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8th Circuit rules in favor of fantasy baseball company

By The Associated Press
10.17.07

Editor's note: On Nov. 26, the 8th Circuit denied a petition to rehear an attempt by the Major League Baseball Players Association and Major League Baseball Advanced Media to reverse the ruling reported below. The petition was denied without explanation. The MLBPA can still ask the U.S. Supreme Court to review the case.

ST. LOUIS — A federal appeals court upheld a lower court ruling yesterday that lets a fantasy baseball company use players’ names and statistics without paying a licensing fee.

In a 2-1 decision, the 8th U.S. Circuit Court of Appeals panel ruled that CBC Distribution and Marketing Inc. doesn’t have to pay the players, even though it profits by using their names and statistics.

The Major League Baseball Players Association had argued that companies like CBC are essentially stealing money from players, who charge big fees to endorse things like tennis shoes and soft drinks. The ruling could have a broad impact on the fantasy league industry, which generates more than $1.5 billion annually from millions of participants.

If CBC had lost, the MLBPA would have gained monopoly rights over publicly available statistics and other information that is used as fodder for fantasy leagues across the country, said CBC attorney Rudy Telscher.

Telscher said the facts and figures are public information. He said it’s no different from media outlets that print game tallies to draw readers and make money.

“When you’re using mass information, it’s protected under the First Amendment,” he said.

Big media companies like Yahoo, ESPN and CBS pay MLB millions in annual fees to operate online fantasy leagues. Players make fake teams comprised of real MLB players. Over the course of a season, fantasy league players crunch statistics to judge how well the players on their team are performing.

MLBPA attorney Virginia Seitz didn’t return a message seeking comment yesterday. She argued before the 8th Circuit panel that online fantasy games exploit players by effectively turning them into game pieces and using their names to draw more customers.

“There’s no way of escaping the fact that players’ names are on the product,” Seitz argued at a hearing before the appeals panel in June.

The court found that fantasy leagues’ broad use of statistics isn’t the same as faking an endorsement.

“[T]he fantasy baseball games depend on the inclusion of all players and thus cannot create a false impression that some particular player with ‘star power’ is endorsing CBC’s products,” said the ruling written by Judge Morris Arnold and joined by Chief Judge James Loken.

Judge Steven Colloton dissented from the opinion, but he didn’t disagree with CBC’s claim of First Amendment protection.

Colloton took issue with the fact that CBC initially signed a contract with MLB Advanced Media to pay fees for the players’ information, but then backed out of the contract when it filed a lawsuit claiming that MLB didn’t have a right to collect the fees.

“That CBC later decided it did not need a license, and that it preferred instead to litigate the point, does not relieve the company of its contractual obligation,” Colloton wrote.


Update
MLB strikes out in effort to shut down fantasy baseball business
Supreme Court leaves intact lower courts' rulings that found company has free-speech right to use players' names and stats. 06.02.08

Previous
League seeks to force fantasy baseball to play by its rules
8th Circuit panel appears skeptical of claim that online fantasy companies must pay license fees to Major League Baseball. 06.18.07

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