Copyright

Breaking "Hot" News: A "Star" Win for Unfair Competition


In a significant IP milestone, the Delhi High Court recognised a separate tort of unfair competition (and unjust enrichment) and prevented Idea Cellular and other leading service providers from “misappropriating” real time cricket scores by sending out regular SMS updates. In upholding the claim of Star TV, which had acquired exclusive transmission rights from BCCI, the court relied significantly on the “hot news doctrine” evolved in the famous INS case, wherein the US Supreme Court had held:

“The defendant’s acts of taking material acquired by the skill, organisation and money of the complainant and appropriating it and selling it as its own, is trying to reap where it has not sown and would thus constitute unfair competition. The underlying principle behind the tort of unfair competition is that he who has fairly paid the price should have the beneficial use of the property.”

Facts:

Let me recapture the facts of this interesting case from an earlier post on this issue:

Star India (the plaintiff) was given an exclusive right to broadcast matches organized by the Board of Control for Cricket in India (BCCI). In particular, it was given a 72 hour monopoly over all media rights, including the right to all information emanating from the event such as real time scores etc. In return, Star paid BCCI a magnificent sum of money to BCCI.

The defendants (essentially telecom service providers) captured the scores on a real time basis and updated their subscribers through text messages (SMSes). Star TV sued, based on the “hot news” doctrine and the tort of unfair competition/unjust enrichment claiming that their exclusive rights under the agreement with BCCI were rendered redundant and that the defendants should not be allowed to “misappropriate” this quasi property right in real time “information” pertaining to the matches.

Single Judge and Remand:

A single judge of the Delhi High Court (Justice Valmiki Mehta) ruled in favour of the defendants within a single day of hearing the parties! However, the framework for analysis was flawed, in that the judge held that since the copyright act did not recognise any common law rights (outside of the breach of confidence), no separate claim of unfair competition (under the hot news doctrine) was maintanable. As a guest blogger rightly points out, the plaintiffs’ claim was not predicated on the copyright act, but a separate tort of unfair competition, which had already been recognised once earlier (although not in very elaborate legal language) by the Chennai High Court in the Marksman case.
Upon appeal to the Division Bench, it remanded the case to the single judge owing to procedural infirmities. Another single judge (Justice ML Mehta) heard arguments afresh and upheld the plaintiffs’ claim that under a separate tort of unfair competition/unjust enrichment, it could restrain third parties from communicating the scores in real time.

Quasi Property Rights and Unfair Competition:

The judge endorsed a quasi property right in the real time “scores”, given the huge investments in the match and the fact that Star TV paid enormous sums of money to BCCI for securing these rights.

However, since the real value lay in the “contemporaneity” of the scores and other information that were being transmitted, the judge permitted third parties to use the scores after a “15” minute time lag. A “middle path” of sorts, if you will.

It is important to note that in an earlier ruling involving similar facts (the Marksman case), the Madras High Court appears to have endorsed the tort of unfair competition and supported the creation of quasi property rights in real time scores. In pertinent part, the court relied upon the NBA case in the US and held:

“The right of providing scores, alerts and updates is the result of expenditure of skill, labour and money of the organisers and so the same is saleable only by them. The sending of score updates and match alerts via SMS amounts to interference with the normal operation of the Organisers business. The defendant‟s act of appropriating facts and information from the match telecast and selling the same is nothing but endeavoring to reap where the defendants have not sown.”

Implications of the Ruling:

Here are some of the quick implications of this ruling:

1. With the earlier Madras decision and now with the Delhi High Court crystallising it even further, we have a new IP category to contend with, namely the tort of unfair competition (unless the appellate courts reverse). The last I counted, we had 10 IP categories in India (patents, copyrights, trademarks, designs, trade secrets, semiconductors, GI’s, plant variety protection, publicity rights, biodiversity protection (in a remote way no doubt). We now have 11, the same number as a cricket team!

Common Law vs Statute?

2. Creative lawyers will no doubt squeeze in many more alleged “wrongs” into this new IP box. This is potentially problematic, given that any new creation invariably takes away from what might have been the “public domain” and principles of free competition.  The key question for discussion is: do we need a separate tort of unfair competition at all? Could one argue that existing IP regimes balance out competing interests appropriately and carve out what can be cleaved off as “private” property? To the extent that a new right needs to be created, is it not a “policy” call that ought to be taken by legislators after balancing out all competing concerns? Will not such an open ended common law tort open the floodgates for the adoption of “data exclusivity” norms in the pharmaceutical context, a distinct form of IP right that the Indian government has, time and again, refrained from legislating on.

Justice Mehta himself quotes with approval the cautionary note struck by Justice Holmes who dissented from the majority view in IMS and thought that this was an issue better left to legislators:

“…the creation or recognition by courts, of a new private right, may work serious injury to the general public, unless the boundaries of the right are definitely established and wisely guarded. In order to reconcile the new private right with the public interest, it may be necessary to prescribe limitation and rules for its enjoyment; and also to provide administrative machinery for enforcing the rules. It is largely for this reason that, in the effort to meet the many new demands for justice, incident to a rapid changing civilization, resort to legislation has latterly been had with increasing frequency.”

3. I am given to believe that industry associations have begun lobbying for a separate statute on unfair competition law. In which case, the above point I raise becomes even more important: should we expressly legislate principles of unfair competition or leave it open ended for the courts to keep populating as newer categories of alleged IP harms emerge?

4. With this ruling (as with many others in the IP space), it is clear that intellectual property is more about  “investment” and less about “intellect”. But then, most of us already knew this, didn’t we? My PhD thesis calls for an explicit investment protection regime in the context of pharmaceutical investments. I argue that we must call a spade a spade and stop pretending that we’re predicating protection on some form of “intellect”.

Sai Krishna Associates represented Star TV and secured this major victory in what will go down as a landmark case in the annals of Indian IP jurisprudence.

 

Shamnad Basheer

Shamnad Basheer

Prof. (Dr.) Shamnad Basheer founded SpicyIP in 2005. He's also the Founder of IDIA, a project to train underprivileged students for admissions to the leading law schools. He served for two years as an expert on the IP global advisory council (GAC) of the World Economic Forum (WEF). In 2015, he received the Infosys Prize in Humanities in 2015 for his work on legal education and on democratising the discourse around intellectual property law and policy. The jury was headed by Nobel laureate, Prof. Amartya Sen. Professional History: After graduating from the NLS, Bangalore Prof. Basheer joined Anand and Anand, one of India’s leading IP firms. He went on to head their telecommunication and technology practice and was rated by the IFLR as a leading technology lawyer. He left for the University of Oxford to pursue post-graduate studies, completing the BCL, MPhil and DPhil as a Wellcome Trust scholar. His first academic appointment was at the George Washington University Law School, where he served as the Frank H Marks Visiting Associate Professor of IP Law. He then relocated to India in 2008 to take up the MHRD Chaired Professorship in IP Law at WB NUJS, a leading Indian law school. Later, he was the Honorary Research Chair of IP Law at Nirma University and also a visiting professor of law at the National Law School (NLS), Bangalore. Prof. Basheer has published widely and his articles have won awards, including those instituted by ATRIP, the Stanford Technology Law Review and CREATe. He was consulted widely by the government, industry, international organisations and civil society on a variety of IP issues. He also served on several government committees.

7 comments.

  1. AvatarAnonymous

    As was expected, the Defendants appealed against this order. The Appeal was listed today and the Division Bench was quick to suspend the operation of this order (directing a certain amount to be deposited in Court). The Appellants/ Defendants are before a bench more familiar with such matters, and can be hopeful that its one that is likely to appreciate that exclusive rights cannot be conjured out of thin air!!

    Reply
  2. AvatarAnonymous

    So does the judgment of the hon’ble single judge amount to stating that if parties to a contract acknowledge certain rights (basically by agreeing to pay money for it) the world at large as well as the courts ought to uphold this as a legal right. This can have huge ramifications as two parties are then free to decide “legal rights”!!

    Reply
  3. AvatarAnonymous

    Anon @ 7.13 Could you please give a link of the order of the DB. Has the court categorically suspended or stayed the order?

    If the order has been suspended why did the DB ask to make deposit? Has the court commented on the Single Judge Judgment in the order?

    Reply
  4. AvatarShamnad Basheer

    We’ve just posted the order on our website. Here is the link.

    https://spicyip.com/docs/star-order.PDF

    It’s a rather curiously worded order. It begins by stating that “status quo” on the date of the order of the single judge shall be maintained. Initially, I assumed this to mean that the “restraining order” against the defendants (that they could not transmit scores without a 15 minutes gap) would stand.

    However, further lines of the order make it clear that this is not what the appellate judges had in mind. They’ve effectively held that the defendants are free to transmit scores, provided they deposit 10 lakhs in court. To this extent, the restraining order does not apply to them anymore. The judges however make it clear that this is purely an interim measure and that they are not delving into the merits of the single judge order at this time. Its a tricky case and one hopes that the appellate bench will come back with a decision that is conceptually clearer than what the single judge rendered and lay down the precise contours of the law in this regard…

    Reply
  5. AvatarAnonymous

    Status quo to be maintained by the parties as on the date of the judgment means that both parties cannot alter the status quo. does it mean that the Def cant transmit scores of any new series since it would be altering the status quo as on the date of the judgment? rightly the DB allowed the Def to provide scores subject to a deposit since the case is about Money only. even the Single judge allowed the Def to take license and provide score.

    Reply
  6. AvatarAnonymous

    Another order of the high Court directing payment of money in Court for IPL 6

       IN THE HIGH COURT OF DELHI AT NEW DELHI
      
      CS(OS) 1118/2011
      
      VROCKMOBILE COMMUNICATIONS PVT LTD ….. Plaintiff
      
      Through: Mr. Pravin Anand and Mr. Gurpreet Singh, Advs.
      
      
    versus
      
      
      
      RELIANCE COMMUNICATIONS LIMITED and ANR….. Defendants
      
      Through: Mr. A. Ringe and Mr. Arnav Kumar, Advs. for D-1.
      
      Mr. Amit Sibbal with Mr. R. Rangaswamy, Mr. Prateek Chadha and Mr.
      Raman Kumar, Advs. for D-2.
      
      Mr. Sanjay Jain, Sr. Adv. with Mr. Hardeep Singh Anand, Ms. Vandana
      Sehgal, mr. Rohan Thawani, Ms. Noor Anand, Ms. Ruchi Jain and Ms. P. Kaur,
      Sr. Advs. for D-3.
      
      CORAM:
      
       HON’BLE MR. JUSTICE RAJIV SAHAI ENDLAW
      
       O R D E R
      
       21.03.2013
      
      
      
      IA No.13725/2011 (of the defendant No.1 u/O 7 R-11 CPC)
      
      1. The counsel for the defendant No.1 seeks passover. It is already
      1600 hours. The matter is unlikely to reach again.
      
      2. List on 7th August, 2013.
      
      IA No.7517/2011 (of the plaintiff u/O 39 R-1and2 CPC)
      
      3. The counsel for the plaintiff presses this application contending
      that IPL-6 is due to commence on 03.04.2013. Attention is invited to the
      order dated 13.05.2011 relating to IPL-4 whereby on the undertaking
      of the
      
      
      
      CS(OS) 1118/2011 Page
      1 of 2
      
      
      
      
      
      defendant No.1 to deposit Rs.40 lacs in this Court, the defendant No.1
      was permitted to provide SMS and IVRS services in respect of IPL-4.
      
      4. The counsel for the defendant No.1 as well as counsel for the
      defendant No.3 argue that no application has been filed for IPL-6. They
      further state that there is no such direction for IPL-5.
      
      5. The suit is for restraining these defendants from providing such
      services during the IPL seasons and it cannot be said that the suit is
      confined to one IPL season only. Moreover, it is not the case that after
      IPL-4, the suit has become infructuous. Rather the same has remained
      till now.
      
      6. In the circumstances, the defendant No.1 is directed to deposit
      Rs.40 lacs in this Court on or before 1st April, 2013, if desires to
      provide SMS and IVRS services in respect of IPL-6.
      
      7. Needless to state that if the said amount is not deposited, the
      defendants No.1 and 3 shall stand restrained from providing the said
      services.
      
      8. On request of the defendant No.2, the time for filing the documents
      is extended by another four weeks.
      
      9. List on 7th August, 2013.
      
      Dasti.
      
      
      
      RAJIV SAHAI ENDLAW, J
      
      MARCH 21, 2013
      

      
      

    Reply

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