Brief Fact Summary.
The defendant’s strategy of distributing information to the general public about trading on the New York Stock Exchange took away the advantages of being a paid customer with the plaintiff investment firms.
Synopsis of Rule of Law.
Where two products do not directly compete, a misappropriation claim cannot be brought.
The cost of generating the information, its time-sensitivity, and direct competition between the parties merely define pre-existing conditions; the threat to the plaintiff's business merely identifies a consequence of the act of free-riding.View Full Point of Law
The plaintiffs are firms that invested heavily in market research targeting specific firms and industries. Each firm released its recommendations regarding stock trading to its paid customers prior to the start of trading on the New York Stock Exchange (NYSE). That information was then released to the general public after the start of trading each day. This strategy was meant to give paid customers a leg up on the market. The defendant removed the advantages to being a paid customer with these plaintiff firms by collecting trading information from a variety of sources and releasing it to the general public prior to the start of trading each day.
Does the defendant’s distribution of trading information unfairly and illegally disrupt the plaintiffs’ businesses?
No. The district court decision is reversed.
It is commonplace for new technologies to destroy old business practices, as the defendant has done here. The defendant is selling the information not as its own, but is attributing it to the firms from where it is coming. The defendant collects, summarizes, and disseminates information and recommendations from firms, and this practice does not constitute misappropriation. In this case, the plaintiffs’ product and the defendant’s product do not directly compete. The claim is preempted by federal legislation on the topic of copyright.