On its face, Monday's ruling by the Court of Appeals for the Second Circuit in Barclays v. Theflyonthewall.com seems like a win for the folks who republish the news.

The Second Circuit, in an 88-page ruling, found that a financial news website called Theflyonthewall.com had not engaged in hot news misappropriation when it ran headlines about stock recommendations by Barclays, Bank of America's Merrill Lynch unit, and Morgan Stanley. (The rarely-invoked hot news doctrine provides copyright holders a cause of action outside of copyright law.)

As Jonathan Stempel reported for Reuters, that's undoubtedly a loss for the banks and their lawyers at Weil, Gotshal & Manges, who had won a lower-court injunction by arguing that the banks were losing trading commissions as a result of Fly's misappropriation. The ruling is great news for Fly, which no longer has to fear a bar on its reporting of analyst recommendations, and for Fly's longtime counsel, Glenn Ostrager of Ostrager Chong Flaherty & Broitman.

Google and Twitter also claimed victory. The companies had supported Fly with a joint amicus brief, and their lawyer, Kathleen Sullivan of Quinn Emanuel Urquhart & Sullivan told The New York Times that the Second Circuit's ruling acknowledges the reality of new media, she said. It's a great decision for the free flow of information in the new media age.

Perhaps. But the Second Circuit's decision is certainly not a free pass for aggregators to appropriate headlines and blurbs from journalism companies without fear of liability for misappropriation. The Second Circuit opinion leaves the hot news doctrine in place. And, more importantly, it pays great heed to the craft of reporting and breaking news -- which is exactly what you'd expect in a decision written by Judge Robert Sack, a onetime media lawyer who represented Dow Jones and Times Mirror when he was in private practice at Gibson, Dunn & Crutcher.

The majority opinion draws a distinction between making news and breaking it. When a bank issues a stock recommendation, the Second Circuit found, the fact of that recommendation is news. Theflyonthewall.com doesn't have the right to republish the underlying analysis that led to the recommendation; Fly actually conceded copyright infringement for cribbing from analysts' reports before the case reached the Second Circuit. But according to the Second Circuit, Fly has the right to uncover and report on the fact that a bank has issued a stock recommendation, even if Fly's reporting means the bank loses commission revenue.

is collecting, collating, and disseminating factual information -- that facts that firms and others in the securities business have made recommendations with respect the value of and the wisdom of purchasing or selling securities -- and attributing the information to its source, Judge Sack wrote. The firms are making the news; Fly, despite the firms' understandable desire to protect their business model, is breaking it.

The appellate panel credited Fly with working hard to find out about the stock recommendations, not simply free-riding on the work done by the banks. Approximately half of Fly's 28 employees are involved the collection of the firms' recommendations and production of the newsfeed on which the summaries of the recommendations are posted, the opinion said. Fly is reporting the financial news -- factual information on the firms' recommendations -- through a substantial organizational effort.

The same principle guided the 1997 Second Circuit panel that established a test for hot news liability in NBA v. Motorola, in which the appeals court determined that Motorola's basketball score-reporting service didn't violate the NBA's rights to information about its games. Manhattan federal district court judge Denise Cote applied the five-prong NBA test in deciding the Fly case in the trial court, finding (among other things) that Fly was free-riding on the banks' work, in direct competition with them. In her appellate court minority opinion, Judge Reena Raggi found that Fly doesn't compete directly with the banks, so it's not liable for hot news misappropriation under the NBA test.

In the majority opinion, Sack engaged in some confusing discussion of the NBA test and ended up concluding that the five-part test isn't established law. That might appear to be a benefit to news aggregators, except that the majority's analysis of the Fly facts hews very closely to the NBA court's examination of free-riding (which, in turn, built upon a 1918 U.S. Supreme Court decision called International News Service v. Associated Press, in which INS illegally cribbed AP headlines and passed them off as its own). The appellate court's ultimate finding is that Fly engaged in its own reporting to find out about the banks' recommendations. It didn't simply capitalize on the banks' work.

OTC talked Tuesday with the lawyer who won the NBA case -- and also represented a group of 13 media companies appearing as amici in the Fly appeal. Andrew Deutsch of DLA Piper said the Second Circuit ruling won't put a crimp in news organizations' rights when it comes to suing Internet operations that crib their headlines. Hot news remains available, he said. I don't think this case affects the rights of original news gatherers to bring claims against aggregators ... says Fly is a reporter, and the hot news doctrine protects reporters.

The Second Circuit's apparent repudiation of the test for hot news liability, Deutsch added, is interesting to lawyers, but not really important in light of the court's free-riding analysis. The classic hot news scenario hasn't changed a bit, he said. (On The Case called and e-mailed Google counsel Sullivan of Quinn Emanuel but didn't hear back.)

So why haven't any news organizations like those Deutsch represents gone after aggregators for hot-news misappropriation? Deutsch said there have been threats of such suits, but they've been averted when aggregators (including Google, in a dispute with a French news service) agreed to take out licenses to the news organization's content. There's still never been a case in which a real aggregator was sued for hot news misappropriation, Deutsch said. But in my view, it's entirely possible.

-- Alison Frankel blogs for Thomson Reuters News & Insight (http://newsandinsight.com). The views that she expresses are her own. --

(Reporting by Alison Frankel; Editing by Eileen Daspin)