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ARTICLE · 05 JULY 2011

Creating, Making, Or Breaking It: Second Circuit Reexamines "Hot News" Misappropriation Tort

Dentons
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In a convoluted 88-page decision, the Second Circuit simultaneously reaffirmed the continued existence of the "hot news" misappropriation tort, stripped the tort of its five-factor preemption test used for nearly fifteen-years, and replaced it with an abridged analysis under the theory of "free-riding." Barclays Capital, Inc. v. Theflyonthewall.com, 2011 WL2437554 (2d Cir. June 20, 2011).

United StatesMedia, Telecoms, IT, Entertainment
Samuel Fifer
Samuel Fifer
Stephen Kudenholdt
Stephen Kudenholdt
Monica Richman
Monica Richman
Natalie Spears
Natalie Spears
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In a convoluted 88-page decision, the Second Circuit simultaneously reaffirmed the continued existence of the "hot news" misappropriation tort, stripped the tort of its five-factor preemption test used for nearly fifteen-years, and replaced it with an abridged analysis under the theory of "free-riding." Barclays Capital, Inc. v. Theflyonthewall.com, 2011 WL2437554 (2d Cir. June 20, 2011). The preemption holding arguably paves the way for news aggregators, such as Defendant Theflyonthewall ("Fly"), to continue to collect headlines and excerpts of other party's news stories where the aggregator exhibits effort and expense to collect and distribute this information.

The Plaintiffs, Barclays Capital Inc., Merrill Lynch, Pierce, Fenner & Smith Inc., and Morgan Stanley & Co. Inc., are all major financial institutions providing asset management, sales and trading, investment banking, and securities brokerage services. At issue in this decision is what the Plaintiffs

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