NBA v. Motorola, Inc., 105 F.3d 841 (1997) p.810

SUBJECT

federal preemption of state law

FACTS

Motorola sold a pager that alerted users to basketball scores. The NBA said it was missapropriation of hot news under a New York state law.

PROCEDURE

Trial court upheld the hot-news exception. Second circuit reversed on the grounds that the NY law had been preempted by federal.

ISSUE

Whether the NY law is preempted.

HOLDING

We hold that a narrow hot news exception does survive preemption. However transmission of scores of games in progress does not constitute a misappropriation of hot news. We conclude that Motorola and STATS have not engaged in unlawful misappropriation under the hot-news test set out above.

RATIONAL

We hold that the surviving hot news claim is limited to the following types of cases:

1. a plaintiff generates or gathers information at a cost
2. the information is time sensitive
3. a defendant's use of the information constitutes free riding on the plaintiff's efforts
4. the defendant is in direct competition with a product or service offered by the plaintiffs
5. the ability of other parties to free ride on the product or service that its existance or quality would be substantially threatened

Created on: Thursday, November 11, 1999 at 20:28:21 (PST)