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Publication of a Recorded Earnings Conference Call is Fair Use: SDNY
Practical Law Legal Update 4-519-5364 (Approx. 4 pages)
Publication of a Recorded Earnings Conference Call is Fair Use: SDNY
by PLC Intellectual Property & Technology
| Published on 18 May 2012 • New York |
In Swatch Group Management Services Ltd. v. Bloomberg L.P., the US District Court for the Southern District of New York determined that the defendant's publication of the plaintiff's recorded earnings conference call was fair use under Section 107 of the Copyright Act.
Key Litigated Issues
The key litigated issue in Swatch Group Management Services Ltd. v. Bloomberg L.P. was whether Bloomberg's publication of a recorded earnings conference call between Swatch's senior executives and invited securities analysts was a fair use and therefore not an infringement of Swatch's copyright in the call.
Background
The plaintiff, The Swatch Group Management Services Ltd., controls the intellectual property of many well-known watch brands. Its parent, The Swatch Group Ltd., produces, among other things, watches and watch components. The defendant, Bloomberg L.P., is a leading provider of business and financial information.
On February 8, 2011, the plaintiff's parent company hosted a conference call to discuss its recent financial results with invited securities analysts.
The participants on the call were advised that The Swatch Group was recording the call but that others should not record the call for publication or broadcast. The plaintiff registered it with the U.S. Copyright Office. The plaintiff asserts that the call qualifies for copyright protection on the basis that its senior executives comments are an original work of authorship and the recording fixed the work in a tangible medium.
Bloomberg was not among the invited participants. However, Bloomberg obtained a recording of the call from a third party transcript service and made the recording available online to its paid subscribers.
The plaintiff sued Bloomberg for copyright infringement. Bloomberg raised the fair use affirmative defense in its answer. Before discovery, the plaintiff moved for judgment on the pleadings, requesting that the court strike the fair use affirmative defense.
Outcome
In its opinion and order, the court granted Bloomberg summary judgment, finding that Bloomberg's use of the call was a non-infringing fair use. The court analyzed Bloomberg's publication of the call under the following four factors set out in Section 107 of the Copyright Act:
- The purpose and character of the use.
- The nature of the copyrighted work.
- The amount and substantiality of the portion used.
- The effect of the use on the potential market for or value of the copyrighted work.
The court concluded that copyright's goals are better served by allowing Bloomberg's use of the call and that the use was therefore a non-infringing fair use.
The Purpose and Character of the Use
The public interest of furthering full, prompt and accurate dissemination of business and financial news was key to the court's analysis of this factor. Specifically, the court noted that:
- Bloomberg is a prominent gatherer and publisher of business and financial information.
- The public is served by the full, timely and accurate dissemination of business and financial news.
While courts evaluating this factor often consider for-profit and non-transformative uses to weigh against a finding of fair use, this court found that:
- News reporting is generally done by for-profit entities.
- Transformation may undermine the accuracy of news reporting.
Nature of the Copyrighted Work
The court found that:
- Very little of the earnings call could qualify as original expressions of The Swatch Group's senior executives.
- The comments and questions of the securities analysts are not copyrightable and were disclaimed by the plaintiff.
- The factual content of the remarks and responses made by The Swatch Group's senior executives is not copyrightable.
The court concluded that:
- At best, the plaintiff had a "thin" copyright.
- The factual character of the earnings call means that it is not within the core of copyright's protective purposes.
Amount and Substantiality of the Portion Used
The court noted that use of an entire copyrighted work generally weighs against a finding of fair use. However, it determined that the public interest served by Bloomberg's dissemination of the information in the earnings call, is better served if the information is disseminated in its entirety. Notably, the court found this to include dissemination of "the incidents of oral speech that... color the purely factual content."
Effect of the Use on the Potential Market for or Value of the Copyrighted Work
The court found no possible market effect stemming from Bloomberg's use of the earnings call. Specifically, the court noted that the value of the call to The Swatch Group was to create a positive perception of its financials and business performance, and that Bloomberg's use of the call was not inconsistent with Swatch's maximizing this value.
Practical Implications
The decision is notable for holding Bloomberg's use of the entire copyrighted work to be a fair use. Key to its ruling, the district court found that the nature and purpose of the earnings call gave it only "thin" copyright protection and that Bloomberg's use of it advanced the public interest.