If Financial Ratings Are Opinions, Would Reporting On Those Opinions Be Factual?

from the have-fun-with-this-one dept

Ray Dowd, over at the Copyright Litigation blog points us to a fascinating ruling on questions related to hot news and copyright. As we’ve been covering quite a bit lately, “hot news” claims have become popular again recently, despite having been considered a “mostly dead” legal theory. Hot news suggests that, while factual information cannot be covered by copyright, it can be covered by a copyright-like concept of “hot news,” based on common law misappropriation and unfair competition theories. The problem is that the defining case in hot news, from nearly a century ago, never even looked at the First Amendment issues related to hot news. Sooner or later (perhaps sooner), we’re going to have a case that raises those issues, but for now it’s an open question.

In this latest case, there appear to be some similarities to the leading “hot news” case this year, the theflyonthewall.com case. A bunch of financial firms sued a site called TipsTrader.com claiming both a hot news violation and a trademark violation, because TipsTrader would list out and record various analyst recommendations, and then measure the performance of the related financial instrument. Frankly, this sounds like a pretty useful service. However, the financial firms felt that it was a violation of their intellectual property rights. For whatever reason, TipsTrader never responded to the lawsuit, and thus the financial firms asked for default judgment. While some courts seem to almost automatically grant default judgments in such cases, it’s really quite nice to see the court decide to do an analsysis anyway, and determine that neither the hot news nor the trademark claim stands up, and to recommend against default judgment.

But where it gets really interesting is why the court found there was no hot news claim. After going through a rather excellent historical look at hot news, it notes that the court rulings and legislative history make it clear that hot news only applies to factual information. That is, hot news can only apply to areas where copyright does not. In other words, if something can be covered by copyright, hot news is meaningless. The problem, for the financial firms, is that they had to make the case that their ratings are not covered by copyright. They argued that the ratings are factual information, but the court disagreed, saying that the ratings are “original works,” using “judgment” and “creativity.”

That seems like it really could go either way when you think about it. I mean, it’s good to see a hot news claim fail, because I think hot news is a terrible concept, but then claiming that a rating is copyrightable seems almost equally problematic. Also, it raises the following tricky question: if a rating given to a financial insrument is copyrightable, couldn’t you still claim that reporting on what the rating is would be factual information? I could imagine someone also making a fair use claim, but even before getting to a fair use analysis, it seems like there’s a reasonable legal question here. Is it possible both for the content to be covered by copyright when given… but then in the process of reporting to others what it is, the reporter is presenting it as factual information? I’m sure some of the legal scholars out there can chime in on whether or not that makes any sense.

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Comments on “If Financial Ratings Are Opinions, Would Reporting On Those Opinions Be Factual?”

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Scott@DreamlandVisions (profile) says:

Opinions vs. facts.


“Hi, I’m Bob D Analyst and I say MegaCorp is a strong buy”

The opinion and creative aspect is what Bob says and the report he created to support his opinion.


“Ed T Morrow reporting here. BD Analyst released a report today stating that MegaCorp is a strong buy. Other’s of the Analyst family are unavailable for comment but generally think Bob is full of himself.”

The report by Bob is opinion and copyrightable. The fact that Bob wrote and published that report and what opinions Bob put in that report is not copyrightable.

WHAT Bob says is opinion. THAT he said it is a fact.

Pretty straight forward to me.


greenbird (profile) says:

Re: Opinions vs. facts.

The report by Bob is opinion and copyrightable. …what opinions Bob put in that report is not copyrightable.

That makes no sense. If what he put in the report isn’t copyrightable what about the report is copyrightable? The paper he wrote it on? You say the opinions are copyrightable then in the next sentence they aren’t copyrightable.

Yup simple, by the same fallacious logic the RIAA/MPAA members use in all there dealings on IP concerns.

Scott@DreamlandVisions (profile) says:

Re: Re: Opinions vs. facts.

Nice edit. Let’s put the context back in, shall we?

“The report by Bob is opinion and copyrightable. The fact that Bob wrote and published that report and what opinions Bob put in that report is not copyrightable.”

The fact that (bob did something) and the fact that bob (put something in a report) is not copyrightable. Only the nonfactual portions of the content *in* the report are copyrightable.

Let’s try it this way and see if it’s more understandable.

If all Bob did was print a spreadsheet of stock prices, financial statements and other facts, then no, it would not be copyrightable.

However, if Bob takes all of those facts, his knowlege of the company and industry involved, does some calculations, throws some darts and rolls some bones to come up with his OPINION on what others should do related to those facts, then he would have a creative work and that work is copyrightable. The facts within the report (ie.. numbers, events, etc.) are not, but the final analysis and recommendations (opinions) are copyrightable.

Jason says:

Re: Re: Opinions vs. facts.

So to summarize (hehe), it should not be considered a violation of copyright to simply note Bob’s report and make a summarizing statement, “Bob says pick ACME,” and include a brief quote under fair use.

If you repost too much of, most of or all of Bob’s report so as to compete with his own publication of it, then you’re in danger of violating something or other (but just which? well we’re not sure).

Hulser (profile) says:

Both opinion and fact

I’m not sure what all the legal aspects of this are, but to me the issue is more about the complexity of the content rather than distinguishing between a fact and an opinion. That the home team’s score in last night’s game was 4 is a fact. But I think that ABC company rates XYZ company as a “Buy” is just as much of a fact. Yes, it’s also opinion, but it’s an opinion that can be reduced to a single phrase: “ABC says buy XYZ”. If your opinion is so small as to meet the requirements for a fair use quote, then I’m thinking that it probably shouldn’t qualify for copyright.

Paul Alan Levy (profile) says:

A somewhat different reading of the opinion -- and my take

The judge actually gives two different reasons for rejecting the hot news claim.

The first is that the Fourth Circuit (which includes Maryland) has never approved the proposition that the hot news misappropriation doctrine survives the addition of a preemption provision to the US Code, and that a different federal district judge in Maryland has squarely rejected the Second Circuit’s ruling in NBA v. Motorola that some aspects of hot news do survive preemption (pages 13-15 of the opinion, discussing Lowry’s Reports, Inc. v. Legg Mason, Inc. , 271 F. Supp. 2d 737, 754 (D. Md. 2003), and rejecting the plaintiffs’ arguments that the ruling is factually distinguishable).

Then the judge said, “even if the court were to apply the NBA test,” plaintiffs’ claim would still fail because, at best, NBA’s formulation only extends to factual information and analysts’ recommendations are opinions, not facts.

In suggesting that this distinction is significant because opinions reflect creative judgment (and hencde originality) while facts do not, the judge went astray because the non-copyrightability of facts is not based on the “fact/eexpression” dichotomy but on the “idea/expression” dichotomy. Although opinions are conceptually distinct from facts – in fact, their expression receives heightened First Amendment protection, as in the rule in libel cases that there is no such thing as a false idea — that does not mean that opinions are themselves copyrightable. Original expression that contains opinions is copyrightable, just as original expression that contains facts is copyightable. But neither the facts themselves, nor the opinions themselves, are copyrightable. So, a later report that informs readers what opinion so-and-so has expressed does not infringe the copyright owned by the creator of the first publication that contained the opinion.

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