Fair Use and News Reporting

The US Court of Appeals for the Ninth Circuit has stated that "[w]aving the news reporting flag is not a get out of jail free card in the copyright arena." In Swatch Group Mgmt. Services v. Bloomberg L.P., __ F.3d __, 2014 WL 2219162 (2014), however, the Second Circuit took a charitable view of such flag waving and interpreted fair use broadly to protect a news organization's dissemination of a highly newsworthy recording. The Second Circuit's broad interpretation of fair use to accommodate news reporting is especially noteworthy in an era in which news organizations are often faced with difficult questions about whether they may legally reproduce "user-generated content."

In Swatch Group Management Services v. Bloomberg, Swatch Group sued for copyright infringement because Bloomberg disseminated a sound recording of a conference call between Swatch and investment analysts to discuss the company's earnings report. Swatch did not admit the press to the conference call, but Bloomberg nonetheless obtained and disseminated a recording of the call to its paid subscribers. A district court granted summary judgment for Bloomberg on fair use grounds, and the Second Circuit affirmed.

First, the court found that “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 investors and analysts.” That Bloomberg profited from the dissemination of the recording did not alter the court’s analysis, because almost all news services obtain profits by publishing factual information. The court further observed that the nature of Bloomberg’s use of the recording supported a finding of fair use even though Bloomberg reproduced the original verbatim: “[T]he need to convey information to the public accurately may in some instances make it desirable and consonant with copyright law for a defendant to faithfully reproduce an original work without alteration.” (emphasis added) This use even could be considered “transformative” because Bloomberg was publishing “factual information to an audience from which Swatch Group’s purpose was to withhold it.” [!]

 Analyzing the second fair use factor (i.e., the nature of the copyrighted work), the court found that Bloomberg’s use of the recording did not threaten Swatch’s copyright interests because the information disseminated was entirely factual, and Swatch had already “publicly disseminated the spoken performance embodied in the recording.” Third, the court assessed “the amount and substantiality of the portion used in relation to the copyrighted work as a whole.” Although Bloomberg used the entire work, the use “was reasonable in light of its purpose of disseminating important financial information to investors and analysts.” Fourth, Bloomberg’s use of the sound recording had no market effect on the value of Swatch’s unpublished recording, and Swatch created the recording for other advantages unrelated to “the possibility of receiving royalties.” Finally, the “balance of factors” favored Bloomberg’s dissemination being treated as a fair use, particularly given the importance of the public interest in financial information.

From a media law scholar's perspective, this decision  is praiseworthy because the court clearly recognizes that the public interest should play an important role in fair use analysis. (Compare the Ninth Circuit's decision in Monge v. Maya Magazines, Inc., 688 F.3d 1164, 1183 (2012), in which it said "fair use has bounds even in news reporting, and no per se public interest exception exists.").  Instead of getting hung up on technical application of the fair use factors, the court implicitly looked to the broader goals of copyright law and found that the newsworthiness of (and lack of originality in) the recording trumped the fact that Bloomberg had used the whole thing without alteration. 

Whether other courts will interpret the fair use factors as broadly when a defendant uses an entire copyrighted work remains to be seen. But in an era when copyright law is being (mis)used in an attempt to force takedowns of photos taken by monkeys, the Second Circuit's decision provides a neeeded dose of common sense.