The Copyright Act, a federal law, not only preempts any state laws that confer similar rights, but may also preempt state law claims on works that are uncopyrightable. This irony leaves many litigants in a quandary of their claims being preempted by the Copyright Act, while leaving them with no remedies because their work is uncopyrightable.
Courts have heavily relied on an opinion by the Second Circuit Court of Appeals in National Basketball Association v. Motorola, Inc. that articulated the "extra elements" test that allowed these types of claims to proceed. While the Copyright Act protects only the expression of thoughts, facts, concepts, or processes, state claims, such as misappropriation or unfair competition, will protect the commercial value of the ideas themselves. But, if the ideas are contained in a copyrightable expression, the Copyright Act will control and preempt any state claims. The NBA Court reasoned that, if a claim sought to vindicate a right beyond those granted by the Copyright Act, then the claim might be outside of federal preemption and still be viable.
Despite heavy reliance on the extra elements test, the Second Circuit itself, in Barclays Capital, Inc. v. Theflyonthewall.com, decided that it was not bound to apply this test, despite the parties' not claiming that the test was inapplicable to the dispute.
The plaintiffs in Barclays were major financial institutions who sought to prevent theflyonthewall.com from publishing the content of their security reports and recommendations regarding individual securities in advance of their own publication. The defendant is a news aggregation service who successfully collects this information and publishes it to news feeds. Plaintiffs brought claims for both copyright infringement and "hot news" misappropriation. At trial, plaintiffs prevailed and won and injunction and an award of attorney's fees.
Hot news claims started in International News Service v. Associated Press, in which INS took factual stories from the AP newswire and sold them to competitors. While the case is no longer considered good law, it still stands for the proposition that claims of misappropriation of non-copyrightable aspects of a copyrighted work are still viable.
The Barclays Court determined that the extra elements test was mere dicta in the NBA opinion and declined to apply it. Despite that the INS opinion is no longer viewed as good law, the Court returned to this analysis and held that the claims were preempted. The problem plaintiffs faced was that they could not protect the fact that recommendations regarding securities were made. While the plaintiffs had no way under the Copyright Act to protect the factual basis of news items, the Copyright Act also stood in the way of pursuing a misappropriation claim under state law.
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