Swatch loses to Bloomberg over analyst call: U.S. court

Mon Jan 27, 2014 1:03pm EST
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By Jonathan Stempel

NEW YORK (Reuters) - In a victory for financial news media, a U.S. appeals court said Bloomberg LP acted lawfully when it secretly obtained a recording of a conference call between Swatch Group SA UHR.VX and securities analysts and published a transcript.

The 2nd U.S. Circuit Court of Appeals in New York on Monday said Bloomberg's handling of a February 8, 2011, call discussing the financial performance and prospects of the world's largest watchmaker constituted "fair use" under U.S. copyright law, and deserved the U.S. Constitution's First Amendment protection of press freedom.

Upholding a lower court dismissal of a lawsuit by Swatch against Bloomberg, the 2nd Circuit said Bloomberg's methods, while "clandestine" and reflecting a "lack of good faith," helped ensure that companies do not selectively disclose material information.

Eliminating selective disclosures had been a goal of the U.S. Securities & Exchange Commission when in 2000 it adopted Regulation FD, or fair disclosure. The 2nd Circuit said it did not matter that Swatch, as a foreign issuer, was not subject to the regulation.

"Although Bloomberg obtained the recording without authorization and put it to commercial use without transforming it, Bloomberg's use served the important public purpose, also reflected in Regulation FD, of ensuring the wide dissemination of important financial information," Chief Judge John Katzmann wrote for a three-judge panel of the 2nd Circuit.

The appeals court also dismissed Bloomberg's request for a finding that the recording deserved no copyright protection in the first place, saying the news service lacked standing and the court lacked jurisdiction.

Joshua Paul, an attorney representing Swatch, declined to comment. Bloomberg spokesman Ty Trippet said the company was pleased with the dismissal of Swatch's claims.

"The investing public benefits from knowing when a public company discloses financial performance to a select group of analysts," he said in a statement. "We'll continue to provide transcripts and recordings from analyst calls to our audiences to bring more transparency and fairness to the markets."   Continued...

The logo of Swiss watchmaker Swatch is seen on the door of a Swatch watches shop in Strasbourg March 12, 2009. REUTERS/Vincent Kessler