On October 7, 2005, I did a post on Judge John Koeltl's fine opinion in New York Mercantile Exchange, Inc. v. Intercontinental Exchange, Inc. Judge Koeltl granted defendant's motion for summary judgment finding that settlement prices for NYMEX open positions were not protectible. Yesterday, the Second Circuit affirmed in an opinion by Judge Katzmann, with a concurring opinion by Judge Hall. Judge Katzmann's opinion is pretty much a by-the-numbers opinion (pun intended), but there were sparks between the two opinions on the threshold standard for protection and the originality of the prices at issue.
As I noted in the original posting, NYMEX's claim was for the individual prices, and not in the compilation of them. 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 Judge Koeltl. I confess to being baffled by why NYMEX every thought it had a claim for such clearly unprotectible material. To me, it matters not if NYMEX exercised judgment in setting a price, the price was still that price and that was a fact. Moreover, the individual price itself not remotely the type of work protected by copyright.
In rejecting plaintiff's claim, Judge Katzmann's opinion evidences some tsouris about drawing the line between discovery and creation -- did NYMEX "author" the prices" or did it discover them? That is a line that has no relevance here: NYMEX's claim was in individual discrete items that could not rise to the level of originality even if it had given them a fanciful name like googa-geeba.
Judge Kaztmann was, I suspect, perfectly happy to decide the case on the solid ground of lack of originality, but didn't, opting instead for what he thought the safer ground of merger. I think safer here relates not to the merits, but to the fact that he avoided a dissent by Judge Hall since while Judge Hall disagreed on the originality issue, he too rejected the claim on merger grounds. Politics aside, I find the merger argument the weakest. In Arica Institute, Inc. v. Palmer, the Second Circuit stated that the roots of the merger doctrine “can be found in cases such as Baker v. Selden.” That seems inaccurate since Baker neither used the term nor were issues commonly associated with the concept raised: Defendant's forms in Baker were concededly not substantially similar to plaintiff's and hence there was more than one way to express the idea. Plaintiff's claim was instead that copyright in his book gave him a monopoly over the system of bookkeeping discussed therein. (See Pam Samuleson's article discussed in yesterday's blog for more on this point).
The merger doctrine has been explained by language like, "When the 'idea' and its expression are … inseparable, copying the 'expression' will not be barred, since protecting the expression' in such circumstances would confer a monopoly of the 'idea' upon the copyright owner free of the conditions and limitations imposed by the patent law." Subsequent courts have expanded the doctrine's reach, finding it applicable when there are a number of ways to express a particular idea, and yesterday's Second Circuit opinion follows this trend.
The doctrine is, however, based on a faulty premise: If an idea and its alleged expression are truly inseparable, there can be no selectivity sufficient to permit originality. This is also true if there are only a limited number of ways to “express” the idea. Such a conclusion is, in reality, a statement that the purported copyright owner's way of expressing the idea contains only a de minimis number of non-ideas. So understood, merger is merely a judgment that there is a lack of originality and thus, like the idea-expression dichotomy, merger merely reflects a judgment about where on the continuum of expression the work at hand lies. The prices asserted by NYMEX fall off the spectrum completely.