[Editor's Note: The National Basketball Association filed suit August 28, 1996 against America Online and STATS, Inc, an electronic sports media company. The NBA claims that AOL's play-by-play accounts and descriptions of all NBA basketball games while the games are in progress, violates "the essence of the NBA's most valuable property -- real-time NBA game information."] Roger L. Zissu (RZ 0973) Barbara A. Solomon (BS 8845) Mark D. Engelmann (ME 0218) Raphael Winick (RW 4291) WEISS DAWID FROSS ZELNICK & LEHRMAN, P.C. 633 Third Avenue New York, New York 10017 (212) 953-9090 Jeffrey A. Mishkin (JM 8380) William S. Koenig (WK 8771) Kathryn L. Barrett (KB 3301) Richard W. Buchanan (RB 9019) NATIONAL BASKETBALL ASSOCIATION and NBA PROPERTIES, INC. 645 Fifth Avenue Olympic Tower New York, New York 10022 (212) 407-8000 Attorneys for Plaintiffs UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK THE NATIONAL BASKETBALL ASSOCIATION and NBA PROPERTIES, INC., Plaintiffs, v. AMERICA ONLINE, INC. and SPORTS TEAM ANALYSIS and TRACKING SYSTEMS, INC. d/b/a STATS, INC. Defendants. Civil Action No. COMPLAINT Plaintiffs, the National Basketball Association ("NBA") and NBA Properties, Inc. ("NBA Properties"), collectively referred to as the "NBA Parties" or the "NBA," by their attorneys named below, for their Complaint against defendants America online, Inc. ("AOL") and Sports Team Analysis and Tracking Systems, Inc., d/b/a Stats, Inc. ("Stats, Inc.") allege: NATURE OF THE ACTION 1. This is an action for misappropriation of plaintiffs' proprietary data under state law. Defendants' violations of plaintiffs' rights arise out of an on-line service provided by defendants that enables AOL customers to receive contemporaneous play-by-play accounts and descriptions of, and information relating to, all NBA basketball games while the games are in progress. Defendant Stats, Inc. supplies the data feed for, produces, and is responsible for the content of this on-line service (hereinafter the "Stats, Inc./AOL Service"). 2. The Stats, Inc./AOL Service, which has not been licensed or otherwise authorized in any way by the NBA Parties, amounts to a flagrant taking of the essence of the NBA's most valuable property -- real-time NBA game information. Accordingly, plaintiffs seek injunctive relief, an accounting, and damages by reason of defendants' conduct which constitutes the misappropriation of real-time data, accounts and descriptions of live NBA games in violation of the New York common law of misappropriation. JURISDICTION AND VENUE 3. This Court has jurisdiction over plaintiffs' claims under 28 U.S.C. Sec. 1332 in that the parties are citizens of different states and the matter in controversy exceeds the sum or value of $50,000 exclusive of interest and costs. 4. Venue is proper in this district pursuant to 28 U.S.C. Sec. 1391(a) because, upon information and belief, defendants reside or do business in this district and a substantial part of the events giving rise to the claim occurred here. PARTIES 5. Plaintiff NBA is a joint venture, comprised of 29 member teams located in the United States and Canada, that operates a professional basketball league. The NBA is responsible for the annual production, organization and presentation (in arenas and through various forms of media) of an entertainment product -- pre-season, regular season and playoff basketball games involving its member teams ("NBA games") -- in the highly competitive entertainment marketplace. The NBA maintains its principal place of business at 645 Fifth Avenue, New York, New York. 6. Plaintiff NBA Properties is a corporation organized and existing under the laws of the State of New York, having its principal place of business at 645 Fifth Avenue, New York, New York. NBA Properties is owned equally by each of the 29 members of the NBA and is engaged throughout the world in marketing and promoting NBA games and in licensing the commercial use of game data from NBA games, NBA-related statistics and information, and other intellectual property of the NBA and its member teams (collectively, "NBA Intellectual Property"). 7. Upon information and belief, defendant America Online, Inc. is a corporation organized and existing under the laws of the State of Delaware, having its principal place of business at 8619 Westwood Center Drive, Vienna, Virginia 22182-2285. America Online, Inc. operates an online computer service providing a wide range of information, including basketball related information, to its over 6 million subscribers worldwide. 8. Defendant Stats, Inc. is a corporation organized and existing under the laws of the State of Missouri, having its principal place of business in Skokie, Illinois and maintains a place of business in this district. Stats, Inc. is engaged, among other things, in the business of obtaining and assembling accounts of and information concerning sporting events and publishing and distributing such accounts and information in various media. STATEMENT OF FACTS The NBA Parties And The Transmission Of NBA Games 9. NBA games are among the most successful and popular forms of entertainment in the United States and throughout the world. The essence of the entertainment is the real-time dissemination of data from ongoing games. Such realtime data is an extremely valuable asset of the NBA Parties. 10. The enormous popularity of NBA games is attributable to the expenditures of large sums of money by the NBA Parties and their continuous efforts in creating, planning, organizing, developing, selecting, arranging, coordinating, regulating, marketing and promoting NBA games. 11. The public's interest in and the entertainment value of each NBA game results from, among other things, the talent and skill of the players and coaches employed by each member team of the NBA and the format, timing, rules and other external limitations adopted and enforced by the NBA in connection with the production of NBA games. The NBA selects the teams that will oppose each other and the venue at which each game is played, and creates rules for, among other things, scoring, fouls, number of periods, free throws and possession of the ball. During each NBA game, the NBA, through its referees, enforces theses rules. 12. The NBA Parties arrange for the authorized, organized, orderly, accurate, useful and timely distribution and dissemination of accounts and descriptions of, and information regarding, NBA games as they occur. The limitations imposed by the NBA Parties on the dissemination of game data preserve, and are intended to preserve, the value of the NBA's proprietary interest in this information. 13. Only bona fide media representatives who have obtained a credential from the NBA or a member team and other official licensees of the NBA are permitted to distribute and disseminate real-time accounts, descriptions, and information concerning NBA games, subject to a variety of terms and conditions established by the NBA Parties. 14. In addition, each year NBA Entertainment ("NBAE"), a wholly- owned subsidiary of NBA Properties, enters into written license agreements with hundreds of television and radio stations and networks throughout the United States and Canada authorizing, subject to specific limitations, the use by such stations and networks of "highlights" from NBA games in news and sports news programming. Among the many restrictions to which television stations and networks agree to adhere is a requirement prohibiting the display or transmission of any highlight from the second half of an NBA game until that game has concluded. NBA Properties monitors closely station and network compliance with the terms of the "highlights" license. 15. The NBA Parties' control over NBA games, and over the real-time accounts and descriptions thereof, and information relating thereto, constitutes one of the primary reasons for the high quality and resulting entertainment value, popularity and commercial success of NBA games. 16. The NBA Parties limit access to NBA games. Fans purchasing game tickets and media representatives attending games pursuant to official credentials are subject to a variety of contractual conditions. Among other explicit restrictions, fans and media representatives may not distribute or transmit, by any means, continuing descriptions of NBA games in progress, unless expressly permitted to do so by the NBA Parties. 17. The NBA Parties promote and distribute NBA games in a variety of media. The NBA Parties' licensing activities currently include the licensing of live, contemporaneous or taped-delayed broadcasts and other transmissions of NBA games through broadcast television, cable television, direct broadcast satellite, FM and AM frequency radio, "800" numbers, pager devices, interactive computer on-line services and other forms of electronic media. 18. The NBA Parties' licensing activities also include the licensing and distribution of NBA game-related statistics and information and other NBA Intellectual Property through numerous forms of media, including printed and electronic publishing, television, radio, telephone, pager devices, interactive computer on-line services, computer CD-ROM devices, and other forms of electronic media. 19. The NBA Parties license NBA games and NBA Intellectual Property only to carefully selected licensees. The high quality of the products and services provided by these licensees is essential to maintaining the goodwill associated with the NBA Parties. The licenses granted by the NBA Parties are of enormous commercial value and include the following: an exclusive license granted to NBC for national over-the-air or "free" television distribution of NBA games; an exclusive license granted to Turner Broadcasting for national cable television distribution of NBA games; an exclusive license granted to the ESPN Radio Network for national radio rights; and an exclusive license granted to Starwave and ESPN Sports Zone for certain rights with respect to the audio distribution of NBA games and the use of certain Intellectual Property over the "world wide web" on the Internet. 20. The NBA games achieve the apex of their value while they are in progress. Roughly 80% of the NBA's revenues are derived from the promotion of NBA games in progress. The Stats, Inc./AOL Service 21. Upon information and belief, AOL is providing an on-line service that disseminates and distributes continuing accounts and descriptions of, and NBA game-related information concerning, NBA games as they occur. The goal and focus of the service is to provide real-time information about the games to AOL's subscribers. 22. The Stats, Inc./AOL Service is not authorized, licensed, sponsored or endorsed by the NBA Parties. 23. Upon information and belief, AOL obtains its data from defendant Stats, Inc. which obtains and assembles accounts of and information concerning sporting events, including NBA games. 24. AOL's information provider Stats, Inc., beginning on or about late Spring 1994, contacted plaintiff NBA Properties about becoming an NBA licensee for collecting and transmitting NBA-related information and statistics. Stats, Inc. continued these negotiations with NBA Properties until January 1996. NBA Properties neither licensed Stats, Inc. nor otherwise granted permission to Stats, Inc. to collect and/or transmit NBA game-related information or to provide such data to AOL. 25. Upon information and belief, while it was continuing such negotiations with the NBA to become a licensee, Stats, Inc., without disclosing its actions to the NBA, proceeded to negotiate with AOL and enter into an agreement to provide the data feed for the Stats, Inc./AOL Service with respect to NBA basketball games to be disseminated to AOL subscribers. 26. On January 16, 1996, AOL commenced dissemination of the Stats, Inc./AOL Service without authorization from the NBA Parties. Neither Stats, Inc. nor AOL ever disclosed to the NBA their plans to establish this site before its operations commenced. 27. The Stats, Inc./AOL Service is an entertainment product. Subscribers who access the Stats, Inc./AOL Service encounter various informational screen displays. These screen displays are jointly designed by AOL and Stats, Inc. with respect to their appearance and organization. These screens have described the data available as "Today's games at a glance. Updated as they happen;" and "The scoreboard has up-to-date line scores with box scores up-dated every minute." 28. AOL has placed advertisements on its "welcome screen" for the basketball service, advising subscribers that the service provides live data from NBA games. 29. The information provided by AOL includes scores, time remaining, foul shots, and other key statistics of ongoing NBA games provided on a real-time basis while the NBA games are in progress. Information is updated between every 15 seconds and one minute. 30. Upon information and belief, since its launch, the AOL site has been accessed hundreds of thousands if not millions of times. 31. On February 2, 1996, the NBA Parties sent a demand letter to AOL requesting that it cease and desist further dissemination of the Stats, Inc./AOL Service. By letter dated March 7, 1996, AOL's attorneys responded, falsely asserting that the Stats, Inc./AOL Service only updated every 10 to 15 minutes and amounted to no more than typical journalistic coverage of NBA games. 32. On March 5, 1996, the NBA Parties sued Stats, Inc. in the United States District Court for the Southern District of New York, 96 Civ. 1615 (LAP) alleging, among other things, that Stats, Inc.'s collection and distribution of real-time NBA data while games are in progress constituted misappropriation of the NBA Parties' property in violation of state common law, including that of New York (the "Prior Action"). 33. In an opinion dated July 19, 1996, the Court found in the Prior Action that Stats, Inc.'s collection and real-time provision to Motorola, Inc. of NBA games data less comprehensive than that being provided by Stats, Inc. to AOL constituted misappropriation of the essence of the NBA's most valuable property. 34. Despite these findings in the Prior Action, Stats, Inc. continues to supply, and AOL continues to distribute via the Stats, Inc./AOL Service, real-time NBA games data. CLAIM FOR RELIEF STATE LAW UNFAIR COMPETITION BY MISAPPROPRIATION 35. Plaintiffs repeat and reallege paragraphs 1 through 34 as if fully set forth herein. 36. Upon information and belief, since some time in or about mid- January, 1996, the Stats, Inc./AOL Service has provided continuously- updated real-time information relating to all NBA games to AOL's Subscribers while the games are in progress -- all without the consent or authority of the NBA Parties. 37. The Stats, Inc./AOL Service competes directly with existing commercial products and services provided by the NBA Parties and their authorized licensees and interferes with the NBA's potential to exploit real-time NBA games scores, information and statistics. 38. Defendants' unlawful and inequitable activities in providing an on- line service that disseminates real-time data from ongoing NBA games, damages and dilutes the commercial value of the NBA's business and inequitably and illegally misappropriates the skill, expenditures and labors of the NBA Parties and their licensees for the commercial advantage of defendant. 39. Defendants' aforesaid activities, specifically the providing of the Stats, Inc./AOL Service, constitutes unfair competition and misappropriation of plaintiffs' commercial property, in violation of the law of the State of New York as well as that of other states. 40. Defendants' unfair competition and misappropriation of plaintiffs' commercial property has caused and continues to cause plaintiffs to suffer irreparable injury and damage, which injuries and damages are not capable of precise monetary determination or adequate remedy at law and, unless restrained, will cause further irreparable injury and damage to plaintiffs. WHEREFORE, plaintiffs demand judgment as follows: 1. Permanently enjoining defendants, their employees, agents, licensees, attorneys, successors, affiliates, subsidiaries and assigns, and all those in active concert and participation with any of them from: (a) Broadcasting, distributing or transmitting, by the aforesaid Stats, Inc./AOL Service or through any form of electronic or other media now known or hereafter developed, real-time data, play-by-play descriptions or accounts of any NBA game in progress; (b) Misappropriating plaintiffs' valuable commercial property in the NBA games, including any scores, statistics and/or other information or real-time accounts of any NBA games while in progress; (c) Engaging in any other activity constituting unfair competition by any misappropriation of plaintiffs' valuable commercial property relating to NBA games and NBA Intellectual Property; (d) Assisting, aiding or abetting any other person or business entity in engaging in or performing any of the activities referred to in subparagraphs (a) through (c) above. 2. Awarding plaintiffs such damages as it has sustained or will sustain by reason of defendants' misappropriation of its commercial property, together with all profits, gains, and advantages derived by defendants from such conduct. 3. Awarding plaintiffs their costs and disbursements incurred in this action, including reasonable attorneys' fees. 4. Awarding plaintiffs interest, including prejudgment interest, on the foregoing sums. 5. Awarding plaintiffs such other and further relief as the Court may deem just and proper. Dated: New York, New York August 28, 1996 WEISS DAWID FROSS ZELNICK & LEHRMAN, P.C. By: /s/ Roger L. Zissu (RZ 0973) Barbara A. Solomon (BS 8845) Mark D. Engelmann (ME 0218) Raphael Winick (RW 4291) 633 Third Avenue New York, NY 10017 (212) 953-9090 THE NATIONAL BASKETBALL ASSOCIATION and NBA PROPERTIES, INC. Jeffrey A. Mishkin (JM 8380) William S. Koenig (WK 8771) Kathryn B. Barrett (KB 3301) Richard W. Buchanan (RB 9019) 645 Fifth Avenue New York, NY 10022 (212) 407-8000 Attorneys for Plaintiffs