The "hot-news" claim is limited to cases where: (i) a plaintiff generates or gathers information at a cost; (ii) the information is time-sensitive; (iii) a defendant's use of the information constitutes free-riding on the plaintiff's efforts; (iv) the defendant is in direct competition with a product or service offered by the plaintiffs; and (v) the ability of other parties to free-ride on the efforts of the plaintiff or others would so reduce the incentive to produce the product or service that its existence or quality would be substantially threatened.
The defendant had a program whereby it sent NBA scores to its subscribers, through pagers. The plaintiff, claiming misappropriation of its information, sued the defendant for misappropriation of the game scores. The trial court ruled in the plaintiffs' favor, and the defendants appealed once more.
Whether plaintiffs' state law claims for appropriation survived preemption.
Yes, plaintiffs' state law claims for appropriation survived preemption.
On appeal, the court held that plaintiffs' state law claims for misappropriation survived preemption. Because defendants expended their own resources to collect purely factual information, they did not free-ride on plaintiffs' product. As to plaintiffs' cross-appeal, the court held that the alleged false statements pertained to nonmaterial minutiae that did not misrepresent an inherent quality or characteristic of the plaintiffs' product.