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Motorola and Sports Team Analysis and Tracking Systems ("STATS") appeal from a permanent injunction entered by the United States District Court for the Southern District of New York (Loretta A. Preska, Judge ) barring, inter alia , the sale of a handheld pager that displays updated scores and statistics of National Basketball Association games as they are played. We hold that Motorola and STATS have not unlawfully misappropriated NBA's property by transmitting "real-time" NBA game scores and statistics taken from television and radio broadcasts of games in progress. We therefore reverse on the misappropriation claim and vacate the injunction. Engelmann, Raphael Winick, Weiss Dawid Fross Zelnick & Lehrman, of counsel), for Plaintiff-Counter-Defendant-Appellee-Cross-Appellant . Leib, Deutsch Levy & Engel Chartered, Chicago, Illinois, of counsel), for Defendant-Appellant-Cross-Appellee . Keller, Debevoise & Plimpton, New York, New York (Lorin L. Reisner, of counsel), for Amici Curiae National Football League, Office of the Commissioner of Baseball and National Hockey League . Floyd Abrams, Cahill Gordon & Reindel, New York, New York, for Amicus Curiae Interactive Services Association . George Freeman, The New York Times Company, New York, New York, for Amicus Curiae The New York Times Company . Gair, of counsel), for Amicus Curiae Chicago Mercantile Exchange . The injunction concerns a handheld pager sold by Motorola and marketed under the name "SportsTrax," which displays updated information of professional basketball games in progress. The injunction prohibits appellants, absent authorization from the National Basketball Association and NBA Properties, Inc. We hold that a narrow "hot-news" exception does survive preemption. However, we also hold that appellants' transmission of "real-time" NBA game scores and information tabulated from television and radio broadcasts of games in progress does not constitute a misappropriation of "hot news" that is the property of the NBA. The NBA cross-appeals from the dismissal of its Lanham Act claim. We hold that any misstatements by Motorola in advertising its pager were not material and affirm. Motorola manufactures and markets the SportsTrax paging device while STATS supplies the game information that is transmitted to the pagers. The product became available to the public in January 1996, at a retail price of about $200.
In that mode, SportsTrax displays the following information on NBA games in progress: the teams playing; The information is updated every two to three minutes, with more frequent updates near the end of the first half and the end of the game. There is a lag of approximately two or three minutes between events in the game itself and when the information appears on the pager screen. SportsTrax's operation relies on a "data feed" supplied by STATS reporters who watch the games on television or listen to them on the radio. The reporters key into a personal computer changes in the score and other information such as successful and missed shots, fouls, and clock updates. The information is relayed by modem to STATS's host computer, which compiles, analyzes, and formats the data for retransmission. The information is then sent to a common carrier, which then sends it via satellite to various local FM radio networks that in turn emit the signal received by the individual SportsTrax pagers. Although the NBA's complaint concerned only the SportsTrax device, the NBA offered evidence at trial concerning STATS's America On-Line ("AOL") site. Starting in January, 1996, users who accessed STATS's AOL site, typically via a modem attached to a home computer, were provided with slightly more comprehensive and detailed real-time game information than is displayed on a SportsTrax pager. On the AOL site, game scores are updated every 15 seconds to a minute, and the player and team statistics are updated each minute. The district court's original decision and judgment, National Basketball Ass'n v. Upon motion by the NBA, however, the district court amended its decision and judgment and enjoined use of the real-time game information on STATS's AOL site. Because the record on appeal, the briefs of the parties, and oral argument primarily addressed the SportsTrax device, we similarly focus on that product. However, we regard the legal issues as identical with respect to both products, and our holding applies equally to SportsTrax and STATS's AOL site. The NBA's complaint asserted six claims for relief: state law unfair competition by misappropriation; Motorola counterclaimed, alleging that the NBA unlawfully interfered with Motorola's contractual relations with four individual NBA teams that had agreed to sponsor and advertise SportsTrax. The district court dismissed all of the NBA's claims except the first -- misappropriation under New York law.
Motorola and STATS appeal from the injunction, while NBA cross-appeals from the district court's dismissal of its Lanham Act false-advertising claim. The issues before us, therefore, are the state law misappropriation and Lanham Act claims. Summary of Ruling Because our disposition of the state law misappropriation claim rests in large part on preemption by the Copyright Act, our discussion necessarily goes beyond the elements of a misappropriation claim under New York law, and a summary of our ruling here will perhaps render that discussion -- or at least the need for it -- more understandable. The issues before us are ones that have arisen in various forms over the course of this century as technology has steadily increased the speed and quantity of information transmission. Today, individuals at home, at work, or elsewhere, can use a computer, pager, or other device to obtain highly selective kinds of information virtually at will. INS involved two wire services, the Associated Press ("AP") and International News Service ("INS"), that transmitted newsstories by wire to member newspapers. INS would lift factual stories from AP bulletins and send them by wire to INS papers. INS would also take factual stories from east coast AP papers and wire them to INS papers on the west coast that had yet to publish because of time differentials. The Supreme Court held that INS's conduct was a common-law misappropriation of AP's property. With the advance of technology, radio stations began "live" broadcasts of events such as baseball games and operas, and various entrepreneurs began to use the transmissions of others in one way or another for their own profit. In response, New York courts created a body of misappropriation law, loosely based on INS , that sought to apply ethical standards to the use by one party of another's transmissions of events. Federal copyright law played little active role in this area until 1976. Before then, it appears to have been the general understanding -- there being no caselaw of consequence -- that live events such as baseball games were not copyrightable. Moreover, doubt existed even as to whether a recorded broadcast or videotape of such an event was copyrightable. In 1976, however, Congress passed legislation expressly affording copyright protection to simultaneously-recorded broadcasts of live performances such as sports events. Such protection was not extended to the underlying events. The 1976 amendments also contained provisions preempting state law claims that enforced rights "equivalent" to exclusive copyright protections when the work to which the state claim was being applied fell within the area of copyright protection. Based on legislative history of the 1976 amendments, it is generally agreed that a "hot-news" INS -like claim survives preemption. However, much of New York misappropriation law after INS goes well beyond "hot-news" claims and is preempted. We hold that the surviving "hot-news" INS -like claim is limited to cases where: a plaintiff generates or gathers information at a cost; Copyrights in Events or Broadcasts of Events The NBA asserted copyright infringement claims with regard both to the underlying games and to their broadcasts. The district court dismissed these claims, and the NBA does not appeal from their ...
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