Investment banks were denied the right to stop a 'breaking news' Web site from immediately publishing research recommendations.  The ruling by a federal appeals court was a striking blow to Wall Street and a win for the investing public.

Perhaps more significant, the decision was a victory for Internet companies whose business models depend upon summarizing and commenting on others’ original content.  Yet media businesses also cheered the ruling because it left in place legal protections against rogue competitors who copy and resell original news reporting at little or no cost.

The panel of 3 judges on the United States Court of Appeals for the Second Circuit in Manhattan ruled that Barclays, Morgan Stanley and Bank of America could not dictate who reported news about their stock research - nor when they reported it.  The decision leaves in place all traditional federal copyright protections. 

e.g. - a site can report on the content of Wall Street research, meaning that it could run a headline like “Morgan Stanley’s semiconductor analyst upgrades Intel.”  But the site would violate copyright law if it reprinted the analyst’s report on Intel verbatim.

“A firm’s ability to make news — by issuing a recommendation that is likely to affect the market price of a security — does not give rise to a right for it to control who breaks that news and how.”  -- Judge Robert Sack, in the court’s 88-page opinion.

“The firms are making the news;  Fly, despite the firms’ understandable desire to protect their business model, is breaking it.”  -- Judge Sack added.

Judge Sack is considered one of the country’s leading experts on copyright law, which could enhance the ruling’s influence.

The ruling reversed a controversial lower court decision made last year that required the financial Web site, theflyonthewall.com, to wait until 10 a.m. to publish news about Wall Street research that had been issued before the stock market’s 9:30 a.m. opening bell.  The site was also ordered to delay its headlines during the day by 2 hours.

For further details, go to:   [Dealbook, 6/20/11, "Big Banks Lose.."]