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March 19, 2010 12:23 PM

Weil Wins Injunction Against Fly on the Wall

Posted by Zach Lowe

Like our colleague Alison Frankel at The Am Law Litigation Daily, we had not before heard of the "hot news" tort that places some limits on the publication of information, even if that information is already in the public domain in some form. That's the tort three banks represented by Weil, Gotshal & Manges used to win an injunction against the breaking Wall Street news site Theflyonthewall.com, according to The Am Law Litigation Daily. The banks claimed Fly's practice of publishing pieces of research reports almost instantly undercut their work by making key nuggets meant for exclusive client use available to a wider audience immediately. Why would clients pay big money those reports--which themselves cost the banks money to produce--if Fly was going to publish the important stuff right away?

Fly, represented by Glenn Ostrager of Ostrager Chong Flaherty & Broitman, played the free speech card, arguing it was publishing breaking news, just as Bloomberg or Reuters would do, according to the Lit Daily and this piece in Bloomberg. The banks--Merrill Lynch, Barclays, and Morgan Stanley--claimed that Fly was "free-riding" on their work, stealing their intellectual property, and costing them money, the stories say. They asked Judge Denise Cote of federal court in Manhattan to bar Fly from publishing their reports for four hours or until noon at the earliest, Bloomberg says.

Cote ruled for the banks but shortened the prohibition, Lit Daily reports. Fly will have to wait until 10 a.m. on trading days to publish pieces of research reports. For any report released once trading starts, Fly will have to wait two hours before publishing, the stories say.

Charles Davis of the National Freedom of Information, a coalition at the University of Missouri in Columbia, said the decision could set a restrictive precedent. "If that's theft of intellectual property, there's a lot of theft of intellectual property across the journalism landscape," Davis told Bloomberg. If information "is on the Street, it's on the Street," Davis added.

Ostrager said Fly will appeal to the U.S. Court of Appeals for the Second Circuit, the Lit Daily reports.

Contact Zach Lowe at zlowe@alm.com.


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As publishing struggles to survive, as newsrooms and news bureaus around the world close, this question will become increasingly more relevant. The ruling will also have an impact on blogs which cite to breaking stories and then summarize and comment on those stories.

What bothers me is that the order is appears to be prior restraint which is really contrary to the spirit of American law. We normally will not bar a story from being printed, but you may pay the consequences after the fact.

It would be nice if someone posted a copy of the ruling so that they we could examine the same further.

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