In this series we will explore some of the important case law that is relevant to the sports leagues’ argument that they should be compensated for “data,” “intellectual property,” or whatever other term du jour the sports league executives choose to use.
- Read the introduction to the series here.
- Case study No. 1
- Case study No. 2
- Case study No. 3
- Case study No. 4
The quest for data rights and fees has been one that has evolved since it first emerged in Indiana in January of 2018. The early wave of requests for one percent integrity fees has died down, with the leagues seeking .25 percent in New York.
The question that many are asking is why should the leagues get paid? What is the foundation of their argument? The short answer is that their argument’s foundation is built on sand in a typhoon zone. What follows is an overview of one of the cases that is the basis for the long answer.
The case: Morris Communications Corp. v. PGA Tour
What happened in the case?
Morris Communications is a publishing company that publishes both print and electronic media. In the early 2000s, the PGA Tour (the same group who wants integrity fees) developed a scoring system that allowed for the real-time transmission of golf scores.
The system was called the Real-Time Scoring System or “RTSS.” The system was state-of-the art technology at the time and relied on both advanced technology and “dozens of trained workers and volunteers.”
The Atlanta-based Eleventh Circuit Court of Appeals summarized the RTSS technology as follows:
During a PGA golf tournament, volunteers known as walking scorers follow each group of golfers on the course and tabulate the scores of each player at the end of each hole played. The scores are then collected by other volunteers, known as hole reporters, located at each of the eighteen greens on the golf course, who relay the scoring information to a remote production truck staffed by PGA personnel.
The scores of all participating golfers are then processed at the remote production truck and transmitted to PGA’s website, www.pgatour.com, as real-time golf scores, which are scores that are transmitted electronically nearly contemporaneously to their actual occurrence on the golf course. At the same time, the compiled scores are also transmitted to an on-site media center where members of the media are able to access the scores.
The same information is also transmitted to various electronic leaderboards located throughout the golf course. As their name suggests, the leaderboards typically show only the top ten or fifteen players’ scores.
What the PGA Tour did
In order to avoid disruptions on the course, the PGA bans the use of handheld devices for scoring, including cell phones. This means that the only source of real-time golf scores is from the PGA’s RTSS system.
The PGA enabled credentialed media access to the RTSS information under a series of conditions regarding the release of the information. Media organizations were embargoed from releasing information until the earlier of 30 minutes after a shot happens or after the information has become legally available in the public domain, after the PGA has posted the information on its own website.
Morris Communications argued that the PGA’s RTSS restrictions meant that the PGA was the only entity capable of selling real-time golf scores and this violated antitrust laws.
What did the court say?
The first thing the Eleventh Circuit did in addressing Morris’ arguments was to state:
Contrary to the arguments of Morris and its amici curiae, this case is not about copyright law, the Constitution, the First Amendment, or freedom of the press in news reporting.
This case is a straight-forward antitrust case involving a product and a defendant’s assertion of a valid business justification as its defense to anticompetitive actions, if any. Also important to note is that this case is being decided based upon the facts presented, not a hypothetical situation, no matter how probable its actualization.
The three-judge panel ruled in favor of the PGA Tour, reiterating again that the case is not about the copyrightability of golf scores or a finding that golf scores were protectable trade secrets. In fact, the Court of Appeals highlighted the lower court’s exact statement on the issue of the property interest in golf scores footnoting “[t]he [PGA]’s property right does not come from copyright law, as copyright law does not protect factual information, like golf scores.”
But, the Appeals Court upheld the District Court’s finding “that a company — even a monopolist company — that expends time and money to create a valuable product does not violate the antitrust laws when it declines to provide that product to its competitors for free.”
The PGA was within its rights to charge Morris Communications for access to its real-time tracker. The court stated: “Morris demands that it be given access to the product of PGA’s proprietary RTSS, without compensating PGA, so that Morris can then sell that product to others for a fee. That is the classic example of “free-riding,” the prevention of which, under antitrust law, constitutes a legitimate pro-competitive reason for imposing a restriction.”
The Morris case is a helpful illustration of both the limits of copyright protection, as well as the scope of data that can be monetized.
How does this apply to legalized sports betting?
The Morris case provides an important distinction from a variety of the other cases that we have examined in this series.
The Morris case provides a clear roadmap by which sports leagues can monetize some data. What is staggering is that the leagues continue to appear to circle their wagons around the argument that there is an intellectual property right in the factual information itself. This is a myth, which neither Morris nor the other examined cases support.
There is, however, the ability for the leagues to control proprietary data like that of the RTSS-feed. While some have questioned the antitrust grounds of the case there likely remains the ability of the leagues to deter free-riding in certain proprietary elements that they invest time, money and resources into developing.
The challenge for the leagues’ is that once that proprietary information enters the public domain and becomes freely available through their own websites, their ability to restrict access to it is limited. Bookmakers value speedy reliable information, but unlike the PGA Tour, which can make a reasonable argument for restricting transmitting devices in order to preserve the etiquette that is associated with golf, the other sports leagues are likely to have a more difficult time taking cell phones or other devices out of fan’s hands.
One additional curious aspect of the Morris case was that Morris Communications never raised a First Amendment argument; they went so far as to state it was not a First Amendment case, which was an intriguing legal strategy. As the argument was not raised, the court did not wade into an analysis of whether Morris had a First Amendment right to the information.
This remains one of several reasons that Morris should not be read as a case that the leagues can hold up as a sign that they own broad swaths of information. Perhaps more importantly, much of this information in many other sports is available from multiple sources nearly simultaneously, unlike in the early 2000s, this information enters the public domain much faster via routes like social media, data brokers, as well as more customizable viewing experiences online and through television packages.
