(Bloomberg) -- Google Inc. asked a federal appeals court to reverse a lower court’s order blocking online financial news service Theflyonthewall.com Inc. from issuing immediate reports of banks’ stock upgrades and downgrades.
The March ruling by U.S. District Judge Denise Cote in New York may impair the distribution of factual information over the Internet and have a negative impact on a wide variety of online services, Google, joined by Twitter Inc., said yesterday in a so-called friend-of-the-court brief filed with the U.S. Court of Appeals in New York.
“In a world of modern communications technology, where anyone with a cell phone may disseminate news throughout the world even as it is occurring, the notion that a single media outlet should have a monopoly on time-sensitive facts is not only contrary to law, it is, as a practical matter, futile,” Google and Twitter said in the filing.
The appeals court in May granted a request by Theflyonthewall.com, based in Summit, New Jersey, to delay the lower court’s order while its appeal is pending. The appeals court last month also granted expedited consideration of the lawsuit filed by Barclays Plc, Bank of America Corp.’s Merrill Lynch and Morgan Stanley.
The banks accused Theflyonthewall.com of “free riding” on their research reports by sending headlines on upgrades and downgrades. Cote ruled Theflyonthewall.com must wait until after the financial exchanges open in New York before repeating pre- market reports by the banks. For reports issued when the market is open, Cote ordered a two-hour delay.
‘Protected’ Speech
Google, owner of the world’s most popular search engine, and Twitter, the microblogging service with 190 million users, said in their filing that reporting of truthful information is “one of the most protected forms of speech” under the U.S. Constitution.
“In our brief, we’re not taking sides or focusing on the details of this particular dispute between the parties,” Chris Gaither, a spokesman for Mountain View, California-based Google, said today in an e-mailed statement. “But we believe that the case raises important issues of law that could affect the free flow of important factual information online.”
Benjamin E. Marks, a lawyer representing the banks, didn’t immediately return a call seeking comment after regular business hours yesterday.
The copyright infringement lawsuit, filed in 2006, said the website “systematically and impermissibly accesses” their proprietary equity research, “free riding” on their work without conducting any of its own.
The banks claim the website misappropriated research and “rushes to market with the intent and effect of undermining the firms’ enormous investments” in providing clients with exclusive market analysis. Their research is undermined and diminished by the website’s “misappropriation,” according to the lawsuit.
The case is Barclays Capital Inc. v. Theflyonthewall.com., 10-1372, 2nd U.S. Circuit Court of Appeals (New York).
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