National Football Scouting v. Rang

11-cv-5762-RBL
December 13, 2012
Federal Court
Washington
Western District of Washington

Defendant Rang, a sports writer, published NFS’s proprietary “Player Grades” intended for use by its customer football teams. The Western District of Washington denied cross-motions for summary judgment finding questions of material fact as to whether plaintiff's subjective assessments represented by the player grades were protectable as trade secrets.

The court first addressed the issue of whether Rang had violated copyright law through release of the National’s player grades. Finding three of the four fair use factors weighed in Rang’s favor, the court decided that while the grades were copyrightable, Rang’s use of the grades constituted fair use. On the issue of trade secret misappropriation, the court found that the grades did constitute “information” under the relevant trade secrets statute, and therefore, could be considered trade secrets. However, the court found that any determination on whether the grades were in fact trade secrets was an issue for a jury, since questions remained over whether National made reasonable attempts to protect the secrecy of the grades.

INC., National Football Scouting
et al., Rob Rang
Uniform Trade Secrets Act

Case Report

National Football Scouting Inc. (“National”) brought action against Robert Rang, a sports writer, and Sports Xchange (collectively “Rang”), a sports website, alleging claims of copyright infringement and misappropriation of trade secrets based on Rang’s publication of player grades from National’s proprietary scouting reports.

Each year, National compiles scouting reports for National Football League (“NFL”) clubs for use during the player draft. These reports include a lengthy analysis on each player, along with a letter grade representing the player’s likelihood of success in the NFL. The scouting reports are proprietary and shared only with member clubs. Rang published eight articles, which disclosed the grades of eighteen players. These articles included National’s assigned grade, along with Rang’s original commentary on the players and his personal opinion of their draft prospects. Rang argued that the grades themselves were not copyrightable, and that even if they were, his actions were protected under the “fair-use” doctrine. In addition, Rang argued that National’s subjective opinions (as expressed through grade assignment) were not entitled to protection as a trade secret.

The court first considered whether a valid copyright existed over the player grades. Emphasizing that “numeric expression of a professional opinion can be copyrightable,” the court determined that the grades were “compilations of data chosen and weighed with creativity and judgment.” National Football Scouting v. Rang, 2012 WL 6444226, at *3, (W.D. Wash. 2012) (citations omitted). Thus, the court concluded that the creativity in forming the grades was sufficient to warrant the grades copyrightable.

Turning to Rang’s fair-use defense, the court determined that three out of four factors under Section 107 of the Copyright Act favored a finding of fair use.

In considering the purpose and character of the use, the court found that the highly transformative nature of Rang’s use of the player grades weighed strongly in favor of a fair use finding. The court applied the three-factor test that the Ninth Circuit articulated in Monge v. Maya Magazines Inc., which focused on (1) news reporting; (2) transformation; and (3) commercialism. Although it was undisputed that Rang’s articles had commercial purposes, the court found that the addition of Rang’s original thoughts created original commentary on the players. This was sufficient to determine that Rang’s articles were highly transformative and this factor weighed in favor of fair use.

Acknowledging that the player grades were minimally creative and entitled to protection as unpublished works, the court found the unpublished nature of the reports weighed in National's favor.

Although both parties agreed that Rang used only a small portion of the reports, National contended that Rang used its most valuable parts. Agreeing that the use was both small and valuable, the court nonetheless found that Rang had merely used the grades as a jumping off point, and emphasized Rang’s addition of original commentary. This factor weighed slightly in Rang’s favor.

Finally, considering the importance of market effect, the court found that Rang’s articles and National’s reports occupied two separate markets. In addition, “even if the Scouting Reports and articles were in the same market, the articles are not in any meaningful sense ‘a market substitute’ or ‘market replacement.’” Rang, 2012 WL 6444226 at *7. Since Rang’s articles did not decrease the market value of the reports, this factor weighed in Rang’s favor as well.

While the unpublished nature of the reports weighed in National’s favor, the court determined that this was insufficient to overcome the other factors and found that Rang had proven fair use.

On the trade secrets claim, Rang argued that National’s grades did not qualify as “information”; claiming that the grades were merely subjective opinions that cannot be protected under trade secret law. National responded that, “although the grades are subjective opinions, what grade National ultimately assigns to college players is itself a fact with independent significance.” The court focused on the statutory definition of trade secret as “information, including a formula, pattern, compilation, program, device, method, or technique.” Rev. Wash. Code. § 19.108.010(4).

Whether an opinion held by a business could be “information” under the Uniform Trade Secrets Act was a novel issue for the court. While Washington had adopted the Uniform Trade Secrets Act, the Washington courts continue to consider the Restatement (Third) of Unfair Competition for guidance. Focusing on the plain meaning of the statute, the court determined that National’s player grades were “information” under the statute and rejected Rang’s contention that the grades were mere ideas or opinions. The court emphasized, without elaborating, that the fact that National assigned a player grade to a certain player was not an idea or opinion.

Given that National’s player grades constituted “information” under the statute, the court determined that whether the grades were protected as a trade secret was an issue for a jury. The court noted that a factual dispute existed over whether National had made reasonable attempts to preserve the secrecy of the information and whether the grades received economic value from not being generally known.

Ultimately, the court did not directly address the novel question of whether an opinion can be a protectable trade secret. The court determined that it did not need to address this issue since National was not arguing that the grades themselves were trade secrets, but rather the fact that National had assigned player grades in the first place.