The 2nd U.S. Circuit Court of Appeals in New York on Monday said
Bloomberg's handling of a February 8, 2011, call discussing the
financial performance and prospects of the world's largest
watchmaker constituted "fair use" under U.S. copyright law, and
deserved the U.S. Constitution's First Amendment protection of press
Upholding a lower court dismissal of a lawsuit by Swatch against
Bloomberg, the 2nd Circuit said Bloomberg's methods, while
"clandestine" and reflecting a "lack of good faith," helped ensure
that companies do not selectively disclose material information.
Eliminating selective disclosures had been a goal of the U.S.
Securities & Exchange Commission when in 2000 it adopted Regulation
FD, or fair disclosure. The 2nd Circuit said it did not matter that
Swatch, as a foreign issuer, was not subject to the regulation.
"Although Bloomberg obtained the recording without authorization and
put it to commercial use without transforming it, Bloomberg's use
served the important public purpose, also reflected in Regulation
FD, of ensuring the wide dissemination of important financial
information," Chief Judge John Katzmann wrote for a three-judge
panel of the 2nd Circuit.
The appeals court also dismissed Bloomberg's request for a finding
that the recording deserved no copyright protection in the first
place, saying the news service lacked standing and the court lacked
Joshua Paul, an attorney representing Swatch, declined to comment.
Bloomberg spokesman Ty Trippet said the company was pleased with the
dismissal of Swatch's claims.
"The investing public benefits from knowing when a public company
discloses financial performance to a select group of analysts," he
said in a statement. "We'll continue to provide transcripts and
recordings from analyst calls to our audiences to bring more
transparency and fairness to the markets."
Swatch complained that Bloomberg gave online subscribers a same-day
transcript of the call, which 132 analysts joined, despite Swatch's
instructions that participants not record it for publication or
broadcast what was said.
[to top of second column]
Katzmann, however, cited the 1971 U.S. Supreme Court decision in the
"Pentagon Papers" case in concluding that Bloomberg's main purpose
was not to "scoop" Swatch or infringe a copyright, but rather to
"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," he
Monday's decision upheld a May 2012 ruling by U.S. District Judge
Alvin Hellerstein in Manhattan.
Swatch is based in Bienne, Switzerland, and is known for colorful
plastic namesake watches. It also owns higher-end brands, including
Breguet, Longines, Omega and Harry Winston.
Thomson Reuters StreetEvents competes with Bloomberg in providing
transcripts of corporate teleconferences.
The First Amendment of the U.S. Constitution provides protections
for press, speech, religion and peaceful assembly.
The case is Swatch Group Management Services Ltd v. Bloomberg LP,
2nd U.S. Circuit Court of Appeals, Nos. 12-2412, 12-2645.
(Reporting by Jonathan Stempel; editing
by Jonathan Oatis)
[© 2014 Thomson Reuters. All rights
Copyright 2014 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.