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Can a price be copyrighted? It may seem bizarre but that is the question at the core of a high-stakes dispute between the New York Mercantile Exchange Inc., and the online commodity marketplace IntercontinentalExchange Inc. (ICE). Late last month, Nymex, the nation’s largest regulated commodity futures exchange, sued its electronic rival in federal court in Manhattan. The lawsuit, which has been assigned to federal Judge John G. Koeltl of the Southern District of New York, accuses ICE of copyright infringement for allegedly using Nymex-created prices for natural gas futures and light sweet crude oil futures contracts to clear and settle trades of derivative contracts for those two commodities. Nymex is claiming that the prices, which are set at the end of each business day, are protected because they are included in its automated database, which is registered with the U.S. Copyright Office. Additionally, the exchange asserts, the prices are “original works of authorship” requiring “a significant degree of educated judgment” of the Nymex staffers who set the prices. Neither a Nymex spokeswoman nor the exchange’s outside counsel, Herbert C. Ross, of Olshan Grundman Frome Rosenzweig & Wolosky, would comment on the lawsuit. Kelly Loeffler, the director of investor and public relations at ICE, also declined to comment. Typically, copyright protection covers original or expressive works such as a song, a painting or a novel. Over the years, the doctrine has been extended to protect works as diverse as software code and belt buckles. Facts or ideas, on the other hand, have never been copyrightable. Yet as far-fetched as it may sound — most people think of the price of an item as the quintessence of a fact — the idea of copyright-protected prices has legal precedence. In a 1994 decision, CCC Information Services Inc. v. Maclean Hunter Market Reports Inc., 44 F.3d 61, the 2nd U.S. Circuit Court of Appeals ruled that projected used car valuations were original works that qualified for copyright protection, since the predictions were based on professional judgment and expertise. One other circuit has followed suit. In CDN Inc. v. Kapes,197 F.3d 1256 (1999), the 9th Circuit found suggested wholesale prices for collectible coins to be copyright-protected, largely for the same reasons cited in CCC Information Services Inc. But many copyright experts say the two cases go too far. Pointing out that the decisions stand alone in extending protection to prices, they argue that the cases misinterpret a 1991 U.S. Supreme Court decision, Feist Publications Inc. v. Rural Telephone Service Co. Inc., 499 U.S. 340, that set the standard for database protection. Feist, in which the Court held that telephone white pages were not copyrightable, sharply limited the scope of copyright protection as it extends to facts. Under the decision, only a compilation of facts — or a database — may be protected, and then only if it demonstrates “sufficient originality” in selection or arrangement. The circuit court cases “cross the line,” said Marci Hamilton, a professor at Benjamin N. Cardozo School of Law. “Courts should be very nervous about extending copyright protection in such circumstances.” Hamilton said the Nymex claim is no different. “I think it is an outrageous overreaching in the face of existing law,” she said. “They may have a right in the selection and arrangement of the data as a compilation, but certainly not in the facts or data itself.” TAKING ADVANTAGE? Commodities experts also worried that Nymex is unfairly taking advantage of its quasi-governmental status. “Exchanges get certain regulatory privileges in exchange for acting in part in the public good,” said Frank Partnoy, a professor at the University of San Diego School of Law. “The price information is a public good,” he said, “so the idea that Nymex would feel that its prices were copyrightable is absurd and counter to the very notion of exchanges.” And copyright lawyers expressed concern that, should Nymex win, the impact could reverberate beyond the immediate dispute with ICE. “Many of these numbers take on a life and significance that goes far beyond the narrow use Nymex is putting them to,” said Jonathan Band, a partner at the Washington, D.C., office of Morrison & Foerster who represents Internet companies. “Say I wanted to compare how this commodity is doing versus that commodity. If a court were to find an infringement here, that kind of analysis would be impossible.” Yet database owners countered that the Nymex prices should qualify for protection, because setting them required the educated judgment of the exchange’s staff. “If it were just the price at the end of the day, like a stock price, it would be more akin to the white pages, and would not be protected,” said Keith Kupferschmid, intellectual property counsel at the Software and Information Industry Association, of which Nymex is a member. “But it seems more akin to coin or stamp prices, in that some amount of creativity goes into creating the price.” DATABASE WARS The Nymex lawsuit is only the latest twist in an ongoing battle over database protection that has been waging since the Feist decision. Most of the action has been on Capitol Hill, where a diverse group of database owners such as the New York Stock Exchange, the American Medical Association and The New York Times have been pushing for legislative protection. They say that Feist has created a gap in copyright law that facilitates piracy, a problem that has become especially acute because of the Internet. “With the Internet, you can copy and distribute information to thousands of people with the click of a mouse,” Kupferschmid said. But an equally unlikely coalition of data collectors worried about access to basic factual information, including Yahoo, Charles Schwab & Co. and the American Library Association, has successfully fended off any initiatives, and the two sides are presently at a stalemate. With their efforts in Congress thwarted, the database owners have been turning to other tactics, including cease-and-desist letters and the courts. Around the same time Nymex sued ICE last month, several major retailers including Wal-Mart and Target threatened legal action against various Internet shopping sites that had published information about post-Thanksgiving sales ahead of their intended release. Upon receiving the cease-and-desist letters, the Web sites immediately pulled the information, saying they could not afford to go up against a big retailer like Wal-Mart. Atlanta-based ICE is in a very different position, and experts predicted it would not cave in nearly as quickly. It is the largest online energy exchange after Enrononline’s demise earlier this year, and has a powerful array of founding members, such as Goldman Sachs, Morgan Stanley, Royal Dutch/Shell and BP Amoco, backing it. After acquiring London’s International Petroleum Exchange last year, ICE has been competing with Nymex for global supremacy in energy trading. Copyright experts are sure to be watching the case closely. “It raises very serious questions about the availability of information in the information age,” said Morrison & Foerster’s Band. Database owners contend that the Nymex prices should qualify for protection because setting them required the educated judgment of the exchange’s staff.

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