The U.S. Court of Appeals for the Second Circuit affirmed the district court’s grant of summary judgment and rejected allegations of copyright infringement by the New York Mercantile Exchange (NYMEX) against IntercontinentalExchange, Inc. (ICE). New York Mercantile Exchange, Inc., v. IntercontinentalExchange, Inc., Case No. 05-5585 (2nd Cir., Aug. 1, 2007) (Katzmann, J.; Hall, J., concurring-in-part).
The dispute boiled down to an attempt by NYMEX to prevent ICE from utilizing NYMEX-generated settlement prices to clear trades. NYMEX claimed that its determination of settlement prices results from independent authorship having at least a minimal degree of creativity, thus entitling the settlement prices to copyright protection. Without reaching a decision on whether NYMEX’s settlement prices were copyrightable, the Second Circuit rejected NYMEX’s allegations of copyright infringement, noting that the merger doctrine, which forecloses allegations of infringement in those instances where there is only one or a few ways of expressing an idea such that finding copyright infringement would be akin to granting a copyright on the idea itself.
NYMEX is an exchange for trading futures and options on energy commodities and consists of a physical trading floor located in New York. In order to clear its trades at the end of the day, NYMEX must set a settlement price to allow for the valuation of open positions. Additionally, the U.S. Commodity Futures Trading Commission requires NYMEX to generate and disseminate these prices. The NYMEX Settlement Price Committee is charged with the task of determining the settlement price for each open futures contract on each commodity. NYMEX argues its generation of these prices is copyrightable.
ICE is an internet-based commodities market that does not clear its own trades, but contracts with the London Clearing House to do so. In order to clear these trades, ICE obtains NYMEX’s settlement prices from a subscriber to NYMEX services and forwards those settlement prices to the London Clearing House to effectuate the clearance of ICE customers’ trades. It is this activity that NYMEX sought to prevent through its copyright infringement suit.
The district court granted ICE’s motion for summary judgment, finding the settlement prices to be "real-world facts" that are not eligible for copyright protection and that the idea represented by the settlement price merged with the expression of it. Alternatively, the district court found that the settlement prices are "non-copyrightable words or short phrases." NYMEX appealed.
The Second Circuit affirmed. Even assuming the settlement prices merit copyright protection, the majority concluded that because the settlement prices had to be numerical and based upon underlying market data, few manners of expression existed to represent these prices and thus the merger doctrine foreclosed NYMEX’s claim.
Judge Hall filed a concurring opinion in which he agreed with the majority’s application of the merger doctrine, but disagreed with the majority’s dicta concerning whether there exists a strong argument that the settlement prices are merely facts not eligible for copyright protection. Judge Hall read existing precedent to require an extremely low threshold to demonstrate originality and criticized the majority’s statements on this point as implying a higher threshold exists.
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