A federal appeals court in New York Wednesday upheld a lower court’s decision that the New York Mercantile Exchange’s (Nymex) settlement prices for oil and natural gas futures are not protected by copyright.
Nymex filed the appeal after the U.S. District Court for the Southern District of New York rejected the energy trading exchange’s claim of copyright infringement by Atlanta-based IntercontinentalExchange (ICE), a major electronic energy trading platform that uses Nymex settlements to price swap transactions offered on its system. Nymex brought the lawsuit in November 2002 after the Copyright Office rejected its application for copyright of its settlement prices.
In upholding the district court’s decision, “we believe there is a strong argument that, like the census taker, Nymex does not ‘author’ the settlement prices as the term is used in copyright law,” the U.S. Court of Appeals for the Second Circuit said.
“We therefore…hold that, in using the settlement prices, ICE ‘took nothing more than ideas, for which the copyright law affords no protection to the author,'” a three-judge panel said.
“This is an important decision for all market participants,” said ICE Chairman and CEO Jeffrey C. Sprecher. “ICE has been confident all along in its position that Nymex has no intellectual property in its settlement prices, and we have been steadfast in our position that we will not allow the threats of a competitor to dictate the direction of our business.
“The United States Copyright Office agreed with our position that Nymex settlement prices are not copyrightable. The district court also agreed with this position and granted judgment in favor of ICE as a matter of law. Now, the Second Circuit Court of Appeals has affirmed this decision in favor of ICE. Given the repeated affirmation of our position, we consider this matter closed.”
Nymex said it was reviewing its legal options in the wake of the setback. “While we are clearly disappointed by this decision, it should have no impact on our business as our competitor [ICE] has for many years been misappropriating, and continues to misappropriate, our settlement prices,” said Nymex President and CEO James E. Newsome.
“Nymex will continue to be the leading market innovator for new products and ideas in the energy and metals industry despite the efforts of our competitor to use these proprietary ideas.”
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