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16 tract192 or of an implied-in-fact contract,193 or for conver- or trespass to chattels 201 are not preempted. sion,194 defamation,195 or breach of fiduciary duty196 may or may not be preempted. The courts generally have Guidance Number 9 held that claims under state law for theft of trade se- Real-time data, even if not copyrightable, come crets,197 misrepresentation198 or fraud,199 and trespass200 within the scope of the Copyright Act. State law claims are preempted when they are equivalent to a copyright 192 claim applicable to an act of reproduction, performance, Firoozye v. Earthlink Network, 153 F. Supp. 2d 1115, 112627 (N.D. Cal. 2001) (stating that "[w]here a plaintiff's distribution, or display of a work in violation of an breach of contract claim only asserts that a defendant violated owner's copyright. Although there is some authority to a promise not to use a certain work, that breach of contract the contrary, some courts have held that the Copyright claim is preempted," but holding that "[a] promise to pay for a Act does not preempt claims for breach of contract, dis- work constitutes an extra element such that a breach of con- cussed further in Section V.B, infra. tract claim is not preempted by section 301"); Wolff v. Inst. of Elec. & Elecs. Eng'rs, Inc., 768 F. Supp. 66, 69 (S.D.N.Y. 1991) B. Tort of Misappropriation Under State Law (contract claim preempted). See, however, Huckshold v. HSSL, One possible claim under state law against an unau- LLC, 344 F. Supp. 2d 1203 (E.D. Mo. 2004) (contract claim not thorized user of a transit agency's real-time data is for preempted); Telecom Tech. Servs. Inc. v. Rolm Co., 388 F.3d 820, 82930 (11th Cir. 2004) (contract claim not preempted); the tort of misappropriation.202 The tort encompasses Lipscher v. LRP Publ'ns, Inc., 266 F.3d 1305, 1318 (11th Cir. the taking without payment for the product of another's 2001) (no preemption of contract claim); Nat'l Car Rental Sys., Inc. v. Computer Assocs. Int'l, Inc., 991 F.2d 426, 431 (8th Cir. 1993) (restrictions on use may constitute an additional element making a breach of contract not equivalent to a copyright ac- the Copyright Act because Grace's evidence of breach of confi- tion); ProCD, Inc. v. Zeidenberg, 86 F.3d 1447, 1454 (7th Cir. dentiality constituted the extra element necessary to avoid 1996) (holding that a claim for breach of contract was not preemption."). 198 equivalent to the exclusive rights protected by the Copyright Firoozye v. Earthlink Network, 153 F. Supp. 2d 1115, Act); Taquino v. Teledyne Monarch Rubber, 893 F.2d 1488, 1127-28 (N.D. Cal. 2001) (claim for misrepresentation not pre- 1501 (5th Cir. 1990) (holding that because a breach of contract empted). action involves a promise that is in addition to the mere repro- 199 Shuptrine v. McDougal Littell, 535 F. Supp. 2d 892, 897 duction, distribution, or display of a work, the contract claim (E.D. Tenn. 2008) (holding that a claim for fraud was "more was not preempted by Section 301 of the Copyright Act). than just copyright infringement" and was not preempted); 193 Murray Hill Publ'ns, Inc. v. ABC Communs., Inc., 264 Valente-Kritzer Video v. Pinckney, 881 F.2d 772, 776 (9th Cir. F.3d 622, 638 (6th Cir. 2001) (noting that "[c]ontracts implied 1989) (claim for common law fraud not preempted). in the equivalency requirement of the preemption 200 Integrative Nutrition, Inc. v. Acad. of Healing Nutrition, analysis" and are preempted). Compare Wrench LLC v. Taco 476 F. Supp. 2d 291, 29899 (S.D.N.Y. 2007) (claim for tres- Bell, 256 F.3d 446, 458 (6th Cir. 2001) (holding implied-in-fact pass not preempted). contract at issue had the necessary extra element and there- 201 eBay, Inc. v. Bidder's Edge, Inc., 100 F. Supp. 2d 1058, fore was not preempted). 1072 (N.D. Cal. 2000) (claim for trespass to chattels not pre- 194 Microstrategy, Inc. v. Netsolve, Inc., 368 F. Supp. 2d 533, empted); but see Ticketmaster Corp. v., Inc., 2000 537 (E.D. Va. 2005) (holding that the "conversion claim is pre- U.S. Dist. LEXIS 4553 (C.D. Cal. 2000) (dismissing trespass empted because it contains no extra element rendering it quali- claim based on unauthorized Internet information aggregation tatively different from the copyright claim"); Cassetica Soft- as preempted by copyright law). ware, Inc. v. Computer Scis. Corp., 2009 U.S. Dist. LEXIS 202 Not considered herein is any claim under state law for 51589, at *14 (N.D. Ill. Jun. 18, 2009) (conversion claim pre- misappropriation of an idea inasmuch as such a claim appears empted); but see United States ex rel. Berge v. Bd. of Trustees to be completely inapplicable to real-time data. For cases see of the Univ. of Ala., 104 F.3d 1453, 1463 (4th Cir. 1997) (stat- McGhan v. Ebersol, 608 F. Supp. 277, 284 (S.D.N.Y. 1985) ing that " 301(a) will preempt a conversion claim `where the (discussing essential elements needed under New York idea plaintiff alleges only the unlawful retention of its intellectual misappropriation law); Nadel v. Play-By-Play Toys & Novel- property rights and not the unlawful retention of the tangible ties, Inc., 208 F.3d 368, 378 (2d Cir. 2000) (stating that "[i]n object embodying its work'" and finding conversion claim pre- contrast to contract-based claims, a misappropriation claim empted) (citation omitted)), cert. denied, 522 U.S. 916, 118 S. can only arise from the taking of an idea that is original or Ct. 301, 139 L. Ed. 2d 232 (1997). novel in absolute terms, because the law of property does not 195 Kindergartners Count, Inc. v. DeMoulin, 249 F. Supp. 2d protect against the misappropriation or theft of that which is 1233, 1251 (D. Kan. 2003) (defamation claim based on state- free and available to all") (citations omitted); Mayer v. Josiah ment that person was a plagiarist not preempted); but see Wedgwood & Sons, Ltd., 601 F. Supp. 1523, 1534 (S.D.N.Y. Daboub v. Gibbons, 42 F.3d 285, 289-90 (5th Cir. 1995) (hold- 1985) ("New York misappropriation tort law has grown much ing that claims for defamation and plagiarism were pre- broader" and "is now a fact-oriented action, providing relief empted). from all types of `commercial immorality.' Generally, it protects 196 Briarpatch Ltd. v. Phoenix Pictures, Inc., 373 F.3d 296, against a defendant's competing use of a valuable product or 307 (2d Cir. 2004) (claim for breach of fiduciary duty not pre- idea created by the plaintiff through investment of time, effort, empted). money and expertise.") (citations omitted) (footnote omitted). 197 Dun & Bradstreet Software Servs., Inc. v. Grace Consult- Another jurisdiction recognizing a claim for idea misappropria- ing, Inc., 307 F.3d 197, 219 (3d Cir. 2002) ("[T]rade secret tion is California. See Chandler v. Roach, 156 Cal. App. 2d 435, claims were qualitatively different from the rights protected by 319 P.2d 776, 78182 (1957).

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17 skill, expenditure of money, or labor or property right.203 dant were allowed to free-ride on the plaintiff's efforts, When the misappropriation involves the taking of the the defendant's free-riding would prevent the plaintiff intellectual property of another, such as a writing that from realizing the full value of its reporting of the is noncopyrightable, the issue is whether the tort, nev- news.207 That is, the defendant's free-riding would "de- ertheless, is preempted by the Copyright Act. prive the plaintiff of sufficient incentive to gather the It may be noted that there is possibly one way that information and, in turn, deprive the public of access to real-time data does not come within the scope of the that news."208 Accordingly, the Court held that INS had copyright laws. Nimmer on Copyright states that if a committed the tort of misappropriation. INS had taken work (e.g., a real-time data feed) is not permanently the news acquired by the AP by virtue of its organiza- fixed in a tangible medium of expression, and, there- tion and "expenditure of labor, skill, and money which fore, is not subject to the Copyright Act, unauthorized is salable by [the AP] for money."209 The Court enjoined users of an agency's real-time data may be subject to INS from copying and reselling the AP's news bulletins. suit in some states for the tort of misappropriation.204 Between the time of the Supreme Court's decision in In general, however, the tort of misappropriation of a International News Service and the passage of the non-copyrightable work is preempted unless the claim Copyright Act, the "courts in fourteen states recognized satisfies a possible exception for "hot news" that was the general tort of misappropriation as a matter of state recognized in 1918 by the U.S. Supreme Court in Inter- law;" 36 states did not recognize the tort; and the courts national News Service v. Associated Press.205 In World in at least 2 states rejected such a tort. 210 War I, reporters working for the International News Assuming a tort of misappropriation is recognized Service (INS), a news organization that was a competi- under state law, an issue for real-time data is whether tor of the Associated Press (AP), had been barred from a claim for misappropriation would be preempted by the the front line. Reporters for the INS obtained and dis- Copyright Act. Although the issue appears to be unset- tributed to newspapers on the West Coast articles writ- tled at this juncture, the Second Circuit at least has ten by the AP that were published in newspapers on the recognized that there is a narrow exception for the East Coast. The Supreme Court wrote that news of the equivalent of hot news for which the Copyright Act has day not preempted a state tort claim for misappropriation. is not the creation of the writer, but is a report of matters In National Basketball Association v. Motorola, that ordinarily are publici juris; it is the history of the Inc.,211 the court used the "extra element" analysis to day. It is not to be supposed that the framers of the Con- determine whether a state tort claim for misappropria- stitution...intended to confer upon one who might happen tion was preempted. The National Basketball Associa- to be the first to report a historic event the exclusive right tion (NBA) alleged claims, inter alia, against Motorola 206 for any period to spread the knowledge of it. for unfair competition by misappropriation and for Nevertheless, the Court held that in some circum- copyright infringement. The Second Circuit held that a stances noncopyrightable information could be pro- "narrow `hot news' exception does survive preemption" tected by state law. The Court characterized the infor- under the Copyright Act but that Motorola's use of in- mation that the INS obtained and used as hot news and formation collected at NBA games did not "constitute a recognized an exception for it. The Court's rationale for misappropriation of `hot news' that is the property of the exception was that the plaintiff had invested sub- the NBA."212 stantial resources to gather the news, and, if the defen- At issue was Motorola's SportsTrak paging device that used information provided by its Sports Team 203 Analysis and Tracking Systems (STATS). Data was Standard & Poor's Corp. Inc. v. Commodity Exchange, supplied by "STATS reporters who on Inc., 683 F.2d 704, 710 (2d Cir. 1982); Roy Export Co. Estab- television or listen to them on the radio" and then enter lishment of Vaduz, Liechtenstein v. Columbia Broad. Sys., Inc., the information into a personal computer that in turn 672 F.2d 1095, 1105 (2d Cir. 1982). 204 relayed the information to the STATS host computer 1 NIMMER ON COPYRIGHT, supra note 19, 2.02, at 2-20. that compiled, analyzed, and formatted the data for The text states that a "work that is not `fixed in a tangible medium of expression' is indisputably immune from federal transmission via common carrier and satellite ulti- preemption." Id. The authority also notes that California, for mately to SportsTrax pagers. example, "now explicitly protects `any original work of author- The court noted that in 1976 Congress provided for ship that is not fixed in any tangible medium of expression....'" copyright protection for simultaneously recorded broad- Id. 2.02, at 2-23 (citing CAL. CIV. CODE 980(a)(1)). Later, casts of live performances such as sports events but not commenting on Nat'l Basketball Ass'n v. Motorola, 105 F.3d 841 (2d Cir. 1997), discussed in this section, Nimmer states 207 See Gary R. Roberts, The Scope of the Exclusive Right to "that misappropriation may remain alive today in the context Control Dissemination of Real-Time Sports Event Information, of unfixed works." Id. 3.04[B][3][b], at 3-34.23. Elsewhere the 15 STAN. L. & POL'Y REV. 167, 170 (2004). text states that "whether labeled `common law copyright,' the 208 `misappropriation' variety of unfair competition, or by any Id. 209 other name, state laws protecting unfixed works are fully vi- Int'l News Serv., 248 U.S. at 239. 210 able." Id. 101[B][2][a], at 1-66. Roberts, supra note 207, at 170 (footnotes omitted). 205 211 248 U.S. 215, 39 S. Ct. 68, 63 L. Ed. 211 (1918). 105 F.3d 841 (2d Cir. 1997). 206 212 Id. at 234. Id. at 843.

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18 for the underlying events.213 Because the underlying forts of the plaintiff or others would so reduce the incen- events are not protected by the Copyright Act, the court tive to produce the product or service that its existence or 221 held that "Motorola and STATS did not infringe NBA's quality would be substantially threatened. copyright because they reproduced only facts from the One of the above critical elements was missing to broadcasts, not the expression or description of the support the NBA's claim of free-riding by Motorola: game that constitutes the broadcast."214 As the district "Motorola and STATS expend their own resources to court had stated, "the `defendants provide purely fac- collect purely factual information generated in NBA tual information which any patron of an NBA game games to transmit to Sports Trax pagers. They have could acquire from the arena without any involvement their own network and assemble and transmit data from the director, cameramen, or others who contribute themselves."222 to the originality of a broadcast.'"215 In the National Basketball Association case, the Sec- In regard to whether the NBA had a claim for mis- ond Circuit relied on the U.S. Supreme Court's decision appropriation, the court observed that under the Copy- in International News Service. However, the First Cir- right Act cuit stated in Columbia Broadcasting, Inc. v. De Costa223 [A] state law claim is preempted when: (i) the state law that in Sears, Roebuck & Co. v. Stiffel Co. 224 and claim seeks to vindicate "legal or equitable rights that are Compco Corp. v. Day-Brite Lighting, Inc.225 the Supreme equivalent" to one of the bundle of exclusive rights al- Court overruled its decision in International New Ser- 226 ready protected by copyright law under 17 U.S.C. 106-- vice. The First Circuit stated that the Supreme Court, styled the "general scope requirement"; and (ii) the par- for example, in Compro, held "that when an article is ticular work to which the state law claim is being applied unprotected by a patent or a copyright, state law may falls within the type of works protected by the Copyright not forbid others to copy that article. To forbid copying Act under Sections 102 and 103--styled the "subject mat- 216 would interfere with the federal policy...favoring free ter requirement." dissemination of intellectual creations...."227 (emphasis The district court had applied what it referred to as supplied). Thus, if Congress intended for data to be in a partial preemption doctrine and held that the NBA's the public domain, a remedy under state law attempt- misappropriation claim was not preempted. The Second ing to protect the data from copying and use by others Circuit rejected the district court's partial preemption is preempted by the copyright laws.228 In contrast, the doctrine, because it was not consistent with the Copy- Second Circuit has stated that although the Supreme right Act. The appellate court held that when "the chal- Court's decision in International News Service is no lenged copying or misappropriation relates in part to longer authoritative, "its doctrine...has been adopted as the copyrighted broadcasts of the games, the subject the common law of a number of states...." 229 matter requirement is met as to both the broadcasts More recently, in Scranton Times, L.P. v. Wilkes- and the games."217 Under the Copyright Act, the NBA Barre Publishing Company,230 in which the defendant could not "assert claims both for infringement of its had published obituaries copied from the plaintiffs' copyright in a broadcast and misappropriation of its newspapers and Web sites, a federal district court in rights in the underlying event."218 Pennsylvania held that the plaintiff's tort claim for The court held that "Section 301 preemption bars misappropriation was preempted by the Copyright Act state law misappropriation claims with respect to un- because one of the extra elements identified in the Na- copyrightable as well as copyrightable elements,"219 (em- 231 tional Basketball Association case was lacking. Like- phasis supplied) because "Congress, in extending copy- wise, according to Patry on Copyright, a misappropria- right protection only to the broadcasts and not to the tion claim under state law is preempted by the underlying events, intended that the latter be in the Copyright Act.232 However, Nimmer on Copyright takes public domain."220 Although a narrow misappropriation claim survived the Copyright Act, the hot news excep- tion was limited to cases in which 221 Id. at 845. 222 (i) a plaintiff generates or gathers information at a cost; Id. at 854. (ii) the information is time-sensitive; (iii) a defendant's 223 377 F.2d 315 (1st Cir. 1967). use of the information constitutes free-riding on the 224 376 U.S. 225, 84 S. Ct. 784, 11 L. Ed. 2d 661 (1964). plaintiff's efforts; (iv) the defendant is in direct competi- 225 376 U.S. 234, 84 S. Ct. 779, 11 L. Ed. 2d 669 (1964). tion with a product or service offered by the plaintiffs; 226 and (v) the ability of other parties to free-ride on the ef- Columbia Broad. Sys., Inc., 377 F.2d at 318. 227 Id. at 319. 228 213 See id. Id. 229 214 McKevitt, 339 F.3d 530, 53453 (7th Cir.), (citing Bd. of Id. at 847. 215 Trade v. Dow Jones & Co., 98 Ill. 2d 109, 456 N.E.2d 84, 88 (Ill. Id. (citation omitted). 1983)). 216 Id. at 848 (footnote omitted). 230 2009 U.S. Dist. LEXIS 17278 (M.D. Pa. 2009). 217 Id. 231 Id. at *1213. 218 Id. (citation omitted). 232 PATRY, supra note 72, 3:69, at 3-221322 (citing Feist 219 Id. at 849. Publ'ns, supra, and Bonito Boats, Inc. v. Thunder Craft Boats, 220 Id. Inc., 489 U.S. 141, 109 S. Ct. 971, 103 L. Ed. 2d 118 (1989)).