National Basketball Ass'n v. Sports Team Analysis

• Decision Date: 02 August 1996
• Docket Number: No. 96 Civ. 1615 (LAP).,96 Civ. 1615 (LAP).
• Citation: 931 F. Supp. 1124
• Parties: The NATIONAL BASKETBALL ASSOCIATION and NBA Properties, Inc., Plaintiffs, v. SPORTS TEAM ANALYSIS AND TRACKING SYSTEMS, INC., d/b/a Stats, Inc., and Motorola, Inc., d/b/a Sportstrax, Defendants.
• Court: U.S. District Court — Southern District of New York

931 F. Supp. 1124

The NATIONAL BASKETBALL ASSOCIATION and NBA Properties, Inc., Plaintiffs, v. SPORTS TEAM ANALYSIS AND TRACKING SYSTEMS, INC., d/b/a Stats, Inc., and Motorola, Inc., d/b/a Sportstrax, Defendants.

No. 96 Civ. 1615 (LAP).

United States District Court, S.D. New York.

July 19, 1996.

Corrected August 2, 1996.

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Roger L. Zissu, Weiss Dawid Fross Zelnick & Lehrman, P.C., New York City, for The National Basketball Association and NBA Properties Inc.

Edward F. Maluf, Piper & Marbury, L.L.P., New York City, for Sports Team Analysis and Tracking Systems, Inc.

Herbert F. Schwartz, Patricia A. Martone, Vincent N. Palladino, Fish & Neave, New York City, Roger H. Dusberger, Motorola, Inc., Schaumburg, IL, for Motorola, Inc.

PRESKA, District Judge:

Plaintiffs The National Basketball Association and NBA Properties, Inc. (collectively, "NBA") bring this action complaining of the sale of SportsTrax, a portable electronic beeper device created and marketed by defendants Sports Team Analysis and Tracking Systems, Inc. ("Stats") and Motorola, Inc. ("Motorola") (collectively, "defendants") which provides real-time information about NBA basketball games. NBA alleges claims for infringement under the Copyright Act of 1976, 17 U.S.C. § 501; commercial misappropriation under New York common law; false advertising and false designations of origin under Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a); and violations of the Communications Act of 1934, 47 U.S.C. § 605.¹ Motorola alleges a counterclaim for NBA's tortious interference with its contractual relations with four NBA teams.

NBA moved, by order to show cause, for a preliminary injunction under Rule 65 of the Federal Rules of Civil Procedure. Following oral argument, a hearing was held on the preliminary injunction (the "Hearing"), at the conclusion of which I reserved decision. The parties subsequently agreed to consolidate the Hearing into a trial on the merits for the issues of liability and injunctive relief, submitted supplemental briefing, and attended another oral argument. The issue of damages has, by agreement of the parties, been reserved for a subsequent decision if necessary.

As set forth in detail below, I find that through the SportsTrax product, defendants disseminated to NBA fans game information on a real-time basis.² In so doing, they have misappropriated the essence of NBA's most valuable property — the excitement of an NBA game in progress. Because defendants have "reaped where they have not sown," International News Serv. v. Associated Press, 248 U.S. 215, 239, 39 S.Ct. 68, 72, 63 L.Ed. 211 (1918), NBA is entitled to injunctive relief. Pursuant to Rule 52(a) of the Federal Rules of Civil Procedure, the following shall constitute findings of fact and conclusions of law in support of this decision.

                                              TABLE OF CONTENTS
                FINDINGS OF FACT
                   I. Parties and Amici ....................................................... 1128
                  II. The Business of NBA Games: Real-Time Data ............................... 1129
                      A. The Value of Real-Time Data .......................................... 1129
                      B. The Controlled Dissemination of Real-Time Data ....................... 1130
                      C. NBA's Real-Time Data System: Gamestats ............................... 1132
                 III. SportsTrax: "Any Game • Any Team •
                                   Any Time • Any Where" ................................. 1132
                      A. The Product .......................................................... 1132
                      B. The Marketing ........................................................ 1133
                      C. The Negotiations ..................................................... 1136
                CONCLUSIONS OF LAW
                   I. Laches Defense .......................................................... 1138
                  II. Prior Restraint Defense ................................................. 1138
                 III. Copyright Infringement Claim ............................................ 1140
                      A. NBA Game Is Not Protected ............................................ 1140
                      B. Copyright In Broadcast Is Not Infringed .............................. 1145
                  IV. Commercial Misappropriation Claim ....................................... 1146
                      A. Preemption by Copyright Act: NBA Games v. Broadcasts of NBA
                          Games ............................................................... 1146
                         1. General Scope Requirement ......................................... 1147
                         2. Subject Matter Requirement ........................................ 1149
                      B. Defendants' Misappropriation ......................................... 1150
                   V. Lanham Act Claims ....................................................... 1159
                      A. No Contributory Infringement ......................................... 1160
                      B. No False Advertising ................................................. 1161
                      C. No False Designations of Origin ...................................... 1162
                  VI. Communication Act Claim ................................................. 1164
                 VII. Interference With Contractual Relations Counterclaim .................... 1166
                VIII. Entitlement to Injunctive Relief ........................................ 1166
                CONCLUSION .................................................................... 1166
                

FINDINGS OF FACT

Upon assessing the evidence in the record, operating and observing SportsTrax, and taking into account my observations of the demeanor and assessments of the credibility of those witnesses who testified at the Hearing, I find the following to be facts in this action.

I. Parties and Amici

1. Plaintiff The National Basketball Association ("TNBA") produces, organizes, and markets pre-season, regular season, and playoff basketball games involving its twenty-nine member teams. (Affidavit of TNBA President of Television and New Media Ventures Edwin S. Desser ("Desser Aff.") ¶ 3.)

2. Plaintiff NBA Properties, Inc. ("NBA Properties") has the exclusive worldwide rights to market and promote NBA games and, accordingly, controls and manages TNBA's intellectual property rights. (Id. ¶ 4.)

3. Defendant Stats provides information about sports, both current and historical, to the public and to various media entities, such as the Associated Press, ESPN, Fox, Turner, NBC Sports, and a majority of Major League Baseball teams. (Affidavit of Stats President and Chief Executive Officer John Dewan ("Dewan Aff.") ¶ 3.) It also gathers and provides the real-time NBA game data which is displayed by SportsTrax.

4. Defendant Motorola develops and markets, inter alia, paging devices which relay a variety of information, from telephone numbers to weather reports.³ (Affidavit of SportsTrax Products, Inc.⁴ President Michael Marrs ("Marrs Aff.") ¶ 3.) It is responsible for the manufacturing and marketing of SportsTrax.

5. Amicus curiae The National Football League ("NFL") is an unincorporated not-for-profit association comprised of thirty member clubs engaged in the business of creating, organizing, promoting, and exhibiting professional football games. (Memorandum of Law Submitted by the NFL, The Office of the Commissioner of Baseball ("MLB") and the National Hockey League ("NHL") as Amicus Curiae ("NFL Memo.") at 2.)

6. Amicus curiae Office of the Commissioner of Baseball is an office serving the twenty-eight clubs, that are members of either The American League of Professional Baseball Clubs or The National League of Professional Baseball Clubs, which are in the business of creating, organizing, promoting, and exhibiting professional baseball games.

7. Amicus curiae NHL is a joint venture engaged in the business of creating, organizing, promoting, and exhibiting the professional hockey games of its twenty-six member teams. (Id. at 3.)

8. Amicus curiae The Associated Press ("AP") is a not-for-profit mutual news cooperative whose members are newspapers, television stations, and radio stations. (Brief Amicus Curiae of AP in Opposition to Plaintiffs' Request for Injunctive Relief ("AP Memo.") at 1). As the world's largest and oldest news gathering organization, AP is in the business of gathering and distributing news, including sports news, to its members and subscribers. (Id.)

9. Amicus curiae America Online, Inc. ("AOL") operates an online computer service providing a wide range of information for over six million subscribers worldwide. (Memorandum of Law Amicus Curiae of AOL in Support of Defendants ("AOL Memo.") at 1.) Stats offers a scoreboard feature on AOL, which provides regularly updated information about ongoing NBA games. (Id. at 2.)

10. Amicus curiae The New York Times Company ("NYT") publishes The New York Times newspaper and has been in the business of reporting and distributing news for over a century. (Memorandum of Law of Amicus Curiae NYT at 1.)

II. The Business of NBA Games: Real-Time Data

A. The Value of Real-Time Data

11. The vast commercial value and appeal of NBA games is beyond dispute.

12. Much of this value and appeal is attributable to years of NBA's promotional investments.

13. Currently, NBA's primary promotional announcement consists of the series of thirty-second advertisements with the theme, "I Love This Game." (Testimony of TNBA President of Television and New Media Ventures Edwin S. Desser, Transcript ("Desser, Tr.") at 160; Exhibit ("Ex.") 141.) NBA typically runs one or two of these advertisements in each network telecast of an NBA game and produces roughly twenty to thirty per year. (Desser, Tr. at 161.)

14. It is also beyond dispute that NBA games achieve the apex of their value while they are in progress. In fact, roughly 80% of NBA's revenues are derived from the promotion of NBA games while they are in progress, such as from broadcast distribution licenses and admission fees to the arenas. (Id. at 11.)⁵

15. The National Broadcasting Company ("NBC"), for example, pays NBA approximately $3 million per...