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

FactsMotorola 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.

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

HoldingThe 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