The court filed its decision and order denying Agon's minions the requested preliminary injunction. This is one of those decisions that can make the losing attorney feel like he should have become a shoe salesman instead of an attorney. Presumably, Patterson Bellknap got a nice retainer up front.
VICTOR MARRERO, United States District Judge.
Plaintiffs World Chess US, Inc. and World Chess Events
Ltd. (collectively, "World Chess") filed a complaint in this
Court against defendants Chessgames Services LLC
(" Chessgames") , E-Learning Ltd. ( "E-Learning") , and Logical
Thinking Ltd. (together with E-Learning, "Chess24")
(collectively, "Defendants"). The complaint alleges (1)
misappropriation of "hot news" and (2) breach of contract or,
in the alternative, tortious interference with contractual
relations.
World Chess filed a motion for a temporary restraining
order and preliminary injunction, seeking to prevent
Defendants from publishing updates regarding the 2016 World
Chess Championship Match ("Championship") while the games are
in progress. The motion was supported by a memorandum of law
dated November 7, 2016. ("Memorandum," Dkt. No. 16.) The
Championship was scheduled to commence in New York City on
November 11, 2016 and continue through November 30, 2016. On
November 10, Chess24 filed its Memorandum of Law in Opposition
to World Chess's Motion. ("Opposition," Dkt. No. 11.)
The Court held a preliminary injunction hearing on
November 10, 2016, at which it heard oral argument from World
Chess and Chess24. 1 ("Preliminary Injunction Hearing," Dkt.
Minute Entry for Nov. 10, 2016). For the reasons stated by
the Court at the conclusion of the Preliminary Injunction
Hearing and the reasons stated below, World Chess's motion
for a preliminary injunction is DENIED.
I. FACTUAL BACKGROUND
World Chess, a British Virgin Islands corporation with
its principal place of business in New York, organizes
championship-level chess tournaments and sells tickets for
admission to its live tournament events. World Chess also
maintains a website on which it distributes real-time
webcasts of tournament games and commentary, among other
things, to website subscribers. (Memorandum, at 1-2.) World
Chess is the organizer of the Championship.
1 At the time of the Preliminary Injunction Hearing, Chessgames had not yet secured legal counsel and therefore did not participate in the hearing. (See "November 10 Letter," Dkt. No. 13.)
Chess24, a Gibraltar corporation, is the operator of a
website providing chess-oriented content, including, among
other things, a "live broadcast" of matches from major events
and accompanying commentary. (Opposition, at 5.) While the
designation may suggest otherwise, Chess24's "live
broadcasts" do not consist of "video feeds of the players of
the chess games themselves" but rather of a "computer
generated 'virtual' chess board" on which Chess24 displays a
chess player's moves as the live game progresses. (Id.)
Chess24 also reports on live games by displaying a series of
alphanumeric characters corresponding to specific chess
moves, and by providing running commentary from chess experts
as to the matches' progress. (See Id., at 5-6; "McGourty
Declaration," Dkt. No. 12, at 4-5.)
The previous World Chess Championship, which was held
in 2014, was organized by World Chess and reported on by
Chess24 in the manner described above without issue between
the parties. (See Opposition, at 7.) Following the March 2016
"Candidates Tournament," an affiliate of World Chess
initiated litigation against Chess24 in Moscow seeking
monetary and injunctive relief alleging Chess24 engaged in
unfair competition by reporting on and broadcasting the
players' chess moves. On October 25, 2016, the Commercial
Court of Moscow held a hearing in the matter and denied World
Chess relief. (See id., at 7-8.)
On November 7, World Chess filed the comglaint in this
action against Chess24 and Chessgames alleging
(1) misappropriation of "hot news" and (2) breach of contract
or, in the alternative, tortious interference with
contractual relations. The complaint also seeks to require
third party service providers to take any actions necessary
to block the Defendants' websites from continuing to operate
should Defendants fail to comply with the temporary
restraining order. Final9..y, World Chess seeks declaratory
relief "to confirm the enforceability of World Chess's
website and admission ticket terms and conditions and that
the defendants' retransmission of the chess moves is in
violation of one or both of these contracts and also
constitutes actionable misappropriation." ("Complaint," Dkt.
No. 1, at 2.)
Together with the Complaint, World Chess also filed a
Motion seeking an order to prohibit Chess24 from republishing
updates of each game at the Championship while the matches
are in progress. World Chess argues that, as the organizer of
the Championship, it "has obtained exclusive access to and
rights to stage and disseminate the [chess] moves"
themselves. (Memorandum, at 13-14.) Accordingly, World Chess
argues Chess24' s "reproduction of the moves made by
contestants" constitutes "misappropriation of the chess
moves" and should be enjoined. (Id., at 13, 21.)
In its Opposition, Chess24 argues that tije information
on which it seeks to report, including the chess players'
moves, consists of factual data that will be in the public
domain by the time of Chess24's reports and commentary. (See
Opposition, at 6.) Chess24 maintains that it will not be
copying (or pirating) any content prepared by World Chess and
"nothing will be published on the Chess24 Website before it
is made public from some other source." (Id., at 5-6.) Rather,
Chess24 states that it intends to gather its website content
of the Championship chess moves not from any agents attending
and reporting on the matches, but from a variety of secondary
sources that are publicly available, including the
broadcasting of the Championship on Norwegian television and
from third-party websites, such as posts on Facebook and
Twitter. (See id.) Chess24 contends that it will then project
the players' moves onto a virtual chess board of Chess24's
creation; make alphanumeric notations of the moves in a manner
commonly understood in the sport; and provide their
subscribers with detailed written and video commentary about
the Championship. (See id., at 4-5.)
II. DISCUSSION
A. LEGAL STANDARD
The district court has wide discretion in determining
whether to grant a preliminary injunction. ~ Grand River
Enter. Six Nations, Ltd. v. Pryor, 481 F.3d 60, 66 (2d Cir.
2007) (per curiam) (citations omitted). However, a preliminary
injunction "is an extraordinary and drastic remedy, one that
should not be granted unless the movant, by a clear showing,
carries the burden of persuasion." Id. at 66 (internal
quotation marks omitted) . 2
A party seeking a preliminary injunction must
demonstrate "(1) either (a) a likelihood of success on the
merits or (b) sufficiently serious questions going to the
merits to make them a fair ground for litigation and a balance
of hardships tipping decidedly in the movant's favor, and (2)
irreparable harm in the absence of the injunction." Faiveley
Transport Mahno AB v. Wabtec Corp., 559 F.3d 110, 116 (2d
Cir. 2009) (citation and internal quotation marks omitted).
B. APPLICATION
The Court finds that World Chess has failed to make a
sufficient showing that it is entitled to injunctive relief.
2 The legal standards governing preliminary injunctions and temporary restraining orders are the same. See AFA Dispensing Group B. V. v. Anheuser-Busch, Inc., 740 F. Supp. 2d 465, 471 (S.D.N.Y. 2010).
First, World Chess has failed to demonstrate that
Defendants would be pirating, by live redistrib~tion on their
websites, the reports of chess moves that World Chess would
produce and distribute. The Court is not persuaded that
Chess24 would be taking content from World Chess and merely
"free-riding" or republishing the information for Chess24's
own subscribers. Rather, the evidence presented indicates
that Chess24 digests factual information about the
Championship from secondary sources and creates its own
website content at great expense. (See Opposition, at 4-5.)
Second, World Chess must show that it is more likely
than not to prevail should this action be tried in court.
See AFA Dispensing Grp. B.V., 740 F. Supp. 2d at 473. World
Chess has not met its burden. World Chess relies on the Second
Circuit's decision in National Basketball Association v.
Motorola, Inc., 105 F.3d 841, 845 (2d Cir. 1997), for the
proposition that Defendants are liable for "hot news"
misappropriation. However, as Chess24 contends, National
Basketball Association expressly rejected the NBA' s "hot
news" misappropriation argument. Specifically, the Second
Circuit "held that the NBA could not prevent Motorola from
attending and watching basketball games and selling play-by
play accounts of the game to its mobile customers." 105 F.3d
at 846. In pertinent part, the Second Circuit found that:
"Motorola expend [s] their own resources to collect
purely factual information generated in NBA games to transmit
to SportsTrax pagers. They have their own network and assemble
and transmit data themselves." Id. at 854.
Similarly, in Barclays Capital Inc. v.
Theflyonthewall.com, Inc., financial services firms brought
suit against an Internet-based subscription news aggregation
service alleging "hot news" misappropriation and copyright
infringement as to their securities recommendations.
Plaintiffs argued that the defendant's republication of their
securities recommendations before they were known to the
public constituted "hot news" misappropriation. See 650 F.3d
876 (2d Cir. 2011). The Second Circuit dismissed the case,
holding that the "hot 'news" misappropriation claim was
preempted by federal copyright law and that the defendant was
not "free riding" on the plaintiffs' efforts, but rather were
collecting, summarizing, and disseminating news of the
securities recommendations "through a substantial
organization effort." Id. at 905.
Based on a review of the evidence in this case, the Court
finds no material difference between the facts presented here
and those at issue in National Basketball Association and
Barclays Capital Inc .. As an initial matter, the Court is not
persuaded that World Chess alone can report on the
Championship game scores. Indeed, it is well-established that
sports scores and events, like players' moves in the
Championship, are facts not protectable by copyright.
Nat'l Basketball Ass'n., 105 F.3d at 946. Further, ~~~~~~~~~~~~~~
See
the
evidence presented here shows Chess24 has expended
considerable resources and hired employees to collect from
secondary sources, analyze, and project factual information
about the Championship, among other things, to its users.
(Opoosition, at 5; McGourty Declaration, at 7.) Like
Motorola's SportsTrax pager, Chess24's virtual chessboard and
compilation of players' moves display factual data that
Chess24 has "assemble[d] and transmit[ted] ... themselves."
Nat'l Basketball Ass'n., 105 F.3d at 854.
Third, " [a] showing of irreparable harm is the single
most important prerequisite for the issuance of a preliminary
injunction." Faiveley Transport Mahno AB, 559 F.3d at 116.
"To satisfy the irreparable harm requirement, Plaintiffs must
demonstrate that absent a preliminary injunction they will
suffer an injury that is neither remote nor speculative, but
actual and imminent, and one that cannot be remedied if a
court waits until the end of trial to resolve the harm." Grand
River Enter. Six Nations, Ltd., 481 F.3d at 66.
Here, World Chess has failed to show that it would suffer
an immediate injury that cannot be remedied by money damages
after trial. Even assuming World Chess is correct that - in
the absence of relief - Defendants' reproduction of the chess
moves made by the contestants in the Championship devalues
World Chess's website product and threatens the existence of
its website, World Chess has provided no basis for concluding
that it cannot be sufficiently compensated by money damages.
The alleged injury here - that a rival website operated by
Defendants may supplant some in-person ticket sales and
subscribership to World Chess's website - is precisely the
type of loss compensable by money damages. Moreover, as
Chess24 indicates, World Chess licenses "to various websites
the right to report on the [Championship] in real time, thus
implicitly conceding that any injury is fully compensable by
monetary damages (i.e. lost licensing fees)." (Opposition, at
3. )
Fourth, World Chess has failed to show that the balance
of equities tips decidedly in its favor. World Chess argues
that "absent a preliminary injunction with a temporary
restraining order, World Chess will likely lose a substantial
number of subscribers and lose its goodwill as the party with
exclusive control over dissemination of Championship updates
and organizer of the Championship." (Memorandum, at 20.) By
contrast, Chess24 argues that it will lose revenue and
reputation if prevented from reporting on the Championship.
On balance, the Court agrees with Chess24 that the public
interest is best served by the robust reporting of factual
data concerning the contestants' moves accompanied by
analysis and commentary on the Championship.
Having found that World Chess has failed to establish
that it satisfies the requirements for a preliminary
injunction, the Court is persuaded that Defendants should be
permitted to report on the Championship while this action is
pending.
III. ORDER
For the foregoing reasons, it is hereby
ORDERED that the motion of plaintiffs World Chess us,
Inc. and World Chess Events Ltd. (collectively, "World
Chess") for a temporary restraining order and preliminary
injunctive relief prohibiting defendants Chessgames Services
LLC ("Chessgames"), E-Learning Ltd. ("E-Learning"), and
Logical Thinking Ltd. (together with E-Learning, "Chess24")
(collectively, "Defendants") from republishing the updates of
each game· at the World Chess Championship ("Championship") in
New York City from November 11, 2016 to November 30, 2016,
while the game is in progress is DENIED.
SO ORDERED.
Dated: New York, New York 22 November 2016
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