June 26 (Bloomberg) -- Merrill Lynch & Co., Morgan Stanley and Lehman Brothers Holdings Inc., three of the world's biggest securities firms, sued Theflyonthewall.com Web site, claiming it ``pirated'' their equity research.

The copyright infringement lawsuit, filed today in U.S. District Court in New York, said the Web site ``systematically and impermissibly accesses'' their proprietary equity research, ``free riding'' on their work without conducting any of its own.

The suit claimed the Web site 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 Web site's ``misappropriation,'' according to the lawsuit.

``Fly promotes itself as a substitute for the firms as a source of information and analysis,'' the securities firms said in the lawsuit. ``Its means of accomplishing this aim is to free- ride on the firms' proprietary equity research.''

The Englewood, New Jersey-based Web site, which charges subscribers a monthly fee for access to market information, allegedly promotes itself as a ``substitute'' to services provided by Merrill, Morgan Stanley and Lehman Brothers.

The lawsuit cites two dozen examples where copyrighted research was compared with Web site items about the same company. The suit claimed these items are ``copied verbatim'' with nearly identical wording to those written by the plaintiffs.

Similar Language

For example, a Lehman research report on Genentech Inc. from March 1, 2005, said, ``We believe the company's guidance of $0.95 - $1.00 is still fully achievable even if fuel costs stay elevated.'' The Web site writes on that same day about Genentech: ``We believe the company's guidance of $0.95 - $1.00 is still fully achievable even if fuel costs stay elevated.''

An individual who answered the phone at the Web site's Englewood office and declined to give his name said ``We haven't seen the lawsuit and won't comment.''

Bill Halldin, a Merrill spokesman, released a statement on behalf of all three banks.

``Fly is taking what is not theirs and exploiting it for their own benefit -- at the expense of the banks and their clients,'' Halldin said. ``The three firms have asked Fly to stop this practice, but it has refused to do so. We are asking the court to issue an injunction preventing Fly from misusing our intellectual property.''

Merrill, the third largest securities firm by market value, is a passive, minority investor in Bloomberg LP, the parent of Bloomberg News. Flyonthewall.com is an independent contributor of news headlines available through the Bloomberg Professional Service. Morgan Stanley is the world's second-biggest securities firm, while Lehman is the No. 4 U.S. securities firm by market value. All are based in New York.

Merrill shares rose 89 cents to $68.89 in composite trading on the New York Stock Exchange today, while Morgan Stanley rose 70 to $60.40 and Lehman rose 38 cents to $63.09.

To contact the reporters on this story: Patricia Hurtado in the Manhattan Federal Courthouse at pathurtado@bloomberg.net.

Last Updated: June 26, 2006 18:32 EDT