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NBA v. Motorola and STATS, Inc. Decision
THE NATIONAL BASKETBALL ASSOCIATION and NBA PROPERTIES, INC.,
Plaintiffs,
-against-
SPORTS TEAM ANALYSIS AND TRACKING SYSTEMS, INC., d/b/a STATS, INC.,
and MOTOROLA, INC., d/b/a SPORTSTRAX,
Defendants.
96 Civ. 1615 (LAP)
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK
1996 U.S. Dist. LEXIS 10262
July 19, 1996, FILED
For THE NATIONAL BASKETBALL ASSOCIATION AND NBA PROPERTIES, INC., plaintiffs: Roger L. Zissu, Weiss Dawid Fross Zelnick & Lehrman, P.C., NYC, NY.
For SPORTS TEAM ANALYSIS AND TRACKING SYSTEMS, INC., dba Stats, Inc., defendant: Edward F. Maluf, Piper & Marbury, L.L.P., New York, NY. For MOTOROLA, INC., dba Sports Trax, defendant: Patricia A. Martone, Fish & Neave, New York, NY.
For MOTOROLA, INC. dba Sports Trax, counter-claimant: Patricia A. Martone, Fish & Neave, New York, NY.
For THE NATIONAL BASKETBALL ASSOCIATION AND NBA PROPERTIES, INC., counter-defendant: Roger L. Zissu, Weiss Dawid Fross Zelnick & Lehrman, P.C., NYC, NY. LORETTA A. PRESKA, District Judge:
Plaintiffs The National Basketball Association and NBA Properties, Inc. (collectively "NBA") bring this action complaining of the sale of SportsTrax, a portable electronic beeper device created and marketed by defendants Sports Team Analysis and Tracking Systems, Inc. ("Stats") and Motorola, Inc. ("Motorola") (collectively, "defendants") which provides real-time information about NBA basketball games. NBA alleges claims for infringement under the Copyright Act of 1976, 17 U.S.C. @ 501; commercial misappropriation under New York common law; false advertising and false designations of origin under Section 43(a) of the Lanham Act, 15 U.S.C. @ 1125(a); and violations of the Communications Act of 1934, 47 U.S.C. @ 605. n1 Motorola alleges a counterclaim for NBA's tortious interference with its contractual relations with four NBA teams.
NBA moved, by order to show cause, for a preliminary injunction under Rule 65 of the Federal Rules of Civil Procedure. Following oral argument, a hearing was held on the preliminary injunction (the "Hearing"), at the conclusion of which I reserved decision. The parties subsequently agreed to consolidate the Hearing into a trial on the merits for the issues of liability and injunctive relief, submitted supplemental briefing, and attended another oral argument. The issue of damages has, by agreement of the parties, been reserved for a subsequent decision if necessary.
As set forth in detail below, I find that through the SportsTrax product, defendants disseminated to NBA fans game information on a real-time basis. n2 In so doing, they have misappropriated the essence of NBA's most valuable property -- the excitement of an NBA game in progress. Because defendants have "reaped where [they] have not sown," International News Serv. v. Associated Press, 248 U.S. 215, 239, 63 L. Ed. 211, 39 S. Ct. 68 (1918), NBA is entitled to injunctive relief. Pursuant to Rule 52(a) of the Federal Rules of Civil Procedure, the following shall constitute findings of fact and conclusions of law in support of this decision.
TABLE OF CONTENTS
FINDINGS OF FACT
I. Parties and Amici
II. The Business of NBA Games: Real-Time Data
A. The Value of Real-Time Data
B. The Controlled Dissemination of Real-Time Data
C. NBA's Real-Time Data System: Gamestats
III. SportsTrax: "Any Game . Any Team . Any Time . Any Where"
A. The Product
B. The Marketing
C. The Negotiations
CONCLUSIONS OF LAW
I. Laches Defense
II. Prior Restraint Defense
III. Copyright Infringement Claim
A. NBA Game Is Not Protected
B. Copyright In Broadcast Is Not Infringed
IV. Commercial Misappropriation Claim
A. Preemption by Copyright Act: NBA Games v. Broadcasts of NBA Games
1. General Scope Requirement
2. Subject Matter Requirement
B. Defendants' Misappropriation
V. Lanham Act Claims
A. No Contributory Infringement
B. No False Advertising
C. No False Designations of Origin
VI. Communication Act Claim
VII. Interference With Contractual Relations Counterclaim
VIII. Entitlement to Injunctive Relief
CONCLUSION
FINDINGS OF FACT Upon assessing the evidence in the record, operating and observing SportsTrax, and taking into account my observations of the demeanor and assessments of the credibility of those witnesses who testified at the Hearing, I find the following to be facts in this action.
I. Parties and Amici
1. Plaintiff The National Basketball Association ("TNBA") produces, organizes, and markets pre-season, regular season, and playoff basketball games involving its twenty-nine member teams. (Affidavit of TNBA President of Television and New Media Ventures Edwin S. Desser ("Desser Aff.") P 3.)
2. Plaintiff NBA Properties, Inc. ("NBA Properties") has the exclusive worldwide rights to market and promote NBA games and, accordingly, controls and manages TNBA's intellectual property rights. (Id. P 4.)
3. Defendant Stats provides information about sports, both current and historical, to the public and to various media entities, such as the Associated Press, ESPN, Fox, Turner, NBC Sports, and a majority of Major League Baseball teams. (Affidavit of Stats President and Chief Executive Officer John Dewan ("Dewan Aff.") P 3.) It also gathers and provides the real-time NBA game data which is displayed by SportsTrax.
4. Defendant Motorola develops and markets, inter alia, paging devices which relay a variety of information, from telephone numbers to weather reports. n3 (Affidavit of SportsTrax Products, Inc. n4 President Michael Marrs ("Marrs Aff.") P 3.) It is responsible for the manufacturing and marketing of SportsTrax. n3, n4
5. Amicus curiae The National Football League ("NFL") is an unincorporated not-for-profit association comprised of thirty member clubs engaged in the business of creating, organizing, promoting, and exhibiting professional football games. (Memorandum of Law Submitted by the NFL, The Office of the Commissioner of Baseball ("MLB") and the National Hockey League ("NHL") as Amicus Curiae ("NFL Memo.") at 2.)
6. Amicus curiae Office of the Commissioner of Baseball is an office serving the twenty-eight clubs that are members of either the American League of Professional Baseball Clubs or The National League of Professional Baseball Clubs, which are in the business of creating, organizing, promoting, and exhibiting professional baseball games.
7. Amicus curiae NHL is a joint venture engaged in the business of creating, organizing, promoting, and exhibiting the professional hockey games of its twenty-six member teams. (Id. at 3.)
8. Amicus curiae The Associated Press ("AP") is a not-for-profit mutual news cooperative whose members are newspapers, television stations, and radio stations. (Brief Amicus Curiae of AP in Opposition to Plaintiffs' Request for Injunctive Relief ("AP Memo.") at 1). As the world's largest and oldest news gathering organization, AP is in the business of gathering and distributing news, including sports news, to its members and subscribers. (Id.)
9. Amicus curiae America Online, Inc. ("AOL") operates an online computer service providing a wide range of information for over six million subscribers worldwide. (Memorandum of Law Amicus Curiae of AOL in Support of Defendants ("AOL Memo.") at 1.) Stats offers a scoreboard feature on AOL, which provides regularly updated information about ongoing NBA games. (Id. at 2.)
10. Amicus curiae The New York Times Company ("NYT") publishes The New York Times newspaper and has been in the business of reporting and distributing news for over a century. (Memorandum of Law of Amicus Curiae NYT at 1.)
II. The Business of NBA Games: Real-Time Data
A. The Value of Real-Time Data
11. The vast commercial value and appeal of NBA games is beyond dispute.
12. Much of this value and appeal is attributable to years of NBA's promotional investments.
13. Currently, NBA's primary promotional announcement consists of the series of thirty-second advertisements with the theme, "I Love This Game." (Testimony of TNBA President of Television and New Media Ventures Edwin S. Desser, Transcript ("Desser, Tr.") at 160; Exhibit ("Ex.") 141.) NBA typically runs one or two of these advertisements in each network telecast of an NBA game and produces roughly twenty to thirty per year. (Desser, Tr. at 161.)
14. It is also beyond dispute that NBA games achieve the apex of their value while they are in progress. In fact, roughly 80% of NBA's revenues are derived from the promotion of NBA games while they are in progress, such as from broadcast distribution licenses and admission fees to the arenas. (Id. at 11.) n5
15. The National Broadcasting Company ("NBC"), for example, pays NBA approximately $ 3 million per game for the national network television broadcast rights to NBA games. (Id. at 53-54.)
16. Turner Broadcasting ("Turner") pays NBA approximately $ 1 million per game for the rights to televise nationally 115 regular season and playoff games. (Id. at 54.)
17. ESPN Radio pays NBA approximately $ 50,000 to $ 100,000 per game for the national radio distribution rights for NBA games. (Id.)
18. In addition to these national broadcast agreements, NBA has a series of local and regional license agreements. (Id.) In the New York Metroplex, NBA has agreements with MSG Network and Sports Channel, which carry New York Knicks and New Jersey Nets games respectively.(Id.)
19. Further, NBA has a license agreement with TRZ Communications, which takes audio descriptions of NBA games and distributes them via a 1-800 number (1-800-HEAR-NBA) to listeners who are not in the vicinity of a radio or television broadcast of an NBA game. (Id. at 13, 54.) Callers are charged a fee in exchange for which they can select a game currently in progress and hear a play-by-play broadcast of the game. (Id. at 106-07.)
20. NBA fans also can pay approximately $ 149 per year as a subscriber to League Pass, a satellite service which allows the subscriber to view 1,000 games (virtually every televised game) over the course of a season. (Id. at 55.)
B. The Controlled Dissemination of Real-Time Data
21. Although NBA relies on this public dissemination of real-time NBA game data to enhance public interest in NBA games, it must, in order to preserve the value of its proprietary interest in this information, impose limitations on its dissemination.
22. NBA's license agreements represent one limitation.
23. Another limitation is NBA's media credentials. These media credentials ensure that entities, despite the legitimacy of their news gathering and dissemination functions, are not able to disseminate real-time information which is comparable to that provided by NBA's paying licensees without compensating NBA.
24. In this manner, NBA balances the goals of informing the public about, and attracting interest in, NBA games, on the one hand, and preserving its ability to derive revenue from the sale of real-time NBA game information, on the other hand. (Id. at 99.)
25. Credentialed media entities are admitted to the arenas and are permitted to provide post-game reports and, to a more limited extent, reports of NBA games while they are in progress. (Id. at 14.) n6
26. According to NBA's 1995-96 Media Pass: Television and radio stations may use excerpts of NBA games only in the manner and on the terms and conditions set forth in the NBA's Video and Audio Highlights Licenses, receipt of which is acknowledged. Any other use requires prior specific written approval from the NBA.
The use of any photograph, film, tape or drawing of the game, player interviews or other arena activities taken or made by the accredited organization or the individual for whom this credential has been issued shall be limited to news coverage of the game by the organization to which this credential is issued unless expressly authorized in writing by the NBA.
Permission to film or tape NBA games may be revoked at any time by the NBA.
All ownership, copyright and property rights in the NBA games, telecast thereof and in the events and activities conducted in the arena shall remain the sole property of the NBA and no such rights are conferred or intended to be conferred or created on behalf of any other person or entity by the issuance of this credential. (Ex. 324.)
27. NBA's Media Guidelines provide further specifications for photographers, cameramen, and the electronic media, and they limit the nature of the media's use of video highlights of NBA games. (Ex. 136.)
28. The electronic media restrictions state:
No electronic media personnel shall transmit scores and/or other game information out of an NBA arena (by telephone or by any other means) more than three times during each quarter and once during each of the two quarter breaks without the prior specific written approval of the NBA; provided, however, that in the event that such game involves one or more "overtime" periods, two additional transmissions per overtime period (once during the overtime period and once during the break immediately prior to the start of such overtime period) shall be authorized without the prior written approval of the NBA; and provided, further, that no such transmission shall exceed thirty seconds in length. The limitation on transmissions contained in the preceding sentence shall not be applicable during pre-game, post-game, or half-time of the game. (Id.)
29. The video highlights restrictions provide, inter alia, that game highlights: "may be used only for news purposes in regularly scheduled news programs up to 72 hours after the completion of the game," "may not exceed two minutes" for any one NBA game that has been completed, "may only include Highlights of the first half" of an ongoing NBA game, and "may not incorporate announcer commentary from game telecasts." (Id.)
30. SportsTicker, which is owned by ESPN (Desser, Tr. at 104), is one of the entities to which NBA has provided its media credentials. Based on game updates from its representatives in the arenas, SportsTicker distributes electronically the score and time remaining three times per quarter and once at the end of the quarter. It creates a data feed with this information and sells theinformation to its clients. (Id. at 100).
31. NBA does not control SportsTicker's decisions as to who receives its data feeds; NBA only regulates the frequency and types of information which SportsTicker may provide. (Id. at 104.)
32. One product which uses SportsTicker's data feed is "ESPNET To.Go," a pager device manufactured by Motorola which distributes sports information about ongoing Major League Baseball, NFL, NBA, NHL, and Division I NCAA football and basketball games. (Id. at 41-42, 59; Exs. 73, 327.).
33. In addition to the promotional benefits provided by other entities with media credentials, SportsTicker provides NBA teams with the scores to other NBA games around the league, which are displayed for fans in each arena. (Desser, Tr. at 55.)
34. For the same reason that NBA restricts the dissemination of real-time information by media entities, NBA also places restrictions on patrons who view NBA games from the arenas.
35. The back of admission tickets states: "By your use of this ticket . . . you agree that you will not transmit or aid in transmitting any description, account, picture or reproduction of the event to which this ticket invites you." (Ex. 83.)
36. Further, NBA places signs at the entrances to the arenas and mails publications to season ticket holders which contain similar restrictions. (Desser, Tr. at 113.)
C. NBA's Real-Time Data System: Gamestats
37. Not only does NBA limit what others can do with its valuable real-time NBA game data, but it currently is developing its own system -- Gamestats -- for capturing and disseminating statistical information about ongoing NBA games. (Id. at 23.)
38. NBA first installed Gamestats during the 1994-1995 NBA season. (Id. at 249.)
39. Its full development, however, consists of four phases.
40. Phase I, which has been completed in most respects, is the development and implementation phase of the software used to Operate Gamestats. (Id. at 35.)
41. At this time, all twenty-nine arenas and all twenty-nine teams are using Gamestats, with the assistance of NBA's two-hundred page user's manual (Ex. 326), as the primary system for entering and capturing the statistics of NBA games. (Desser, Tr. at 35.) NBA currently uses Gamestats to generate the official play-by-play game sheet and the half-time and postgame box scores, to provide information to broadcasters announcing the games and to allow television stations to update their on-screen graphics, and to distribute information throughout the arena in which the game is being played for use by members of the press and those in luxury suites. (Id. at 34.)
42. Phase II, which the NBA plans to have operational for the 1996-1997 basketball season, is the development of a network linking the Gamestats data from all twenty-nine arenas. (Id. at 35.) At present, Gamestats does not have the capability to provide real-time data outside of a particular arena. (Id. at 253.)
43. Phases III and IV consist of further enhancements to Gamestats to achieve its objectives of creating and collecting game statistics and interfacing these statistics with arena clocks and scoreboards, networking this information among the arenas, and making this information available for commercial use. (Ex. 144.)
44. NBA recently has been involved in discussions with various entities in order to market Gamestats. These entities include ESPN, SportsTicker, Time Warner, Intel, IT Network, and even defendants. (Desser, Tr. at 40-42.)
45. NBA expects to receive almost $ 1 million from license fees for the first year in which it has the capability to license real-time data from Gamestats. (Id. at 57.)
46. Although NBA presently does not have any agreements with beeper manufacturers for a product analogous to SportsTrax or ESPNET To.Go (id. at 105), NBA intends to provide a Gamestats data feed to a pager product once Gamestats has the capability to provide real-time information beyond the particular arena in which the game is being played (id. at 206-07, 253).
III. SportsTrax: "Any Game . Any Team . Any Time . Any Where" n7
47. In January 1996, defendants' product -- SportsTrax -- presented retail consumers with another means of acquiring real-time information about NBA games.
A. The Product
48. At its core, it provides real-time "Basketball Action Wherever You Go." (Ex. 8-D ("Retail Box").)
49. More specifically, it allows the consumer to follow all NBA games, including playoff games, being played around the nation at any particular time by regularly updating its displays of the score, quarter, ball possession, time remaining, and team in the bonus while the games are in progress. (Retail Box.) n8
50. These updates appear on a display screen which depicts a basketball court. (Ex. 8-B ("SportsTrax Device").)
51. SportsTrax also designates whether a team is the home or visiting team and it has audible alerts which indicate the start of a game, the end of a period, the six minute warning, the two minute warning, and all game updates. (Retail Box; Ex. 8-C ("User's Guide") at 14.) n9
52. The consumer receives these, as well as some other specialized features, [n10] for "exciting basketball action in the palm of your hand." (Retail Box.)
53. By providing "up-to-date information on all National Basketball Association teams," SportsTrax is the consumer's "personal viewing window into the exciting world of Pro Basketball." (User's Guide at 2, 3.)
54. Its operation is analogous to that of a television, with each "channel" of SportsTrax "showing a different Basketball game" and "a channel for every game being played that day." (Id. at 3.)
55. Once a particular game begins, "the start times are replaced with live updates about the progress of the games," thus allowing the consumer to "flip the channels and view the status of any and every game being played that day." (Id.)
56. As these advertised features make clear, SportsTrax is designed and marketed as a commercial entertainment product for NBA fans. (Testimony of SportsTrax Products, Inc. President Michael Marrs, Transcript ("Marrs, Tr.") at 275; Ex. 251; Testimony of Stats President and Chief Executive Officer John Dewan, Transcript ("Dewan, Tr.") at 458-59.)
57. It "is designed for those times when you cannot be at the arena, watch the game on TV, or listen to the radio and a slight delay is acceptable." (User's Guide at 14.)
58. Although SportsTrax has the capability to deliver real-time information about NBA games as fast as that information is sent to the device (Marrs, Tr. at 281), "status updates are usually received within two minutes of the on-court activity" (User's Guide at 14).
59. Toward the end of competitive NBA games, however, SportsTrax often updates more frequently than every two minutes. (Marrs, Tr. at 281-282, 402-04; Dewan, Tr. at 545.) In fact, updates sometimes occur numerous times within one minute. (Ex. 285.)
60. The updates presented by SportsTrax are provided to Motorola by Stats. (Dewan, Tr. at 466.)
61. Stats, however, does not have reporters in the arenas or at the press tables; instead, it pays reporters $ 10 per game to watch NBA games on broadcast and cable television and to listen to radio broadcasts. (Id. at 466, 468.)
62. Accordingly, some of the information relied on by Stats' reporters may be that which Gamestats provided to the broadcast announcers (especially for the radio broadcasts where Stats' reporters do not view the game independently). (Id. at 473-77.)
63. Two reporters cover each game. (Id. at 473.) They watch or listen to the broadcasts and type information, such as successful shots, missed shots, fouls, and clock updates, into computers which calculate various statistics and relay them for eventual transmission to SportsTrax devices. (Id. at 473-74.)
64. Two or three night editors monitor the information relayed by the reporters for a particular night's games to address any discrepancies between the two reporters covering each game. (Id. at 485.) Stats' software also has built-in corrective features. (Id. at 479.)
B. The Marketing
65. The marketing of SportsTrax is the responsibility of Motorola.
66. While marketing SportsTrax at the wholesale level, Motorola occasionally used the acronym "NBA" to describe SportsTrax, such as referring to it as the "NBA SportsTrax." (Marrs, Tr. at 283-84; Exs. 228, 250, 251, 361.)
67. Motorola's retail advertising also refers to "NBA games" (Ex. 63 ("Point-of-Sale Flyer")), "National Basketball Association teams," "Pro games," "Pro Basketball," "Pro Basketball Teams," (User's Guide at 2, 3, 9) and "29 Pro Basketball Teams" (Retail Box).
68. Similarly, it states the team names and uses terms such as "Eastern Conference" and "Western Conference." (User's Guide at 9.)
69. Motorola uses these terms descriptively to explain in an intelligible fashion the type of information conveyed by SportsTrax and its operation. Motorola attempts to make clear, for example, that SportsTrax does not display NCAA (or collegiate level) basketball updates. (Marrs, Tr. at 286, 325-26.)
70. Motorola also made statements relating to the origin of the information conveyed by SportsTrax.
71. A January 1996 press release issued by Motorola stated that SportsTrax provides "updated game information direct from each arena" which "originate[s] from the press table in each arena." (Ex. 228; Marrs, Tr. at 297-98.)
72. Marrs approved this press release on behalf of Motorola based on his mistaken belief, from an August 1994 conversation with Stats, that Stats actually gathered its information in this manner. (Marrs, Tr. at 298-301.)
73. The retail box and display stand also advertise that SportsTrax provides updates "from the arena." (Retail Box; Ex. 252 ("Retail Display Stand").)
74. Finally, Motorola made statements about the contemporaneous nature of information conveyed by SportsTrax. It stated in the January 1996 press release that SportsTrax provides "minute-by-minute updates" of NBA games. (Ex. 228.)
75. The record is devoid, however, of evidence that Motorola ever advertised that NBA manufactured, licensed, sponsored, or approved of SportsTrax.
76. The only words on the face of the SportsTrax device are "SportsTrax" and "Motorola."
77. The retail box states in conspicuous letters "Motorola SportsTrax" on every side which has text.
78. Similarly, the user's guide, other than a depiction of the product, has four words written on the cover: "Motorola," "SportsTrax," "User's," and "Guide."
79. Nevertheless, Brookstone, a retailer of SportsTrax, despite conceding that Motorola never stated that SportsTrax was officially licensed (Deposition of Brookstone Employee Jenny J. Van Treese ("Van Treese Dep.") at 5), accidentally stated in one of its retail advertisements that SportsTrax was "officially licensed by the National Basketball Association." (Marrs, Tr. at 287-288.)
80. The drafter of the advertisement, Jenny J. Van Treese ("Van Treese"), without verifying the accuracy of this advertisement, placed a question mark by the "officially licensed" clause in her draft, and incorrectly assumed that the information would be verified by a proofreader and by Brookstone's SportsTrax buyer. (Van Treese Dep. at 33-34, 44-45.)
81. This was part of Van Treese's practice as a writer to "take a little license with what is said" in order to "make it a little more interesting to the reader." (Id. at 27.)
82. Motorola first learned of the error in late January 1996. (Marrs, Tr. at 290.)
83. Within approximately ten days thereafter, Motorola wrote a letter to Brookstone to remedy the erroneous advertisement. (Id. at 290-91.)
84. Motorola subsequently placed numerous telephone calls to Brookstone to ensure Brookstone's correction of its erroneous advertisement. (Id. at 291.)
85. The reference to NBA's license was corrected in Brookstone's next catalogue (id. at 292), and Brookstone apologized for the error (Ex. 281).
86. When NBA was made aware of Brookstone's erroneous advertisement, NBA called Brookstone to order a unit, but, prior to this lawsuit, never complained to Brookstone about its false statement. (Desser, Tr. at 78-80.)
87. Hammacher Schlemmer, another retailer of SportsTrax, ran an advertisement primarily focused on the baseball SportsTrax. It referred to the baseball SportsTrax n11 as a "palm-sized electronic marvel that lets you see the play-by-play action of every Major League baseball game." (Ex. 331.) It also noted, correctly according to Motorola, that the baseball SportsTrax was "officially licensed by Major League Baseball." (Id.) Below this portion of the advertisement, Hammacher Schlemmer included a brief description of the basketball SportsTrax, which began: "As above." (Id.) n12
88. Despite these advertisements and references to terms such as "NBA," "Eastern Conference," and "from the arena," NBA has not received any communications from consumers expressing their confusion as to NBA's sponsorship or approval of SportsTrax. (Desser, Tr. at 107-08.)
89. Similarly, NBA has not conducted any market research or consumer surveys to assess such confusion. (Id. at 108.)
90. Motorola's marketing of SportsTrax also involved negotiating promotion and sales agreements n13 with four NBA teams -- the New Jersey Nets (the "Nets"), the Los Angeles Lakers (the "Lakers"), the Los Angeles Clippers (the "Clippers"), and the Orlando Magic (the "Magic"). (Deposition of Nets Employee James Lampariello ("Lampariello Dep.") at 44; Deposition of California Sports Inc. n14 Employee Stephen Chase ("Chase Dep.") at 42; Deposition of Clippers Corporate Marketing Director Adam David Smith ("Smith Dep.") at 27; Deposition of Orlando Magic Fanattic n15 Employee James Winzig ("Winzig Dep.") at 27-28; Exs. 14, 16.)
91. Prior to the commencement of this lawsuit and despite the existence of established procedures for teams to notify NBA about infringing activities (Ex. 13-A ("NBA Operations Manual 1995-1996") at 236), NBA did not receive any communications from these NBA teams regarding the propriety of their agreements with Motorola. (Desser, Tr. at 88, 111.)
92. Eventually, however, all four teams did have discussions with NBA representatives and ceased doing business with Motorola in relation to SportsTrax. (Lampariello Dep. at 71, 75; Chase Dep. at 87-88; Smith Dep. at 84-86; Winzig Dep. at 26-27, 46-50.)
93. The Nets concluded that SportsTrax was a "renegade product" (Lampariello Dep. at 42) which required NBA approval but lacked the relevant indications, such as an NBA logo or the Nets logo, of this approval. (Id. at 38, 40, 64, 66.)
94. The Lakers, after learning of NBA's conflict with Motorola (Chase Dep. at 83-84), recognized the erroneous nature of their assumption that NBA must have approved of SportsTrax in order for it to convey real-time NBA game information (id. at 70-71, 101.)
95. Similarly, the Clippers discovered that they erroneously assumed, because the Nets and Lakers already had similar agreements with Motorola, that NBA acquiesced in such agreements. (Smith Dep. at 38.) The Clippers also based their erroneous assumption of NBA acquiescence on their belief that Stats, which provides the information to SportsTrax, also provided similar statistical information to NBA, and on the use by SportsTrax of "LAL" and "LAC" (to refer to the Los Angeles Lakers and Los Angeles Clippers), "Eastern Conference," and "Western Conference." (Id. at 95-96, 98.)
96. The Magic, unlike the other teams, had decided that NBA approval was not required because SportsTrax did not use Magic logos or NBA logos (Winzig Dep. at 37, 51).
C. The Negotiations
97. SportsTrax is the outgrowth of lengthy negotiations among NBA, Motorola, and Stats.
98. In September 1994, at the initiation of NBA, Motorola and NBA first met to discuss a potential business relationship involving the dissemination of real-time NBA game information. (Desser, Tr. at 69-71; Marrs, Tr. at 303.)
99. At this time, Motorola already had an agreement with Stats for the SportsTrax Major League Baseball paging device. (Marrs, Tr. 307.)
100. Motorola firmly desired to have the basketball version of SportsTrax selling at the retail level by the outset of the 1995-1996 NBA season. (Id. at 276, 316.)
101. Motorola's goal was to preempt any competitors in this potentially prosperous line of products (id. at 276-77, 319), to take advantage of the relatively recent favorable press coverage regarding its baseball SportsTrax product (id. at 306, 315-16), and to reduce its reliance on the baseball SportsTrax, especially in light of the 1994 baseball player's strike (id. at 319-20).
102. Therefore, Motorola was unwilling to wait beyond the fall of 1995 for NBA's Gamestats to be in a position to provide the necessary information for a real-time NBA product. (Id. at 315-16, 318-19.)
103. Motorola soon realized, however, that its negotiations with NBA were not leading toward a fall 1995 retail launch date for SportsTrax.
104. Consequently, by March 1995, Motorola had decided to develop its real-time NBA product -- SportsTrax -- with or without NBA's involvement. (Id. at 313-14.)
105. Motorola never informed NBA of this decision. (Id. at 320.)
106. In July 1995, Motorola and NBA attended the National Sporting Goods Convention (a trade show) in Chicago. (Id. at 278-79, 345.)
107. Among the many promotional items at Motorola's booth were an order form with a preprinted reference to the baseball and basketball SportsTrax (id. at349, 352) and a fiberglass replica of the basketball SportsTrax (id. at 358).
108. Nevertheless, no press release regarding the basketball SportsTrax accompanied this July 1995 trade launch of SportsTrax (id. at 345, 350-51), the basketball SportsTrax was not operational at that time (id. at 345-46), and Motorola's booth was one of the smallest booths at this show involving thousands of booths (id. at 357-58).
109. NBA maintained parallel discussions with Stats during this time frame. (Id. at 303-304; Ex.229.)
110. In May 1994, Desser attended the National Cable Television Association Convention on behalf of NBA. (Desser, Tr. at 174.) Stats maintained a booth at this convention which displayed a videotape on a continuing basis that demonstrated Stats' services, such as updating the scores of ongoing games, for a variety of sports. (Id. at 174-178; Dewan, Tr. at 547.) One of these sports was professional basketball. (Marrs, Tr. at 174-178.) The videotape was playing so loudly that even Stats describes it as annoying. (Dewan, Tr. at 547, 572.) Despite this annoyance, NBA representatives visited Stats' booth. (Id. at 551; Desser, Tr. at 174.)
111. It was around the time of this convention that NBA and Stats first discussed Stats' becoming an NBA data wholesaler. (Dewan, Tr. at 446, 550; Ex. 242.)
112. Stats, which competes with companies such as SportsTicker (Dewan, Tr. at 466), was "looking to be the exclusive provider of information -- of NBA-developed information" (id. at 451).
113. NBA's ultimate plan was to rely on Gamestats to provide raw information to Stats, which would then customize the information to be fed for use by a real-time product made by Motorola but associated with NBA. (Desser, Tr. at 256; Dewan, Tr. at 522.)
114. NBA's negotiations with Stats continued through January 1996. (Dewan, Tr. at 503; Ex. 213.)
115. Defendants also negotiated between themselves to develop and market SportsTrax.
116. Defendants recognized that the essence of their product was the provision of timely NBA information. (Marrs, Tr. at 365, 422; Dewan, Tr. at 443, 446; Ex. 237.)
117. They also realized, perhaps due to this central feature of SportsTrax, that they may be required to go forward with NBA's involvement, such as by paying NBA a royalty (Marrs, Tr. at 368-70; Ex. 244 P 3), or else face claims by NBA. In fact, Motorola required an assurance from Stats that Motorola would be protected from potential NBA claims. (Marrs, Tr. at 359-60; Ex. 269.)
118. Stats first provided Motorola with a bid for the provision of real-time NBA information for SportsTrax in September 1995. (Marrs, Tr. at 345-46.)
119. In October 1995, Stats provided Motorola with a draft contract for provision of real-time data for SportsTrax. (Dewan, Tr. at 500.)
120. In January 1996, SportsTrax began selling at the retail level.
121. By the end of January 1996, NBA presented Motorola a letter demanding that it "cease and desist from further advertisement, distribution and sale of the NBA SportsTrax Device." (Ex. 85.)
122. On March 5, 1996, NBA filed this lawsuit.
CONCLUSIONS OF LAW
123. NBA claims that defendants' conduct regarding SportsTrax n16 constitutes infringement under the Copyright Act of 1976, 17 U.S.C. @ 501; commercial misappropriation under New York common law; false advertising and false designations of origin under Section 43(a) of the Lanham Act, 15 U.S.C. @ 1125(a); and a violation of the Communications Act of 1934, 47 U.S.C. @ 605.
124. Defendants, in addition to their claim-specific defenses, allege two global defenses to NBA's assertions which I will address at the outset.
I. Laches Defense
125. First, defendants assert that the doctrine of laches bars NBA's injunctive and monetary recovery because of NBA's delay in bringing the instant action. I find this affirmative defense to be without merit.
126. "Laches is an equitable defense which bars injunctive relief where a plaintiff unreasonably delays in commencing an action." Tri-Star Pictures, Inc. v. Leisure Time Prods., 17 F.3d 38, 44 (2d Cir. 1994), cert. denied, 130 L. Ed. 2d 396, U.S. , 115 S. Ct. 484 (1994).
127. "It is often said that 'mere delay' will not, by itself, bar a plaintiff's suit, but that there must be some element of estoppel, such as reliance by the defendant." Saratoga Vichy Spring Co., Inc. v. Lehman, 625 F.2d 1037, 1040 (2d Cir. 1980).
128. Accordingly, to succeed under a laches defense, a defendant must prove: (1) the plaintiff had knowledge of the conduct about which it now complains; (2) the plaintiff inexcusably delayed in taking the instant legal action; and (3) the defendant will be prejudiced by permitting the plaintiff to assert its rights in the instant action. Id.; Tri-Star Pictures, 17 F.3d at 44.
129. This determination "necessarily requires that the resolution be based on the circumstances peculiar to each case," and it is one which "is entirely within the discretion of the trial court." Tri-Star Pictures, 17 F.3d at 44.
130. Assuming that the other requirements of a laches defense are satisfied, I find that NBA has not inexcusably delayed in filing and prosecuting this action.
131. Although the record does not reveal precisely when NBA and Motorola stopped negotiating, it does reveal that their negotiations continued at least until early 1995 and that Motorola never communicated to NBA its decision to proceed with SportsTrax with or without NBA's involvement. Further, NBA was involved in negotiations with Stats until January 1996; SportsTrax did not begin selling in the retail market until January 1996; NBA mailed Motorola a cease and desist letter in January 1996; and NBA filed this action, requesting expedited relief, on March 5, 1996.
132. Accordingly, I exercise my discretion to reject defendants' laches defense.
II. Prior Restraint Defense
133. Second, defendants make a sweeping First Amendment argument to avoid the injunctive relief sought by NBA. Defendants contend that the First Amendment to the United States Constitution prohibits this Court from enjoining their dissemination of real-time information about NBA games because such an injunction would constitute an unconstitutional prior restraint. I disagree.
134. "There is no doubt that entertainment, as well as news, enjoys First Amendment protection. It is also true that entertainment can itself be important news." Zacchini v. Scripps-Howard Broadcasting Co., 433 U.S. 562, 578, 53 L. Ed. 2d 965, 97 S. Ct. 2849 (1977).
135. Nevertheless, as the Supreme Court recently held in rejecting a prior restraint argument by antiabortion protestors:
We also decline to adopt the prior restraint analysis urged by petitioners. Prior restraints do often take the form of injunctions. See, e.g., New York Times Co. v. United States, 403 U.S. 713, 91 S. Ct. 2140, 29 L. Ed. 2d 822 (1971) (refusing to enjoin publications of the "Pentagon Papers"); Vance v. Universal Amusement Co., 445 U.S. 308, 100 S. Ct. 1156, 63 L. Ed. 2d 413 (1980) (per curiam) (holding that Texas public nuisance statute which authorized state judges, on the basis of a showing that a theater had exhibited obscene films in the past, to enjoin its future exhibition of films not yet found to be obscene was unconstitutional as authorizing an invalid prior restraint.) Not all injunctions which may incidentally affect expression, however, are "prior restraints" in the sense that that term was used in New York Times Co., supra, or Vance, supra. Here petitioners are not prevented from expressing their message in any one of several different ways; they are simply prohibited from expressing it within the 36-foot buffer zone. Moreover, the injunction was issued not because of the content of petitioners' expression, as was the case in New York Times Co. and Vance, but because of their prior unlawful conduct. Madsen v. Women's Health Ctr., Inc., 129 L. Ed. 2d 593, U.S. , , 114 S. Ct. 2516, 2524 n.2 (1994).
136. The Court in Madsen, in other words, highlighted the distinction between injunctions which constitute merely literal prior restraints (in that they have incidental prospective effects on protected speech or conduct) and those which constitute unconstitutional prior restraints.
137. This distinction, as the Court's discussion indicates, requires two assessments: if such an injunction (1) has a content-neutral justification, and (2) does not represent an absolute bar on a particular expression, then it is not an unconstitutional prior restraint. Pro-Choice Network v. Schenck, 67 F.3d 359, 368 n.5 (2d Cir. 1994) (interpreting Madsen), vacated in part on other grounds, 67 F.3d 377 (2d Cir. 1995) (en banc), cert. granted, U.S. , 116 S. Ct. 1260 (1996).
138. As for content-neutrality, courts repeatedly have distinguished between injunctions which serve to suppress particular ideas and those which provide a remedy for violations of content-neutral laws. See, e.g., Organization for a Better Austin v. Keefe, 402 U.S. 415, 418-19, 29 L. Ed. 2d 1, 91 S. Ct. 1575 (1971) (finding an unconstitutional prior restraint because, as in Near v. Minnesota, 283 U.S. 697, 75 L. Ed. 1357, 51 S. Ct. 625 (1931), the seminal prior restraint case, "the injunction operates, not to redress alleged private wrongs, but to suppress, on the basis of previous publications, distributions of literature 'of any kind' in a city of 18,000"); Dallas Cowboys Cheerleaders, Inc. v. Pussycat Cinema, Ltd., 604 F.2d 200, 206 (2d Cir. 1979) (recognizing, to reject a prior restraint argument, that "this is not a case of government censorship, but a private plaintiff's attempt to protect its property rights," and that "the prohibition of the Lanham Act is content neutral . . . and therefore does not arouse the fears that trigger the application of constitutional 'prior restraint' principles").
139. In this action, as will be discussed below, defendants have commercially misappropriated NBA's proprietary rights in violation of New York's content-neutral common law. It is this remedial purpose, and only this purpose, which justifies the injunctive relief provided herein.
140. The injunction, therefore, is content-neutral and the fact that defendants' unlawful conduct happens to confine itself to a particular topic -- NBA games -- does not alter this reality.
141. Further, defendants are not totally thwarted in their efforts to profit on the presentation of information about NBA games. I hold only that they cannot do so in the unlawful manner which they presently have chosen -- providing their continuous and contemporaneous updates of ongoing NBA games without compensating NBA for its skill, labor, and expenditures. n17 See Zacchini, 433 U.S. at 578 ("Petitioner does not seek to enjoin the broadcast of his performance; he simply wants to be paid for it."). 142. Accordingly, defendants' prior restraint argument is unavailing. Cf. San Francisco Arts & Athletics, Inc. v. Olympic Comm., 483 U.S. 522, 541, 97 L. Ed. 2d 427, 107 S. Ct. 2971 (1987) ("The mere fact that the [plaintiff] claims an expressive, as opposed to a purely commercial, purpose does not give it a First Amendment right to 'appropriate to itself the harvest of those who have sown.'") (quoting International News Serv. v. Associated Press, 248 U.S. 215, 239-40, 63 L. Ed. 211, 39 S. Ct. 68 (1918)); Zacchini, 433 U.S. at 575 (holding that the First Amendment does not "privilege respondent [broadcasting company] . . . to film and broadcast a prize fight . . . or a baseball game . . . where the promoters or the participants had other plans for publicizing the event") (citing, inter alia, Pittsburgh Athletic Co. v. KQV Broadcasting Co., 24 F. Supp. 490 (W.D. Pa. 1938)).
III. Copyright Infringement Claim
143. As for NBA's claims, it alleges initially that defendants infringed its copyrights in both the NBA games and the broadcasts of the games in violation of the Copyright Act of 1976 (the "Copyright Act"), 17 U.S.C. @ 501.
144. "To establish copyright infringement, 'two elements must be proven: (1) ownership of a valid copyright, and (2) copying of constituent elements of the work that are original.'" Williams v. Crichton, 84 F.3d 581, 587 (2d Cir. 1996) (quoting Feist Publications, Inc. v. Rural Tel. Serv. Co., Inc., 499 U.S. 340, 361, 113 L. Ed. 2d 358, 111 S. Ct. 1282 (1991)).
145. I hold that NBA has failed to satisfy the first element for its allegation of infringement of its copyright in the NBA games and has failed to satisfy the second element for its allegation of infringement of its copyright in the broadcasts of NBA games.
A. NBA Game Is Not Protected
146. With respect to the NBA games, NBA is not seeking to protect a written book of NBA rules or coaches' plays or a tangible recording of an NBA game.Instead, it seeks to protect the NBA games themselves -- the culmination of interaction of these NBA rules and coaches' plays, the referees, the players, and perhaps even the announcers, members of the press, vendors, patrons, security guards, ticket takers, and the like who are present at the arena during an NBA game and whose interaction comprises an NBA game.
147. I hold, however, that NBA games do not constitute "original works of authorship" and thus do not fall within the subject matter of copyright protection under 17 U.S.C. @@ 102, 103.
148. "The source of Congress' power to enact copyright laws is Article I, @ 8, cl. 8, of the Constitution . . . ." Feist, 499 U.S. at 346.
149. According to this provision, "Congress shall have Power . . . To promote the Progress of Science and useful Arts, by securing for limited Times to Authors . . . the exclusive Right to their respective Writings." U.S. Const. art. I, @ 8, cl. 8.
150. As indicated by the language of the Copyright Clause, "the primary objective of copyright is not to reward the labor of authors, but 'to promote the Progress of Science and useful Arts.'" Feist, 499 U.S. at 349 (quoting U.S. Const. art. I, @ 8, cl. 8)).
151. Reward to the author is regarded as a secondary consideration necessary only because it "afford[s] greater encouragement to the production of works of benefit to the public." Zacchini, 433 U.S. at 577; accord Harper & Row, Publishers, Inc. v. Nation Enters., 471 U.S. 539, 546, 85 L. Ed. 2d 588, 105 S. Ct. 2218 (1985) ("'The monopoly created by copyright thus rewards the individual author in order to benefit the public.'") (citation omitted).
152. Thus, the economic philosophy behind the clause empowering Congress to grant . . . copyrights is the conviction that encouragement of individual effort by personal gain is the best way to advance public welfare through the talents of authors . . . in "Science and useful Arts." Sacrificial days devoted to such creative activities deserve rewards commensurate with the services rendered. Mazer v. Stein, 347 U.S. 201, 219, 98 L. Ed. 630, 74 S. Ct. 460, reh'g denied, 347 U.S. 949, 98 L. Ed. 1096, 74 S. Ct. 637 (1954).
153. "To this end, copyright assures authors the right to their original work, but encourages others to build freely upon their ideas and information conveyed by a work." Feist, 499 U.S. at 349-50; see Harper & Row, 471 U.S. at 545-46 (discussing the need to "assure contributors to the store of knowledge a fair return for their labors," on the one hand, and the need to avoid "impeding the harvest of knowledge" available for public use, on the other hand).
154. The United States Court of Appeals for the Eleventh Circuit has discussed these bedrock policies in terms of the proprietary and regulatory aspects of copyright protection. Cable News Network, Inc. v. Video Monitoring Servs. of Am., Inc., 940 F.2d 1471, 1478 (11th Cir.), vacated on other grounds, 949 F.2d 378 (11th Cir. 1991), appeal dismissed, 959 F.2d 188 (11th Cir. 1992). "Copyright's basis as a proprietary concept is that it enables one to protect his or her own creations. Its regulatory basis is that when these creations constitute the expression of ideas presented to the public, they become part of the stream of information whose unimpeded flow is critical to a free society." Id. (quoting Patterson, Free Speech, Copyright, and Fair Use, 40 Vand. L. Rev. 1, 5 (1987)).
155. The primary method by which copyright law seeks to promote these bedrock policies is through a principle known as the "idea/expression or fact/expression dichotomy." Feist, 499 U.S. at 350.
156. According to this principle, "the most fundamental axiom of copyright law is that 'no author may copyright his ideas or the facts he narrates.'" Id. at 344-45 (quoting Harper & Row, 471 U.S. at 556).
157. Instead, the "copyright is limited to those aspects of the work -- termed 'expression' -- that display the stamp of the author's originality." Harper & Row, 471 U.S. at 547; see Arica Inst., Inc. v. Palmer, 970 F.2d 1067, 1074 (2d Cir. 1992) ("There is a world of difference between the creative expression of an idea or a fact and its revelation.").
158. The requirement of an original expression "is the very 'premise of copyright law.'" Feist, 499 U.S. at 347 (citation omitted). Not only is it required by the Copyright Act, but it is "a constitutional requirement." Id. at 346.
159. Originality, in turn, is comprised of two components: (1) the work must be created independently, as opposed to being copied from another work; and (2) the work must possess some minimal degree of creativity. Id. at 345.
160. Originality, however, does not require novelty. [A] work may be original even though it closely resembles other works so long as the similarity is fortuitous, not the result of copying. To illustrate, assume that two poets, each ignorant of the other, compose identical poems. Neither work is novel, yet both are original and, hence, copyrightable. Id. at 345-46.
161. Facts are not protectible because they lack originality. "The first person to find and report a particular fact has not created the fact; he or she has merely discovered its existence." Id. at 347. Census takers, for example, do not "create" the population figures that emerge from their efforts; in a sense, they copy these figures from the world around them. . . . Census data therefore do not trigger copyright because these data are not "original" in the constitutional sense. . . . The same is true of all facts -- scientific, historical, biographical, and news of the day. "They may not be copyrighted and are part of the public domain available to every person." Id. at 347-48 (citations omitted).
162. Ideas, although they may possess some degree of originality, are not protectible because they are not expressions of originality. See Feist, 499U.S. at 345 ("'No author may copyright his ideas . . . .'") (citation omitted). This distinction between an idea and an expression of an idea is necessary to further the primary goal underlying copyright protection: "to increase and not to impede the harvest of knowledge" available to the public. Harper & Row, 471 U.S. at 545.
163. Section 102(b) of the Copyright Act embodies the idea/expression or fact/expression dichotomy. See Feist, 499 U.S. at 356 ("[Section] 102(b) is universally understood to prohibit any copyright in facts."); Warner Bros. Inc. v. American Broadcasting Cos., Inc., 720 F.2d 231, 240 (2d Cir. 1983) ("The idea-expression dichotomy originated in the case law and is now codified in the statute, 17 U.S.C. @ 102(b) . . . .").
164. It provides: "In no case does copyright protection for an original work of authorship extend to any idea, procedure, process, system, method of operation, concept, principle, or discovery, regardless of the form in which it is described, explained, illustrated, or embodied in such work." 17 U.S.C. @ 102(b).
165. Application of the idea/expression or fact/expression dichotomy to a particular situation is more of an art than a science. Nevertheless, as the Court of Appeals has recognized, the idea/expression dichotomy, although an imprecise tool, has not been abandoned because we have as yet discovered no better way to reconcile the two competing societal interests that provide the rationale for the granting of and the restrictions on copyright protection: "rewarding an individual's ingenuity and effort while at the same time permitting the nation to benefit from further improvements or progress resulting from others' use of the same subject matter." Durham Indus., Inc. v. Tomy Corp., 630 F.2d 905, 912 (2d Cir. 1980) (quoting Reyher v. Children's Television Workshop, 533 F.2d 87, 90 (2d Cir.), cert. denied, 429 U.S. 980, 50 L. Ed. 2d 588, 97 S. Ct. 492 (1976)); see Computer Assocs. Int'l, Inc. v. Altai, Inc., 982 F.2d 693, 696 (2d Cir. 1992) (referring to this balancing of interests as "a delicate equilibrium").
166. In furtherance of these ends, Congress has specified that copyright protection extends only to "original works of authorship fixed in any tangible medium of expression, now known or later developed, from which they can be perceived, reproduced, or otherwise communicated, either directly or with the aid of a machine or device." 17 U.S.C. @ 102(a).
167. Although "the printing of a book [is] the traditional focus of copyright protection," Cable News Network, 940 F.2d at 1478; accord Sony Corp. of Am. v. Universal City Studios, Inc., 464 U.S. 417, 430, 78 L. Ed. 2d 574, 104 S. Ct. 774 ("Indeed, it was the invention of a new form of copying equipment -- the printing press -- that gave rise to the original need for copyright protection."), reh'g denied, 465 U.S. 1112, 80 L. Ed. 2d 148, 104 S. Ct. 1619 (1984), the Copyright Act reflects the history of "gradual expansion in the types of works accorded protection," H. Rep. No. 94-1476, 94th Cong., 2d Sess. (1976), reprinted in 1976 U.S.C.C.A.N. 5659, 5664 [hereinafter "H. Rep. No. 94-1476, U.S.C.C.A.N. at " or "House Report No. 94-1476"].
168. It states that "works of authorship include the following categories: (1) literary works; (2) musical works, including any accompanying words; (3) dramatic works, including any accompanying music; (4) pantomimes and choreographic works; (5) pictorial, graphic, and sculptural works; (6) motion pictures and other audiovisual works; (7) sound recordings; and (8) architectural works." 17 U.S.C. @ 102(a).
169. Noticeably absent from this illustrative list of works of authorship, however, is a category for sports events or other analogous organized events.
170. Nevertheless, NBA relies on Baltimore Orioles, Inc. v. Major League Baseball Players Ass'n, 805 F.2d 663 (7th Cir. 1986), cert. denied, 480 U.S. 941, 94 L. Ed. 2d 782, 107 S. Ct. 1593 (1987), to argue, in essence, that NBA games -- as opposed to broadcasts or other audiovisual recordings of the games -- constitute a ninth category of protectible works of authorship.
171. In that case, the United States Court of Appeals for the Seventh Circuit addressed the issue of "whether major league baseball clubs own exclusive rights to the televised performances of major league baseball players during major league baseball games." Id. at 665.
172. The baseball clubs sought a declaratory judgment that the telecasts of the games constituted copyrighted works made for hire in which the baseball players had no rights whatsoever. Id. at 667.
173. "The Players argued that the district court erred in holding that a baseball player's live performance, as embodied in a copyrighted telecast of the game, constitutes a work made for hire so as to extinguish the player's right of publicity in his performance." Id.
174. The Court, after applying the work-for-hire doctrine in 17 U.S.C. @ 201(b), n18 held that the baseball clubs owned the copyright in telecasts of major league baseball games. Id. at 673.
175. In this context, the Court included a footnote upon which NBA now relies to argue that the NBA games are protectible. In footnote 7, the Court stated: The Players argue that their performances are not copyrightable works because they lack sufficient artistic merit. We disagree. Only a modicum of creativity is required for a work to becopyrightable. . . . Judged by the above standard, the Players' performances possess the modest creativity required for copyrightability. . . . Courts thus should not gainsay the copyrightability of a work possessing great commercial value simply because the work's aesthetic or educational value is not readily apparent to a person trained in the law. That the Players' performances possess great commercial value indicates that the works embody the modicum of creativity required for copyrightability. Moreover, even if the Players' performances were not sufficiently creative, the Players agree that the cameramen and director contribute creative labor to the telecasts. The work that is the subject of copyright is not merely the Players' performances, but rather the telecast of the Players' performances. The creative contribution of the cameramen and director alone suffices for the telecasts to be copyrightable. Id. at 669 n.7.
176. I am not persuaded by NBA's reliance on Baltimore Orioles.
177. The focus of Baltimore Orioles was on the work-for-hire doctrine in 17 U.S.C. @ 201(b), not on the issue of whether a sports event, as opposed to its broadcast, is protectible.
178. Further, to the extent that the Court actually addressed this issue, it cites no authority holding that athletic or other organized events fall within the subject matter of copyright protection under 17 U.S.C. @@ 102, 103.
179. In fact, Nimmer on Copyright, the oft-cited treatise which the Supreme Court recently characterized as the work of a "leading scholar[]," Feist, 499 U.S. at 347, specifically and resoundingly rejects the analysis and conclusion of the Court in Baltimore Orioles regarding the protectibility of an athletic event. 1 M. Nimmer & D. Nimmer, Nimmer on Copyright @ 2.09[F] (1996) [hereinafter Nimmer].
180. Nimmer points out, inter alia, the problematic consequences of according copyright protection to an athletic event, as opposed to its telecast.
181. For example, it is unclear who in addition to NBA would be considered a copyright owner and, therefore, whose consent a party would have to obtain prior to using copyrightable portions of the game. Id. @ 2.09[F], at 2-169. One might be required to seek the consent of referees, coaches, and all other participants whose creative energies contributed to the NBA game. See Eastern Microwave, Inc. v. Doubleday Sports, Inc., 691 F.2d 125, 128 (2d Cir. 1982) (discussing the unworkability of requiring a party "to obtain the consent of or negotiate with numerous copyright owners"), cert. denied, 459 U.S. 1226, 75 L. Ed. 2d 467, 103 S. Ct. 1232 (1983); Booth v. Colgate--Palmolive Co., 362 F. Supp. 343, 347 (S.D.N.Y. 1973) ("The recognition of a performer's right in a copyrighted work would impose undue restraints on the potential market of the copyright proprietor since a prospective licensee would have to gain permission from each of possibly many performers who might have rights in the underlying work before he could safely use it.")
182. Similarly, if a coach copied a play devised by another coach, the second coach might be forced to defend a copyright infringement action if he or she failed to obtain the consent of the first coach. Nimmer @ 2.09[F], at 2-169.
183. In the end, Nimmer concludes that the "more reasonable . . . construction [is] that athletic events are subject to legal protection pursuant only to right of publicity, misappropriation, and other established legal doctrines outside the ambit of statutory copyright." Id. @ 2.09[F], at 2-170.1.
184. In addition to Nimmer, case law, although far from bountiful, suggests that organized events are not subject to copyright protection. See Morrissey v. Procter & Gamble Co., 379 F.2d 675, 678 (1st Cir. 1967) (characterizing as "unquestionably correct" the proposition that the substance of a promotional sweepstakes contest was not copyrightable); Production Contractors, Inc. v. WGN Continental Broadcasting Co., 622 F. Supp. 1500, 1503 (N.D. Ill. 1985) (holding that a "[Christmas] parade, including its production and promotion, is not a work of authorship entitled to copyright protection").
185. Another critique of NBA's reliance on Baltimore Orioles is that the Court blurred the very distinction upon which resolution of the issue herein rests. The Court appeared to rely on the creative labor of the cameramen and director in creating the telecast of a baseball game to conclude that the baseball players' performances, in addition to the telecasts of those performances, are protectible works of authorship. See Baltimore Orioles, 805 F.2d at 669 n.7 ("Moreover, even if the Players' performances were not sufficiently creative, the Players agree that the cameramen and director contribute creative labor to the telecasts."). The creative labor of the cameramen and director in broadcasting a game, however, is irrelevant to the issue of the creativity and ultimate protectibility of the game itself.
186. Next, as noted above, the Copyright Act's illustrative list of protectible works of authorship fails to include a category for sports events or other analogous organized events. See 17 U.S.C. @ 102(a).
187. Although this omission does not necessarily foreclose the possibility of extending copyright protection to an NBA game, see 17 U.S.C. @ 101 ("The terms 'including' and 'such as' are illustrative and not limitative."), it is probative of the absence of congressional intent to afford copyright protection to such well known events as NBA games, see United States v. Crane, 979 F.2d 687, 690 n.2 (9th Cir. 1992) ("The maxim of statutory construction, 'expressio unius est esclusio alterius' provides that, 'when a statute limits a thing to be done in a particular mode, it includes the negative of any other mode.'") (quoting Botany Worsted Mills v. United States, 278 U.S. 282, 289, 73 L. Ed. 379, 49 S. Ct. 129 (1929)).
188. Another indicator of congressional intent, the legislative history, demonstrates that Congress specifically contemplated the application of the Copyright Act to sports events. According to House Report No. 94-1476,
the bill seeks to resolve, through the definition of "fixation" in section 101, the status of live broadcasts -- sports, news coverage, live performances of music, etc. -- that are reaching the public in unfixed form but that are simultaneously being recorded. When a football game is being covered by four television cameras, with a director guiding the activities of the four cameramen and choosing which of their electronic images are sent out to the public and in what order, there is little doubt that what the cameramen and the director are doing constitutes "authorship." The further question to be considered is whether there has been a fixation. If the images and sounds to be broadcast are first recorded (on a video tape, film, etc.) and then are transmitted, the recorded work would be considered a "motion picture" subject to statutory protection against unauthorized reproduction. If the program content is transmitted live to the public while being recorded at the same time, the case would be treated the same; the copyright owner would not be forced to rely on common law rather than statutory rights in proceeding against an infringing user of the live broadcast. H. Rep. No. 94-1476, U.S.C.C.A.N. at 5665. n19
189. In light of this deliberation over the application of the Copyright Act to sports events, the omission in 17 U.S.C. @ 102(a) of an illustrative category affording copyright protection to these or other analogous events becomes an even greater indication that Congress did not intend to include NBA games within the subject matter of copyright protection. Cf. Sony Corp., 464 U.S. at 429 ("As the text of the Constitution makes plain, it is Congress that has been assigned the task of defining the scope of the limited monopoly that should be granted to authors. . . .").
190. Absent a more clear directive from Congress, the Supreme Court, or the Court of Appeals, I decline NBA's invitation to stretch the Copyright Act's grant of exclusivity to subject matters so far removed and qualitatively different from those at the core of its protection. See id. at 431 (characterizing as "sound policy" "the judiciary's reluctance to expand the protections afforded by the copyright without explicit legislative guidance").
191. Accordingly, I hold that an NBA game does not fall within the subject matter of copyright protection under 17 U.S.C. @@ 102, 103.
B. Copyright In Broadcast Is Not Infringed
192. Similarly, NBA has failed to show an infringement of its copyright in the broadcasts of NBA games. Although it is uncontested that these broadcasts, unlike the NBA games themselves, are subject to copyright protection, see 17 U.S.C. @ 102(a)(6) ("Works of authorship include . . . motion pictures and other audiovisual works . . . ."), NBA has failed to satisfy the second element of a copyright infringement claim -- that defendants copied "'constituent elements of the [broadcast] that are original,'" Williams, 84 F.3d at 587 (citation omitted).
193. "In the absence of direct evidence, copying is proven by showing '(a) that the defendant had access to the copyrighted work and (b) the substantial similarity of protectible material in the two works.'" Id. (citation omitted). "In the alternative, 'if two works are so strikingly similar as to preclude the possibility of independent creation, "copying" may be proved without a showing of access.'" Lipton v. Nature Co., 71 F.3d 464, 471 (2d Cir. 1995) (citation omitted).
194. Even if direct evidence exists of copying, a defendant is not liable for infringing a copyright if the defendant copied only unprotectible elements of the copyrighted work. See Feist, 499 U.S. at 348 ("The mere fact that a work is copyrighted does not mean that every element of the work may be protected."); Williams, 84 F.3d at 588 (holding, while applying the two-prong test to assess copying in the absence of direct evidence, that if a court determines "that a work contains both protectible and unprotectible elements, [it] must take care to inquire only whether 'the protectible elements, standing alone, are substantially similar'") (citation omitted).
195. In the instant case, although direct evidence exists that defendants actually copied certain aspects of the broadcasts of the NBA games, n20 this evidence also reveals that defendants copied, at most, the idea of an NBA game and facts from specific NBA games, both of which are beyond the realm of protectibility, Feist, 499 U.S. at 350. Defendants did not copy or otherwise capture the original features of the broadcasts of the NBA games which render such broadcasts protectible in the first instance.
196. The Copyright Act's legislative history highlights the rationale for protecting live broadcasts of sports events. When a football game is being covered by four television cameras, with a director guiding the activities of the four cameramen and choosing which of their electronic images are sent out to the public and in what order, there is little doubt that what the cameramen and the director are doing constitutes "authorship." H. Rep. No. 94-1476, U.S.C.C.A.N. at 5665.
197. It is this element of originality, therefore, that renders live broadcasts of sports events amenable to copyright protection. See Feist, 499 U.S. at 345 ("The sine qua non of copyright is originality."); Baltimore Orioles, 805 F.2d at 668 ("The many decisions that must be made during the broadcast of a baseball game concerning camera angles, types of shots, the use of instant replays and split screens, and shot selection similarly supply the creativity required for the copyrightability of the telecasts.").
198. The information conveyed by defendants, such as the score, time remaining, team with possession, and quarter, is unaffected by the camera angles, close-ups, and particular shots selected for broadcast.
199. Defendants provide purely factual information which any patron of an NBA game could acquire from the arena without any involvement from the director, cameramen, or others who contribute to the originality of a broadcast. This is not a scenario where defendants reproduced actual excerpts of the broadcasts of NBA games.
200. The mere fact that the information conveyed by defendants often is acquired by viewing the broadcasts of NBA games does not alter the fact that defendants have not copied the "'constituent elements of the [broadcasts of NBA games] that are original.'" Williams, 84 F.3d at 587 (citation omitted); accord Chamberlin v. Uris Sales Corp., 150 F.2d 512, 513 (2d Cir. 1945) ("But since the only copying here was of that portion of the subject matter which, standing alone, could not validly be copyrighted, we hold there is no infringement.").
201. NBA, therefore, has failed to satisfy its burden of persuasion on its claim that defendants infringed its copyright in the broadcasts of NBA games.
IV. Commercial Misappropriation Claim
202. NBA also alleges that defendants unlawfully misappropriated NBA's property interests in the NBA games and the broadcasts of NBA games in violation of New York common law. A. Preemption by Copyright Act: NBA Games v. Broadcasts of NBA Games
203. Defendants' initial defense is that 17 U.S.C. @ 301 preempts NBA's commercial misappropriation claim. I agree in part. NBA's misappropriation claim is not preempted as it relates to NBA's proprietary rights in the NBA games; NBA's misappropriation claim is preempted as it relates to NBA's proprietary rights in the broadcasts of NBA games.
204. Section 301 states:
(a) On and after January 1, 1978, all legal or equitable rights that are equivalent to any of the exclusive rights within the general scope of copyright as specified by section 106 in works of authorship that are fixed in a tangible medium of expression and come within the subject matter of copyright as specified by sections 102 and 103, whether created before or after that date and whether published or unpublished, are governed exclusively by this title. Thereafter, no person is entitled to any such right or equivalent right in any such work under the common law or statutes of any State.
(b) Nothing in this title annuls or limits any rights or remedies under the common law or statutes of any State with respect to --
(1) subject matter that does not come within the subject matter of copyright as specified by sections 102 and 103, including works of authorship not fixed in any tangible medium of expression; or
* * *
(3) activities violating legal or equitable rights that are not equivalent to any of the exclusive rights within the general scope of copyright as specified by section 106;
* * * 17 U.S.C. @ 301(a), (b)(1), (b)(3) (emphasis added).
205. As is readily apparent from the statutory language, preemption of a state law claim consists largely n21 of two requirements: (1) the state law claim must seek to vindicate rights equivalent to those in 17 U.S.C. @ 106 (the "general scope requirement"); and (2) the work to which the state law claim is being applied must be the type of work which falls within the ambit of 17 U.S.C. @@ 102, 103 (the "subject matter requirement"). See H.R. No. 94-1476, U.S.C.C.A.N. at 5746 ("The intention of section 301 is to preempt and abolish any rights under the common law or statutes of a State that are equivalent to copyright and that extend to works coming within the scope of the Federal copyright law.") (emphasis added).
206. The goal of this provision is to "substitute a single Federal system for the present anachronistic, uncertain, impractical, and highly complicated dual system" of "'common law copyright' for unpublished works and statutory copyright for published works." Id. at 5745.
1. General Scope Requirement
207. The general scope requirement necessitates an assessment of the types of rights sought to be protected by the state law. 208. If these rights are "equivalent" to those in 17 U.S.C. @ 106, then this requirement of preemption is satisfied. 17 U.S.C. @ 301(a).
209. Section 106, entitled "Exclusive rights in copyrighted works," affords a copyright owner the exclusive rights to reproduce the work, prepare derivative works, distribute and display copies of the work, and perform certain copyrighted works publicly. Id. @ 106.
210. "Section 301 thus preempts only those state law rights that 'may be abridged by an act which, in and of itself, would infringe one of these exclusive rights' provided by federal copyright law." Computer Assocs., 982 F.2d at 716 (citation omitted).
211. "But if an 'extra element' is 'required instead of or in addition to the acts of reproduction, performance, distribution or display, in order to constitute a state-created cause of action, then the right does not lie "within the general scope of copyright," and there is no preemption.'" Id. (quoting Nimmer @ 1.01[B]).
212. In other words, "[a] state law claim is not preempted if the 'extra element' changes the nature of the action so that it is qualitatively different from a copyright infringement claim." Id. (citation omitted) (emphasis in original).
213. However, "an action will not be saved from preemption by elements such as awareness or intent, which alter 'the action's scope but not its nature.'" Id. at 717 (citation omitted).
214. State law rights which satisfy the extra element test -- and thus avoid preemption -- "include unfair competition claims based upon breaches of confidential relationships, breaches of fiduciary duties and trade secrets." Id.
215. In the trade secret branch of unfair competition law, for example, "the defendant's breach of duty . . . supplies the 'extra element' that qualitatively distinguishes such trade secret causes of action from claims for copyright infringement that are based solely upon copying." Id.
216. Claims based on the misappropriation branch of unfair competition law suffer a different fate.
217. It is true that these claims do not necessarily fail to satisfy the extra element standard. For example, state law should have the flexibility to afford a remedy (under traditional principles of equity) against a consistent pattern of unauthorized appropriation by a competitor of the facts (i.e., not the literary expression) constituting "hot" news, whether in the traditional mold of International News Service v. Associated Press, 248 U.S. 215, 63 L. Ed. 211, 39 S. Ct. 68 (1918), or in the newer form of updates from scientific, business, or financial data bases. H.R. No. 94-1476, U.S.C.C.A.N. at 5748 (footnote omitted); see Financial Info. Inc. v. Moody's Investors Serv., Inc., 808 F.2d 204, 208 (2d Cir. 1986) (citing this provision to note that a misappropriation claim, although preempted in that case, is not necessarily preempted by the Copyright Act), cert. denied, 484 U.S. 820, 98 L. Ed. 2d 42, 108 S. Ct. 79 (1987). But see Edmund W. Kitch & Harvey S. Perlman, Legal Regulation of the Competitive Process 470-71 (rev. 4th ed. 1991) (quoting 122 Cong. Rec. H. 10910 (daily ed. Sept. 22, 1976), which reflects the impenetrable exchange between Congressmen Seiberling and Railsback on Congressman Seiberling's proposed amendment, which ultimately was adopted, to remove the examples of non-preempted doctrines from Section 301(b)(3) on the ground that, inter alia, including misappropriation as a non-preempted area was anti-competitive).
218. Nevertheless, the Court of Appeals, when confronted with the issue, repeatedly has held common law misappropriation claims to be preempted by the Copyright Act. See, e.g., Computer Assocs., 982 F.2d at 717 ("Following this 'extra element' test, we have held that unfair competition and misappropriation claims grounded solely in the copying of a plaintiff's protected expression are preempted by section 301."); Princess Fabrics, Inc. v. CHF, Inc., 922 F.2d 99, 104 (2d Cir. 1990) (holding that a misappropriation claim, as opposed to a claim of "'palming off' of copies by one producer as those of another," is preempted by federal copyright law); Financial Info., 808 F.2d at 208 ("We are not persuaded by [plaintiff's] argument that misappropriation is not 'equivalent' to the exclusive rights provided by the Copyright Act.") (citing Editorial Photocolor Archives, Inc. v. Granger Collection, 61 N.Y.2d 517, 474 N.Y.S.2d 964, 967, 463 N.E.2d 365 (1984) ("That plaintiffs have chosen to enforce such rights to reproduce, display, sell, lease or license for reproduction, the transparencies in the form of [a] cause[] of action for unfair competition . . . does not make the underlying rights sought to be enforced any less equivalent to copyright, or remove plaintiff's claims from the Federal pre-emptive scheme.")); Walker v. Time Life Films, Inc., 784 F.2d 44, 53 (2d Cir.) (affirming the district court's dismissal of an unfair competition claim because "as the New York Supreme Court found in [Walker's] state court action, Walker's cause of action for unfair competition is preempted by the federal copyright laws to the extent it seeks protection against copyrighting of Walker's book"), cert. denied, 476 U.S. 1159, 90 L. Ed. 2d 721, 106 S. Ct. 2278 (1986); Warner Bros., 720 F.2d at 247 ("State law claims that rely on the misappropriation branch of unfair competition are preempted . . . ."); Durham Indus., 630 F.2d at 918 (citing 17 U.S.C. @ 301 to hold that "Tomy cannot achieve by an unfair competition claim what it failed to achieve under its copyright claim").
219. In the instant action, just as in the cases cited above, NBA seeks to vindicate rights, under the guise of a commercial misappropriation claim, which are "equivalent to . . . the exclusive rights within the general scope of copyright as specified by section 106." 17 U.S.C. @ 301(a).
220. NBA's misappropriation allegations, as they relate to NBA's rights both in the NBA games and in the broadcasts of NBA games, complain, in effect, of defendants' "'reproduction, . . . distribution or display'" of information regarding NBA games. Computer Assocs., 982 F.2d at 716 (citation omitted). Such allegations of copying fail to include the extra element necessary to render NBA's misappropriation claim qualitatively different from its copyright claim.
221. Accordingly, the general scope requirement is satisfied for NBA's misappropriation claim as it relates to both the NBA games and the broadcasts of NBA games.
2. Subject Matter Requirement
222. The next requirement -- the subject matter requirement -- mandates a determination of whether the type of work at issue falls within the "subject matter of copyright as specified by sections 102 and 103." 17 U.S.C. @ 301(a).
223. Section 102, entitled "Subject matter of copyright: In general," and Section 103, entitled "Subject matter of copyright: Compilations and derivative works," articulate the types of works which may give rise to the exclusive rights protected by the Copyright Act.
224. As a "motion picture[] or other audiovisual work[]," id., the broadcasts of NBA games fall within the "subject matter of copyright as specified by section[] 102," id. @ 301(a).
225. Consequently, NBA's misappropriation claim is preempted to the extent that it relies on misappropriation of property rights in the broadcasts of NBA games.
226. As for the NBA games themselves, however, they do not satisfy the subject matter requirement and, accordingly, NBA's misappropriation claim, as it relates to the NBA games, is not preempted by 17 U.S.C. @ 301.
227. Unlike the NBA games herein, the works at issue in the cases discussed above, which found preemption of misappropriation claims, satisfied the subject matter requirement. See Princess Fabrics, 922 F.2d at 100 (addressing a textile company's fabric lace design which had received a certificate of copyright); Financial Info., 808 F.2d at 205 (addressing a financial publisher's index card service which provided various information to subscribers about municipal bonds); Editorial Photocolor Archives, 474 N.Y.S.2d at 967 ("It is not disputed that the transparencies and photographs at issue are within the subject matter of copyright . . . ."); Walker, 784 F.2d at 46 (addressing the book "Fort Apache"); Warner Bros., 720 F.2d at 235 (addressing the "fictional character Superman, the hero of comic books, television, and more recently films"); Durham Indus., 630 F.2d at 908 (addressing a toy manufacturer's dolls and other toys).
228. This is not to say that all of the works ultimately were accorded copyright protection, but merely that they were the types of works which could have been accorded such protection but for their insufficient originality, the plaintiff's failure to comply with the technical requirements of the Copyright Act, or the plaintiff's failure to show that defendants copied the work. See, e.g., Princess Fabrics, 922 F.2d at 101 (affirming a district court's holding that a copyright was invalidated due to a failure to affix notice of the copyright to the copyrighted fabric design); Financial Info., 808 F.2d at 208 (affirming the district court's finding that the financial index cards lacked sufficient independent creation to merit copyright protection); Walker, 784 F.2d at 46 ("We conclude that no reasonable observer could find substantial similarity between the protectible elements of plaintiff's book and defendant's movie . . . ."); Warner Bros., 720 F.2d at 245 (affirming a district court's judgment in favor of the defendants on the copyright claim because no reasonable jury could find that the parties' works were substantially similar); Durham Indus., 630 F.2d at 919 n.15 (holding that the works of the purported copyright owner "lack sufficient originality to qualify for protection under the Copyright Act").
229. As discussed above, however, my holding that the NBA games are not subject to the Copyright Act's grant of exclusivity is not based merely on the lack of originality of particular NBA games, the failure of NBA to comply with the technical requirements of the Copyright Act, such as the notice requirements in 17 U.S.C. @ 401, or the failure of NBA to show that defendants copied protected aspects of the NBA games. Instead, I hold categorically that the NBA games, unlike broadcasts of NBA games, do not fall within the ambit of protected subject matters under 17 U.S.C. @@ 102, 103.
230. Thus, NBA's claim of misappropriation of its rights in the NBA games fails to satisfy the subject matter test of 17 U.S.C. @ 301 and, therefore, is not preempted. n22
B. Defendants' Misappropriation
231. Turning to the merits of NBA's misappropriation claim, I find that NBA has satisfied its burden of proof that defendants have engaged in unfair competition in violation of New York common law through their commercial misappropriation of NBA's proprietary interests in the NBA games.
232. The law of unfair competition originated in the conscience, justice and equity of common-law judges. It developed within a framework of a society dedicated to freest competition, to deal with business malpractices offensive to the ethics of that society. The theoretical basis is obscure, but the birth and growth of this branch of law is clear. It is an outstanding example of the law's capacity for growth in response to the ethical as well as the economic needs of society. As a result of this background the legal concept of unfair competition has evolved as a broad and flexible doctrine with a capacity for further growth to meet changing conditions. There is no complete list of the activities which constitute unfair competition . . . .
The statement of a sufficient cause of action in unfair competition, in the last analysis, is therefore dependent more upon the facts set forth and less upon technical requirements than in most causes of action. Metropolitan Opera Ass'n, Inc. v. Wagner-Nichols Recorder Corp., 199 Misc. 786, 101 N.Y.S.2d 483, 488-89 (Sup. Ct. N.Y. Co. 1950), aff'd mem., 107 N.Y.S.2d 795 (1st Dep't 1951).
233. "The early cases of unfair competition in which relief was granted were cases involving 'palming off' -- that is, the fraudulent representation of the goods of the seller as those of another." Id. at 489.
234. Palming off was actionable because of the "two wrongs inflicted thereby: (1) The deceit and fraud on the public; and (2) the misappropriation to one person of the benefit of a name, reputation or business good will belonging to another." Id.
235. Subsequently, the courts of New York extended the doctrine of unfair competition beyond cases of palming off to grant relief "in cases where there was no fraud on the public, but only a misappropriation for the commercial advantage of one person of a benefit or 'property right' belonging to another." Id.
236. In Roy Export Co. Establishment of Vaduz v. Columbia Broadcasting Sys., Inc., 672 F.2d 1095 (2d Cir.), cert. denied, 459 U.S. 826, 74 L. Ed. 2d 63, 103 S. Ct. 60 (1982), the Court of Appeals discussed this extension of the law of unfair competition:
The misappropriation branch of the unfair competition tort traces its lineage to the Supreme Court's decision in International News Service v. Associated Press, 248 U.S. 215, 63 L. Ed. 211, 39 S. Ct. 68 (1918), upholding a decision enjoining INS from copying AP's news bulletins, which AP had compiled at considerable effort and expense, and then selling the pirated information in competition with AP. With the subsequent decline of general federal common law, the doctrine was developed by the states, New York in particular; there it has flourished in a variety of factual settings, . . . despite some early efforts by this Court to limit the doctrine to the narrow circumstances of the INS case, . . . . n23
An unfair competition claim involving misappropriation usually concerns the taking and use of the plaintiff's property to compete against plaintiff's own use of the same property. . . . By contrast, in this case the Compilation was taken and used to compete unfairly against a different property. . . . Despite the unusual facts, we are satisfied that the plaintiffs have established an unfair competition tort under New York law.
New York courts have noted the "incalculable variety" of illegal practices falling within the unfair competition rubric, . . . calling it a "broad and flexible doctrine" that depends "more upon the facts set forth . . . than in most causes of action". . . . It has been broadly described as encompassing "any form of commercial immorality," . . . or simply as "endeavoring to reap where [one] has not sown" . . .; it is taking "the skill, expenditures and labors of a competitor," . . . and "misappropriating for the commercial advantage of one person . . . a benefit or 'property' right belonging to another" . . . . The tort is adaptable and capacious. Roy Export, 672 F.2d at 1105 (citations omitted); see Greenblatt v. Prescription Plan Servs. Corp., 783 F. Supp. 814, 825 (S.D.N.Y. 1992) (holding that the "essence of the tort is the effort to misappropriate the fruits of another's efforts").
237. The breadth of the commercial misappropriation doctrine is evidenced by the absence of a requirement "of actual competition between the parties." Metropolitan Opera, 101 N.Y.S.2d at 491-92. Instead, the modern view as to the law of unfair competition does not rest solely on the ground of direct competitive injury, but on the broader principle that property rights of commercial value are to be and will be protected from any form of commercial immorality, and a court of equity will penetrate and restrain every guise resorted to by the wrongdoer. The courts have thus recognized that in the complex pattern of modern business relationships, persons in theoretically non-competitive fields may, by unethical business practices, inflict as severe and reprehensible injuries upon others as can direct competitors. Id. at 492; accord Berni v. International Gourmet Restaurants of Am., Inc., 838 F.2d 642, 648 (2d Cir. 1988) ("Under New York law, a party need not be a direct competitor to institute an unfair competition action.").
238. Courts have applied these principles to find commercial misappropriation in a wide variety of contexts.
239. One such context is that of the gathering and dissemination of news, both financial and other types of news.
240. In Board of Trade of the City of Chicago v. Christie Grain & Stock Co., 198 U.S. 236, 49 L. Ed. 1031, 25 S. Ct. 637 (1905), the Chicago Board of Trade sought to enjoin the principal defendants from using and distributing the continuous quotations of prices on sales of grain and provisions for future delivery, which are collected by plaintiff, and which cannot be obtained by the defendants except through a known breach of the confidential terms on which the plaintiff communicates them. Id. at 245.
241. The Supreme Court held that "plaintiff's collection of quotations is entitled to the protection of the law" and, therefore, the "plaintiff has the right to keep the work which it has done, or paid for doing, to itself." Id. at 250. Further, according to the Court, the plaintiff does not lose its rights by communicating the result to persons, even if many, in confidential relations to itself, under a contract not to make it public, and strangers to the trust will be restrained from getting at the knowledge by inducing a breach of trust, and using knowledge obtained by such a breach. * * * . . . Time is of the essence in matters like this, and it fairly may be said that, if the contracts with the plaintiff are kept, the information will not become public property until the plaintiff has gained its reward. Id. at 250-51. The Court concluded that an injunction restraining the defendant's conduct was appropriate. Id. at 253; see Board of Trade of City of Chicago v. Tucker, 221 F. 305, 306-07 (2d Cir. 1915) (relying on Christie Grain & Stock to affirm an injunction restraining the defendant's ability to obtain, use, or distribute the plaintiff's continuous price quotations).
242. Next, in International News Serv. v. Associated Press, 248 U.S. 215, 63 L. Ed. 211, 39 S. Ct. 68 (1918), the Supreme Court addressed a misappropriation claim involving parties who were competitors in the "gathering and distribution of news and its publication for profit in newspapers throughout the United States." Id. at 221.
243. The defendant company acquired news gathered by plaintiff's company by bribing plaintiff's employees and employees of newspapers with subscriptions to the plaintiff's news gathering service, and by copying news from "bulletin boards and from early editions of [plaintiff]'s newspapers." Id. at 231. The defendant then sold this news to its customers in an effort to compete with the plaintiff in providing timely news. Id.
244. The Supreme Court, recognizing that the "peculiar value of news is the spreading of it while it is fresh" and that "a valuable property interest in the news, as news, cannot be maintained by keeping it secret," id. at 235, held that defendant, by its very act, admits that it is taking material that has been acquired by complainant as the result of organization and the expenditure of labor, skill, and money, and which is salable by complainant for money, and that defendant in appropriating it and selling it as its own is endeavoring to reap where it has not sown, and by disposing of it to newspapers that are competitors of complainant's members is appropriating to itself the harvest of those who have sown. Stripped of all disguises, the process amounts to an unauthorized interference with the normal operation of complainant's legitimate business precisely at the point where the profit is to be reaped, in order to divert a material portion of the profit from those who have earned it to those who have not; with special advantage to defendant in the competition because of the fact that it is not burdened with any part of the expense of gathering the news. The transaction speaks for itself and a court of equity ought not to hesitate long in characterizing it as unfair competition in business. Id. at 239-40.
245. More recently, the Appellate Division, First Department, in New York relied on International News Serv. to grant a temporary injunction and thereby protect a plaintiff's property interest in the gathering and dissemination of news. The Bond Buyer v. Dealers Digest Publishing Co., Inc., 25 A.D.2d 158, 267 N.Y.S.2d 944, 945-46 (1st Dep't 1966) (per curiam).
246. Both parties produced publications on municipal and other governmental bonds. Id. at 159. The plaintiff also operated a teletype service which provided immediate information on bond offerings in advance of either of the parties' publications. Id.
247. The defendant appropriated information gained from plaintiff's wire service, though defendant is not a subscriber, and by this means has been enabled to publish items in its news sheet contemporaneously with plaintiff's publications in its news sheet, thereby reaping the benefit of plaintiff's news gathering staff without either incurring the expense or expending the effort. Id.
248. Relying on International News Serv., the Court held that "to make a commercial use of the result of the labor is, as the court said, to reap where one has not sown. In legal phraseology, it is a form of unfair competition." Id. at 160.
249. In addition to the news gathering and dissemination context, courts repeatedly have protected, through the doctrine of commercial misappropriation, the property rights of those who invest the time and money into the creation of sports events and their broadcasts by limiting the permissible uses which others may make of information regarding ongoing sports events.
250. In Pittsburgh Athletic Co. v. KQV Broadcasting Co., 24 F. Supp. 490 (W.D. Pa. 1938), cited by Metropolitan Opera, 101 N.Y.S.2d at 497, the plaintiffs sought a preliminary injunction to "restrain defendant from broadcasting play-by-play reports and descriptions of baseball games played by the 'Pirates,'" a professional baseball team owned by the plaintiffs. Id. at 491.
251. The defendant operated a radio broadcasting station from which it broadcast play-by-play descriptions of the games played by the Pirates. Id. at 492. It acquired its information about the games "from its own paid observers whom it stations at vantage points outside [the baseball park] on premises leased by the defendant. These vantage points are so located that the defendant's observers can see over the enclosures the games as they are played." Id. Just as in the present case, the paid observers had no contractual relationship with the plaintiff.
252. The defendant sought by its broadcast "to cultivate the good will of the public for its radio station," but it did not derive revenue directly from the broadcast. Id. at 493.
253. The plaintiffs required payment of an admission fee to view the game from within the ballpark and the admission ticket contained a clause preventing the ticketholder from giving out any news of the game while it is in progress. Id. at 492. Further, the plaintiffs licensed the exclusive broadcast rights to the baseball games, and they, "at great expense, acquired and maintained a baseball park, [and] paid the players who participated in the game." Id.
254. The Court held that the plaintiffs, "by reason of [their] creation of the game, [their] control of the park, and [their] restriction of the dissemination of news therefrom, [have] a property right in such news, and the right to control the use thereof for a reasonable time following games." Id.
255. Further, "the communication of the news by the plaintiff, or by [their] licensed news agencies, is not a general publication and does not destroy that right." Id.
256. The defendant's conduct, however, interfered with this right by depriving "the plaintiffs and each of them of the just benefits of their labors and expenditures in respect of baseball games and the public dissemination of news thereof," id. at 494, and amounted to "unfair competition," id. at 492.
257. In Twentieth Century Sporting Club, Inc. v. Transradio Press Serv., Inc., 165 Misc. 71, 300 N.Y.S. 159 (Sup. Ct. N.Y. Co. 1937), promoters of a boxing exhibition sued a press service engaged in the business of supplying news to certain broadcasting stations.
258. The promoters granted the exclusive radio broadcast rights to National Broadcasting Company for the ringside round-by-round description of the fight. Id. at 160. The press service, aware of this grant of exclusive broadcast rights, notified its radio broadcasting station customers that Transradio would provide a running account of the fight while it is in progress, covering each round "as rapidly as it is mechanically possible." Id.
259. The press service intended to "'obtain tips from the ringside broadcast as to the facts of the progress of the fight, and to authenticate them by independent investigation by news gathering representatives of defendants located at vantage points outside the stadium but within view of the bout.'" Id. (quoting defendant's letter).
260. The ultimate goal of the press service's plan was "to rebroadcast the description of the exhibition without waiting for the termination thereof." Id. at 161.
261. In granting the promoter's motion for a preliminary injunction, the Court concluded that "obviously such action by defendants would constitute an unlawful appropriation of the exclusive property rights of the plaintiff." Id.
262. The Court continued: By appropriating or utilizing the whole or the substance of the plaintiff's broadcast the defendants would be enabled to derive profits from the exhibition without having expended any time, labor, and money for the presentation of such exhibition. It is to be borne in mind that this exhibition will only be possible as a result of an expenditure of considerable time, labor, and money by the plaintiffs. The plaintiffs are entitled to look for recoupment through the grant of exclusive broadcasting privileges. They have taken proper steps to retain these exclusive rights by selling tickets for admission to such exhibition, which tickets contain [an express contract limiting the ticketholder's ability to film or broadcast the exhibition]. * * * The defendant's plan for broadcasting an account of the exhibition will necessarily be based to a substantial degree upon the use of the plaintiffs' broadcast. Under all the circumstances, this court cannot reach any conclusion other than that plan submitted by defendants cannot be utilized without an unlawful appropriation of the substance of the plaintiffs' broadcast. Id.
263. Next, in Mutual Broadcasting Sys., Inc. v. Muzak Corp., 177 Misc. 489, 30 N.Y.S.2d 419 (Sup. Ct. N.Y. Co. 1941), the Court confronted a similar attempt to misappropriate another's rights arising from a sports event.
264. The plaintiff, pursuant to written contract, acquired the exclusive right to broadcast the 1941 World Series Games over radio broadcasting stations throughout the United States, Canada, and Cuba. Id. at 419. The defendant sought to use a conventional radio receiver to receive plaintiff's broadcast and then to transmit the sound through telephone lines to the defendant's customers. Id. at 420. The plaintiff sued the defendant, arguing that the "defendant's act is that of an interloper or parasite." Id.
265. In this context, the Court rejected the defendant's argument that it acted properly by not palming off as its own broadcast that which is broadcast by the plaintiff and, instead, granted the plaintiff's motion for a temporary injunction restraining the defendant's conduct. Id.
266. After noting that the parties were "competitors or potential competitors" because both were relying on the play-by-play descriptions of the games in order to attract listeners and enhance the profitability of their businesses, id. at 419, the Court balanced the rights of the plaintiff with those of the defendant.
267. The plaintiff "expended large sums of money and laborious effort in competition with other broadcasting systems in order to obtain the right to transmit" the World Series. Id. at 420. "As a prerequisite it was required to and did obtain a license to broadcast and is subjected to the regulations of public authorities under the Federal Communications Act, 47 U.S.C.A. @ 151 et seq." Id. Further, the plaintiff "through the expenditure of such money and effort obtained the exclusive right which common sense indicates is of tremendous commercial value," and it "may reasonably be expected that further good will, additional listeners and added profit will result." Id.
268. Citing International News Serv., the Court concluded that "it seems clear that plaintiff's right has been invaded by defendant and that plaintiff is entitled to the injunction sought." Id.
269. In National Exhibition Co. v. Fass, 143 N.Y.S.2d 767 (Sup. Ct. N.Y. Co. 1955), a case remarkably similar to this one despite the vast gap in the technologies employed, the Court rejected a defendant's argument that radio broadcasts of baseball games constitute news in the public domain available to all persons for all purposes and permanently enjoined the defendant's misappropriation of the proprietary rights of a professional baseball team owner.
270. The plaintiff was the owner and operator of "a professional baseball club with a team of professional baseball players known as the 'Giants.'" Id. at 769. The defendant was an "independent newsgatherer and professional sports reporter." Id.
271. The defendant listened "to broadcasts of play-by-play descriptions of baseball games produced by plaintiff" and sent "out simultaneous teletype reports of the games to radio stations for immediate rebroadcast." Id. at 768. These teletype reports usually were relayed "within seconds or minutes," id. at 775, and were rebroadcast by the receiving radio stations "on the same day and during the time that plaintiff's game involved was actually in progress," id.
272. In granting the permanent injunction, the Court held that plaintiff is the owner of the professional baseball exhibitions which it produces; and its property rights, as owner of such exhibitions, include the proprietary right to sell to others, who desire to purchase and to whom plaintiff desires to sell, licenses or other rights under which the purchasers are authorized to have their representatives attend such exhibitions, prepare oral and/or pictorial descriptions of such exhibitions and transmit such descrip