At least in rhetoric, courts have long espoused the ideal that intellectual property law primarily protects incentives for creation, not remuneration for creators, and that property-like entitlements in this area of law are instrumental -- not natural -- rights.(1) These affirmations, however, have rung somewhat hollow, since courts have rarely, if ever, had to make the hard choice between the incentive and remunerative purposes of intellectual property law in a particular case.(2)
National Basketball Ass'n v. Motorola, Inc.(3) presents a rare fact pattern in which the plaintiff's remuneration and the plaintiff's incentives may be separately considered, allowing a court to explore the full ramifications of the incentive logic of intellectual property. The Second Circuit's decision is significant in two principal ways. First, it substantially narrows the scope of "hot news" misappropriation(4) -- one of the last bastions of a Lockean labor theory of property(5) and a perennial bite more of intellectual property incentive theorists.(6) Second, it goes further than any previously reported case by indicating that intellectual property law will not protect a plaintiff's remuneration if the plaintiff's incentives are not thereby protected.(7) Judge Winter's opinion, without much fanfare, offers a new and promising test for misappropriation, a test which has the broader effect of refocusing courts' attention on the goal of intellectual property: the enrichment of the public domain.
In 1996, Motorola began selling "SportsTrax" -- a handheld pager that displays continually updated real-time information about NBA games in progress. The SportsTrax technology relies upon a data feed from Sports Team Analysis and Tracking Systems ("STATS") reporters, who watch or listen to television or radio broadcasts of the games and transmit score changes, the team in possession, the time remaining, and other information. STATS also relays this information to an America Online site. The NBA, which is developing a similar product known as "Gamestats," sued, alleging common law misappropriation of its rights in the broadcasts, among other claims.(8)
The district court upheld the misappropriation claim:(9) "By disseminating to fans the changing scores and leads and other information on a real-time basis, defendants have appropriated the essence of NBA's most valuable property -- the excitement and entertainment of a game in progress."(10) The Second Circuit affirmed in part and reversed in part, holding that the Copyright Act of 1976(11) preempted the hot news misappropriation claim.(12)
The doctrine of misappropriation -- and its hot news variant -- originated in the classic case International News Service v. Associated Press (INS).(13) In that case, Justice Pitney's opinion -- employing an agricultural conceit that has caught the fancy of numerous courts and commentators -- held that "the defendant in appropriating [this material] and selling it as its own is endeavoring to reap where it has not sown, and by disposing of it to newspapers that are competitors of complainant's members is appropriating to itself the harvest of those who have sown."(14) Characterizing the nature of the plaintiff's hot news remuneration as "quasi-property,"(15) the INS Court established a broad, equitable anti-copying doctrine that has developed into the law of misappropriation. Although courts and commentators have struggled to lend definition to the Court's sweeping statement, the tort seems to involve at least the following: (1) the creation of a product by the plaintiff's expenditure of time, labor, and skill; (2) the defendant's use of the product in competition with the plaintiff; and (3) resulting commercial damage to the plaintiff.(16)
The precedential value of INS has weakened over time, and fact patterns calling for application of the doctrine are relatively rare.(17) Nevertheless, misappropriation has functioned as a useful space in which courts and commentators could debate the philosophy and policy of the "pure" common law of intellectual property, unencumbered by any need to take account of statutory provisions or congressional intent.
Hot news misappropriation is one of the few state law misappropriation claims that the Copyright Act of 1976 did not preempt.(18) The Second Circuit's decision, like those of many other courts,(19) concluded that "only a narrow `hot-news' misappropriation claim survives preemption for actions concerning material within the realm of copyright."(20) Judge Winter's preemption analysis was fairly standard to the extent that it required a state misappropriation claim to contain an "extra element" in order to survive preemption if it was otherwise within the general scope of federal copyright law.(21) The significance of Judge Winter's opinion inheres in his distillation of the surviving INS claim to the following list of elements:
(i) the plaintiff generates or collects information at some cost or
expense; (ii) the value of the information is highly time-sensitive; (iii)
the defendant's use of the information constitutes free-riding on the
plaintiff's costly efforts to generate or collect it; (iv) the defendant's
use of the information is in...