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Distributing Earnings Call Information to the Public Is Fair Use

White & Case Technology Newsflash

In Swatch Group Management Services Ltd. v. Bloomberg L.P., the Second Circuit Court of Appeals ruled that the unauthorized distribution of a recording and transcript of a company’s earnings call was allowed as copyright fair use.[1] This decision gives significant leeway for news organizations and other services to redistribute and sell companies’ earnings call information to customers and the public.

Swatch, a Swiss company, held a conference call with a limited group of invited financial analysts to discuss its 2010 earnings report, and it made a recording of the call. Bloomberg, a news organization, was not invited but obtained a recording and written transcript of the call and made both available online to Bloomberg subscribers. Swatch sued Bloomberg for copyright infringement, and the district court, sua sponte, granted summary judgment to Bloomberg, finding that Bloomberg's copying and dissemination was fair use. Swatch appealed.

Fair Use to Distribute Earnings Call Information
The Second Circuit affirmed the district court’s decision after considering each of the Copyright Act’s four fair use factors:

Purpose and character of the use. The first factor favored fair use. The court acknowledged that Bloomberg's use was commercial – ordinarily something that would weigh against fair use. Also, the use was not "transformative" because Bloomberg disseminated verbatim copies; if it were transformative, that would have strengthened Bloomberg's fair use arguments. Nevertheless, the court was persuaded that Bloomberg’s purpose in obtaining and disseminating the recording was to make important financial information available to American investors and analysts. “[W]here a financial research service obtains and disseminates important financial information about a foreign company in order to make that information available to American investors and analysts, that purpose supports a finding of fair use.” The use of the copyrighted material was very closely analogous to "news reporting," which was indicative of fair use.

Nature of the copyrighted work. The second factor also favored fair use. Fair use is less likely where a work is unpublished as the copyright owner has an interest in being the first to disseminate his or her work to the public, and Swatch’s earnings call was not "published" because Swatch held the call by telephone and never distributed a copy of its own recording. That, however, did not persuade the court. Swatch invited hundreds of investment analysts to the call, and more than a hundred attended. Swatch was never deprived of the ability to control the first public appearance of its expression. Moreover, the copyright in the earnings call was "exceedingly thin" given its factual character. The whole purpose of the call was to convey financial information, not any greater expression.

Amount and substantiality of the copyrighted work used. The third factor was neutral and favored neither party. Even though Bloomberg used all of Swatch's work, Bloomberg’s use was reasonable in light of its purpose of disseminating important financial information to American investors and analysts.

Effect on the market for or value of Swatch's work. The fourth factor favored fair use. Swatch posited a hypothetical market for audio recordings of earnings calls, but the court was not persuaded that this market was reasonable or likely to be developed. Moreover, the possibility that Swatch might receive licensing royalties played no role in stimulating the creation of the earnings call – that would have occurred regardless given Swatch’s purpose to disseminate financial information about the company. Balancing the public benefits of the use against the potential private royalties lost, the fourth factor weighed in favor of fair use.

Balancing all of these factors, the court ruled that Bloomberg's use was fair.

The case is notable because the court found fair use even though the use was commercial and non-transformative, the work used was unpublished, and the plaintiff used the entirety of the work – all facts that typically weigh against a finding of fair use.

The decision sets an important precedent allowing news organizations and other companies to freely collect, repackage, sell, and distribute earnings call information to their customers and to the wider public.


[1] - Swatch Group Mgmt. Servs. Ltd. v. Bloomberg L.P., Docket No. 12-2412-cv (2d Cir. Jan. 27, 2014).


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