In a victory for financial news media, a U.S. appeals court said Bloomberg News acted lawfully when it secretly obtained a recording of a conference call between Swatch Group and securities analysts and published a transcript, reports Jonathan Stempel of Reuters.
Stempel writes, “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 freedom.
“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.”
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