Opinion ID: 219099
Heading Depth: 1
Heading Rank: 5

Heading: The Complaint and Pre-Trial District Court Proceedings

Text: In 2004, the Firms identified Fly as one of several entities systematically publishing the Recommendations without the Firms' permission. Others doing the same included larger and better-known news outlets with far broader audiences, such as Bloomberg, Dow Jones, and Thomson Reuters. [13] All of them regularly post short headlines reporting Recommendations soon after they become available. [14] The Firms nonetheless focused their legal actions in this regard on Fly. In March and April 2005, the Firms complained to Fly that its publication of the Firms' Recommendations in February and March of that year infringed the Firms' copyrights and was tortious under New York State's hot news misappropriation doctrine. The Firms demanded that Fly cease and desist. Fly's counsel responded in April and May 2005, representing that Fly had altered its reporting practices so that it no longer obtained the Recommendations from research reports sent by employees of the Firms, instead gathering the information from independent, public sources. Fly continued posting the Firms' Recommendations. On June 26, 2006, the Firms filed this suit naming Fly as the sole defendant. The Firms assert two causes of action in their complaint: copyright infringement based on Fly's extensive excerpting of 17 research reports released in February and March 2005, and hot news misappropriation based on Fly's continual electronic publication of the Firms' Recommendations. The gravamen of the latter claim is that the aggregate widespread, unauthorized reporting of Recommendations by Fly and other financial news providers  including better known, better financed, more broadly accessed outlets  has threatened the viability of the Firms' equity research operations. The Firms allege that this unauthorized distribution allows clients and prospective clients to learn of Recommendations from sources other than the Firms before the Firms' sales staff can reach out to them to solicit their business, thereby reducing the ability of research to drive commission revenue. This, they assert, seriously threatens their ability to justify the expense of maintaining their extensive research operations. On August 16, 2006, Fly answered, raising several affirmative defenses, including fair use and protections purportedly afforded to it and its dissemination of news by the First Amendment. [15] On May 18, 2009, after completion of discovery, the Firms and Fly cross-moved for summary judgement. The district court (Denise L. Cote, Judge ) denied the summary judgment motions on November 6, 2009. The Firms then waived their claims for actual damages, and the court set the case for a bench trial.