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Pawn to E4: Chess Website Kept in Check over Digital Rights to Publish Players' Moves

Last month, on the eve of a battle between two chess grandmasters, three websites found themselves "FIDEing" for advantage over tournament revenue streams. After much anticipation, the World Chess Championship recently concluded in New York City, as reigning champion Magnus Carlsen of Norway successfully defended his title against challenger Sergey Karjakin of Russia. Before the action even unfolded, World Chess Events Ltd. and World Chess U.S., Inc. ("World Chess") – owners and operators of the chess website worldchess.com – partnered with the World Chess Federation ("Fédération Internationale des Échecs" or "FIDE") to gain exclusive production and broadcast rights to the event. By doing so, World Chess was looking to become the king of the chess broadcasting world, mixing together live commentary on match moves, virtual reality, and a 360 degree panorama of every flank, fork and forfeit.

Given its big investment gambit, World Chess decided to go on the legal attack, attempting to pin down two of its main competitors. In a complaint filed in a New York district court against the operators of the websites chessgames.com ("Chessgames") and chess24.com ("Chess24"), World Chess sought $4.5 million in damages, a preliminary injunction prohibiting the sites from republishing live match updates, and declaratory relief that its Championship broadcast rights were enforceable (World Chess U.S., Inc. v. Chessgames Services LLC, No. 1:16-cv-08629-VM (S.D.N.Y., filed Nov. 7, 2016)). In its strong judicial play, World Chess alleged that the method the defendants would use to acquire the moves (e.g., logging into World Chess' site or attending the live event and transmitting moves) would constitute a breach of contract. Both World Chess' terms of use (which one must agree to before accessing World Chess' website content) and visitor rules (which are found on the admission ticket to the live event) prohibit the reproduction and redistribution of the players' chess moves. Hence, in World Chess' view, Chess24 and Chessgames would be violating the "express contractual restrictions" placed upon them. In a tactic typically used by newspapers and media outlets, World Chess also brought hot news misappropriation claims, reasoning that real-time chess moves were akin to breaking news, which could be treated as the quasi-property of World Chess, and thus subject to protection against a competitor's "free riding."

World Chess argued that Chessgames and Chess24 were essentially "pirates" that intended to report and analyze the moves list of each Championship match in real time without compensating World Chess for its production efforts. Such an opportunist strategy, World Chess contended, "threatens the continued viability of chess tournaments and the enjoyment of such events by chess fans around the world." To support its contentions, World Chess noted that chess moves are unique because of the purely intellectual nature of chess. Unlike other traditional sporting events where the entertainment value goes far beyond the X's and O's, one can fully appreciate a high-level chess match simply by studying the moves. Tournament hosts gain needed revenue, in part, from being the first (and perhaps exclusive) entity to publish the moves in real time. Therefore, by republishing the Championship moves at approximately the same time as World Chess, World Chess argued that Chess24 and Chessgames would be stalemating its profit model and its very ability to produce such an event and award prize money to the participants.

With Chess24 and Chessgames on the clock, Chess24 quickly countered and submitted a reply brief just prior to the injunction hearing. In its response, Chess24 argued that the issue of whether one can hold exclusive rights in chess moves is black and white: chess moves are purely factual in nature and thus not protectable by copyright. The website further noted that none of the audiovisual or textual materials from the World Chess site would be displayed on its site during the tournament. Rather, Chess24 would draw the moves list from publicly available sources such as Twitter or the Norwegian TV broadcast and then compile its own digital chess boards and commentaries for each match. Moreover, Chess24 contended that World Chess could not demonstrate irreparable harm because it purportedly licenses the right to real-time match reports to other websites, thereby establishing, in the defendant's view, that a monetary remedy (e.g., lost licensing revenue) was available.

Despite World Chess' best efforts to piece together a viable claim against Chess24 and Chessgames, its motion for preliminary relief appears to have been a miscalculation. In a written opinion handed down on November 22nd, the New York court laid out its reasons for denying World Chess' application. Ultimately, the court found that World Chess could not carry the burden on its hot news and contract claims at this early stage. The court determined that the defendants were not necessarily "free riding" off of World Chess' event, but collecting factual data from secondary sources and expending their own resources to disseminate the news. Also, with the primary issue being a potential loss of ticket sales, television rights, and other forms of licensing revenue, the court did not agree that World Chess would suffer irreparable harm without an injunction. The court noted that such revenue "is precisely the type of loss compensable by money damages." Looking ahead, while World Chess' opening move failed, it needn't resign yet, and can instead advance its claims across the board in an effort to obtain monetary relief against Chess24 and Chessgames.

© 2019 Proskauer Rose LLP.

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