An Internet subscription news service that aggregated and disseminated research recommendations of financial services firms without authorization is liable for misappropriation of "hot news," a type of unfair competition. Barclays Capital Inc. v. Theflyonthewall.com, 1:06-cv-04908 (S.D.N.Y. March 18, 2010). The Court held that the defendant usurped the value of the plaintiff's reports that comes from the quality of the information and analysis, and the reports' exclusivity and timeliness. The tort of misappropriation of breaking news first arose in the early decision of International News Service v. Associated Press, 248 U.S. 215 (1918), in which the United States Supreme Court protected the efforts of the Associated Press (AP) in gathering news in Europe during World War I against INS' copying and transmittal across the country of early AP reports. The "hot news" doctrine was applied to financial information in Fin. Info., Inc. v. Moody's Investors Service, Inc., 808 F.2d 204, 209 (2d Cir. 1986), to stop publication of information gathered by another before the gatherer can "utilize his competitive edge." But in Nat'l Basketball Assn v. Motorola, Inc., 105 F.3d 841 (2d Cir. 1997), the same court did not protect against real time distribution of scores for games in progress as hot news, and explained its test for "hot news" misappropriation in five factors: (1) the plaintiff must incur substantial cost to gather the information; (2) the information must be time sensitive; (3) the defendant must engage in free riding by taking the information without authorization; (4) the defendant must be in direct competition with the plaintiff; and (5) the defendant's taking must create a substantial threat to the very existence of the product or service of the plaintiff by removing the incentive to gather the information.

In last month's decision against Theflyonthewall.com (Fly.com), the Southern District of New York held that the financial services plaintiffs met the burden on all five factors based on Fly.com's obtaining their confidential reports involving extensive research and advice, and publishing them in a time-sensitive manner. The Court held that the defendant's attribution of the reports to the plaintiffs did not lessen the defendant's free riding but increased the value of the misappropriated information. The fact that other news aggregators and publishers now publish similar time-sensitive material does not protect Fly.com from liability. The Court noted that since Fly.com began the practice of publishing the reports without authorization, many other online services had done the same, having a profound effect on the business mode of the financial services plaintiffs. The Court granted an injunction barring publications of the plaintiffs' reports issued while the New York Stock Exchange (NYSE) is closed, lasting until 10:00 a.m. EST, or half an hour after the NYSE opens the next day, whichever is later; and reports issued while the NYSE is open, lasting two hours after release. In light of the many copycat publishers, the Court also ordered re-evaluation of its order in one year if the plaintiffs have not taken reasonable steps to restrain others engaging in similar conduct. In short, the Court said that misappropriating someone else's info is beyond inappropriate.