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Court Addresses Copyright Implications of Documents Posted on EDGAR

By Robert C. Rodriguez, Litigation News Associate Editor – July 20, 2010

Once a document is publicly filed and made available on a government website, it is subject to being downloaded, used, and even sold by anyone having access to that website. However, a federal district court has now held that a party who downloads and resells public documents posted on the “Electronic Data Gathering, Analysis and Retrieval system” used by the SEC, known as EDGAR, may be subject to copyright infringement claims.

The District Court’s Decision
In a decision describing the issue as one of “first impression,” the U.S. District Court for the Southern District of New York denied a motion to dismiss and allowed a copyright claim to go forward despite the fact that the copyrighted material was obtained from a public filing posted on the EDGAR website. International Swaps & Derivatives Association, Inc. v. Socratek, LLC, 2010 U.S. Dist. LEXIS 43350 (S.D.N.Y. May 4, 2010).

The case involves a claim by International Swaps and Derivatives Association, Inc. (ISDA) that its blank copyrighted derivatives transaction agreements, which are often filed with the SEC after being completed, are being wrongfully downloaded from EDGAR and resold by Socratek.

There was no dispute that Socratek downloads the completed forms from the EDGAR website and in turn resells them as reference documents to its customers. However, in deciding Socratek’s motion to dismiss and ISDA’s motion for preliminary injunction, the district court appeared to struggle with the competing interests embodied in the public’s right to access documents posted on EDGAR and rights protected by copyright law.

For its part, Socratek argued that any potential copyright liability was preempted by the Securities and Exchange Act. Socratek contended that language in the Exchange Act allows “any person” the right to access, use and resell documents posted on EDGAR. ISDA argued that copyright laws still apply even in the context of public filings.

The district court found the Exchange Act’s impact on copyright law “at best unclear,” determined that Socratek had not shown that the Exchange Act preempted the Copyright Act and denied Socratek’s motion to dismiss. However, the district court also denied ISDA’s motion for preliminary injunction, noting that the issue was one of “first impression” and that Socratek’s liability for copyright infringement was “hardly an ‘open-and-shut case’” given that “EDGAR provides for the unfettered copying of documents filed with the SEC.”

Copyright Protection for Documents Posted on EDGAR
Some commentators believe it is unlikely that the district court will ultimately determine that documents made available on EDGAR have lost their copyright protection. “EDGAR’s accessibility to the public does not divest the documents stored there of their copyright protection,” says Andrew Berger, New York, cochair of the Copyright Subcommittee of the ABA Section of Litigation’s Intellectual Property Committee. “EDGAR acts much like a local library, and just because War and Peace is available to be checked out at the library does not mean that book has lost whatever copyright protection it may have,” Berger says.

“There should be no exposure to anyone using EDGAR, so long as it is used for the purpose intended,” Berger notes. However, “once someone attempts, as Socratek did, to compile a database of copyrighted works on file there and start selling them to the public, then there may be further litigation,” he explains.

Potential Application Beyond EDGAR
While the district court in the ISDA case was focused on the EDGAR website, it is not the only government website hosting publicly filed documents. The PACER system used by the federal courts is another example of a system that allows the public to access publicly filed documents that may be protected by copyright. However, the potential exposure of attorneys and other users of the PACER system to copyright claims may be limited.

“I do not think this case will lead to many lawsuits against attorneys for using court docketing systems,” says Kim R. Jessum, Philadelphia, cochair of the Section’s Technology for the Litigator Committee. “The issue in the ISDA case is that another company was selling, without permission, documents that are based on copyrighted documents,” Jessum explains.

“I see no real exposure to those using docketing systems like PACER because the use of copyrighted works in court proceedings is generally protected by fair use,” Berger adds.

A New Avenue for Copyright Claims?
The facts of the ISDA case appear to illustrate a growing trend of businesses offering copyrighted blank forms or completed publicly filed documents found on government websites to their customers for sale at a profit. “I would never advise a client that is copying another’s work to not worry about copyright laws,” says Jessum. “There is definitely a risk to reselling such documents, but of course, the copyright owner has the option to enforce its rights and may or may not choose to do so,” she says.

“Sample forms have copyright protection if they are original and do not simply copy other forms that are publicly available,” Berger says. However, he adds, “the protection extends only to the original, creative elements added to the form by the creator.” “But if there are enough original elements in blank legal forms created by companies, any company engaged in copying and reselling these forms may have some exposure,” Berger warns.

Keywords: Litigation, EDGAR, copyright infringement


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