FAQ & Copyright News



Frequently Asked Questions

Inside Mortgage Finance Publications, Inc.


Q. I am a subscriber to this publication. However, I have a team of employees who need to have this information. How can I legally share this issue without violating your copyright?

A. You can share your publication in these ways:

  • Put a routing slip on your paper publication - or on the one copy you are allowed to print out from your email-delivered newsletter - and pass it around to everyone on the list.
  • Place your newsletter in a binder that your staff can access to read the issues.
  • Order more subscriptions at reduced multiple-subscriber rates.

Q. But I have 75 people who need to know what's in the publication. Won't getting more subscriptions be very expensive?
A. We offer very attractive pricing for large numbers of readers through a "site license" agreement.

Q. Tell me more about site licenses.
A. The chief benefit is that many staffers can have access to the editorial and statistical content of IMF newsletters at greatly reduced prices. These low prices make it easy for individual departments to stay within budgets. Subscription rates are computed on a sliding scale, with lower prices for more subscribers.

Q. What if my people need access to more than one publication from Inside Mortgage Finance?
A. Based on expected readership, IMF can offer one price for access to all publications, or varying prices for each newsletter. Some agreements are for access to only one publication. Some companies start with a license for one publication and add more later. These decisions are based on discussions with the company about its needs. (Note: we also offer data site licenses.)

Q. My team needs to access your online archives. How can I legally let them do that on my subscription?
A. Anyone with a paid subscription has the right to access our archives through use of a password for that individual. That includes site license subscribers. When you apply for a password you sign an agreement that stipulates single person access.

Q. Can't I just let my team share my password to access the archives?
A. Not legally. Access to archives is a free benefit for the named subscriber, as stated in the signed agreement. Abuse of the password will necessitate our denying you any access.

Q. If I have the newsletter delivered by email, can I forward it to others?
A. Not legally. That would violate our copyright and the agreement you signed when you arranged for email delivery.

Q. Can't I just print out several copies of an electronically-delivered newsletter?
A. You are certainly authorized to print out one copy for your use. You may physically route that paper copy to any number of your staff. You cannot, however, print out several copies for their use, nor can you photocopy it.

Q. Who do I contact to discuss the possibility of a site license?
A. Call our customer service manager, Gwen Jones, at (301) 951-1240.

Q. Where can I find Inside Mortgage Finance's privacy policy?
A. www.imfpubs.com/privacy



SEC Records Indicate Copyright Suit Cost Legg Mason $10 Million-Plus

While both parties in the Lowry's Reports Inc. V. Legg Mason, Inc., copyright case agreed not to reveal the settlement amount in the suit, federal records show the Baltimore-based investment firm apparently spent nearly $11 million in the settlement and other costs associated with the litigation.

When a federal district court jury awarded plaintiff Paul Desmond, president of Lowry's Reports, Inc., of North Palm Beach, FL, a nearly $20 million judgment in Oct. 2003, Legg Mason filed a $150,000 litigation charge against its earnings for fiscal year 2003 and another $19 million for FY 2004, according to the company's 2005 10K Annual Report filed with the Securities and Exchange Commission this June.

The company listed those charges as "litigation charges" and explained them as "the result of the verdict and subsequent judgment."

Legg Mason appealed the case to the U.S. Court of Appeals for the 4th Circuit. It was during that appeal process that both sides agreed to an out-of-court settlement earlier this year, without revealing the amount (Hotline, July 5).

On June 9, Legg Mason filed an 8K report with the SEC, stating that it had settled with the plaintiff prior to the appeals court's ruling. As a result of that settlement, the company said it would subtract from its prior $19 million-plus set-aside "approximately $8.2 million in previously recorded litigation award expenses related to the case."

That indicates that Legg Mason has charged $10,950,000 against its earnings to pay for the Lowry's litigation. It isn't clear from SEC records what portion of that figure may have been paid to settle the case or was spent on other costs associated with the long-running litigation.

Reprinted with permission from the Specialized Information Publishers Association's Hotline, August 1, 2005



Lowry's, Legg Mason Settle

NEPA member Lowry's Reports, Inc., has settled its multi-million-dollar copyright-infringement lawsuit with investment firm Legg Mason, Inc., for a sum that both sides agreed to keep confidential.

The settlement came during Legg Mason's appeal to the U.S. 4th Circuit Court of Appeals of a lower-court ruling for Lowry's. The lower court found Legg Mason guilty of routine infringement of Lowry's copyright, and a jury awarded the Florida publisher $19.7 million in damages.

Lowry's Publisher Paul Desmond said the case "demonstrates to the world that copyright needs to be observed and protected. It's an important case to have on the books."

Desmond said a lot of cases similar to this cannot be taken on, particularly by small publishers like himself, because of the high costs of prosecuting them. He said this was a classic case that needed to be prosecuted because there was a potential for a high payoff in the end, making the five years and high court costs and attorneys fees worth it.

Baltimore-based Legg Mason declined to comment on the settlement.

While both parties were prohibited from releasing details of the settlement, Desmond characterized it as a "good lesson" for Legg Mason.

The case was precedent-setting in that it was the first copyright-infringement case in which the jury set the amount of the award. The law allows statutory damages of up to $150,000 per infringement. The jury awarded Lowry's $50,000 per infringement for illegal copying prior to the company's notification to Legg Mason of the violations and $100,000 per infringement for those occurring after Lowry's warning.

Paul Desmond, Lowry's Reports, Inc., 1201 U.S. Highway One, Suite 250, North Palm Beach, FL 33408 (561)799-1889 Fax: (561)799-3036 Email: admin@lowrysreports.com Web: www.lowrysreports.com

Reprinted with permission from Newsletter and Electronic Publishers Association's Hotline, August 1, 2005



Memorandum from Counsel of the Newsletter and Electronic Publishers Association

1. Appellate Court Hears Arguments In Lowry's Reports Case (Spring 2005)

2. Copyright Spotlight: Take Care In "Digesting' the News (May 2004)

1. Appellate Court Hears Arguments In Lowry's Reports Case (Spring 2005)

The U.S. Court of Appeals for the 4th Circuit heard arguments in March in the Lowry's Reports copyright case. Lowry's, a NEPA member, last year obtained a $19.7 million verdict for copyright infringement committed by its subscriber financial services firm Legg Mason, Inc. Legg Mason is asking the appellate court to throw out the verdict as excessive.

The appellate court's decision is potentially of great significance to newsletter publishers, particularly those who pursue copyright claims. NEPA, together with members Inside Mortgage Finance Publications and Warren Communications News, filed a "friend of the court" brief in the 4th Circuit in support of Lowry's.

The case is also being closely watched in copyright circles more generally because of the legal issues the appeal presents with respect to the calculation of statutory damages by juries.

Size of the Verdict

The three-judge panel that heard the appeal in Richmond, VA, appeared to recognize the potential importance of the case, repeatedly characterizing the case at argument as a significant one presenting "interesting" and sometimes "difficult" legal issues. The judges permitted the parties approximately two hours to argue the case. Typically, the 4th Circuit limits oral argument in any one case to 40 minutes.

The thrust of Legg Mason's argument is that the $19.7 million verdict was out of proportion to the harm suffered by Lowry's and was instead the result of the jury's improper decision to punish Legg Mason for being a wealthy large company.

"This award is off the charts. It has no relationship to what actually happened in this case," Legg Mason's counsel Theodore Boutrous told the appellate panel.

Legg Mason argued that a company's wealth should not be taken into account in assessing statutory damage under the Copyright Act, an argument that one or more judges on the appellate court appeared to treat with some skepticism.

Noting that statutory damages under the Copyright Act are intended in part to have a deterrent effect on infringers, the panel appeared to think it counterintuitive not to consider wealth as at least one relevant factor in the jury's calculation of statutory damages.

Indeed, a verdict that might be sufficient to deter a less wealthy defendant could very well be written off as simply a cost of doing business by a much wealthier corporation, undermining the achievement of the deterrence goal of statutory damages.

Emphasis on Wealth?

A more complex issue that the judges appeared to genuinely struggle with was not whether the wealth of the defendant should ever be considered by a jury but whether, in the context of this particular case, this jury placed too much of an emphasis on Legg Mason's wealth and too little an emphasis on the harm suffered by Lowry's.

"I'm not even sure that I object to the jury's award of damages," said Judge Harvie Wilkinson, "but what does bother me is the prejudice that can occur to a defendant … when somebody just hammers on the fact that this is "deep pockets' litigation."

For its part, Lowry's argued that Legg Mason's wealth was not emphasized and, moreover, that Lowry's suffered enormous financial harm due to Legg Mason's conduct. Legg Mason has conceded on appeal that it repeatedly infringed Lowry's copyrights in its newsletters and, considering the record of that harm, Lowry's argued that the jury's verdict was more than justified.

"This is one of the most massive and egregious copyright infringement cases in the American casebooks," Lowry's counsel Thomas Kirby told the 4th Circuit. "The jury was entitled to infer from the evidence before it that we incurred millions of dollars in lost subscription revenues and that, but for the fluke that led to the discovery of Legg Mason's behavior, we likely would have incurred millions and millions more."

Repeated Infringement

The infringement at issue in Lowry's lawsuit arose out of Legg Mason's purchase of a single $700 subscription to the daily and weekly editions of Lowry's financial newsletter, Lowry's New York Stock Exchange Market Trend Analysis. Legg Mason regularly copied the newsletter, distributing those copies throughout the company.

From 1999 through 2001, for example, Legg Mason posted the report on its company-wide intranet - where company brokers at more than 100 locations downloaded or accessed the material approximately 16,000 times.

The jury awarded Lowry's $50,000 for each infringement that occurred before Lowry's sent written notice reminding Legg Mason that unauthorized reproduction of its newsletter was forbidden, and $100,000 for each infringement that occurred after the warning. The Copyright Act generally provides a calibrated legislative scheme through which juries are permitted to award a range of statutory damages which takes into account whether the infringing conduct was innocent, negligent or willful.

The 4th Circuit's decision in Lowry's Reports v. Legg Mason was expected, however the case was settled confidentially in the district court in Maryland.


2. Copyright Spotlight: Take Care In "Digesting' the News (May 2004)

In recent months, NEPA's legal counseling program has received a number of questions from members about issues related to summarizing or "digesting" another publisher's content. For example, a newsletter publisher might summarize the content of news reports from the nation's leading newspapers on a particular topic, such as air travel or arthritis, so that newsletter readers have a snapshot of the latest news consolidated in a single publication. While such digesting is common, it presents issues of copyright law. This issue of Memorandum From Counsel focuses on the copyright implications of digesting for newsletter publishers and other specialized-information providers.

In addition, NEPA members with general questions about digesting and other aspects of copyright law - as well as questions about defamation law, marketing law and public access to government records - are entitled to up to 10 hours per year of assistance at no charge to the member through NEPA's Legal Counseling Program. Contact Tom Curley or Chad Bowman at Levine Sullivan Koch & Schulz, L.L.P., 1050 17th Street, N.W., Suite 800 Washington, DC20036, (202) 508-1100, tcurley@lskslaw.com, cbowman@lskslaw.com.

Newsletter publishers typically think of copyright law as the legal shield protecting one of their most valuable assets – editorial content. But when newsletters engage in the increasingly popular practice of digesting articles published by third parties, it is important to consider copyright law from the opposite perspective. Fortunately, it is possible to minimize (though not eliminate) potential legal risk associated with digesting if editors and reporters bear in mind certain governing principles of copyright law.

Copyright Basics

As a general matter, copyright protection under U.S. law extends to original literary, pictorial, graphic, dramatic, musical, artistic and related expressive works, so long as they are "fixed" or recorded in some tangible form. A work is fixed in tangible form, for example, when it is written down or stored on a computer disk. The owner of a copyright possesses certain exclusive rights in the work, including the right to reproduce it, distribute copies and prepare derivative works.

When someone exercises one or more of these rights without permission from the copyright owner, copyright infringement occurs. Infringement, however, may be legally excused if the infringer has a valid defense, including, most notably in the digesting context, the defense of "fair use."

Furthermore, it is important to emphasize at the outset that no one can properly claim a copyright on a particular fact, as copyright protection generally does not extend to facts, ideas or opinions. Instead, what copyright law protects is the particular way in which an author uses specific language to express facts, ideas or opinions. Simply put, copyright law exists to protect original expression.

For example, no publisher can properly claim a copyright in the fact that a pharmaceutical company has announced the discovery of a new drug that is expected to be helpful in treating certain types of cancer, even if that publisher is the first to report the development. However, the publisher can claim a copyright in the expressive content of its own news report announcing the discovery.

Put differently, other publishers cannot be precluded from also reporting the fact of the discovery but, as a general matter, it would likely constitute infringement for other publishers to subsequently copy that first publisher's report verbatim and in its entirety.

Similarly, the selection, coordination and arrangement of certain facts - if sufficiently original - may be protected under copyright law as well. For example, because a telephone number or address is a fact, copyright law may not protect against copying an alphabetical phone directory of all addresses and numbers in a particular city. But, in contrast, a "yellow pages" directory organized by subject likely qualifies for at least some copyright protection if the organization scheme is sufficiently creative. Protection has also been extended to forms for reporting baseball statistics, maps and price listings arrived at by an interpretation of market data.

Hot News' Exception?

There is at least one caveat to the general rule that facts are not subject to legal protection from copying. In rare situations, courts have recognized that a news organization may, for a short time, own the "facts" of a story, at least against competitors attempting to piggyback on the original author's work. The rule stems from a World-War-I-era case in which a rival wire service lifted reporting from the Associated Press wire and then resold rewritten versions of the Associated Press's reporting.

Although the U.S. Supreme Court observed that facts are "the history of the day" and thus cannot be copyrighted, the court decided the competing news wire's practice was a type of unfair competition - "appropriating to itself the harvest of those who have sown."

While the Supreme Court has not recently revisited this issue, other courts have similarly indicated that, at least in narrow situations where so-called "hot news" is time-sensitive and expensive to gather, direct competitors cannot legally "free-ride" if appropriation of such information would threaten the economic viability of the original newsgathering effort. Such protections, however, would most likely apply only for a short period of time, measured in minutes or hours rather than in days.

Types of Digests Vary

Digests take various forms, with certain forms likely posing a greater degree of legal risk than others. First, there are the genuine "rewrites," where a digester extracts unprotected facts from a copyrighted work and reassembles them into new works using the digester's own language. Second, there is what might be described as "paraphrasing." This is a rewrite that, although employing different language, follows the same basic structure as the original, arranging facts or opinions in the same way. Third, there is verbatim copying, where a portion of the original piece is reproduced virtually word-for-word. Some digests may fall somewhere between these examples.

With respect to all forms of digesting, there are at least two principal copyright questions to consider: Has there been an infringement in the first instance? In other words, has expressive content - as distinct from factual content - been copied? And, if so, does a "fair use" defense nevertheless protect the publisher from liability?

Rewriting and Paraphrasing

Putting aside "hot news," there is less likelihood of infringement where a digester uses his or her own words to express facts, opinions or ideas derived from a previously published work, thereby creating a new, entirely rewritten work.

For example, a federal appeals court recently considered an infringement claim in the context of a digest that had been rewritten, i.e., the facts in the digest were "in a different arrangement, with a different sentence structure and with different phrasing" than that of the source material. Not surprisingly, the appellate court found that no copyright infringement had occurred.

The situation may be different, however, when the rewritten digest reads very much like the original article, with only slightly altered language. Although it may seem counter-intuitive, paraphrasing a copyrighted work may represent infringement even without any verbatim copying. This is so because copyright infringement occurs when two works are "substantially similar." Essentially, the legal test asks whether a reasonable person looking at the two works would naturally conclude that one was copied from the other because of the degree of similarity between them.

A federal appeals court in New York recently applied this principle in a lawsuit brought by a Japanese publisher, Nihon Keizai Shimbun, Inc., against an American company that resold "abstracts" - or as the court described them, "rough translations" - of Japanese articles without permission.

"Substantial Similarity" Applied

Since the defendant had translated the original works into English, they were not verbatim reproductions. But, as the appellate court pointed out, "The abstracts track the information in the articles sentence by sentence, in sequence; only occasionally do the abstracts combine two Nikkei sentences, divide a sentence or rearrange the facts among different sentences. Comline [the U.S. company] adopts, by and large, the exact same structure and organization of the facts reported by Nikkei." The court decided that 20 translated abstracts were "substantially similar" and thus represented copyright infringement.

In the 20 infringing articles, Comline had translated an average of two-thirds of each of the original articles. In contrast, the court found that another abstract, which paraphrased just 20% of the original article - essentially, the lead paragraph of a six-paragraph story - was not "substantially similar." The court, however, like other courts before it, rejected the "bright-line" rule that paraphrasing 20% of a news article is always acceptable or, on the other hand, that paraphrasing more than 50% is always actionable.

Finally, with respect to digesting in which there is verbatim copying of the original work in whole or in part, the risk of infringement is obviously greater. Where more than a minor or de minimus portion of the expressive content of an original work has been copied, a court is considerably more likely to conclude that infringement has, in fact, taken place. The threshold amount of copying to trigger a finding of infringement can be quite low where there is word-for-word reproduction. Indeed, two or three sentences may be enough, particularly if the content thus reproduced represents the crux of the original work.

Fair-Use Defense

Even where a digest infringes the copyright of the source work, whether through verbatim copying or because the digest is "substantially similar" due to paraphrasing, copyright law recognizes that not all infringement is actionable. Under the so-called "fair-use" defense, infringement is not actionable where reasonable portions of a work are reproduced for worthwhile purposes, including, among other purposes, criticism, comment, news reporting, scholarship or teaching.

Courts traditionally consider four factors when deciding whether a particular use is fair: (1) the purpose and character of the infringing use, including whether such use is of a commercial nature; (2) the nature of the copyrighted work; (3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and (4) the effect of the infringing use on the potential market or value of the copyrighted work.

As the term "fair use" implies, the test is intended to help courts determine the equities of a particular situation and, so there are no ironclad rules with respect to whether a specific use will be recognized as fair. For example, republishing entire articles word for word is unlikely to be recognized by the courts as a fair use, at least in the absence of extenuating circumstances.

Indeed, a federal court recently awarded The Washington Post and Los Angeles Times $1 million in damages in a lawsuit brought against FreeRepublic.com, which republished the full text of certain of the newspapers' stories on its Web site. The court in Los Angeles Times v.FreeRepublic applied the four traditional "fair-use" principles, pointing specifically to the fact that FreeRepublic reproduced complete news stories on its Web site, rather than excerpts or even simply links to the newspapers' own Web pages.

How Much Is Too Much?

While copying multiple articles verbatim is unlikely to constitute fair use, there is no clear rule on exactly how much of a particular article may be reproduced fairly. At bottom, the answer depends on how the information is used and presented.

In Wainwright Securities Inc. v. Wall Street Transcript Corp., for example, the federal appeals court in New York decided that a company that republished summaries of market reports was not protected from copyright liability by the fair-use defense. The conclusion was, in large part, due to the fact that the summaries did not use the information in the context of any additional reporting or discussion.

The court noted that the copying company "did not provide independent analysis or research," "did not solicit comments on the same topics from other financial analysts" and "did not include any criticism, praise or other reactions by industry officials or investors." Rather, the summaries "appropriated almost verbatim the most creative and original aspects of the reports, the financial analyses and predictions, which represent a substantial investment of time, money and labor."

Other courts have found it significant that, while a relatively small portion of the original work was copied, the copyright owner was able to demonstrate that the copying caused financial injury. In Harper & Row, Publishers, Inc., v. Nation Enterprises, former President Gerald Ford contracted with Harper & Row to publish his memoirs. Harper & Row also had the exclusive right to publish "prepublication excerpts" from Ford's book, a right Harper & Row sold to Time magazine for $25,000. However, a few weeks before Time's scheduled publication, The Nation obtained a copy of Ford's manuscript and published a lengthy article on the memoirs, including 300 words taken verbatim from the 200,000-word manuscript.

Harper & Row sued The Nation for copyright infringement and won, despite the fact that the copied material constituted only about one-tenth of one percent of the manuscript. The Supreme Court noted that the copied 300-word excerpt, in which Ford reflected on the resignation and pardon of former President Richard Nixon, constituted "the heart of the book," thus increasing its importance, despite the excerpt's small size. Perhaps most importantly, the Court observed that there was direct evidence of the harmful effect of the copying on the market for Ford's book: After The Nation published its story, Time cancelled its $25,000 contract with Harper & Row.

Finally, take heed that the principles of copyright law generally are the same in cyberspace as they are in the print world, including the application of the fair-use defense. Thus, the author of any given work - even if that work is only found on a Web site or in an email - has the right to control the use of that work. There is no blanket fair-use exception that applies to works posted on the Internet.

Advice for Publishers

Denied permission to quote directly from the T.S. Eliot's writings, biographer Peter Ackroyd later remarked that he "had to paraphrase the paraphrase" in his book about the poet. The following reminders may help minimize the legal risk necessarily associated with digesting under copyright law:

  • Just the Facts. Ideally, the focus of a digest will be on facts, opinions or ideas, which in most instances are not subject to copyright protection.
  • Put it in Your Own Words. To the greatest extent practicable, avoid the temptation to copy verbatim or to use extensive paraphrasing. Put the digest in your words.
  • Keep it Short. Take only as much as you need for the legitimate purposes of the digest. If a digest must quote directly from the underlying work, keep the quoted passages as short as possible. Consider using direct quotations and attribution within the context of a discussion or analysis rather than simply letting the copied passages stand alone.
  • Don't Get Burned. Be careful when dealing with "hot news," especially news falling within a claimed "embargo" period or in the time period immediately after its publication.
  • Where Credit is Due. Crediting the original author as the source of the digested work, while perhaps otherwise appropriate and admirable, does not defeat an infringement claim or make the digest of a particular work "fair." In short, giving credit does not afford legal shelter to a digester under copyright law. It nevertheless can go a long way toward mollifying the original publisher.
  • Other Laws. Take note that other state and federal laws, in addition to copyright law, may be implicated by digesting. For example, trademark as well as laws governing deceptive practices may be implicated where a digester erroneously suggests that he or she is affiliated with the publisher of the source material.

Reprinted with permission from the Specialized Information Publishers Association.

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