The NSE Case

22nd May, 2023 - 7:07 am Categories: Copyright Legal Issues 0 Comments

Introduction

Copyright law is built on the foundation of originality, and several doctrinal approaches have been developed to define and apply it. Two such approaches are the sweat of the brow and modicum of creativity doctrines. In Indian copyright case law, DB Modak sought to reconcile these standards by adopting a middle ground. The sweat of the brow standard was deemed too low, while the creativity standard was too high. To qualify for copyright protection, a work must be the result of the author’s skill and judgment, with at least a minimal degree of creativity. It cannot be a mere product of labor or investment. This aligns with Canadian jurisprudence and the influential US decision in Feist Publications.

In order to argue against NSE’s copyright claims, we can draw an analogy between NSE’s data and the copy-edited judgments in DB Modak. The Supreme Court in that case only extended copyright protection to the headnotes of the judgments, as they required a minimal level of skill and creativity in their preparation. The rest of the judgment was considered a mere product of labor. Similarly, the data in question here is essentially just share prices of real-time listed companies. It is a product of market forces and does not involve any significant creativity beyond the labor and capital invested in the functioning of the stock exchange. The data is simply a collection of empirical facts compiled by algorithms. In the US, the court in NYMEX v ICE denied copyright protection to settlement prices on the basis that they merely reflected economic facts of the world. Similarly, the stock prices of a listed company on NSE and BSE are nearly identical, with only a small difference of 5-10 paise. This suggests that even the additional details surrounding the stock, such as high, low, open, close, and graph, are essentially the same and do not involve a significant level of creativity.

It may be argued in response that while facts themselves are not copyrightable, compilations or databases of facts may be protected under copyright law. However, as previously discussed, this protection is contingent on the existence of a modicum of creativity. This was also held in the case of Tech Plus Media Private Ltd vs Jyoti Janda, where the item in question was a “potential subscriber database”. The Delhi High Court in this case relied on the DB Modak ruling to determine the appropriate standard. Some compilations have been protected in the US because the author exercised subjective judgment and selectivity in choosing the elements that make up the compilation. However, if the stock gaming apps were to copy data from indices such as NIFTY BANK, NIFTY AUTO, etc., NSE may have a stronger argument for copyright protection, as the companies included in these indices are selected based on their market capitalization and the weighted average of each company may not be the same. Additionally, the threshold for creativity in these cases is not very high.

To address NSE’s concern that these apps use live data, including graphs, the apps may argue the applicability of the merger doctrine. This doctrine holds that if there are very few ways of expressing an idea, the subject matter is not copyrightable, as the idea and expression merge. This doctrine aims to prevent the creation of a monopoly over an idea through copyrightability, as clarified in Morrissey v. Procter & Gamble and other similar cases. In this case, as in the instant case, the item in question did not contain any original creative authorship. The representation of such a large volume of numbers changing every second in very few ways is a challenge. The method of representing stock prices through graphs is used across all countries, which proves the same. Additionally, since the exchange-generated prices themselves are economic facts of the world and not copyrightable, as held in multiple cases such as NYMEX, Dow & Jones v. Board of Chicago, S & P v. Comex, the addition of graphs should not affect the copyrightability of the data.

An additional factor that could work against NSE’s arguments is the functionality of their data and graphs. The functionality doctrine in copyright law denies protection to subject matter that is dictated by technical considerations and solely serves a utilitarian purpose without any creative expression. The graph in question serves a technical and functional purpose, showing changes in prices without any added creativity or aesthetic elements. It is designed to represent the market dynamics of share trade. The precedent set in Star Athletica, L.L.C. v. Varsity Brands states that the utilitarian function of a useful article should be separable from its aesthetic design, as was done in the case of the cheerleader costume and its various designs. In this case, the two elements do not appear to be distinct. Despite sufficient precedent in cases such as Brompton Cycle and Star Athletica, the Dow & Jones case held that even if copyright exists, the protection for such utilitarian items is weak and fails to protect the author, especially if there are slight deviations from the protected subject-matter. It is worth noting that one of the apps visited had a difference of 2-3 rupees in prices, and the likelihood of this being the case with most apps is high due to data transmission times.

Conclusion

After analyzing the issues discussed above, we have arrived at the following conclusions. Firstly, NSE’s data lacks the necessary level of creativity required for copyright protection. Secondly, the data and its graphical representation are closely connected and, as a result, are not subject to copyright protection under the merger doctrine. Lastly, the data serves a strictly utilitarian purpose and does not involve any creative expression, which is a fundamental requirement for copyright protection. While NSE may have a strong argument regarding securities, as the value of the points is linked to underlying securities and thus can only be traded on recognized stock exchanges, the same cannot be said for intellectual property rights (IPR).

Author: Tanya Saraswat, in case of any queries please contact/write back to us via email to chhavi@khuranaandkhurana.com or at Khurana & Khurana, Advocates and IP Attorney.

References

• https://spicyip.com/2022/11/copyrighting-the-uncopyrightable-the-nse-saga.html
• https://yourstory.com/2022/10/exclusive-nse-issues-cease-desist-notices-to-stock-gaming-apps#:~:text=News-,%5BExclusive%5D%20NSE%20issues%20’cease%20%26%20desist’,notices%20to%20stock%20gaming%20apps&text=The%20National%20Stock%20Exchange%20has,mimicking%20real%2Dtime%20equities%20trading.