Lexplug logoLexplug

National Basketball Association v. Motorola, Inc.

United States Court of Appeals, Second Circuit
105 F.3d 841 (1997)
ELI5:

Rule of Law:

A state law 'hot-news' misappropriation claim survives preemption by the federal Copyright Act only if it meets a five-part test, which requires showing that a defendant is free-riding on the plaintiff's costly, time-sensitive information in a way that directly competes with and threatens the very existence of the plaintiff's product.


Facts:

  • Motorola, Inc. manufactures and markets a handheld pager called 'SportsTrax,' which displays real-time information about NBA games in progress.
  • Sports Team Analysis and Tracking Systems (STATS) supplies the game data for the pager.
  • STATS reporters gather information, such as score changes, team possession, and time remaining, by watching NBA games on television or listening to them on the radio.
  • The reporters key this factual data into a computer, and it is then compiled and transmitted to the pagers with a lag of two to three minutes.
  • STATS also provides similar real-time game information on a site hosted by America On-Line (AOL).
  • The National Basketball Association (NBA) produces the basketball games, licenses their broadcasts, and offers its own data service called 'Gamestats' in arenas.
  • The NBA planned to enhance its 'Gamestats' service to support a pager product that would directly compete with SportsTrax.

Procedural Posture:

  • The National Basketball Association (NBA) sued Motorola, Inc. and Sports Team Analysis and Tracking Systems (STATS) in the U.S. District Court for the Southern District of New York.
  • The NBA's complaint asserted claims for state law misappropriation, copyright infringement, and false advertising under the Lanham Act, among others.
  • The district court dismissed most claims but found Motorola and STATS liable for misappropriation under New York law.
  • The district court entered a permanent injunction against Motorola and STATS, prohibiting them from transmitting real-time data about NBA games.
  • Motorola and STATS, as appellants, appealed the injunction to the U.S. Court of Appeals for the Second Circuit.
  • The NBA, as cross-appellant, appealed the district court's dismissal of its Lanham Act false advertising claim.

Locked

Premium Content

Subscribe to Lexplug to view the complete brief

You're viewing a preview with Rule of Law, Facts, and Procedural Posture

Issue:

Does the transmission of real-time factual information about NBA games, gathered from public broadcasts, constitute a 'hot-news' misappropriation under state law that is not preempted by the federal Copyright Act?


Opinions:

Majority - Winter, Circuit Judge

No, the transmission of real-time factual information about NBA games gathered from public broadcasts does not constitute a 'hot-news' misappropriation that survives preemption by the Copyright Act. The court held that while a narrow 'hot-news' claim based on International News Service v. Associated Press (INS) can survive copyright preemption, the NBA's claim fails. The court first rejected the district court's 'partial preemption' theory, stating that for preemption analysis, the uncopyrightable elements (the game facts) are subsumed within the copyrightable work (the broadcast). Therefore, the state law claim is subject to preemption. The claim survives only if it contains 'extra elements' beyond those of a copyright claim. The court established a five-part test for a surviving 'hot-news' claim: (i) plaintiff generates information at a cost; (ii) the information is time-sensitive; (iii) defendant's use is free-riding on plaintiff's efforts; (iv) defendant is in direct competition; and (v) the free-riding threatens the existence of plaintiff's product. The court found that Motorola and STATS were not free-riding because they expended their own resources to gather the data from broadcasts; they did not steal it from the NBA's internal data collection efforts. Furthermore, the SportsTrax pager did not threaten the NBA's primary products (live games and broadcasts) because it was a supplement, not a substitute. Thus, the misappropriation claim was preempted.



Analysis:

This decision significantly clarifies and narrows the scope of the state law 'hot-news' misappropriation tort, particularly in the context of the digital age. By establishing a stringent five-part test, the court makes it much more difficult for plaintiffs to use state law to protect factual, time-sensitive information that falls outside federal copyright protection. The ruling reinforces the broad preemptive power of the Copyright Act and protects the public domain of facts, ensuring that entities that independently gather and report factual information from public sources are not liable for misappropriation. This has major implications for news organizations, data aggregators, and fantasy sports leagues that rely on the dissemination of real-time factual data.

🤖 Gunnerbot:
Query National Basketball Association v. Motorola, Inc. (1997) directly. You can ask questions about any aspect of the case. If it's in the case, Gunnerbot will know.
Locked
Subscribe to Lexplug to chat with the Gunnerbot about this case.

Unlock the full brief for National Basketball Association v. Motorola, Inc.