AOL File Library: 9,300 to 9,399/9300.zip/AOLDLs/Legal Documents/NBA v. America Online/NBAOL.txt

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[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
[phone]

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
[phone]

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
[phone]

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
[phone]

Attorneys for Plaintiffs