Friday, October 07, 2005

The Price May Be Right, But There's No Protection

Since 1956, the television show "The Price is Right" has aired. On September 28, Judge John Koeltl of the SDNY issued a very fine opinion involving a spurious claim to copyright protection for commodities trading settlement prices for futures contracts. (I tried to post this yesterday and had it written, but when I went to publish it, the server was under maintenance and did not save the blog. I was so angry I waited a day before doing it all over again; apologies for the delay).

Plaintiff is the New York Mercantile Exchange, defendant the IntercontinentalExchange, Inc. On each day a futures contract remains open and unexpired, the amount of the required margin deposit changes as the price of the underlying commodity fluctuates. The change in value is determined by an end of the day settlement price. The parties disputed how the settlement prices are calculated, consistent with their litigation positions. NYMEX alleged the price involved judgment and discretion; ICE alleged the price was determined by a mathematical formula. This posturing was the result of some loose language in CCC Information Services, Inc. v. Maclean Hunter Market Reports, 44 F.3d 61 (2d Cir. 1994), that could be read as indicating the availability of protection for the prices themselves. CCC, by the great Pierre Leval, is (and I fully believe he would agree), far too complicated: it was an effort to deconstruct the idea-expression dichotomy in the area of factual compilations. The effort was largely beside the point, though, because the claim in CCC was a compilation claim and defendant had copied substantial parts of the compilation. And it was on this basis that Judge Koeltl properly distinguished CCC in NYMEX.

Plaintif NYMEX however clearly asserted a claim for the individual prices, and not in the compilation thereof, which is what makes the case (and decision noteworthy). One might wonder how NYMEX got a registration for prices. The answer is it didn't. The Copyright Office repeatedly refused registration for the prices and NYMEX then (in my opinion) misused the registration process to get into court with a registration. The Office submitted a very helpful brief to the court. I confess to being baffled by why NYMEX every thought it had a claim for such clearly unprotectible material.

6 comments:

Timothy Phillips said...

Maybe NYMEX has an interest in getting a clear decision on the point, so that they know what they can do with their competitors' price quotations, or so that they can run to congress and claim a need for sui-generis database protection.

Or maybe they're just stubborn.

Dan said...

Why the proprietary MS-Word-format attachment for the decision? It appears the file contains nothing that couldn't have been expressed in a nonproprietary plain ASCII .txt file, which would be viewable in a browser without launching another application, and wouldn't be doing a part to perpetuate the hegemony of Microsoft.

William Patry said...

Sorry about the MS Word attachment. I had saved the document off of Westlaw at work and that's the format our IT department used for the link. On the substantive issue presented, I am interested in the logical and semantic sleight of hand that is used, to wit, prices involve judgment, judgment is creative, copyright protects creative judgment.

Karl-Friedrich Lenz said...

That should be "why NYMEX _ever_ thought" in the last sentence.

To guard against the loss of data you mentioned it might be a good idea to just copy everything into the Windows clipboard immediately before posting.

If there is any creative judgment involved, most of that would be that of market participants. NYMEX is not supposed to creatively make up prices, but to faithfully reflect what the market thinks.

Therefore I think it is unfortunate that they would want to boast about their creativity.

More on this (with a comparison to vote counts, which also should not be "creative") on my own Blog.

Max said...

While I hate Microsoft as much as the next guy, it's hard for me to understand why MS Word's format is considered "proprietary" and Adobe's PDF isn't. I believe they both have published specs available. And, while Microsoft may choose to not do so, it's technically possible to write a plugin that views MS Word documents without the need to open MS Word itself, just as it's possible to view PDF documents without opening Acrobat.

Randy said...

The difference between PDF and MS Word is that the PDF format is a Federal Information Processing Standard (FIPS) format and MS-Word is not.

Microsoft does not publish the MS-Word file format. What documentation exists outside of Redmond has been compiled through extensive reverse engineering.