The Appeals Court said the lawsuit against Theflyonthewall.com under New York "misappropriation" statutes was preempted by federal copyright law.
Financial institutions argued that Theflyonthewall.com was getting a "free ride" by "misappropriating research", including stock news, which cost them profits.
Theflyonthewall.com countered that it had a First Amendment right to publish before news goes stale, and that it got much of its information from public sources or from talking with traders and others in the Wall Street area.
The Appeals Court concluded: "We conclude that in this case, a Firm's ability to make news -- by issuing a Recommendation that is likely to affect the market price of a security -- does not give rise to a right for it to control who breaks that news and how."
Because of some legal gymnastics and an earlier ruling that Theflyonthewall.com had "waived" its First Amendment and fair use defenses, the Appeals Court did not directly rule on the First Amendment/fair use argument, but sections of the latest decision seem to suggest that court would have been sympathetic to it.
For instance, the Appeals Court wrote:
As the INS Court explained, long before it would have occurred to the Court to cite the First Amendment for the proposition:..."[T]he news element -- the information respecting current events contained in the literary production -- is not the creation of the writer, but is a report of matters that ordinarily are publici juris; it is the history of the day. It is not to be supposed that the framers of the Constitution, when they empowered Congress "to promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries" (Const., 8 Art I, § 8, par. 8), intended to confer upon one who might happen to be the first to report a historic event the exclusive right for any period to spread the knowledge of it."
We do not perceive a meaningful difference between (a) Fly's taking material that a Firm has created (not "acquired") as the result of organization and the expenditure of labor, skill, and money, and which is (presumably) salable by a Firm for money, and selling it by ascribing the material to its creator Firm and author (not selling it as Fly's own), and (b) what appears to be unexceptional and easily recognized behavior by members of the traditional news media -- to report on, say, winners of Tony Awards or, indeed, scores of NBA games with proper attribution of the material to its creator.
Reuters has more here:
Full court opinion here: http://www.ca2.uscourts.gov/decisions/isysquery/61c431d7-9894-48c3-8222-dda6c1b74742/2/doc/10-1372_both.pdf#xml=http://www.ca2.uscourts.gov/decisions/isysquery/61c431d7-9894-48c3-8222-dda6c1b74742/2/hilite/