A federal judge has rejected the New York Mercantile Exchange's (Nymex) claims of copyright and trademark infringement by competitor Intercontinental Exchange (ICE) for ICE's use of Nymex settlement prices in electronic energy trading and clearing operations. However, Nymex, which filed the lawsuit nearly three years ago, said it plans to appeal the judge's decision (see NGI, Nov. 25, 2002).

"We are currently reviewing our options," said Nymex President James E. Newsome. "We believe that the court's recent opinion and order is incorrect, and expect to appeal the decision."

Nymex claimed that ICE was violating copyright law by using Nymex futures settlement prices in contracting and clearing processes. Nymex also told the court that it was being deprived of "substantial revenues and profits" as a result of the copying.

However, Judge John G. Koeltl of the U.S. District Court for the Southern District of New York granted summary judgment in favor of ICE on all of Nymex's claims. The judge decided that Nymex's settlement prices are not copyrightable works, and that ICE had not engaged in copyright or trademark infringement in referencing Nymex's publicly available settlement prices in energy derivative contracts.

"We have always believed that Nymex's lawsuit was more about squelching competition than about protecting any valid intellectual property right," said ICE Chairman Jeffrey C. Sprecher. "At the beginning of this case, we took a principled position that we would not allow a competitor to dictate the direction of our business based upon a claim of intellectual property where none existed.

"We are gratified that both the court and the United States Copyright Office agreed that Nymex's settlement prices are not copyrightable works, but are facts that can be referenced by the marketplace," Sprecher added. "This is a positive ruling not only for ICE, but for all energy market participants who use the derivatives markets to manage risk."

Nymex had attempted to register a copyright in its settlement prices in March 2002, but the U.S. Copyright Office declined to approve the initial application on the basis that individual settlement prices are not copyrightable. Then in April 2002, the exchange filed a second application and was granted copyright protection in the composition of its website, which included access to its futures settlement prices. Nymex attempted to use that copyright protection as a basis for its lawsuit.

But in a statement of interest filed with the court, the U.S. Copyright Office reiterated its position that the exchange should not be afforded copyright protection in individual settlement prices.

Last year, Judge Koeltl dismissed ICE's antitrust counterclaims, stating that Nymex has a legitimate business interest in trying to prevent ICE from using its settlement prices (see NGI, July 12, 2004). ICE had countersued Nymex for abuse of monopoly power for claiming copyright protection over publicly available settlement prices (see NGI, Jan. 13, 2003). Koeltl said that given the Commodity Futures Trading Commission's authority to "regulate the scope and terms of access to Nymex settlement prices, ICE cannot make out a claim under the essential facilities doctrine" of antitrust law.

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