12‐2412 (L)
`Swatch Group v. Bloomberg
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`UNITED STATES COURT OF APPEALS
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`FOR THE SECOND CIRCUIT
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`_______________
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`August Term, 2013
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`(Argued: October 21, 2013
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`Decided: January 27, 2014
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`Amended: May 30, 2014)
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`Docket Nos. 12‐2412‐cv, 12‐2645‐cv
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`_______________
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`THE SWATCH GROUP MANAGEMENT SERVICES LTD.,
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`Plaintiff‐Counter‐Defendant‐Appellant‐Cross‐Appellee,
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`—v.—
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`BLOOMBERG L.P.,
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`Defendant‐Counter‐Claimant‐Appellee‐Cross‐Appellant.
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` _______________
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`Before:
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`KATZMANN, Chief Judge, KEARSE and WESLEY, Circuit Judges.
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`_______________
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`Swatch Group v. Bloomberg
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`UNITED STATES COURT OF APPEALS
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`FOR THE SECOND CIRCUIT
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`_______________
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`August Term, 2013
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`(Argued: October 21, 2013
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`Decided: January 27, 2014
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`Amended: May 30, 2014)
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`Docket Nos. 12‐2412‐cv, 12‐2645‐cv
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`_______________
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`THE SWATCH GROUP MANAGEMENT SERVICES LTD.,
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`Plaintiff‐Counter‐Defendant‐Appellant‐Cross‐Appellee,
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`—v.—
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`BLOOMBERG L.P.,
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`Defendant‐Counter‐Claimant‐Appellee‐Cross‐Appellant.
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` _______________
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`Before:
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`KATZMANN, Chief Judge, KEARSE and WESLEY, Circuit Judges.
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`_______________
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`Appeal and cross‐appeal from a judgment of the United States District
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`Court for the Southern District of New York (Hellerstein, J.), granting summary
`judgment to the defendant as to the plaintiff’s claim of copyright infringement on
`the ground that the defendant had engaged in fair use. The plaintiff claims that
`the defendant, a financial news and data reporting service, infringed the
`plaintiff’s copyright in a sound recording of a foreign public company’s earnings
`call with invited investment analysts by obtaining a copy of the recording
`without authorization and making it available to the defendant’s paying
`subscribers. We hold, upon consideration of the relevant factors, see 17 U.S.C.
`§ 107, that the defendant’s use qualifies as fair use. We further grant the
`plaintiff’s motion to dismiss the defendant’s cross‐appeal because the defendant
`lacks appellate standing and we lack appellate jurisdiction.
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`For the reasons stated below, the defendant’s cross‐appeal is DISMISSED,
`and the judgment of the district court is AFFIRMED.
`_______________
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`JOSHUA PAUL (Jess M. Collen, Kristen Mogavero, on the brief),
`COLLEN IP, Ossining, NY, for Plaintiff‐Counter‐Defendant‐
`Appellant‐Cross‐Appellee.
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`JOHN M. DIMATTEO (Thomas H. Golden, Amina Jafri, on the brief),
`Willkie Farr & Gallagher LLP, New York, NY, for Defendant‐
`Counter‐Claimant‐Appellee‐Cross‐Appellant.
`_______________
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`KATZMANN, Chief Judge:
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`This case concerns the scope of copyright protection afforded to a sound
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`recording of a conference call convened by The Swatch Group Ltd. (“Swatch
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`Group”), a foreign public company, to discuss the company’s recently released
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`2
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`earnings report with invited investment analysts. In particular, we must
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`determine whether Defendant‐Appellee Bloomberg L.P. (“Bloomberg”), a
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`financial news and data reporting service that obtained a copy of that sound
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`recording without authorization and disseminated it to paying subscribers, may
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`avoid liability for copyright infringement based on the affirmative defense of
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`“fair use.” 17 U.S.C. § 107. We also must determine whether we have jurisdiction
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`to hear Bloomberg’s cross‐appeal on the issue of whether the sound recording of
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`the conference call is copyrightable in the first instance.
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`Plaintiff‐Appellant The Swatch Group Management Services Ltd.
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`(“Swatch”), a subsidiary of Swatch Group, appeals from a judgment of the
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`United States District Court for the Southern District of New York (Hellerstein,
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`J.), which sua sponte granted summary judgment to Bloomberg on Swatch’s claim
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`of copyright infringement on the ground of fair use. On appeal, Swatch argues
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`that the district court’s ruling was premature because Swatch had not yet had the
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`opportunity to take discovery on three issues: (1) whether Bloomberg obtained
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`and disseminated the sound recording for the purpose of “news reporting” or for
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`some other business purpose; (2) Bloomberg’s state of mind when it obtained
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`3
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`and disseminated the recording; and (3) whether Bloomberg subscribers actually
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`listen to sound recordings of earnings calls, or instead glean information about
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`such calls by reading written transcripts or articles. Swatch also contends that the
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`district court erroneously concluded that Swatch had published the sound
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`recording before Bloomberg disseminated it. More broadly, Swatch argues that
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`the district court erred in how it evaluated and balanced the various
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`considerations relevant to fair use. For the reasons set forth below, we agree with
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`the district court and hold that, upon consideration of the relevant factors and
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`resolving all factual disputes in favor of Swatch, Bloomberg has engaged in fair
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`use.
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`In addition, Bloomberg cross‐appeals from the same judgment of the
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`district court, urging us to hold that Swatch’s sound recording is not protected
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`by the copyright laws in the first place. Swatch has moved to dismiss the cross‐
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`appeal on the grounds that Bloomberg lacks appellate standing and we lack
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`appellate jurisdiction. That motion is granted. Because the judgment designated
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`in Bloomberg’s notice of appeal was entered in Bloomberg’s favor, Bloomberg is
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`not “aggrieved by the judicial action from which it appeals,” Great Am. Audio
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`4
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`Corp. v. Metacom, Inc., 938 F.2d 16, 19 (2d Cir. 1991), and therefore lacks standing.
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`Similarly, although the district court later dismissed as moot Bloomberg’s
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`counterclaim for a declaration that Swatch’s copyright is invalid, Bloomberg
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`never filed an additional notice of appeal identifying that subsequent order as
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`the subject of an appeal, and thus we have no jurisdiction to review it.
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`Accordingly, we affirm the judgment of the district court, and we dismiss
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`the cross‐appeal.
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`BACKGROUND
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`Factual Background
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`The following facts are drawn from the record before the district court and
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`I.
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`are undisputed unless otherwise noted.
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`On February 8, 2011, Swatch Group released its 2010 earnings report, a
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`seven‐page compilation of financial figures and textual narrative about the
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`company’s financial performance during the prior year. Because Swatch Group is
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`incorporated in Switzerland and its shares are publicly traded on the Swiss stock
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`exchange, Swatch Group is governed by Swiss securities law and the listing rules
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`of the Swiss exchange. In accordance with those rules, Swatch Group filed its
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`5
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`earnings report with the exchange before trading opened for the day, and
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`simultaneously posted the report in four languages (English, German, French,
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`and Italian) on the Investor Relations section of its website.
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`After it released this information to the public, Swatch Group held a
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`conference call with an invited group of financial analysts, as is its custom. Swiss
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`law permits public companies to hold this kind of earnings call with a limited
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`group of analysts, provided that the company does not disclose non‐public,
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`significantly price‐sensitive facts during the call. Before the call, Swatch Group
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`sent invitations to all 333 financial analysts who had registered in advance with
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`Swatch Group’s Investor Relations Department. In accordance with its practice,
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`Swatch Group did not invite members of the press. Swatch Group held the call at
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`2 p.m. local Swiss time, several hours after it had released the earnings report, in
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`order to allow European, American, and Asian analysts to participate. In the end,
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`approximately 132 analysts joined the call. For Swatch Group’s part, its Chief
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`Executive Officer, Chief Financial Officer, and three other senior executives
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`participated in the call from the company’s offices in Switzerland.
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`6
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`At Swatch Group’s request, an audio conferencing vendor recorded the
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`entire earnings call as it was in progress. At the beginning of the call, an operator
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`affiliated with the vendor welcomed the analysts to the call and told them, “This
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`call must not be recorded for publication or broadcast.” J.A. 22. Swatch Group’s
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`executives then provided commentary about the company’s financial
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`performance and answered questions posed by fifteen of the analysts. The entire
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`call lasted 132 minutes; Swatch Group executives spoke for approximately 106 of
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`those minutes.
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`Neither Bloomberg nor any other press organization was invited to the
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`earnings call. Nevertheless, within several minutes after the call ended,
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`Bloomberg obtained a sound recording and written transcript of the call and
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`made them both available online, without alteration or editorial commentary, to
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`subscribers to its online financial research service known as Bloomberg
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`Professional. According to Bloomberg’s promotional materials, Bloomberg
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`Professional provides “[a] massive data stream” with “rich content” that is
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`“unparalleled in scope and depth” and is “delivered to your desktop in real
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`time,” as well as “access to all the news, analytics, communications, charts,
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`liquidity, functionalities and execution services that you need to put knowledge
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`into action.” Id. 640.
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`On February 10, 2011, after Swatch Group learned that the recording and
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`transcript had been made available on Bloomberg terminals, Swatch Group sent
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`Bloomberg a cease‐and‐desist letter demanding that they be removed.
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`Bloomberg refused. On February 14, 2011, Swatch then filed its initial complaint
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`against Bloomberg in this action claiming infringement of its copyright in the
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`sound recording of the earnings call. In an agreement signed by representatives
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`of Swatch Group and Swatch on February 14 and 15, 2011, Swatch Group
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`assigned its interest in the copyright to its subsidiary Swatch.
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`Two weeks later, on March 2, 2011, Swatch filed an application with the
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`U.S. Copyright Office to register a copyright in a sound recording of the earnings
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`call. The Copyright Office and Swatch then exchanged a series of emails over the
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`scope of the claimed copyright. After Swatch narrowed the copyright to cover
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`only the statements made by Swatch Group executives, and not the statements
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`made by the operator or the questions posed by the analysts, the Copyright
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`Office issued a registration on April 27, 2011.
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`8
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`II.
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`Procedural History
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`As stated, Swatch filed its initial complaint in this action on February 14,
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`2011. Swatch then twice amended its complaint; the operative pleading thus is
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`the Second Amended Complaint, filed on May 10, 2011. The Second Amended
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`Complaint alleges that, by recording the earnings call and making the recording
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`available to the public, Bloomberg infringed Swatch’s exclusive rights “to
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`reproduce the copyrighted work” and “to distribute copies or phonorecords of
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`the work to the public.” 17 U.S.C. § 106(1), (3). Swatch does not challenge
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`Bloomberg’s preparation or distribution of the written transcript of the earnings
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`call.1
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`On May 20, 2011, Bloomberg moved under Rule 12(b)(6) to dismiss the
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`Second Amended Complaint for failure to state a claim, arguing inter alia that the
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`earnings call was not copyrightable in the first place and that Bloomberg’s
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`copying and dissemination of the call was fair use. The district court denied that
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`motion in an order entered on August 30, 2011. Swatch Grp. Mgmt. Servs. Ltd. v.
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`1 Swatch has disclaimed any such challenge in light of 17 U.S.C. § 114(b), under which a
`copyright owner’s right to prepare derivative works based on a sound recording “is
`limited to the right to prepare a derivative work in which the actual sounds fixed in the
`sound recording are rearranged, remixed, or otherwise altered in sequence or quality.”
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`9
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`Bloomberg L.P. (“Swatch I”), 808 F. Supp. 2d 634 (S.D.N.Y. 2011). The district court
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`found that the recording was copyrightable, id. at 638–39, and declined to
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`address the “fact‐intensive” questions implicated by Bloomberg’s fair use
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`defense on a motion to dismiss, id. at 641.
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`At an in‐court conference held two weeks later on September 16, 2011,
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`however, the district court informed the parties of its belief that it could resolve
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`the case through a motion for judgment on the pleadings, and directed Swatch to
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`file such a motion. Swatch moved as directed on October 21, 2011, and
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`Bloomberg opposed. The district court held oral argument on December 12, 2011,
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`at which it denied Swatch’s motion and explained that, in the court’s view,
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`“defendant’s use qualifies as fair use.” J.A. 581. Later that day, the district court
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`issued a summary order stating that it had “preliminarily granted judgment to
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`Defendant on the basis that if Defendant’s alleged actions constitute
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`infringement, they are protected as fair use.” Id. 584. The order directed Swatch
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`to submit “a brief regarding the existence of any triable issues of material fact
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`with respect to Defendant’s fair use affirmative defense.” Id. Swatch did so,
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`pointing out that it had taken no discovery in the action.
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`10
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`In an opinion and order entered on May 17, 2012, the district court sua
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`sponte granted summary judgment to Bloomberg, finding that Bloomberg’s
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`copying and dissemination of the recording qualify as fair use. Swatch Grp.
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`Mgmt. Servs. Ltd. v. Bloomberg L.P. (“Swatch II”), 861 F. Supp. 2d 336 (S.D.N.Y.
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`2012). On May 18, 2012, the clerk of the district court entered judgment “in favor
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`of defendant.” J.A. 7.
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`On June 14, 2012, Swatch filed a timely notice of appeal from that
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`judgment. On June 28, 2012, Bloomberg filed a notice of cross‐appeal from the
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`same judgment, and on July 24, 2012, Swatch moved to dismiss the cross‐appeal.
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`On August 27, 2012, after the parties had filed a stipulation of dismissal without
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`prejudice to reinstatement under Local Rule 42.1, the district court issued an
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`order dismissing as moot all of Bloomberg’s counterclaims, including a
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`counterclaim seeking a declaration that Swatch’s copyright is invalid. On
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`November 13, 2012, upon receipt of a letter from Swatch, the Clerk reinstated the
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`appeal. Finally, on January 14, 2013, the motions panel of this Court referred
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`Swatch’s motion to dismiss the cross‐appeal to the merits panel.
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`11
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`DISCUSSION
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`We review a district court’s grant of summary judgment de novo, resolving
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`all ambiguities and drawing all reasonable inferences against the moving party.
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`See Garanti Finansal Kiralama A.S. v. Aqua Marine & Trading Inc., 697 F.3d 59, 63–64
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`(2d Cir. 2012). Summary judgment is appropriate only where the record shows
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`“that there is no genuine dispute as to any material fact and that the movant is
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`entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). Under Federal Rule
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`of Civil Procedure 56(f), district courts have discretion to grant summary
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`judgment sua sponte “[a]fter giving notice and a reasonable time to respond” and
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`“after identifying for the parties material facts that may not be genuinely in
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`dispute.” Fed. R. Civ. P. 56(f), (f)(3); see also Celotex Corp. v. Catrett, 477 U.S. 317,
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`326 (1986) (“[D]istrict courts are widely acknowledged to possess the power to
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`enter summary judgments sua sponte, so long as the losing party was on notice
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`that [it] had to come forward with all of [its] evidence.”). Before granting
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`summary judgment sua sponte, however, a district court “must assure itself that
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`following the procedures set out in Rule 56[(a)–(e)] would not alter the
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`outcome.” Ramsey v. Coughlin, 94 F.3d 71, 74 (2d Cir. 1996). In other words,
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`12
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`“[d]iscovery must either have been completed, or it must be clear that further
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`discovery would be of no benefit,” such that “the record . . . reflect[s] the losing
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`partyʹs inability to enhance the evidence supporting its position and the winning
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`partyʹs entitlement to judgment.” Id.2
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`I.
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`Fair Use
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`The Copyright Act of 1976 grants copyright holders a bundle of exclusive
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`rights, including the rights to “reproduce, perform publicly, display publicly,
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`prepare derivative works of, and distribute copies of” the copyrighted work.
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`Arista Records LLC v. Doe 3, 604 F.3d 110, 117 (2d Cir. 2010) (citing 17 U.S.C.
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`§ 106). Because copyright law recognizes the need for “breathing space,”
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`Campbell v. Acuff‐Rose Music, Inc., 510 U.S. 569, 579 (1994), however, a defendant
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`who otherwise would have violated one or more of these exclusive rights may
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`avoid liability if he can establish that he made “fair use” of the copyrighted
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`material. Though of common‐law origin, the doctrine of fair use is now
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`2 Although Ramsey was decided before Rule 56 was amended in 2010 to provide express
`procedures governing the grant of summary judgment independent of a motion, its
`statements regarding the care a district court must take before sua sponte granting
`summary judgment remain good law. See Fed. R. Civ. P. 56, advisory comm. notes (2010
`Amendments) (“Subdivision (f) brings into Rule 56 text a number of related procedures
`that have grown up in practice.”).
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`13
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`recognized at 17 U.S.C. § 107, which provides that “the fair use of a copyrighted
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`work . . . for purposes such as criticism, comment, news reporting, teaching
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`(including multiple copies for classroom use), scholarship, or research, is not an
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`infringement of copyright.”
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`To evaluate whether a particular use qualifies as “fair use,” we must
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`engage in “an open‐ended and context‐sensitive inquiry.” Blanch v. Koons, 467
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`F.3d 244, 251 (2d Cir. 2006). The Copyright Act directs that, in determining
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`whether a particular use is fair, “the factors to be considered shall include”:
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`the purpose and character of the use, including whether such
`(1)
`use is of a commercial nature or is for nonprofit educational
`purposes;
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`(2)
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`the nature of the copyrighted work;
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`the amount and substantiality of the portion used in relation
`(3)
`to the copyrighted work as a whole; and
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`the effect of the use upon the potential market for or value of
`(4)
`the copyrighted work.
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`17 U.S.C. § 107. Though mandatory, these four factors are non‐exclusive.
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`Moreover, “[a]lthough defendants bear the burden of proving that their use was
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`fair, they need not establish that each of the factors set forth in § 107 weighs in
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`their favor.” NXIVM Corp. v. Ross Inst., 364 F.3d 471, 476–77 (2d Cir. 2004)
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`14
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`(internal citation omitted). Rather, “[a]ll [factors] are to be explored, and the
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`results weighed together, in light of the purposes of copyright.” Campbell, 510
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`U.S. at 578.
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`The determination of fair use is a mixed question of fact and law. See
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`Harper & Row Publishers, Inc. v. Nation Enters., 471 U.S. 539, 560 (1985). While we
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`have reversed district courts that too hastily resolved factual questions relevant
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`to fair use on summary judgment, see, e.g., Ringgold v. Black Entm’nt Television,
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`Inc., 126 F.3d 70, 81 (2d Cir. 1997), “this [C]ourt has on a number of occasions
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`resolved fair use determinations at the summary judgment stage where there are
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`no genuine issues of material fact.” Blanch, 467 F.3d at 250 (quoting Castle Rock
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`Entm’t, Inc. v. Carol Publ’g Grp., 150 F.3d 132, 137 (2d Cir. 1998)) (ellipsis omitted).
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`A. Purpose and Character of Use
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`We turn first to “the purpose and character of the use.” 17 U.S.C. § 107(1).
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`Below, the district court found that this factor favored fair use because
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`“[Bloomberg]’s work as a prominent gatherer and publisher of business and
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`financial information serves an important public interest, for the public is served
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`15
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`by the full, timely and accurate dissemination of business and financial news.”
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`Swatch II, 861 F. Supp. 2d at 340.
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`Swatch argues that this conclusion was error for several reasons. First,
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`Swatch contends that the district court improperly accepted Bloomberg’s
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`unsubstantiated claim that it had engaged in “news reporting.” Swatch notes
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`that Bloomberg itself has characterized its Bloomberg Professional service as
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`delivering both financial “news” and “data,” and argues that the district court
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`erred in denying Swatch the chance to develop facts in discovery to show that
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`the sound recording at issue here is the latter and not the former. Similarly,
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`Swatch argues that the district court improperly denied Swatch the chance to
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`develop facts relevant to Bloomberg’s state of mind. Swatch acknowledges that
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`the district court “credited [Swatch]’s allegations that [Bloomberg] was not
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`authorized to access the Earnings Call and that [Bloomberg]’s publication of the
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`Infringing Work violated [Swatch Group’s] directive,” Swatch II, 861 F. Supp. 2d
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`at 343, but argues that Swatch should have been able to take discovery into
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`whether Bloomberg knew at the time that obtaining and publishing the recording
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`violated Swatch Group’s directive. Swatch also argues that it should have been
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`16
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`permitted to take discovery into whether Bloomberg Professional subscribers
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`actually choose to access information about earnings calls by listening to
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`recordings, or instead choose to read written transcripts or articles. More
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`broadly, Swatch argues that the district court gave insufficient weight to the fact
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`that Bloomberg’s use was commercial and did not transform the underlying
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`recording.
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`We find these arguments unpersuasive and hold that the first statutory
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`factor favors fair use here. To begin with, whether one describes Bloomberg’s
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`activities as “news reporting,” “data delivery,” or any other turn of phrase, there
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`can be no doubt that Bloomberg’s purpose in obtaining and disseminating the
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`recording at issue was to make important financial information about Swatch
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`Group available to investors and analysts. That kind of information is of critical
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`importance to securities markets. Indeed, as Bloomberg points out, the Securities
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`and Exchange Commission (“SEC”) has mandated that when American
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`companies disclose this kind of material nonpublic information, they must make
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`it available to the public immediately. See Regulation FD, 17 C.F.R. § 243.100. At
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`a minimum, such public dissemination of financial information serves this public
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`17
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`purpose in the nature of news reporting. See Harper & Row, 471 U.S. at 561
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`(“News reporting is one of the examples enumerated in § 107 to ‘give some idea
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`of the sort of activities the courts might regard as fair use under the
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`circumstances.’” (quoting S. Rep. No. 94‐473, at 61 (1975)).
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`Seizing on Bloomberg’s citation to Regulation FD, Swatch protests that in
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`crafting that regulation, the SEC expressly exempted “foreign private issuer[s]”
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`like Swatch Group that are “incorporated or organized under the laws of [a]
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`foreign country.” 17 C.F.R. §§ 243.101(b), 230.405. In fact, as initially proposed,
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`Regulation FD would have applied to such issuers, see Selective Disclosure and
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`Insider Trading, 64 Fed. Reg. 72,590, 72,597 (Dec. 28, 1999), but the SEC
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`ultimately “determined to exempt foreign private issuers . . . as it has in the past
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`exempted them from certain U.S. reporting requirements such as Forms 10‐Q
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`and 8‐K,” Selective Disclosure and Insider Trading, 65 Fed. Reg. 51,716, 51,724
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`(Aug. 24, 2000). Swatch thus argues that giving weight to a public interest in the
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`dissemination of important financial information in this case would in effect
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`erase foreign issuers’ exemption from Regulation FD and set up organizations
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`like Bloomberg as private enforcers of U.S. public disclosure rules.
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`18
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`This argument, however, misattributes to Regulation FD a role in the law
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`of copyright. That regulation is relevant here only insofar as it provides
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`additional support for a proposition that would be clear in any event: Investors
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`and analysts have an interest in obtaining important financial information about
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`companies whose securities are traded in American and other markets. The fact
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`that the SEC has chosen not to require foreign issuers to follow certain disclosure
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`rules imposed on domestic issuers in no way implies that information about
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`foreign issuers is irrelevant. Accordingly, contrary to Swatch’s suggestion,
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`nothing in our decision today subjects Swatch Group or any other foreign issuer
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`to the requirements of Regulation FD. Nor do we hold that a foreign issuer’s
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`failure to follow Regulation FD prevents it from enforcing its copyrights in the
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`United States. We merely hold that where a financial research service obtains and
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`disseminates important financial information about a foreign company in order
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`to make that information available to investors and analysts, that purpose lends
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`support to a finding of fair use.
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`Swatch also stresses the commercial nature of Bloomberg’s use. Section 107
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`expressly directs courts to consider whether the use “is of a commercial nature or
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`19
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`is for nonprofit educational purposes,” 17 U.S.C. § 107(1), and we have said that
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`“[t]he greater the private economic rewards reaped by the secondary user (to the
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`exclusion of broader public benefits), the more likely the first factor will favor the
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`copyright holder and the less likely the use will be considered fair.” Am.
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`Geophysical Union v. Texaco Inc., 60 F.3d 913, 922 (2d Cir. 1994). It is undisputed
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`here that Bloomberg is a commercial enterprise and that Bloomberg Professional
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`is a subscription service available to paying users. At the same time, we have
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`recognized that “[a]lmost all newspapers, books and magazines are published by
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`commercial enterprises that seek a profit,” Consumers Union of U.S., Inc. v. Gen.
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`Signal Corp., 724 F.2d 1044, 1049 (2d Cir. 1983), and have discounted this
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`consideration where “the link between [the defendant]’s commercial gain and its
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`copying is . . . attenuated” such that it would be misleading to characterize the
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`use as “commercial exploitation.” Am. Geophysical Union, 60 F.3d at 922; see also
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`Campbell, 510 U.S. at 594 (holding that “[i]t was error for the Court of Appeals to
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`conclude that the commercial nature of [a secondary work] rendered it
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`presumptively unfair”).
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`20
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`Here, Swatch does not contest that Bloomberg Professional is a
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`multifaceted research service, of which disseminating sound recordings of
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`earnings calls is but one small part. Moreover, it would strain credulity to
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`suggest that providing access to Swatch Group’s earnings call more than trivially
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`affected the value of that service. So while we will not ignore the commercial
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`nature of Bloomberg’s use, we assign it relatively little weight.
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`Swatch also contends that Bloomberg acted in bad faith and that this
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`should count against it. Regardless of what role good or bad faith plays in fair
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`use analysis, see Blanch, 467 F.3d at 255–56, we need not tarry over it here. Even
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`assuming that Bloomberg was fully aware that its use was contrary to Swatch
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`Group’s instructions, Bloomberg’s overriding purpose here was not to “scoop[]”
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`Swatch or “supplant the copyright holder’s commercially valuable right of first
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`publication,” Harper & Row, 471 U.S. at 562, but rather simply to deliver
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`newsworthy financial information to investors and analysts. That kind of
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`activity, whose protection lies at the core of the First Amendment, would be
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`crippled if the news media and similar organizations were limited to sources of
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`21
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`information that authorize disclosure. See generally New York Times Co. v. United
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`States, 403 U.S. 713 (1971).
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`The Supreme Court has also instructed courts analyzing the first fair use
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`factor to consider the transformativeness of the use—that is, whether “the new
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`work merely supersedes the objects of the original creation, or instead adds
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`something new, with a further purpose or different character, altering the first
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`with new expression, meaning, or message.” Campbell, 510 U.S. at 579 (internal
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`citations, quotation marks, and alterations omitted). While a transformative use
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`generally is more likely to qualify as fair use, “transformative use is not
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`absolutely necessary for a finding of fair use.” Id.; see also Sony Corp. of Am. v.
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`Universal City Studios, Inc., 464 U.S. 417 (1984) (finding a non‐transformative use
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`to be a fair use).
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`In the context of news reporting and analogous activities, moreover, the
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`need to convey information to the public accurately may in some instances make
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`it desirable and consonant with copyright law for a defendant to faithfully
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`reproduce an original work without alteration. Courts often find such uses
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`transformative by emphasizing the altered purpose or context of the work, as
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`22
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`evidenced by surrounding commentary or criticism. See, e.g., Bill Graham Archives
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`v. Dorling Kindersley Ltd., 448 F.3d 605, 609–610 (2d Cir. 2006); Nunez v. Caribbean
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`Intʹl News Corp., 235 F.3d 18, 22–23 (1st Cir. 2000). Here, Bloomberg provided no
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`additional commentary or analysis of Swatch Group’s earnings call. But by
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`disseminating not just a written transcript or article but an actual sound
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`recording, Bloomberg was able to convey with precision not only the raw data of
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`the Swatch Group executives’ words, but also more subtle indications of
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`meaning inferable from their hesitation, emphasis, tone of voice, and other such
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`aspects of their delivery. This latter type of information may be just as valuable
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`to investors and analysts as the former, since a speaker’s demeanor, tone, and
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`cadence can often elucidate his or her true beliefs far beyond what a stale
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`transcript or summary can show. As courts have long recognized in the context
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`of witness testimony, “’a cold transcript contains only the dead body of the
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`evidence, without its spirit,’” and “cannot reveal . . . ‘[the speaker’s] hesitation,
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`his doubts, his variations of language, his confidence or precipitancy, his
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`calmness or consideration.’” Zhou Yun Zhang v. INS, 386 F.3d 66, 73–74 (2d Cir.
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`2004) (quoting Regina v. Bertrand, L.R. [1867] 1 L.R.P.C. 520, 535), overruled on
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`23
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`other grounds by Shi Liang Lin v. U.S. Depʹt of Justice, 494 F.3d 296, 305 (2d Cir.
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`2007).
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`Furthermore, a secondary work “can be transformative in function or
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`purpose without altering or actually adding to the original work.” A.V. ex rel.
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`Vanderhye v. iParadigms, LLC, 562 F.3d 630, 639 (4th Cir. 2009) (holding that
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`making an exact digital copy of a student’s thesis for the purpose of determining
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`whether it included plagiarism is a fair use); see also Perfect 10, Inc. v. Amazon.com,
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`Inc., 508 F.3d 1146, 1165 (9th Cir. 2007) (holding that a search engine’s publication
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`of low‐resolution, thumbnail copies of copyrighted images was “highly
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`transformative” because the thumbnails were “incorporate[ed] . . . into a new
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`work, namely, an electronic reference tool”). Here, notwithstanding that the data
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`disseminated by Bloomberg was identical to what Swatch Group had
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`disseminated, the two works had different messages and purposes. To begin
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`with, while Swatch Group purported to convey true answers to the analysts’
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`questions and to justify the propriety and reliability of its published earnings
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`statement, Bloomberg made no representation one way or another as to whether
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`the answers given by Swatch Group executives were true or reliable. Nor did
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`24
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`Bloomberg purport to support the propriety or reliability of Swatch Group’s
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`earnings statement. Bloomberg was simply revealing the newsworthy
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`information of what Swatch Group executives had said. Bloomberg’s message—
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`“This is what they said”—is a very different message from Swatch Group’s—
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`“This is what you should believe.”
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`Moreover, Swatch Group intended to exclude members of the press and to
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`restrict the information supplied by its executives to a relatively small group of
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`analysts who had identified themselves to the company in advance. Bloomberg’s
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`objective in rebroadcasting the call, by contrast, was to make this information
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`public, defeating Swatch Group’s effort to restrict access. Bloomberg’s purpose,
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`in other words, was to publish this factual information to an audience from
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`which Swatch Group’s purpose was to withhold it. These differences give
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`Bloomberg’s use at least an arguably transformative character.
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`In any event, regardless of how transformative the use is, we conclude that
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`the first fair use factor, focusing on the purpose and character of the secondary
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`use, favors fair use. We of course recognize that a news reporting purpose by no
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`means guarantees a finding of fair use. See Harper & Row, 471 U.S. at 557. After
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`25
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`all, “[t]he promise of copyright would be an empty one if it could be avoided
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`merely by dubbing the infringement a fair use ‘news report.’” Id. A news
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`organization thus may not freely copy creative expression solely because the
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`expression itself is newsworthy. Nevertheless, we agree
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