendment, would be crippled if the news media and similar organizations were limited to authorized sources of information."
Swatch Group Ltd., the parent company of Swatch Group Management Services, owns or controls more than 200 subsidiaries and distributes watches for 19 of the world's best-known brands, including Omega, Breguet, Longines, Blancpain, Swatch, Tissot and others.
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