NBA v. Motorola, Inc.

Second Circuit Court of Appeals, 105 F.3d 841 (2nd Cir. 1997)

Key Search Terms: “Hot News,” misappropriation, Copyright Act,

underlying games, preemption

Facts
Motorola is a manufacturer of electronic paging devices, and one of its
products, the SportsTrax paging device, displays information on NBA games
provided by STATS, a company responsible for outputting a “data feed.” STATS
employees watch the games on television or listen to the games on the radio
and input the information into STATS computer system. The SportsTrax
device provides numerous updates of games while they are in progress. The
information on the pager is updated every two to three minutes and it appears
on the pager screen about two to three minutes after the events occur in the
game itself. The NBA filed a complaint against Motorola alleging state law
unfair competition by misappropriation, false advertising, false representation,
unfair competition, federal copyright infringement and unlawful interception of
communications in violation of Communications Act. The District Court
entered a permanent injunction, finding Motorola and STATS liable for state
law misappropriation and dismissed the other claims. Motorola appealed.

Issue
Whether the misappropriation claim is whether Motorola’s SportsTrax product
had a competitive effect on the NBA’s product.

Holding
The Second Circuit stated that the claim involves the collection and
retransmission of the game’s strictly factual events. Analogizing SportTrax’s
product to box-scores in newspapers and summaries of games on television the
Second Circuit reasoned that it is a separate product from consuming the
game in person or on TV. The court stated that the NBA failed to show that
SportTrax’s product would cause any competitive effect. The NBA did not
present any evidence suggesting that people who regularly attend NBA games
or watch the games on television viewed Sportstrax as a substitute. In fact,
Motorola’s marketing material states that the product is designed for those
times when people cannot attend the game, watch it on TV, or listening to the
radio. The Second Circuit further reasoned that Motorola was not involved in
any free-riding of the information provided by Gamestats (a NBA run service
similar to that of SportTrax) because SportsTrax and Gamestats each bear
their own costs of collecting the information and providing a network for
transmission. The Second Circuit held that the injunction should be vacated
because the NBA has not shown any damage to any of its products.
Summarized by: Reid Murtaugh