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6 through a process that reflects creativity and the exer- prices.50 The court explained, first, that there is no cise of judgment."40 At the close of each day of trading, copyright protection for ideas because such protection NYMEX's subcommittees "determine the appropriate would impede the advancement of knowledge and learn- price for the delivery of crude oil for each of the next 32 ing.51 or 33 months and for delivery of natural gas for each of Second, invoking the doctrine of merger in copyright the next 72."41 law, discussed infra, the court held that there is no pro- ICE, on the other hand, contended that NYMEX de- tection under the copyright laws for a work when termined prices with a "back office" computer pro- "`there is only one or so few ways of expressing an idea gram.42 It is not clear from the district and appellate that protection of the expression would effectively ac- courts' opinions how much of the NYMEX committees' cord protection to the idea itself.'"52 NYMEX could avoid judgment was involved in determining the prices, par- summary judgment only if it could "demonstrate that ticularly for the contracts for the low-volume or more the range of possible settlement prices is broad enough distant or "outer" months.43 In any event, NYMEX dis- that any possible expression will not necessarily be sub- seminates its settlement prices through licensed market stantially similar,"53 a showing that the court held that data vendors in accordance with a Market Data Agree- NYMEX had not made.54 Accordingly, the court applied 44 ment (MDA). NYMEX's MDA applied to three catego- the doctrine of merger and held "that, in using the set- ries of data, some of which was distributed within 30 tlement prices, ICE `took nothing more than ideas, for minutes. For example, "[i]ntermittent Real Time which the copyright law affords no protection to the NYMEX Market Data" was "redistributed more than author.'"55 two minutes but less than thirty minutes" after a ven- dor's receipt of the data.45 Guidance Number 2 NYMEX alleged that ICE "unlawfully reproduced" Real-time data are not copyrightable. A database that and transmitted NYMEX's settlement prices, thus free- meets the test of originality may be copyrightable as a riding on "NYMEX settlement prices, reputation, and compilation, but the underlying data would not be pro- 46 goodwill each day." In ruling in favor of ICE, the dis- tected by the copyright laws. A database produced auto- trict court held, first, that there is no copyright protec- matically by a computer program also may not be copy- tion for an idea, fact, procedure, process, system, or rightable because there would be no exercise of method of operation.47 Second, the district court held judgment and discretion in choosing which data to in- that, regardless of NYMEX's assertion that the settle- clude in a compilation of data. A second issue for real- ment prices are the result judgment and creativity, time data and the copyrightability of a database is that "there is plainly only one settlement price...."48 there are so few ways to express the data that all ex- In affirming the district court, the Second Circuit pressions would be substantially the same. Thus, any stated that it was "a close question" whether NYMEX's attempted copyright would violate the doctrine of committees' daily determinations satisfied the original- merger. ity test required by the Copyright Act. Thus, the court declined to decide whether settlement prices are origi- C. Issues for Real-Time Data Under the Copyright nal.49 The Second Circuit held, however, that even if Act NYMEX's real-time settlement prices are created, not As for whether a transit agency's real-time data are simply discovered, there was still no violation of subject to the protection of the copyright laws, a num- NYMEX's copyright in its database of settlement ber of issues are presented under the Copyright Act, including those identified in the Feist and NYMEX 40 Id. at 531 (citations omitted). cases. 41 NYMEX, 497 F.3d 109, 112 (2d Cir. 2006) (footnote omit- ted). 1. Fixed in a Tangible Medium of Expression 42 NYMEX, 389 F. Supp. 2d at 531. One issue is whether real-time data "is `fixed' in a 43 NYMEX, 497 F.3d at 111. tangible medium of expression."56 Assuming other pre- 44 NYMEX, 389 F. Supp. 2d at 532 (citation omitted). requisites are satisfied, a writing that is in a fixed form, 45 Id. (citations omitted). The court noted that "[t]he MDA including an electronic form, is protected by the copy- states that GlobalView `will not furnish Real Time or Intermit- right laws.57 Under § 101 of the Copyright Act, tent Real Time NYMEX Market Data to any of its Subscribers until a Uniform Subscriber Addendum...has been executed by 50 Id. at 116 (footnote omitted). the Subscriber and returned to Vendor.'" Id. 51 46 Id. at 118 (citation omitted). Id. at 533 (citation omitted). 52 47 Id. at 11617 (citation omitted). Id. at 541 (citation omitted). 53 48 Id. at 117 (citation omitted) (internal quotation marks Id. at 54142. It may be noted that ICE did "not engage in omitted). wholesale copying and sale of NYMEX settlement prices, but 54 rather, use[d] NYMEX settlement prices solely as the estab- Id. at 118. 55 lished benchmarks in the energy trading industry to facilitate Id. (citation omitted). 56 the clearing of its own OTC swaps." Id. at 543. 17 U.S.C. § 102(a) (2009). 49 57 NYMEX, 497 F.3d at 115. Smith, supra note 22, at 706 (2006).
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7 [A] work is "fixed" in a tangible medium of expression or expression of the fact is there an author.67 when its embodiment in a copy or phonorecord, by or un- After a system is designed and implemented to cap- der the authority of the author, is sufficiently permanent ture a transit agency's real-time data, it appears that or stable to permit it to be perceived, reproduced, or other- the data would be collected "without the slightest ele- wise communicated for a period of more than transitory ment of creativity,"68 a feature of real-time data indicat- duration. A work consisting of sounds, images, or both, that are being transmitted, is "fixed" for purposes of this ing that it would not have an author or be an original title if a fixation of the work is being made simultane- work of authorship as required under the copyright ously with its transmission. (emphasis supplied). laws. If a process for the selection of data is "too rote and mechanical," a compilation is not subject to the The Copyright Act's "tangible medium of expression" copyright laws.69 Under § 101, the term "[s]election im- requirement is "satisfied if the work as fixed can be plies the exercise of judgment in choosing which facts perceived `either directly or with the aid of a machine or 70 58 from a given body of data to include in a compilation." other devices.'" Also relevant is that under § 101, the term Real-time data appear to satisfy the requirement of "[a]rrangement `refers to the ordering or grouping of being fixed in a tangible medium of expression, because data into lists or categories that go beyond the mere it is possible to perceive, reproduce, or communicate the mechanical grouping of data as such, for example, the data with the aid of a machine or device.59 According to alphabetical, chronological, or sequential listings of one authority, however, "a reproduction captured mo- data.'"71 According to Patry on Copyright, the copy- mentarily in the memory of a computer" is not a work 60 rightability of a database is "problematic," because the fixed in a tangible medium of expression. arrangement and location of data for the most part is 2. Original Work of Authorship "meaningless," and retrieval is accomplished "by means of a complementary computer program in which the Another issue is whether the collection of real-time only creativity lies."72 data has an author within the meaning of the Copyright In any event, no case was located for the digest that Act. Section 102 of the Copyright Act requires that a holds that real-time data are an original work of au- work of authorship be an "original" work. Furthermore, thorship that may be copyrighted. originality is "the essence of authorship" that requires a "modicum of intellectual labor" by an author.61 Only an Guidance Number 3 author of an original work is entitled to copyright pro- It appears that real-time data may satisfy the Copy- tection.62 Among the works of authorship referenced in § right Act's requirement that a work be fixed in a tangi- 102 are "literary works" and "audiovisual works,"63 ble medium of expression. However, there may be an terms that apply to compilations, including electronic issue whether real-time data has an author in the sense ones or databases. Even if data are not copyrightable, that the data are created with the required degree, al- data come within the subject matter or scope of the beit minimal, of intellectual creativity needed to satisfy Copyright Act. the copyright laws. To the extent that a system merely In NYMEX, although the Second Circuit did not de- discovers facts, i.e., data, the Copyright Act's au- cide the originality of the settlement prices, the court thor/originality test is not fulfilled. recognized that originality requires some independent, although "minimal," creativity.64 The court stated that "there is a strong argument that...NYMEX does not `author' the settlement prices as the term is used in copyright law."65 The court regarded the settlement prices as "an empirical reality, an economic fact about 67 Id. at 114. Although not deciding whether determinations the world that Committee members are seeking to of settlement prices met the test for originality, the court noted discover."66 A discoverer of a fact is not an author; only if that it was disputable whether settlement prices for high vol- there is some originality in the manner of the reporting ume markets amounted to the discovery of facts not subject to copyright protection. Id. 68 Southco, Inc. v. Kanebridge Corp., 390 F.3d 276, 282 (3d Cir. 2002). 58 69 1 NIMMER ON COPYRIGHT, supra note 19, § 2.03[B], at Mid Am. Title Co. v. Kirk, 59 F.3d 719, 722 (7th Cir. 1995). 2-32. See, however, Data General Corp. v. Grumman Sys. Support 59 17 U.S.C. § 102 (2009). Corp., 834 F. Supp. 477 (D. Mass. 1992) (holding that computer 60 software product called "ADEX" was protected by copyright 1 NIMMER ON COPYRIGHT, supra note 19, § 2.03[B], at laws, even though product, as distributed, was machine- 2-34 (citation omitted) (internal quotation marks omitted). 61 generated compilation of object code). Id. § 1.06[A], at 1-104 (emphasis in original). 70 62 Key Publ'ns, Inc. v. Chinatown Today, 945 F.2d 509, 513 Id. at 1-103. (2d Cir. 1991) (citation omitted). 63 17 U.S.C. §§ 102(a)(1) and (6) (2009). 71 Id. (citing Copyright Office, Guidelines for Registration of 64 NYMEX, 497 F.3d at 113 (citation omitted). Fact-Based Compilations 1 (rev. Oct. 11, 1989)). 65 Id. at 114 (citation omitted) (footnote omitted). 72 WILLIAM F. PATRY, 2 PATRY ON COPYRIGHT, § 3-69, at 3- 66 Id. at 115. 220 (2010).
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8 3. Whether Facts, Ideas and Processes Are respect to the copyrightability of a computer program Copyrightable for the collection, display, or dissemination of real-time data. Whether and to what extent a computer program In a case involving the alleged infringement of a is protected by the copyright laws depends on whether compilation, the Second Circuit stated that "`the law of the program is an expression of an idea or is the idea copyrights defies the laws of logic...since it `affords to itself. The expression of an idea in a computer program the summation of one hundred or one million [individ- is copyrightable, but the idea is not copyrightable. It is ual facts and their unadorned expression] a significant difficult, however, to articulate the difference between measure of protection' while affording none to the facts an idea and the expression of an idea.79 themselves....'"73 Copyright protection does not "extend In sum, when there is only one way to express the to any idea, procedure, process, system, method of op- idea, idea and expression merge, meaning there is no eration, concept, principle, or discovery, regardless of 80 copyrightable material. The reason for the rule is that the form in which it is described, explained, illustrated, if it were possible to copyright expression, the result or embodied in such work."74 Thus, facts, ideas, and would be a monopoly of the idea.81 processes are not copyrightable. As seen in the Supreme Court's decision in Feist, 5. Copyrightability When Expression Is Dictated by facts have "limited copyright coverage," because "there Industry Practice are only a limited number of ways to express factual material...."75 Even if a transit agency has taken action A related issue is that the requirements or practices to make its real-time data a unique database in that the of the transit industry may dictate how real-time data selection and arrangement of the data are original, the are expressed or displayed and render the data non- copyright laws do not prevent the extraction of unpro- copyrightable for that reason as well. In Maddog Soft- 82 tected data from an otherwise protected database. In- ware Inc. v. Sklader, Sklader, a former employee of deed, "[t]he more comprehensive a data collection be- Maddog Software, Inc., designed a computer program comes, the harder it is to protect it via copyright."76 known as FastFreight to assist Maddog with dispatch and billing functions relating to intermodal trucking, 4. Doctrine of Merger for which Maddog registered a copyright. The program In NYMEX, the Second Circuit applied the doctrine permitted the entry of data on different forms that had of merger in ruling that NYMEX had no copyright pro- been "designed to accommodate the standard practices tection for its real-time settlement prices, because the of the industry."83 After leaving Maddog's employment, settlement prices were the only way of expressing the Sklader designed and sold a software package known as idea of the price. When there is no other way to express IMX that used forms that looked identical to those of an idea, a work is not copyrightable because of the doc- FastFreight.84 Maddog's problem in establishing copy- trine of merger. right infringement was that, because of the needs of the industry, the forms were the only possible expression of The doctrine of merger, a necessary corollary to the non- the idea. copyrightability of ideas, holds that "when there is essen- tially only one way to express an idea, the idea and its The expression of an idea is not copyrightable if the expression are inseparable and copyright is no bar to expression of the idea is dictated by industry practice. copying that expression." ...The related doctrine of scenes Thus, to the extent that the form of expression or dis- a faire denies copyright protection to "unoriginal elements play of real-time data, such as arrival and departure flowing from the undisputed standard and inherent char- information, is set by industry practice, the data may 77 acteristics" of a common idea. not be copyrightable for that reason as well. Similarly, NYMEX was unable to show that "the range of pos- with respect to computer programs, it has been held sible settlement prices is broad enough" to permit other that if there are "external factors," such as market or expressions of the prices that would not be "substan- industry demands, requiring, for example, that all com- tially similar."78 puter programs display specific words on a computer The doctrine of merger is a potential issue also with screen, "the components of that program that provide 85 such a function are not protected by copyright laws." 73 Key Publ'ns, Inc., 945 F.2d at 512 (quoting Robert C. Denicola, Copyright in Collections of Facts: A Theory for the 79 Protection of Nonfiction Literary Works, 81 COLUM. L. REV. Apple Computer, Inc. v. Franklin Computer Corp., 714 516, 527 (1981)). F.2d 1240, 1253 (3d Cir. 1983) (citations omitted). 80 74 17 U.S.C. § 102(b) (2009). M. Kramer Manuf. Co. v. Andrews, 783 F.2d 421, 436 (4th 75 Whelan Assocs., Inc. v. Jaslow Dental Lab., Inc., 797 F.2d Cir. 1986). 81 1222, 1236 (3d Cir. 1986). Compaq Computer Corp. v. Procomm Tech., 908 F. Supp. 76 1 NIMMER ON COPYRIGHT, supra note 19, § 3.04[B][b], 1409, 141819 (S.D. Tex.) (citation omitted). 82 at 3-33. 382 F. Supp. 2d 268 (D.N.H. 2005). 83 77 Maddog Software Inc., v. Skladder, 382 F. Supp. 2d 268, Id. at 272. 84 278 (D.N.H. 2005) (citation omitted) (footnote omitted). Id. at 274. 78 85 NYMEX, 497 F.3d at 117 (citation omitted) (internal quo- Cognotec Servs., Ltd. v. Morgan Guar. Trust Co. of N.Y., tation marks omitted). 862 F. Supp. 45, 49 (S.D.N.Y. 1994).
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9 6. Noncopyrightability of Numbers, Short Words, and trine.94 Phrases Guidance Number 4 Another issue for real-time data is that, just as indi- Several rules of copyright law appear to preclude the vidual facts may not be copyrighted,86 numbers, short copyrighting of real-time data. When there is only one words and phrases, and even the titles of works are not 87 way to express an idea, or when the ways of expressing copyrightable. The Copyright Office, to which the an idea are substantially the same, a work is not copy- courts tend to defer, has a "long-standing practice...to rightable because of the doctrine of merger. Moreover, deny copyright protection to words and short phrases, when the expression of an idea is determined by indus- ...because they do not "constitute copyrightable subject try needs or practice, the copyrightability of a work may matter."88 The courts have held that there is no copy- be precluded. Just as facts and data are not copyright- right protection for "naked numbers."89 Moreover, the able, numbers, short words, and phrases such as are Sixth Circuit has held that a catalog with part num- used to express real-time data would not be copyright- bers, as well as illustrations, not only lacked sufficient able. Even if data are copyrighted as a compilation, the originality for copyright protection but also that the underlying data may be extracted without violating the classification scheme was an idea that was not copy- 90 copyright laws. rightable under § 102(b). The lack of copyright protection for numbers and 8. Whether Predictive Real-Time Data Are short phrases is relevant to the issue of whether real- Copyrightable time data are copyrightable. As observed in the NYMEX case, copyright protection does not extend to Although the issue was present in the NYMEX case, numbers: "`The mere fact that numbers are attached the district and appellate courts did not decide whether to or are a by-product of categories and descriptions real-time data of a predictive nature may be protected that are copyrightable does not render the numbers by copyright. In NYMEX, the Second Circuit implied themselves copyrightable.'" 91 that NYMEX had a stronger copyright argument for the settlement prices that were determined for the outer or 7. Fair Use more distant months because the committees' work was 95 A copyrighted work is subject to the "fair use" doc- more akin to making "predictions." On the other hand, trine. Thus, if another party copies part of a copy- in a footnote, the court stated that "[w]hile there is a righted database, there may be no basis for a copyright strong argument NYMEX did not independently create infringement claim. The fair use doctrine depends in the settlement prices," the court had not considered part on the purpose and character of the use, such as "the extent of NYMEX's creativity."96 The court did not whether the use was for a commercial or a nonprofit address whether the settlement prices for the more dis- educational purpose. The copying of a copyrighted work tant, outer months could be copyrighted even if the set- purely for a commercial use is a factor that militates tlement prices for the more recent, higher-volume against a finding of fair use.92 Other factors that are months could not be copyrighted. considered in deciding whether copying is a fair use are To the extent that an agency's real-time data may be the nature of the copyrighted work, the amount of the used to make predictions, there may be an argument copying of the work, and how the use affects the market that such predictions are not the same as the discovery 93 for or the value of a copyrighted work. If part of an of facts, which are not copyrightable. A concurring opin- unpublished work is copied, the absence of publishing is ion in NYMEX cited CCC Information Services, Inc. v. an important but not necessarily a determinative factor Maclean Hunter Market Reports,97 in which the Second in whether the copying is permitted the fair use doc- Circuit held that a compilation of projections of used car prices merited copyright protection. The majority opin- ion in NYMEX, however, distinguished CCC Informa- tion Services, because in that case it was not necessary for the court to decide whether the estimates were 86 Feist, 499 U.S. at 340, 344. copyrightable. The compilation was copyrightable based 87 Melville B. Nimmer & David Nimmer, 2 NIMMER ON on its selection and arrangement of the estimates.98 Ac- COPYRIGHT § 7.26; Southco, Inc. v. Kanebridge Corp., 390 F.3d cording to the court, unlike NYMEX's settlement prices 276, 28587 (3d Cir. 2004). 88 NYMEX, 389 F. Supp. 2d at 54344 (citations omitted) 94 Harper & Row Publishers, Inc. v. Nation Enters., 471 (footnote omitted). U.S. 539, 554, 105 S. Ct. 2218, 2227, 85 L. Ed. 2d 588, 603 89 1 NIMMER ON COPYRIGHT, supra note 19, § 3.04[B][c], at (1985). 3-34.4(1). 95 NYMEX, 497 F.3d at 116. 90 ATC Distribution Group, Inc. v. Whatever It Takes 96 Id. at 115 n.4. Transmissions & Parts, Inc., 402 F.3d 700, 70506 (6th Cir. 97 44 F.3d 61 (2d Cir. 1994). See also CDN Inc. v. Kapes, 197 2005). F.3d 1256 (9th Cir. 1999); Justin Hughes, Created Facts and 91 NYMEX, 389 F. Supp. 2d at 54142 (citation omitted). the Flawed Ontology of Copyright Law, 83 NOTRE DAME L. REV. 92 Compaq Computer Corp., 908 F. Supp. at 1419. 43 (2007). 93 98 Id. (citing 17 U.S.C. § 107). NYMEX, 497 F.3d at 115 n.5 (citation omitted).