• by Wendy Davis  @wendyndavis, June 22, 2010

Google and Twitter are asking a federal appellate court in New York to reverse a 1997 decision that allowed companies to sue for misappropriation of "hot news" when their time-sensitive exclusives were rewritten.

"The modern ubiquity of multiple news platforms renders 'hot news' misappropriation of an anachronism, aimed at muzzling all but the most powerful media companies," the companies say in papers filed this week with the Second Circuit Court of Appeals. "In a world of citizen journalists and commentators, online news organizations, and broadcasters who compete 24 hours a day, news can no longer be contained for any meaningful amount of time."

Google and Twitter make that argument in a friend-of-the-court brief filed in support of financial site TheFlyOnTheWall.com in its legal battle with three investment banks. The Web companies argue that U.S. District Court Judge Denise Cote incorrectly ruled in March that TheFlyOnTheWall.com misappropriated hot news of Barclays, Bank of America's Merrill Lynch and Morgan Stanley by posting summaries of their time-sensitive research and recommendations before their clients had received them.

Cote ordered the site to refrain from publishing summaries of much of the banks' research until 10 a.m. on trading days -- even where other publishers had already posted the same material.

Last month, the Second Circuit lifted the injunction while it considers the financial site's appeal.

Cote based her decision on a 1918 U.S. Supreme Court decision establishing that rewriting another publication's scoops is actionable as a misappropriation of hot news.

Observers have long questioned whether that decision remains valid, given the developments in copyright law and free speech law in the last 90 years, but the Second Circuit said as recently as 1997 that the hot news doctrine remains good law.

Google and Twitter are now asking the appellate court to reverse Cote's decision as well as its own 1997 ruling. The companies argue that it no longer makes sense to consider any news as time-sensitive, given the emergence of the Internet. "In a world of modern communications technology, where anyone with a cell phone may disseminate news throughout the world even as it is occurring, the notion that a single media outlet should have a monopoly on time-sensitive facts is not only contrary to law, it is, as a practical matter, futile," they argue.

They aren't the only ones to weigh in on the closely watched case. Dow Jones also filed a friend-of-the-court brief in the matter.

While Dow Jones argues that the hot news doctrine is valid -- and, in fact, is currently suing Briefing.com for allegedly misappropriating Dow Jones' hot news -- the publisher also wants the court to distinguish between companies that systematically "free-ride" on other publishers' work and those that re-report news that first appeared elsewhere.

Only the former should be considered misappropriation, the company argues. In its court papers, Dow Jones asked the court to consider a scenario where Dow Jones learns at 8 a.m. that a major investment bank like Morgan Stanley downgraded a major company like Microsoft, and "decides that the fact of the downgrade is newsworthy."

The publisher argues that it should be able to tell readers about the downgrade "because it is news."

The digital rights groups Electronic Frontier Foundation, Citizen Media Law Project and Public Citizen also weighed in on the case. (Public Citizen is representing MediaPost in an unrelated matter.) The organizations are asking the appellate court to direct trial judges to examine free speech issues when evaluating hot news claims.

"Special First Amendment concerns arise where, as here, a court enjoins the publication of newsworthy information," they argue. They say that the hot news doctrine should not be used "to stifle common journalistic practices and new forms of commentary, curation, and information sharing online."