Factual Background Edit
Sports Team Analysis & Tracking Systems, Inc. (STATS), a provider of sporting event scores via beeper and online, and Motorola, Inc., the pager manufacturer, tramsmitted "real-time" National Basketball Association (NBA) game scores and statistics taken from broadcasts of games in progress to pager owners, on STATS' site on America OnLine, Inc., or "any equivalent means."
Appellate Court Proceedings Edit
The appellate court ruled that the while the state's misappropriation law, based on the case of International News Service v. Associated Press, , survives copyright preemption as applied to "hot news," much of the case law, which went beyond "hot news" and precluded the use of other information, is preempted by the federal Copyright Act.
In its ruling, the appellate court established a new test for misappropriation claims under the "INS doctrine." Under the test, to be actionable, the plaintiff's misappropriation claim, meet five criteria:
- plaintiff generates or gathers information at cost;
- the information is time-sensitive;
- defendant's use of the information constitutes free-riding on the plaintiff's efforts;
- defendant is in direct competition with a product or service offered by the plaintiff; and
- the ability of other parties to free-ride on the efforts of the plaintiff or others would so reduce the incentive to produce the product or service that its existence or quality would be substantially threatened.
Even though the court determined that the underlying material at issue was not copyrightable, the court further noted that “[c]opyrightable material often contains uncopyrightable elements within it, but Section 301 preemption bars state law misappropriation claims with respect to uncopyrightable as well as copyrightable elements.” “Under the general scope requirement, Section 301 ‘preempts only those state law rights that may be abridged by an act which, in and of itself, would infringe one of the exclusive rights' provided by federal copyright law.’”
The appeals court held that under the facts of the case, the NBA had not established a claim for misappropriation under this test.
First, the court reiterated that sporting events themselves are not copyrightable. The same would be true for other types of events over which the participants have no effective control of the outcome. This is very important, since much of the value of cyberspace is the ability to provide real-time access to information.
Second, the court made a clear distinction between the event itself (which is not protected) and a broadcast or report about the event (which is protectable by copyright). The trial court held, and the appellate court reiterate, that Motorola and STATS did not infringe NBA's copyright because they reproduced only facts from the broadcasts, not the expression or description of the game that constituted the broadcast.
Third, the court held that where the challenged copying or misappropriation relates in part to the copyrighted broadcasts of the games, the subject matter requirement of copyright preemption is met as to both the broadcasts and the games. The court found that a properly-narrowed INS "hot news" misappropriation claim will survive preemption because it fails the general scope requirement, but that a broader claim of misappropriation for reporting on events would be preempted. "Copyrightable material often contains uncopyrightable elements within it, but Section 301 preemption bars state law misappropriation claims with respect to uncopyrightable as well as copyrightable elements."
The court also held that: "As long as a work fits within one of the general subject matter categories of sections 102 and 103, the bill prevents the States from protecting it even if it fails to achieve federal statutory copyright because it is too minimal or lacking in originality to qualify, or because it has fallen into the public domain."