NBA v. Motorola

Citation: National Basketball Ass'n v. Motorola, Inc., 105 F.3d 841, 41 U.S.P.Q.2d (BNA) 1585 (2d Cir. 1997).

Factual Background
STATS, Inc., a provider of sporting event scores via pager and online, and Motorola, Inc., the pager manufacturer, transmitted “real-time” NBA game scores and statistics taken from broadcasts of games in progress to pager owners on STATS' site on America Online, and elsewhere. The NBA sued for misappropriation under New York state law.

Trial Court Decision
In the trial court, the NBA successfully argued that STATS' and Motorola's conduct violated New York “hot-news” misappropriation law. The court preliminary enjoined the defendants from providing the service.

Appellate Court Decision
The Second Circuit Court of Appeals ruled that 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 that decision, which went beyond “hot news” and precluded the use of other information, was 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 must meet five criteria:

1. plaintiff generates or gathers information at cost;

2. the information is time sensitive;

3. defendant's use of the information constitutes free-riding on the plaintiff's efforts;

4. defendant is in direct competition with a product or service offered by the plaintiffs; and

5. 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.

The appeals court held that under the facts of the case, the NBA had not established a claim for misappropriation under this test.

In addition to the new test for misappropriation, the court of appeals made some important statements, which should be useful in preventing future claims to the protection of facts and information relating to newsworthy events.

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 reiterated, 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 constitutes 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.”