Swatch Grp. Mgmt. Servs. Ltd. v. Bloomberg L.P.

Decision Date27 January 2014
Docket NumberDocket Nos. 12–2412–cv, 12–2645–cv.
PartiesThe SWATCH GROUP MANAGEMENT SERVICES LTD., Plaintiff–Counter–Defendant–Appellant–Cross–Appellee, v. BLOOMBERG L.P., Defendant–Counter–Claimant–Appellee–Cross–Appellant.
CourtU.S. Court of Appeals — Second Circuit

OPINION TEXT STARTS HERE

Joshua Paul (Jess M. Collen, Kristen Mogavero, on the brief), Collen IP, Ossining, NY, for PlaintiffCounter–DefendantAppellantCross–Appellee.

John M. DiMatteo (Thomas H. Golden, Amina Jafri, on the brief), Willkie Farr & Gallagher LLP, New York, NY, for DefendantCounter–ClaimantAppelleeCross–Appellant.

Before: KATZMANN, Chief Judge, KEARSE, and WESLEY, Circuit Judges.

KATZMANN, Chief Judge:

This case concerns the scope of copyright protection afforded to a sound recording of a conference call convened by The Swatch Group Ltd. (Swatch Group) a foreign public company, to discuss the company's recently released earnings report with invited investment analysts. In particular, we must determine whether DefendantAppellee Bloomberg L.P. (Bloomberg) a financial news and data reporting service that obtained a copy of that sound recording without authorization and disseminated it to paying subscribers, may avoid liability for copyright infringement based on the affirmative defense of “fair use.” 17 U.S.C. § 107. We also must determine whether we have jurisdiction to hear Bloomberg's cross-appeal on the issue of whether the sound recording of the conference call is copyrightable in the first instance.

PlaintiffAppellant The Swatch Group Management Services Ltd. (Swatch), a subsidiary of Swatch Group, appeals from a judgment of the United States District Court for the Southern District of New York (Hellerstein, J.), which sua sponte granted summary judgment to Bloomberg on Swatch's claim of copyright infringement on the ground of fair use. On appeal, Swatch argues that the district court's ruling was premature because Swatch had not yet had the opportunity to take discovery on three issues: (1) whether Bloomberg obtained and disseminated the sound recording for the purpose of “news reporting” or for some other business purpose; (2) Bloomberg's state of mind when it obtained and disseminated the recording; and (3) whether Bloomberg subscribers actually listen to sound recordings of earnings calls, or instead glean information about such calls by reading written transcripts or articles. Swatch also contends that the district court erroneously concluded that Swatch had published the sound recording before Bloomberg disseminated it. More broadly, Swatch argues that the district court erred in how it evaluated and balanced the various considerations relevant to fair use. For the reasons set forth below, we agree with the district court and hold that, upon consideration of the relevant factors and resolving all factual disputes in favor of Swatch, Bloomberg has engaged in fair use.

In addition, Bloomberg cross-appeals from the same judgment of the district court, urging us to hold that Swatch's sound recording is not protected by the copyright laws in the first place. Swatch has moved to dismiss the cross-appeal on the grounds that Bloomberg lacks appellate standing and we lack appellate jurisdiction. That motion is granted. Because the judgment designated in Bloomberg's notice of appeal was entered in Bloomberg's favor, Bloomberg is not “aggrieved by the judicial action from which it appeals,”Great Am. Audio Corp. v. Metacom, Inc., 938 F.2d 16, 19 (2d Cir.1991), and therefore lacks standing. Similarly, although the district court later dismissed as moot Bloomberg's counterclaim for a declaration that Swatch's copyright is invalid, Bloomberg never filed an additional notice of appeal identifying that subsequent order as the subject of an appeal, and thus we have no jurisdiction to review it.

Accordingly, we affirm the judgment of the district court, and we dismiss the cross-appeal.

BACKGROUND
I. Factual Background

The following facts are drawn from the record before the district court and are undisputed unless otherwise noted.

On February 8, 2011, Swatch Group released its 2010 earnings report, a seven-page compilation of financial figures and textual narrative about the company's financial performance during the prior year. Because Swatch Group is incorporated in Switzerland and its shares are publicly traded on the Swiss stock exchange, Swatch Group is governed by Swiss securities law and the listing rules of the Swiss exchange. In accordance with those rules, Swatch Group filed its earnings report with the exchange before trading opened for the day, and simultaneously posted the report in four languages (English, German, French, and Italian) on the Investor Relations section of its website.

After it released this information to the public, Swatch Group held a conference call with an invited group of financial analysts, as is its custom. Swiss law permits public companies to hold this kind of earnings call with a limited group of analysts, provided that the company does not disclose non-public, significantly price-sensitive facts during the call. Here, Swatch Group did not reveal any significantly price-sensitive facts during the call that had not already been revealed in its previously released report. In advance of the call, Swatch Group sent invitations to all 333 financial analysts who were registered with Swatch Group's Investor Relations Department. Swatch Group held the call at 2 p.m. local Swiss time, several hours after it had released the earnings report, in order to allow European, American, and Asian analysts to participate. In the end, approximately 132 analysts joined the call. For Swatch Group's part, its Chief Executive Officer, Chief Financial Officer, and three other senior executives participated in the call from the company's offices in Switzerland.

At Swatch Group's request, an audio conferencing vendor recorded the entire earnings call as it was in progress. At the beginning of the call, an operator affiliated with the vendor welcomed the analysts to the call and told them, “This call must not be recorded for publication or broadcast.” J.A. 22. Swatch Group's executives then provided commentary about the company's financial performance and answered questions posed by fifteen of the analysts. The entire call lasted 132 minutes; Swatch Group executives spoke for approximately 106 of those minutes.

Neither Bloomberg nor any other press organization was invited to the earnings call. Nevertheless, within several minutes after the call ended, Bloomberg obtained a sound recording and written transcript of the call and made them both available online, without alteration or editorial commentary, to subscribers to its online financial research service known as Bloomberg Professional. According to Bloomberg's promotional materials, Bloomberg Professional provides [a] massive data stream” with “rich content” that is “unparalleled in scope and depth” and is “delivered to your desktop in real time,” as well as “access to all the news, analytics, communications, charts, liquidity, functionalities and execution services that you need to put knowledge into action.” Id. 640.

On February 10, 2011, after Swatch Group learned that the recording and transcript had been made available on Bloomberg terminals, Swatch Group sent Bloomberg a cease-and-desist letter demanding that they be removed. Bloomberg refused. On February 14, 2011, Swatch then filed its initial complaint against Bloomberg in this action claiming infringement of its copyright in the sound recording of the earnings call. In an agreement signed by representatives of Swatch Group and Swatch on February 14 and 15, 2011, Swatch Group assigned its interest in the copyright to its subsidiary Swatch.

Two weeks later, on March 2, 2011, Swatch filed an application with the U.S. Copyright Office to register a copyright in a sound recording of the earnings call. The Copyright Office and Swatch then exchanged a series of emails over the scope of the claimed copyright. After Swatch narrowed the copyright to cover only the statements made by Swatch Group executives, and not the statements made by the operator or the questions posed by the analysts, the Copyright Office issued a registration on April 27, 2011.

II. Procedural History

As stated, Swatch filed its initial complaint in this action on February 14, 2011. Swatch then twice amended its complaint; the operative pleading thus is the Second Amended Complaint, filed on May 10, 2011. The Second Amended Complaint alleges that, by recording the earnings call and making the recording available to the public, Bloomberg infringed Swatch's exclusive rights “to reproduce the copyrighted work” and “to distribute copies or phonorecords of the work to the public.” 17 U.S.C. § 106(1), (3). Swatch does not challenge Bloomberg's preparation or distribution of the written transcript of the earnings call.1

On May 20, 2011, Bloomberg moved under Rule 12(b)(6) to dismiss the Second Amended Complaint for failure to state a claim, arguing inter alia that the earnings call was not copyrightable in the first place and that Bloomberg's copying and dissemination of the call was fair use. The district court denied that motion in an order entered on August 30, 2011. Swatch Grp. Mgmt. Servs. Ltd. v. Bloomberg L.P. (“ Swatch I ”), 808 F.Supp.2d 634 (S.D.N.Y.2011). The district court found that the recording was copyrightable, id. at 638–39, and declined to address the “fact-intensive” questions implicated by Bloomberg's fair use defense on a motion to dismiss, id. at 641.

At an in-court conference held two weeks later on September 16, 2011, however, the district court informed the parties of its belief that it could resolve the case through a motion for judgment on the pleadings, and directed Swatch to file such a motion. Swatch moved as directed on October 21, 2011, and Bloomberg opposed. The district court...

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