CYBERLAW AND CYBERTORTS - THE AMERICAN EXPERIENCE

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CYBERLAW & CYBERTORTS – THE AMERICAN EXPERIENCE - PART 2



Last week we considered email privacy and the law that is applied in the United States. Today we continue looking at the exciting world of the latest star in the legal celestial galaxy…the world of cyberlaw and cybertorts.
Under traditional tort law people who misuse your property are liable to be sued for damages and injunctions can be granted by courts to restrain the trespassing party. Examples of such situations are when persons without permission come into your home or your land or they use your trade name or your business goodwill and make profits without your consent.

Today however we live in the Information Age and information has now acquired the status of ‘property’ in its own right. Valuable information is worth protecting from unlawful predators who seek to use them for profit. Another golden rule in this age is that its no longer what you know but how fast the information you have is processed and made available to your network or market or clients, whatever you call them. Besides business, education and other traditional fields and profession the law now has to keep up with these new developments together with the technological advances they come along with such as the internet browsers, handphones and sms.

‘ENGLISH PREMIER LEAUGE’ DRAMA IN SANDAKAN

Sau Ker is a football fanatic living in Sandakan. His passion is the English Premier League and he spends endless hours collecting all types of soccer statistics. He also runs and manages an illegal football pool with almost 100 participants. Recently he signed up with a SMS service known as EPL SOCCER EXPRESS, which provides live statistics coverage of EPL matches such as goals as and when they are scored, the names of the scorers, team sheets, substitutions made and the comments of managers and players.
He is charged 60 sen for each SMS he receives from EPL SOCCER EXPRESS. Sau Ker now uses the information he receives from EPL SOCCER EXPRESS to relay it to his ‘betting clients’. He charges his clients 30 sen for each SMS he sents out and makes a huge pile of money during the weekend when EPL matches are being played. Some of his clientele know about the EPL SOCCER EXPRESS service but prefer to stick on with Sau Ker instead of signing on with EPL SOCCER EXPRESS because Sau Ker is charging half the price for each sms he relays when compared to the 60 sen rate applied by EPL SOCCER EXPRESS. In fact Sau Ker’s service is so popular that now even non punters and other football fans are making use of his service. His clients are found all over Sabah and even Kuala Lumpur, Penang and Brunei. Last week EPL SOCCER EXPRESS discovers Sau Ker’s activities. They have applied to the High Court in Sandakan for an injunction to restrain Sau Ker in the following terms:-

MALAYSIA
IN THE HIGH COURT IN SABAH AND SARAWAK AT SANDAKAN
CIVIL SUIT NO 20-000-2006

EPL SOCCER EXPRESS …..Plaintiff

And

SAU KER … Defendant

LET ALL PARTIES concerned attend before the judge in chambers on the 25th day of November, 200 at 9 am on the hearing of an application by the Plaintiff for:

(a) An order that the Defendant be restrained throughout Sandakan, Sabah, Malaysia and the world at large, whether by himself or by his servants or agents or otherwise, from misappropriating the information of English Premier League soccer results furnished to him by EPL Soccer Express;
(b) An order that the Defendant be restrained throughout Sandakan, Sabah, Malaysia and the world at large, whether by himself or by his servants or agents or otherwise, from relaying the information on the English Premier League he receives from EPL Soccer Express for a period of 4 business days from the time he is in receipt of such information;
(c) An account of all monies earned by the
Defendant from the time the Defendant relayed
the information on English Premier League
matches he received from EPL Soccer Express
(d) Damages to be assessed
(e) Such other or further order that the court deems just and necessary;
(f) Costs of this application.

Dated the 25th day of November 2006


Will EPL Soccer Express succeed in Court?


THE SCORE: MOTOROLA 1 NBA 0


The fictitious situation mentioned above was actually the subject matter of a civil suit in United States Court of Appeals for the Second Circuit between the National Basketball Association (NBA) against the telecommunications giant Motorola in 1997 long before the global world we now live in where information content and downloads we now receive in our handphones is commonplace.


Motorola manufactured and marketed the SportsTrax paging device while STATS supplies the game information that is transmitted to the pagers. The product became available to the public in January 1996, at a retail price of about $200. SportsTrax’s pager had an inch-and-a-half screen and operated in four basic modes: “current”, “statistics”, “final scores” and “demonstration.” It was the “current” mode that gave rise to the dispute between Motorola and the NBA. In that mode, SportsTrax displays the following information on NBA games in progress: (i) the teams playing; (ii) scores changes; (iii) the team in possession of the ball; (iv) whether the team is in the free-throw bonus; (v) the quarter of the game; and (vi) time remaining in the quarter. The information was updated every two to three minutes, with more frequent updates near the end of the first half and the end of the game. There was a lag of approximately two or three minutes between events in the game itself and when the information appeared on the pager screen.
SportsTrax’s operation relied on a “data feed” supplied by STATS reporters who watched the games on television or listen to them on the radio. The reporters keyed into a personal computer changes in the score and other information such as successful and missed shots, fouls and clock updates. The information was relayed by modem to STATS’s host computer, which complied, analyzed, and formatted the data for retransmission. The information was then sent to a common carrier, which then sent it via satellite to various local FM radio networks that in turn emitted the signal received by the individual SportsTrax pagers.
Although the NBA’s complaint concerned only the SportsTrax device, the NBA offered evidence at trial concerning STATS’s America On-Line (“AOL”) site. Starting in January 1996, users who accessed STATS’s AOL site, typically via a modem attached to a home computer, were provided with slightly more comprehensive and detailed real-time game information than is displayed on a SportsTrax pager. On the AOL site, game scores were updated every 15 seconds to a minute, and the player and team statistics are updated each minute.
The district court dismissed all of the NBA’s claims except the first claim which is misappropriation under New York law.



Ruling of the U. S. Court of Appeals

‘The issues before us are ones that have arisen in various forms over the course of this century as technology has steadily increased the speed and quantity of information transmission. Today, individuals at home, at work, or elsewhere, can use a computer, pager, or other device to obtain highly selective kinds of information virtually at will. International News Service v. Associated Press (1918) was one of the first cases to address the issues raised by these technological advances, although the technology involved in that case was primitive by contemporary standards. INS involved two wire services, the Associated Press (“AP”) and International News Service (“INS”), that transmitted news stories by wire to member newspapers. INS would lift factual stories from AP bulletins and send them by wire to INS papers. INS would also take factual stories from east coast AP papers and wire them to INS papers on the West Coast that had yet to publish because of time differentials. The Supreme Court held that INS’s conduct was a common-law misappropriation of AP’s property.
With the advance of technology, radio stations began “live” broadcasts of events such as baseball games and operas, and various entrepreneurs began to use the transmissions of others in one way or another for their own profit. In response, New York courts created a body of misappropriation law, loosely based on INS, that sought to apply ethical standards to the use by one party of another’s transmissions of events.


We hold that the surviving “hot-news” INS-like claim is limited to cases where: (i) a plaintiff generates or gathers information at a cost; (ii) the information is time-sensitive; (iii) a defendant’s use of the information constitutes free-riding on the plaintiff’s efforts; (iv) the defendant is in direct competition with a product or service offered by the plaintiffs; and (v) the ability of other parties to free-ride on the efforts of the plaintiffs or others would so reduce the incentive to produce the product or service that its existence or quality would be substantially threatened.


The district court’s injunction was based on its conclusion that, under New York law, defendants had unlawfully m/isappropriated the NBA’s property rights in its games. The district court reached this conclusion by holding: (i) that the NBA’s misappropriation claim relating to the underlying games was not preempted by Section 301 of the Copyright Act; and (ii) that, under New York common law, defendants had engaged in unlawful misappropriation.

We conclude that Motorola and STATS have not engaged in unlawful misappropriation under the “hot-news” test set out above. To be sure, some of the elements of a “hot-news” INS-claim are met. The information transmitted to SportsTrax is not precisely contemporaneous, but it is nevertheless time-sensitive. Also, the NBA does provide, or will shortly do so, information like that available through SportsTrax. It now offers a service called “Gamestats” that provides official play-by-play game sheets and half-time and final box scores within each arena. In the future, the NBA plans to enhance Gamestats so that it will be networked between the various arenas and will support a pager product analogous to SportsTrax. SportsTrax will of course directly compete with an enhanced Gamestats.
However, there are critical elements missing in the NBA’s attempt to assert a “hot-news” INS-type claim. As framed by the NBA, their claim compresses and confuses three different informational products. The first product is generating the information by playing the games; the second product is transmitting live, full descriptions of those games; and the third product is collecting and transmitting strictly factual information about the games. The first and second products are the NBA’s primary business: producing basketball games for live attendance and licensing copyrighted broadcasts of those games. The collection and retransmission of strictly factual material about the games is a different product: e.g., box-scores in newspapers, summaries of statistics on television sports news, and real-time facts to be transmitted to pagers. In our view, the NBA has failed to show any competitive effect whatsoever from SportsTrax on the first and second products and a lack of any free-riding by SportsTrax on the third.”

NBA’s appeal was dismissed by the Court which perhaps would be good news for our fictitious friend, Mr. Sau Ker in his dispute with EPL Soccer Express.







LEX BORNEO MAIL BAG – Lex Borneo Quiz Promotes National Integration

Dear Marcel,

RE: LEX BORNEO LAW QUIZ
It came as a pleasant surprise that I had scored the 3rd highest marks in your quiz; considering that I am non Sabahan and many questions relating to Sabah I was unable to answer.

Normally in the Sunday Daily Express I would turn to the page on forum but for The Borneo Post there was no pivotal page to turn to. But things have changed for now I would turn to your page right away.

I may be a lay man but I am very interested in matters relating to laws as our daily life is governed by law, physical as well as spiritual

I look forward to more interesting articles especially those that include readers participation, like the one on WW2 which had earlier slipped my attention.

Meanwhile, I have a question for you and hope you can elaborate on 'certificate of posting', what is its implication and authority.

Thank you & regards,
Razman
LAW & COMMERCE TRUST LTD of raz@simplyoffshore.com

LEX BORNEO REPLIES: Thanks Razman for your vote of confidence. We are always looking for ways to make LEX BORNEO informative and stimulating to readers of Borneo Post. Your comments dispels the commonly held notion that whoever law is ‘ just boring stuff’ and such people would get converted to change their perspectives after reading LEX BORNEO. Your comments also inspire us to lift LEX BORNEO and BORNEO POST to greater heights. Lex Borneo will be dealing with your query on ‘certificate of posting’ soon so WATCH THIS SPACE and keep READING THE BORNEO POST.
LEX BORNEO ROCKS!!…….Marcel Jude

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