TheFlyonTheWall: A Judicial Paradox? By Robert P. LoBue

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Lawyers crave structure. Give them a cause of action that has several well defined elements and you can keep them occupied for days on end, arguing about each prong. If you number the elements so they can converse in code, so much the better. But a legal theory with obscure architecture gives most of them conniptions. If you are one of “those” lawyers, you probably don’t like the Second Circuit decision in Barclay’s Capital, Inc. v TheFlyonTheWall.com, Inc., 650 F.3d 876 (2d Cir. 2011). Addressing the “hot news misappropriation” tort spawned by International News Service v. Associated Press, 248 U.S. 215 (1918), the court rejected a claim by several investment banks that an online news service was tortiously misappropriating the plaintiffs’ stock buy and sell recommendations, which were shared on a limited basis with preferred clients, by republishing them before the banks were able to reap the economic benefit of those recommendations. Along the way, the court “held” that the five-part test for hot news misappropriation articulated in National Basketball Association v. Motorola, Inc., 105 F. 3d 841 (2d Cir. 1997), was actually dictum. The quotation marks in the previous sentence are used advisedly. Those of us who have toiled in the vineyard of media law have become accustomed to NBA’s five-part test, and some may shed a tear as it seemingly fades into the netherworld of dictum.

What is or was that test? Answering that question shouldn’t be controversial, but it is. Part of the problem, according to Judge Sack’s majority opinion in Fly, is that the NBA court iterated the test twice, and the five elements didn’t come out quite the same each time. Here’s the first recitation, at 845...

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Published In: Business Torts Updates, Communications & Media Updates, Conflict of Laws Updates, Finance & Banking Updates, Intellectual Property Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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