Holden: Chess Case Shows Holes In PGA Tour Argument
Legal Sports Report

Checkmate? How A Chess Case Puts Another Nail In The Proprietary Sports Betting Data Coffin

Sports betting data

Andy Levinson, the senior VP of tournament administration for the PGA Tour, said recently  data not provided by the PGA Tour to sportsbooks is “stolen data.”

This latest salvo is one instance in the ongoing sports leagues’ battle for additional compensation from sports betting.

What began as a search for integrity fees, quickly transitioned into a search for royalties and then shifted into an ask for official data mandates.

These requests, or in some purported instances demands, are without legal justification, as we detail in our ongoing series, “Making Sense Of Leagues’ Search For Sports Betting Data Fees.”

Not to further beat the dead horse, but there isn’t anything virtually justifiable about pro sports league demands for integrity fees and data mandates.

Still, here we are again with another case. This one is straight from the Southern District of New York, which is down the street from the home offices of many major American sports leagues.

Chess? You’re talking about chess?

In 2016, World Chess US Inc. filed a lawsuit against the company ChessGames Services LLC. World Chess went to court and asked for help:

“Protecting its right to disseminate, in real-time, the chess moves played at the upcoming World Chess Championship, scheduled to commence in New York City on November 11, 2016, from internet piracy.”

The plaintiffs argued that this was a misappropriation of hot news (you might recall this argument from our breakdown of the NBA v. Motorola case.) Furthermore, there was a breach of contract or tortious interference with contractual relations.

So, what happened?

The plaintiff, World Chess, organizes and promotes high-level chess tournaments.

As part of its promotion and publicizing, World Chess disseminated moves by the players in “a modern and speedy way.” World Chess, in agreement with the game’s international governing body, sought to limit access to the event by charging a fee to watch it live or online. Also, viewers were asked not to publish updates of the players’ moves while the games were taking place.

ChessGames and Chess24.com, the defendants, were in the business of reporting chess moves “live” on their websites at a price cheaper than World Chess.

World Chess claimed that this act rendered the defendants “pirates,” and the defendants were free-riding on the plaintiff’s work and investment.

World Chess asked that the court issue a temporary restraining order in advance of the 2016 World Chess Championship, which would have prevented the defendants from publishing the moves of players while the matches were ongoing.

Federal judge puts an end to the madness

District Court Judge Victor Marrero issued the ruling on Nov. 22, 2016.

Interestingly, Marrero noted that prior to the action brought in New York, World Chess had previously sued Chess24 in a Moscow court seeking to block the same activity on a different event a month earlier.

The Russian court rejected the efforts of World Chess, allowing Chess24 to continue its operations.

In New York, Chess24 argued that “the 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.”

The defendant further noted that nothing is pirated, noting the company will not publish any information before it appears in public from another source.

Chess24 informed the court that it was gathering information from several sources, including television broadcasts, Twitter and Facebook, and was not going to be in violation of any conditions of admittance to the event.

Free-riding?

The court found that Chess24 would not be merely taking and republishing information from World Chess, but instead Chess24:

“Digests factual information about the championship from secondary sources and creates its own website content at great expense.”

Judge Marrero noted that World Chess relied on the NBA v. Motorola case as support for their contention. But as was pointed out by the defendants, the NBA’s argument that Motorola was liable for hot-news misappropriation failed.

Noting the Second Circuit’s (the Southern District of New York is within the Second Circuit Court of Appeals purview) holding:

“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”… “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.”

Marrero further cited the case Barclays Capital v. Theflyonthewall.com, in rejecting the plaintiff’s arguments in favor of the restraining order. Noting that when defendants collect, summarize, and re-disseminated news “through a substantial organization effort,” they are not free-riding.

Judge Marrero noted that players’ moves in chess, like sports scores, are not protectable by copyright.

What does this mean?

The biggest takeaway from the World Chess decision is it furthers the rebuttal of the argument advanced by specific sports organizations that they have some intellectual property interest in sports betting data obtained independently.

Once the information is public domain, others can gather, compile, and resell it.

The continued effort to demonize and legislatively eliminate legitimate business practices risks stifling innovation and competition. Certainly, this would almost lead to increases in viewership of sporting events, increasing revenues in a more significant manner than the leagues could hope for from mandates and government handouts.

It is also worth noting that snuffing out innovative industries threatens the economic benefits associated with gaming expansion.

John Holden
- John Holden J.D. / Ph.D. is an academic. His research focuses on policy issues surrounding sports corruption.
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