Chicago Board Options Exchange v. International Securities Exchange , 973 N.E.2d 390 ( 2012 )

ILLINOIS OFFICIAL REPORTS
Appellate Court
Chicago Board Options Exchange, Inc. v. International Securities Exchange, L.L.C.,
2012 IL App (1st) 102228Appellate Court CHICAGO BOARD OPTIONS EXCHANGE, INCORPORATED, CME
Caption GROUP INDEX SERVICES, L.L.C., and THE MCGRAW-HILL
COMPANIES, INC., Plaintiffs-Appellees, v. INTERNATIONAL
SECURITIES EXCHANGE, L.L.C., and THE OPTIONS CLEARING
CORPORATION, Defendants-Appellants.
District & No. First District, Sixth Division
Docket Nos. 1-10-2228, 1-10-2252 cons.
Filed May 25, 2012
Held The trial court’s order enjoining defendants from providing an exchange
(Note: This syllabus market for the trading of index options tied to the Dow Jones Industrial
constitutes no part of Average and the S&P 500, which are owned by plaintiffs, was affirmed
the opinion of the court on appeal, and the appellate court also rejected defendants’ contention
but has been prepared that plaintiffs’ claims were preempted by federal copyright law, since
by the Reporter of plaintiffs’ claims did not fall under the Copyright Act, they were based
Decisions for the on defendants’ intended unlicensed and unauthorized use of the indexes,
convenience of the that use constituted misappropriation under Illinois law, in the absence of
reader.)
any conflict between the law of Illinois and the law of New York on the
issue of misappropriation, Illinois law applied, and plaintiffs were entitled
to injunctive relief.
Decision Under Appeal from the Circuit Court of Cook County, No. 06-CH-24798; the
Review Hon. William O. Maki, Judge, presiding.
Judgment Affirmed.
Counsel on William J. Nissen and Jamie E. Haney, both of Sidley Austin LLP, and
Appeal Andrew L. Deutsch, Kenneth L. Schmetterer, and Steven L. Reynolds, all
of DLA Piper LLP (US), both of Chicago, for appellants.
Paul E. Dengel, Stacie R. Hartman, and Ayad P. Jacob, all of Schiff
Hardin LLP, and Robert P. LoBue, Adeel A. Mangi, and Elizabeth
Shofner, all of Patterson Belknap Webb & Tyler LLP, both of Chicago,
and R. Bruce Rich, Benjamin E. Marks, and Mark J. Fiore, all of Weil,
Gotshal & Manges LLP, and Alan L. Unikel and Justin K. Beyer, both of
Seyfarth Shaw LLP, both of New York, New York, for appellees.
Panel JUSTICE GARCIA delivered the judgment of the court, with opinion.
Presiding Justice R. Gordon and Justice Lampkin concurred in the
judgment and opinion.
OPINION
¶1 Defendants International Securities Exchange (ISE) and The Options Clearing
Corporation (OCC) appeal the circuit court’s order enjoining them from providing an
exchange market for the trading of index options tethered to the Dow Jones Industrial
Average (DJIA) and the S&P 500 Composite Stock Price Index (S&P 500), which are,
respectively, owned by plaintiffs CME Group Index Services (CME) and McGraw-Hill
Companies. Plaintiff Chicago Board Options Exchange (CBOE) pays CME and McGraw-
Hill for exclusive licenses to provide such a market. ISE contends the circuit court erred in
declining to find the plaintiffs’ state law claims of misappropriation and unfair competition
preempted by federal copyright law. We hold the circuit court correctly rejected ISE’s
contention of preemption because the plaintiffs’ claims are not centered on “works of
authorship” to trigger copyright protection. Rather, the plaintiffs’ claims center on ISE’s
intended unlicensed, unauthorized use of the research, development, expertise, and goodwill
of the indexes for its own gain. Under Illinois law, this constitutes misappropriation as our
supreme court ruled in Board of Trade v. Dow Jones & Co., 98 Ill. 2d 109 (1983), which
concluded that a commodities exchange’s unlicensed use of the DJIA to offer a derivative
contract to investors constituted misappropriation. While there is some indication that federal
jurisprudence may have shifted from the underpinnings of Board of Trade, the case remains
the law in Illinois. Thus, we uphold the circuit court’s injunction against ISE’s unlicensed
use of the indexes and OCC’s clearing of trades on those indexes. We also reject ISE’s
conflict of law claim that Illinois law and New York law differ on the issue of
misappropriation.
-2-
¶2 BACKGROUND
¶3 The DJIA and S&P 500 indexes are widely disseminated to provide investors with a
gauge by which to measure the overall activity of the stock market. The indexes generate
millions of dollars in licensing revenues by serving as the underlying bases for a wide variety
of financial products. The indexes are tabulated through complex calculations involving both
objective and subjective factors, including the selection of appropriate securities to evaluate,
identification of evaluation criteria, and determination of policies for reflecting mergers,
takeovers, spin-offs, and other corporate events affecting the index components.
¶4 CBOE is a national securities exchange registered with the Securities and Exchange
Commission (SEC) and located in Chicago. It offers index options that trace the DJIA and
S&P 500 under its exclusive licenses with CME and McGraw-Hill Companies. An index
option gives its holder the right, but not the obligation, to exercise the option and receive the
difference between an index level when the index option is opened (the “strike price” or
“exercise price”) and the index level at the expiration of the option. It is essentially “a bet on
the future value of the index.” Dow Jones & Co. v. International Securities Exchange, Inc.,
451 F.3d 295, 300 n.6 (2d Cir. 2006). Since an index option is based on the overall stock
market, it gives the investor the ability to hedge against systemic risk in the market as a
whole, something that cannot be accomplished by portfolio diversification.
¶5 ISE is also a national securities exchange, with its principal place of business in New
York City. It specializes in the trading of options contracts, including index options. ISE has
created over two dozen of its own indexes, including three that highly correlate with the S&P
500. ISE requires third parties to obtain licenses to offer financial products based on its
indexes, and ISE itself has obtained licenses from third parties to use third parties’ indexes
as bases for its options products. ISE unsuccessfully requested a license to offer S&P 500
index options in the early and mid 2000s, and it expressed interest in a license for DJIA
index options in 2002, but the index providers opted to grant exclusive licenses to CBOE.
¶6 OCC is based in Chicago and is the lone clearing agency for index options in the United
States. It clears and settles every index option exercised in the country.
¶7 On November 2, 2006, ISE announced its intention to offer index options based on the
DJIA and S&P 500 without obtaining a license from the providers of those indexes. That
same day, ISE filed an action against Dow Jones1 and McGraw-Hill in the United States
District Court for the Southern District of New York, seeking a declaratory judgment that
ISE would not infringe on any rights of Dow Jones or McGraw-Hill by listing DJIA and S&P
500 options without a license.
¶8 On November 15, 2006, the plaintiffs filed a complaint in the circuit court of Cook
County advancing three counts: count I alleged that ISE’s proposed use of the indexes would
constitute misappropriation under Illinois common law; count II asserted that ISE’s actions
would tortiously interfere with CBOE’s prospective business advantage; and count III alleged
that ISE’s actions would constitute unfair competition under Illinois common law.
1
Dow Jones is the predecessor in interest to the DJIA, of which CME now owns a majority
share.
-3-
¶9 ISE removed the Illinois action to the United States District Court for the Northern
District of Illinois. On February 23, 2007, in accordance with the plaintiffs’ motion, Judge
Robert W. Gettleman remanded the matter to the circuit court of Cook County. Chicago
Board Options Exchange, Inc. v. International Securities Exchange, LLC, No. 06 C 6852,
2007 WL 604984 (N.D. Ill. Feb. 23, 2007). In ordering the remand, the court concluded that
“[p]laintiffs’ claims for misappropriation and unfair competition are not based on the
defendants’ threatened use of the published Index values themselves as ‘works of
authorship.’ Instead, their claims are based on defendants’ intended use of plaintiffs’ research
and development used to create the Indexes, in addition to goodwill, skills, labor, reputation,
and necessary expenditures.” Id. at *5. The court expressly rejected ISE’s contention that the
plaintiffs’ misappropriation and unfair practice claims came within the subject matter of
federal copyright law. “The property interests that plaintiffs seek to protect have been
recognized by the highest court of the state as state law claims, and thus do not fall within
the subject matter of copyright as required by 17 U.S.C. §§ 102 and 103.” Id. (citing Board
of Trade, 98 Ill. 2d at 121-22). Nor were the rights the plaintiffs sought to protect of the type
within the general scope of copyright. Judge Gettleman rejected the defendants’ assertions
that the plaintiffs’ claims were based on “intended ‘copying and distributing [of] factual
information embodied within works such as Internet websites and newspapers.’ ” Id. Judge
Gettleman found “[t]his statement [to be] a gross oversimplification of plaintiffs’ claims.”
Id.¶ 10 In light of the Northern District’s remand to state court, the United States District Court
for the Southern District of New York stayed the action before it, pending resolution of the
action by our state court. International Securities Exchange, LLC v. Dow Jones & Co., No.
06 Civ. 12878, 2007 WL 2142068 (S.D.N.Y. July 25, 2007), aff’d, No. 07-3324-CV, 2009
WL 46889 (2d Cir. Jan. 8, 2009). The Second Circuit Court of Appeals declined to reach the
merits of the case and affirmed the stay. International Securities Exchange, No. 07-3324-CV,
2009 WL 46889 (2d Cir. Jan. 8, 2009).
¶ 11 Before the circuit court below, ISE once again moved to dismiss the plaintiffs’ complaint
on preemption grounds, which the court denied. The Illinois Supreme Court denied ISE’s
requests for certification of an interlocutory appeal and for a writ of prohibition. ISE and the
plaintiffs then filed cross-motions for summary judgment. The plaintiffs’ joint summary
judgment motion on counts I and III contended the counts were controlled by Board of
Trade, 98 Ill. 2d 109; ISE’s motion for summary judgment argued that the plaintiffs’ claims
were preempted by federal copyright law. Alternatively, if preemption did not apply, ISE
contended the action was governed by New York law, under which the misappropriation
claim could not stand. However, even if Illinois law applied, ISE argued Board of Trade was
distinguishable and did not support the plaintiffs’ summary judgment motion.
¶ 12 On July 8, 2010, Judge William O. Maki issued an opinion denying ISE’s motion for
summary judgment and granting summary judgment to the plaintiffs on counts I and III,
while dismissing count II as moot. The circuit court held plaintiffs’ claims were predicated
on ISE’s use of the index providers’ “research efforts, skills, expertise, reputation and
goodwill” and that “[s]uch intangible assets are not capable of being fixed in a tangible
medium and are therefore not the subject matter of copyright.” It held there was no conflict
-4-
of law between Illinois and New York law that would require a choice of law analysis, as
“Illinois and New York are in agreement that the Index Providers may sustain an action for
misappropriation against ISE for its proposed actions.” The court ruled for the plaintiffs:
“Consistent with Board of Trade, Plaintiffs are entitled to protection of their rights in their
indexes from ISE’s proposed use.” Noting that ISE had created an index of its own, which
failed to gain acceptance to compete with the S&P 500, the court observed, “The court fails
to understand how ISE’s failure somehow entitles it to profit for free from the efforts, skills
and reputation of the Index Providers.” ISE was permanently enjoined from providing an
exchange market for DJIA or S&P 500 index options, and OCC was permanently enjoined
from clearing or settling ISE index options based on the DJIA or S&P 500. ISE and OCC
timely appeal.
¶ 13 ANALYSIS
¶ 14 ISE contends the plaintiffs’ claims are preempted by federal copyright law, which ISE
argues permits its intended use of the DJIA and S&P 500 because the indexes are in the
public domain. If we find no preemption, ISE argues New York law differs from Illinois law
on misappropriation and a choice of law analysis requires that we apply the law of New
York, the principal location of the defendant’s conduct. ISE contends the plaintiffs’
misappropriation claim would fail under New York law, and that even under Illinois law, the
Board of Trade decision does not support the grant of summary judgment to the plaintiffs.
The plaintiffs respond that this case is controlled by Board of Trade, that Judge Maki
(consistent with the ruling by federal district court Judge Gettleman) did not err in finding
ISE’s claims outside the scope of copyright law, and that Judge Maki properly applied
Illinois law given that both Illinois and New York law recognize the proprietary rights of the
index providers in their stock indexes.
¶ 15 Though it filed no motions or briefs before the circuit court addressing the parties’ cross-
motions for summary judgment, OCC appeals arguing that should ISE be granted relief,
OCC should be granted the same relief. In the event ISE fails to win relief, OCC contends
the circuit court had no jurisdiction to include OCC in the injunctive relief, which the
plaintiffs requested only against ISE; the plaintiffs sought only a declaratory judgment
against OCC. The plaintiffs counter that OCC forfeited its arguments on appeal by its
inaction before the circuit court; in any event, the plaintiffs argue OCC was properly included
in the injunction as a court in a declaratory action has the power to issue injunctive relief.
¶ 16 The parties and the circuit court (and Judge Gettleman) all treated the plaintiffs’ count
I (misappropriation) and count III (unfair competition) as essentially the same. See Board of
Trade, 98 Ill. 2d at 117 (misappropriation is “a form of unfair competition” (citing
International News Service v. Associated Press, 248 U.S. 215 (1918))). We follow suit.
¶ 17 The plaintiffs sought a permanent injunction. “In order to be entitled to a permanent
injunction, the party seeking the injunction must demonstrate: (1) a clear and ascertainable
right in need of protection; (2) that he or she will suffer irreparable harm if the injunction is
not granted; and (3) that there is no adequate remedy at law.” Kopchar v. City of Chicago,
395 Ill. App. 3d 762, 772 (2009). Generally, parties that file cross-motions for summary
-5-
judgment “concede the absence of a genuine issue of material fact and invite the court to
decide the questions presented as a matter of law.” Steadfast Insurance Co. v. Caremark RX,
Inc., 359 Ill. App. 3d 749, 755 (2005). Our standard of review of the grant of summary
judgment is de novo. Morris v. Margulis, 197 Ill. 2d 28, 35 (2001). We agree with the
implicit acknowledgment of the parties that the initial question before us is whether the
plaintiffs’ claims are preempted by the federal copyright law, upon which the parties centered
their opposing summary judgment motions.
¶ 18 Before turning to the merits, we note ISE’s main brief and the plaintiffs’ response brief
contain 22 and 25 footnotes, respectively; many of the footnotes contain substantive
arguments. “Footnotes are discouraged ***.” Ill. S. Ct. R. 341(a) (eff. July 1, 2008).
“Substantive arguments may not be made in footnotes ***.” Technology Solutions Co. v.
Northrop Grumman Corp., 356 Ill. App. 3d 380, 382 (2005) (sua sponte striking all
footnotes from the parties’ briefs where the briefs contained slightly more footnotes per page
than the briefs in this case). We grant the parties greater lenience than the court in
Technology Solutions, but caution counsel that Supreme Court Rules are required to be
followed.
¶ 19 Copyright Preemption
¶ 20 ISE contends its proposed copying and use of the index values falls within the subject
matter of federal copyright law, which renders the plaintiffs’ misappropriation claim the
equivalent of a copyright violation claim. The plaintiffs’ first response is that “the Northern
District of Illinois, the Illinois Supreme Court [in Board of Trade], the Southern District of
New York, the Court of Appeals for the Second Circuit, and the Circuit Court [of Cook
County]” have rejected ISE’s preemption arguments. While the rulings of the circuit court
below and Judge Gettleman’s decision rejected ISE’s preemption argument on its merits, we
are not bound to follow either ruling. The lack of preclusive effect of the circuit court’s
ruling is apparent on this court of intermediate review; the same is true of Judge Gettleman’s
opinion on the federal preemption question for reasons that are less obvious but no less
sound.
¶ 21 The district court’s decision to remand is not appealable (28 U.S.C. § 447(d) (2006)) and
“ ‘[c]ontemporary principles of collateral estoppel . . . strongly militat[e] against giving an
[unreviewable judgment] preclusive effect.’ ” Kircher v. Putnam Funds Trust, 547 U.S. 633,
647 (2006) (quoting Standefer v. United States, 447 U.S. 10, 23 (1980)). “While the state
court cannot review the decision to remand in an appellate way, it is perfectly free to reject
the remanding court’s reasoning ***.” Kircher, 547 U.S. at 647. “ ‘If the state courts reject
a claim of federal pre-emption, that decision may ultimately be reviewed on appeal by [the
Supreme] Court.’ ” Id. at 648 (quoting Franchise Tax Board v. Construction Laborers
Vacation Trust for Southern California, 463 U.S. 1, 12 n.12 (1983)). Hence, we review the
federal preemption question de novo.
¶ 22 We turn to the merits, mindful that “in the interest of a uniform body of precedent,” we
are to give “ ‘considerable weight’ to the decisions of federal courts that have addressed
preemption of laws protecting copyrightable material.” People v. Williams, 235 Ill. 2d 178,
-6-
187 (2009) (quoting Sprietsma v. Mercury Marine, 197 Ill. 2d 112, 120 (2001)). As a result
of a 1976 amendment, section 301 of the Copyright Act of 1976 (17 U.S.C. § 101 et seq.
(2006)) provides for general federal preemption of copyright issues, but explicitly exempts
from preemption certain matters:
“(b) Nothing in this title annuls or limits any rights or remedies under the common
law or statutes of any State with respect to–
(1) subject matter that does not come within the subject matter of copyright as
specified by sections 102 and 103, including works of authorship not fixed in any
tangible medium of expression; or
***
(3) activities violating legal or equitable rights that are not equivalent to any of
the exclusive rights within the general scope of copyright as specified by section
106[.]” 17 U.S.C. § 301(b) (2006).
If either of these two prongs applies, there is no preemption.
¶ 23 The first prong looks to the subject matter of copyright under section 102 of the Act,
which covers “original works of authorship fixed in any tangible medium of expression,”
including literary works, musical works, dramatic works, pantomimes, pictorial, graphic, and
sculptural works, motion pictures, sound recordings, and architectural works. 17 U.S.C. §
102(a) (2006). “In no case does copyright protection for an original work of authorship
extend to any idea, procedure, process, system, method of operation, concept, principle, or
discovery, regardless of the form in which it is described, explained, illustrated, or embodied
in such work.” 17 U.S.C. § 102(b) (2006). Section 103 protects compilations and derivative
works. 17 U.S.C. § 103 (2006).
¶ 24 The second prong of section 301(b) calls for a comparison of the elements of the
common law claim with those of the copyright claim. “[I]f an extra element is required [by
the common law claim] instead of or in addition to the acts of reproduction, performance,
distribution or display, in order to constitute a state-created cause of action, then the right
does not lie within the general scope of copyright, and there is no preemption.” (Internal
quotation marks omitted.) National Basketball Ass’n v. Motorola, Inc., 105 F.3d 841, 850
(2d Cir. 1997) (quoting Computer Associates International, Inc. v. Altai, Inc., 982 F.2d 693,
716 (2d Cir. 1992)).
¶ 25 We find no difficulty in concluding the plaintiffs’ claims are not premised on protecting
“original works of authorship fixed in a tangible medium of expression.” 17 U.S.C. § 102(a)
(2006). Nor do the plaintiffs seek to preclude “reproduction, performance, distribution or
display” of their indexes. See 17 U.S.C. § 301(b) (2006). It is also clear that the plaintiffs’
claims are not predicated on wrongful copying. See Barclays Capital Inc. v.
Theflyonthewall.com, Inc., 650 F.3d 876, 896 (2d Cir. 2011) (the Copyright Act “provides
a remedy for wrongful copying”). The index providers are well aware that their indexes are
freely copied and distributed globally on almost a real-time basis. It is also true, as ISE
argues, that “the values once published are in the public domain and may be freely used by
anyone.” The circuit court’s uncontested finding acknowledges this: “Plaintiffs are aware that
they may assert no rights in the published index values themselves, which have been held by
-7-
courts to constitute ‘a matter of basic market fact.’ ” (citing New York Mercantile Exchange,
Inc. v IntercontinentalExchange, Inc., 389 F. Supp. 2d 527, 542 (S.D.N.Y. 2005) (NYMEX
I), aff’d, 497 F.3d 109 (2d Cir. 2007) (NYMEX II)).
¶ 26 Rather, plaintiffs’ misappropriation claim is premised on ISE’s unauthorized use of the
research, expertise, reputation, and goodwill associated with the plaintiffs’ product for ISE’s
own gain. We too find ISE’s contention that the plaintiffs’ claim centers on unauthorized
copying or unlicensed distribution to be an oversimplification of the plaintiffs’ cause of
action. The plaintiffs’ claim centers on ISE’s unauthorized and unlicensed use of plaintiffs’
ideas, systems, and concepts; accordingly, the claims do not fall under the Copyright Act and
therefore are not preempted. 17 U.S.C. §§ 102(b), 301(b) (2006) (ideas, processes, systems,
and concepts are outside the subject matter of copyright); Dunlap v. G&L Holding Group
Inc., 381 F.3d 1285, 1295 (11th Cir. 2004) (“where *** there is no work that is claimed to
have been pirated–only an idea which lends itself to very few expressions–there is *** no
preemption” (emphasis omitted) under section 102(b)); Toney v. L’Oreal USA, Inc., 406 F.3d
905, 910 (7th Cir. 2005) (that a model’s intangible likeness or persona could be fixed in a
copyrightable photograph did not make that intangible asset a “work of authorship” subject
to copyright law).
¶ 27 This conclusion is supported by the legislative history of the 1976 amendment, our
supreme court case law, and federal case law. “The doctrine of misappropriation as a form
of unfair competition was first enunciated by the Supreme Court in International News
Service v. Associated Press ***.” Board of Trade, 98 Ill. 2d at 117. The United States
Supreme Court upheld an injunction against International News Service, prohibiting it from
copying news gathered at the expense of the Associated Press (AP) and transmitting the
copied news to its members. International News Service, 248 U.S. at 242, 246 (finding AP
would otherwise be deprived of revenues, which would adversely impact AP’s incentive to
gather news). The court held International News Service’s activity constituted common law
misappropriation of the type judicially denominated “hot news” misappropriation. Id. at 242.
The decision, however, is “no longer *** legally authoritative because it was based on the
federal courts’ subsequently abandoned authority to formulate common law principles in
suits arising under state law though litigated in federal court.” McKevitt v. Pallasch, 339 F.3d
530, 534 (7th Cir. 2003). International News Service nonetheless retains “a ghostly presence
as a description of a tort theory.” Barclays, 650 F.3d at 894. Illinois courts have adopted the
common law tort of misappropriation as first announced in International News Service. See,
e.g., Capitol Records, Inc. v. Spies, 130 Ill. App. 2d 429, 432 (1970).
¶ 28 While the 1976 Copyright Act amendment generally preempted state law claims that
approximate copyright claims, “Congress clearly intended to preserve some form of the tort
of misappropriation.” Nash v. CBS, Inc., 704 F. Supp. 823, 834-35 (N.D. Ill. 1989),
aff’d, 899 F.2d 1537 (7th Cir. 1990). Indeed, “ ‘it is generally agreed that a “hot-news” INS-
like claim survives preemption’ ” (Barclays, 650 F.3d at 894 (quoting National Basketball
Ass’n, 105 F.3d at 845, citing H.R. Rep. No. 94-1476, at 132 (1976), reprinted in 1976
U.S.C.C.A.N. 5659, 5748)), and misappropriation claims other than “hot news” claims have
survived as well. See Stewart Title of California, Inc. v. Fidelity National Title Co., 279 F.
App’x 473, 476 (9th Cir. 2008) (claim for misappropriation of legal contract templates not
-8-
preempted); National Car Rental System, Inc. v. Computer Associates International, Inc.,
991 F.2d 426, 432-33 (8th Cir. 1993) (no copyright preemption as to unauthorized use of
software); Board of Trade, 98 Ill. 2d 109.
¶ 29 In fact, a plain reading of the House of Representatives Report on the 1976 amendments
to the Copyright Act indicates that appropriation of data updates from financial databases is
a form of misappropriation that is not preempted:
“ ‘Misappropriation’ is not necessarily synonymous with copyright infringement, and
thus a cause of action labeled as ‘misappropriation’ is not preempted if it is in fact based
neither on a right within the general scope of copyright as specified by section 106 nor
on a right equivalent thereto. For example, state law should have the flexibility to afford
a remedy *** against a consistent pattern of unauthorized appropriation by a competitor
of the facts *** constituting ‘hot’ news, whether in the traditional mold of International
News Service ***, or in the newer form of data updates from scientific, business, or
financial data bases.” (Emphasis added.) H.R. Rep. No. 94-1476, at 132 (1976),
reprinted in 1976 U.S.C.C.A.N. at 5748, quoted in Barclays, 650 F.3d at 894, National
Basketball Ass’n, 105 F.3d at 850, and Nash, 704 F. Supp. at 834-35).
¶ 30 When Congress again amended the Copyright Act in 1990, it issued a House Report
reaffirming separate causes of action for misappropriation and unfair competition. “State law
causes of action such as those for misappropriation [and] unfair competition *** are not
currently preempted under § 301, and they will not be preempted under the proposed law.”
H.R. Rep. No. 101-514, at 21 (1990), reprinted in 1990 U.S.C.C.A.N. 6915, 6931; see also
Mississippi Band of Choctaw Indians v. Holyfield, 490 U.S. 30, 56 n.2 (1989) (Stevens, J,
dissenting, joined by Rehnquist, C.J., and Kennedy, J.) (treating a House Report as a valuable
source of legislative intent). We read these legislative reports as a clear indication that
Congress intended for misappropriation to avoid preemption in cases such as this one, where
ISE, a direct competitor of CBOE and a competitor of the index providers by virtue of their
relationship with CBOE, has appropriated information in the form of data updates from the
index providers’ databases.
¶ 31 This conclusion is consistent with our supreme court’s holding in Board of Trade, by
which we are bound. As we noted above, the court in Board of Trade upheld Dow Jones’
misappropriation claim under circumstances nearly identical to this one, where a
commodities exchange used the DJIA to develop futures contracts that it offered to investors
without a license or authorization. Board of Trade, 98 Ill. 2d at 122. It is true that the Board
of Trade decision did not address the preemption issue, though it was decided after the 1976
amendments to the Copyright Act, but its conspicuous silence on the issue necessarily means,
by logical deduction, that a misappropriation claim of the type advanced by the plaintiffs is
not preempted. The court would not have ruled as it did had preemption applied. Federal case
law also supports the conclusion that preemption does not apply to this case.
¶ 32 In a factually similar case involving some of the same parties in this case, the Second
Circuit clearly held that copyright law does not preempt misappropriation claims of the type
at issue here. In Dow Jones, the Second Circuit addressed the claims of Dow Jones and
McGraw-Hill that ISE and OCC were misappropriating their exchange-traded funds
-9-
(ETFs)–publicly traded financial products tied to the index providers’ respective indexes–by
offering options trading on shares of the ETFs. Dow Jones, 451 F.3d at 298, 306. The court
concluded that “the information [in question] does not fall within the scope of federal
copyright law.” Id. at 302 n.8. Just as unlicensed options trading based on the index
providers’ index-based funds was outside the scope of copyright law in Dow Jones, so too
are the unlicensed options trading based on the index values outside the scope of copyright
law, as the circuit court ruled in this case.
¶ 33 An even more factually similar case, with published decisions at both the district court
and court of appeals levels, is Standard & Poor’s Corp. v. Commodity Exchange, Inc., 538
F. Supp. 1063 (S.D.N.Y. 1982) (Comex I), aff’d, 683 F.2d 704 (2d Cir. 1982) (Comex II). In
that case, Commodity Exchange (Comex) sought to offer stock index futures contracts2 for
trading based on the S&P 500. Comex II, 683 F.2d at 706. Just as in this case, the exchange
sought a license from the S&P 500 provider, but the provider instead licensed its index to
CME, a rival exchange. Id. Standard & Poor’s Corp., Inc. (S&P), sued Comex under both
federal copyright law and common law misappropriation as the district court’s decision
reveals. Id. at 707. The district court issued a preliminary injunction, “enjoining defendant
Commodity Exchange, Inc. (‘Comex’) from trading any futures contract which is based upon
the Standard & Poor’s 500 Stock Index.” Id. at 706. Despite the copyright claim asserted by
S&P, neither court found the misappropriation claim preempted. In fact, consistent with the
finding that preemption did not apply, the district court found that “Comex is
misappropriating the S&P 500 Index and the skills, expenditures, labor and reputation of
S&P in generating and producing the S&P 500 Index, for Comex’s own advantage and profit
by creating a futures contract based on the S&P 500 Index.” Comex I, 538 F. Supp. at 1071.
“In promoting its index, Comex deliberately sought to capitalize on the extraordinary
reputation and goodwill of S&P in the financial community.” Id. at 1070. The Second Circuit
Court of Appeals affirmed. Comex II, 683 F.2d at 712.
¶ 34 The decisions in Comex I and II offer clear support for the circuit court’s decision in the
case at bar. In each case, an exchange sought permission to use S&P 500 for index trading.
In each case, the exchange sought to use the index after its request for permissive use was
rejected. As the federal district court in Comex I made clear, the focus of the lawsuit by S&P
500 was not on the copying of index values by the exchanges–even though the index
provider brought a claim for copyright violation–but on “the skills, expenditures, labor and
reputation of S&P in generating and producing the S&P 500 Index, for Comex’s own
advantage and profit by creating a futures contract based on the S&P 500 Index.” Comex I,
538 F. Supp. at 1070-71. Nearly identical assets are at the crux of the plaintiffs’
misappropriation claim before this court. Based on clear authority, that claim is not
preempted by copyright law. Comex II, 683 F.2d at 712.
1
The only difference between a futures contract and an options contract is that a futures
contract imposes an obligation at a future date, whereas an option affords merely an option to
exercise the contract, as the name implies. See Comex II, 683 F.2d at 707; Dow Jones, 451 F.3d at
298.
-10-
¶ 35 ISE discredits Comex I based on its observation that the Second Circuit did not address
the merits of the misappropriation claim on appeal. Its criticism is off base. While the
majority refrained from discussing the case’s merits, its summation of the outstanding issues
focused entirely on misappropriation. Comex II, 683 F.2d at 712. It made no mention of
copyright or even the possibility that S&P’s claim might be preempted, despite the clear
opportunity to do so given the copyright claim in the lawsuit. Id. In furtherance of its efforts
to discredit Comex I, ISE misleadingly asserts Dow Jones found Comex I “had no
precedential value.” In actuality Dow Jones only stated that “Comex I is not a precedent that
substantially favors plaintiffs because the facts of that case are significantly different than
those before us.” (Emphasis added.) Dow Jones, 451 F.3d at 306 (finding no
misappropriation because, unlike in Board of Trade, Dow Jones had “licensed the creation
of ETFs and the sale of their shares to the public, and ISE [was] simply creating a mechanism
for trading in those shares”). Far from calling into question its decision, Dow Jones fully
discussed the facts of Comex I in order to distinguish Comex I from the case before it. Id.Comex I remains good law, as affirmed by the Second Circuit in Comex II, and offers
guidance against a finding of preemption in this case.
¶ 36 Despite the compelling authority of Board of Trade, Dow Jones, and Comex, ISE relies
on a factually dissimilar case to argue the proposition that, because the index values
themselves are arguably copyrightable, this means the plaintiffs’ claim contains
copyrightable elements, from which ISE contends the plaintiffs’ claim must be treated as a
copyright claim in its entirety. National Basketball Ass’n, 105 F.3d at 849, 854 (finding
preemption of the NBA’s misappropriation claim against Motorola for copying and
distributing NBA scores via a consumer paging device without the NBA’s permission). ISE
once again oversimplifies. See Toney, 406 F.3d at 910 (that an item in a certain form is
copyrightable does not ipso facto mean that the depiction of the item is a “work of
authorship” that is subject to copyright law). Even if we were to ignore the holding in Toney
that the presence of copyrightable elements does not necessarily preempt a state law claim,
ISE’s contention is still unavailing. As the National Basketball Ass’n court noted, there is
no preemption if a cause of action complains of something other than “acts of reproduction,
performance, distribution or display.” (Emphasis added.) (Internal quotation marks omitted.)
National Basketball Ass’n, 105 F.3d at 850. In that case and the other cases relied on by ISE,
the gravamen of the plaintiffs’ claims was the unauthorized copying or the act of distributing
the plaintiffs’ information, which brought the claims within the scope of the Copyright Act.
National Basketball Ass’n, 105 F.3d at 843-44 (the so-called “current mode” of Motorola’s
paging device copied and distributed information on NBA games in progress, and “[i]t is the
‘current mode’ that gives rise to the present dispute”); see also Barclays, 650 F.3d at 880(finding preemption of Barclays’ misappropriation claim against a Web site for unauthorized
copying and distributing of Barclays’ written investment reports, where Barclays, unlike the
index providers here, had “increasingly taken measures to seek to prevent *** public
dissemination” of its product); BanxCorp v. Costco Wholesale Corp., 723 F. Supp. 2d 596,
599 (S.D.N.Y. 2010) (plaintiff index provider alleged that defendant “Capital One breached
the [parties’] License Agreement by redistributing the *** Indices to [defendant] Costco”
(emphasis added)); Centrifugal Force, Inc. v. Softnet Communication, Inc., 08 Civ. 5463,
-11-
2011 WL 744732, at *9-10 (S.D.N.Y. Mar. 1, 2011) (software developer’s misappropriation
was based on defendant’s copying its software and selling it to customers under a different
name).
¶ 37 In contrast, the instant case, Board of Trade, Dow Jones, and Comex are all predicated
on the unauthorized use of the providers’ expertise and goodwill as the index providers
consent to the copying and the distributing of the indexes. The instant plaintiffs’ claims are
more akin to those involving the United States Golf Association (USGA):
“What USGA sought, and what the trial court ordered, was an injunction preventing [the
defendant software company] from using the USGA Formulas or misappropriating them
as [the defendant’s] own. USGA’s common law misappropriation claim did not seek to
bar [the defendant] from simply copying the Formulas. ‘Use’ and ‘appropriation’ are not
among the ‘exclusive rights’ granted copyright owners under the Act. Copying is an
exclusive right protected under the Act; use is not.” (Emphasis in original.) United States
Golf Ass’n v. Arroyo Software Corp., 81 Cal. Rptr. 2d 708, 717 (Cal. Ct. App. 1999)
(citing 17 U.S.C. § 106 (1996), and G.S. Rasmussen & Associates, Inc. v. Kalitta Flying
Service, Inc., 958 F.2d 896, 904-05 (9th Cir. 1992)).
¶ 38 We also agree with the Second Circuit that Dow Jones is distinguishable from ISE’s
principal case of National Basketball Ass’n: “While defendants argue that [National
Basketball Ass’n] severely limits the scope of a misappropriation claim under New York law,
[National Basketball Ass’n] did not purport to address the scope of a misappropriation claim
where, as here, the information does not fall within the scope of copyright law.” Dow Jones,
451 F.3d at 302 n.8. The fundamental flaw in ISE’s argument is its reliance on cases
involving claims under the federal copyright law when, as the circuit court ruled below, the
plaintiff’s misappropriation claim falls outside the scope of copyright law, a ruling with
which we agree.
¶ 39 ISE assets the case involving the New York Mercantile Exchange (NYMEX I and II),
which it calls “the most pertinent precedent of all,” stands for the proposition “that the
Copyright Act allows an exchange to copy published settlement values and use them to offer
a derivative product for trading, even if the plaintiff claims that the values are the product of
its ‘creativitiy’ and ‘judgment,’ and that the defendant is free-riding on the plaintiff’s
‘reputation and goodwill.’ ” In that case, Intercontinental Exchange (ICE) attempted to use,
for its own commodity futures trading, settlement prices derived from trading at and
calculations by NYMEX. NYMEX II, 497 F.3d at 110-12. NYMEX brought claims “alleging
copyright infringement, trademark infringement under federal and state law, and a state law
claim of tortious interference with contract,” but did not advance a misappropriation claim.
Id. at 112. With no misappropriation claim pending, ICE did not raise a preemption defense.
The ruling by the Second Circuit was straightforward: “ICE ‘took nothing more than ideas,
for which the copyright law affords no protection to the author.’ ” NYMEX II, 497 F.3d at
118 (quoting CCC Information Services, Inc. v. Maclean Hunter Market Reports, Inc., 44
F.3d 61, 68 (2d Cir. 1994) (finding no infringement)). Thus, NYMEX is inapposite factually.
The case did not address preemption in general or preemption as it relates to a
misappropriation claim specifically. Neither “preemption” nor “misappropriation” is
mentioned in either the district court’s decision or the opinion of the court of appeals.
-12-
NYMEX II is exclusively a claim for copyright protection of NYMEX’s settlement prices.
That NYMEX’s claim for copyright protection of its financial data was unsuccessful does
not support the proposition that a misappropriation claim for protection of that data would
have been preempted. If anything, NYMEX could be read as supporting the opposite
conclusion.
¶ 40 We reiterate that under section 301(b)(1) of the Copyright Act, “subject matter that does
not come within the subject matter of copyright as specified by sections 102 and 103” is
saved from preemption. 17 U.S.C. § 301(b)(1) (2006). The court in NYMEX emphasized that
under section 102 of the Copyright Act, “ ‘copyright protection does not extend to ideas; it
protects only the means of expression employed by the author.’ ” NYMEX II, 497 F.3d at 116(quoting CCC, 44 F.3d at 68, citing 17 U.S.C. § 102(b) (2006)). The court held the plaintiffs’
settlement prices were not entitled to protection under section 102 because, as in this case,
“enforcing the copyright here would effectively accord protection to the idea itself.” NYMEX
II, 497 F.3d at 110. Because no claim for misappropriation was advanced in NYMEX, the
case does not support ISE’s argument that a common law claim of misappropriation of
financial data by an exchange is preempted by copyright law. We also note that the court in
NYMEX declined to exercise supplemental jurisdiction over the state claims that did not fall
within the federal copyright law, which the court “dismissed without prejudice.” NYMEX I,
389 F. Supp. 2d at 547 (“It is particularly appropriate to decline supplemental jurisdiction
over the remaining state law claims because they raise issues of fact that are unnecessary to
resolve for purposes of deciding the federal claims.”), aff’d, 497 F.3d at 118-19. The
practical effect of the decision not to exercise supplemental jurisdiction was akin to the order
of Judge Gettleman in this case: the state law claims were deemed outside the scope of
federal law, they were not preempted, and they were best resolved in state court. We
conclude that the outcome of the state claims in NYMEX is contrary to the position ISE urges
before us. NYMEX does not favor a finding of preemption.
¶ 41 ISE complains that the circuit court failed to address the cautionary language in Nash v.
CBS, that allowing a plaintiff to “challenge the use of his copyrighted material under both
federal copyright law and the state law tort of misappropriation” “would emasculate § 301.”
Nash, 704 F. Supp. at 835 (plaintiff author’s claim that television network misappropriated
his work was preempted by copyright law). It is true that in Nash, the federal district court
was “inclined to hold that § 301 always preempts the tort of misappropriation.” Id. at 834.
Nonetheless, the court observed that “Congress clearly intended to preserve some form of
the tort of misappropriation.” Id. The court held “that all misappropriation claims, except
those similar to the examples cited in the House Report, are preempted.” (Emphasis added.)
Id. at 835. One example cited in the House Report, which we quoted above, fits precisely
within the facts of this case: “ ‘[S]tate law should have the flexibility to afford a remedy ***
against a consistent pattern of unauthorized appropriation by a competitor of the facts ***
in the newer form of data updates from *** financial data bases.’ ” (Emphasis added.) Nash,
704 F. Supp. at 834 (quoting H.R. Rep. No. 94-1476, at 132 (1976), reprinted in 1976
U.S.C.C.A.N. at 5748). Contrary to the complaints of ISE, a fair reading of Nash does not
support a finding of preemption here, which we conclude explains the decision of the circuit
court not to address the Nash language quoted by ISE.
-13-
¶ 42 Choice of Law
¶ 43 ISE next contends there is an outcome-determinative conflict regarding misappropriation
between Illinois and New York law. Based on its home forum of New York, ISE contends
choice of law analysis mandates that we apply New York law.
¶ 44 It is undisputed that a “choice-of-law determination is required only when a difference
in law will make a difference in the outcome.” Townsend v. Sears, Roebuck & Co., 227 Ill.
2d 147, 155 (2007). “In the absence of a conflict, Illinois law applies as the law of the
forum.” SBC Holdings, Inc. v. Travelers Casualty & Surety Co., 374 Ill. App. 3d 1, 13
(2007). ISE bears the burden of demonstrating a conflict of law exists. Gleim v. Roberts, 395
Ill. App. 3d 638, 643 (2009) (“As the parties seeking a choice-of-law declaration, it was the
defendants’ burden to present evidence establishing that such a declaration was necessary.”);
Sterling Finance Management, L.P. v. UBS PaineWebber, Inc., 336 Ill. App. 3d 442, 447
(2002). “Because these issues ‘involve the selection, interpretation, and application of legal
precepts,’ review is de novo.” Townsend, 227 Ill. 2d at 154 (quoting Dent v. Cunningham,
786 F.2d 173, 175 (3d Cir. 1986)).
¶ 45 Illinois courts have recognized that New York misappropriation law is the source from
which Illinois misappropriation law arose. See Board of Trade v. Dow Jones & Co., 108 Ill.
App. 3d 681, 690 (1982) (“any discussion of the doctrine [of misappropriation] must make
repeated reference to the law of other jurisdictions, particularly New York, where the
doctrine has been most fully delineated”), aff’d, 198 Ill. 2d 109 (1983); Board of Trade, 98
Ill. 2d at 116 (citing New York case law: Metropolitan Opera Ass’n v. Wagner-Nichols
Recorder Corp., 101 N.Y.S.2d 483 (N.Y. Sup. Ct. 1950), aff’d, 107 N.Y.S.2d 795 (N.Y.
App. Div. 1951)). Indeed, ISE in its motion to dismiss filed before the circuit court asserted
that “the elements of a misappropriation claim are the same in Illinois and New York.”
Compare LinkCo, Inc. v. Fujitsu Ltd., 230 F. Supp. 2d 492, 500 (S.D.N.Y. 2002) (“The
central principle underlying a claim for unfair competition under New York law is that one
may not misappropriate the results of the labor, skill, and expenditures of another.”), with
Board of Trade, 98 Ill. 2d at 119 (underlying the policy of misappropriation is “that
protection should be afforded one who expends labor and money to develop products”).
¶ 46 For purposes of its conflict of law argument, ISE begins from the premise that its use of
the indexes would be an impermissible misappropriation under Illinois law in light of Board
of Trade. While ISE contends the same would not be true under New York law, it fails to
carry its burden to compel such a declaration. Gleim, 395 Ill. App. 3d at 643. We find no
distinction between Comex, applying New York law, and Board of Trade, applying Illinois
law, on the law of misappropriation. See Dow Jones, 451 F.3d at 306 (“Like Comex, Board
of Trade involved a defendant’s attempt to create index futures that would allow investors
to speculate directly on the value of an index copied from the DJIA.”). Just as our supreme
court found in favor of Dow Jones in Board of Trade, the Comex court concluded that
“Comex is misappropriating the S&P 500 Index and the skills, expenditures, labor and
reputation of S&P in generating and producing the S&P 500 Index, for Comex’s own
advantage and profit by creating a futures contract based on the S&P 500 Index.” Comex I,
-14-
538 F. Supp. at 1071.
¶ 47 To avoid this holding, ISE resurrects its claim that Comex I is a legal nullity. We reaffirm
our rejection of that claim: Comex I was affirmed by Comex II. No court has held that Comex
I is not good law. If the Second Circuit wished to declare Comex I a legal nullity, it had the
opportunity in Dow Jones to do so, but it issued no such proclamation. The trial court in Dow
Jones observed, “It is unclear that the Court in Comex would have reached the same decision
today,” as the Second Circuit’s opinion in Comex II “suggests *** that an index’s property
rights may not extend to every product that happens to use the index only as a reference
point.” McGraw-Hill Cos. v. International Securities Exchange, Inc., No. 05 Civ. 1129, 2005
WL 2100518, at *3-4 (S.D.N.Y. Sept. 1, 2005), aff’d, Dow Jones, 451 F.3d 295. On appeal,
rather than echo the trial court’s uncertainty about Comex I or take it a step further and reject
its holding, the Second Circuit discussed the merits of Comex I in order to distinguish its
facts from the case before it. Dow Jones, 451 F.3d at 306 (finding no misappropriation under
the distinct circumstance where Dow Jones had ceded the right to preclude trading on its
ETFs by selling them to the public). This constituted an implicit acknowledgment by the
Second Circuit that Comex I remains good law.
¶ 48 Based on our reading of Comex, there is no outcome-determinative conflict of law
regarding misappropriation between Illinois and New York law. Accordingly, Illinois law
applies.
¶ 49 Misappropriation Under Illinois Law
¶ 50 Finally, ISE contends that even if Illinois law applies, summary judgment was not proper
because material questions of fact remain. Its argument against the propriety of summary
judgment essentially contradicts its claims before the circuit court, where ISE filed a
summary judgment motion of its own, arguing that the case “can be decided as a matter of
law.” As noted above, parties filing cross-motions for summary judgment “concede the
absence of a genuine issue of material fact and invite the court to decide the questions
presented as a matter of law.” Steadfast, 359 Ill. App. 3d at 755. As both sides contended
below that no disputed facts remain, we will not entertain ISE’s belated claim to the contrary.
Bohne v. La Salle National Bank, 399 Ill. App. 3d 485, 494 (2010) (“[D]efendants have
forfeited any claim that the trial court erred *** because defendants failed to object in the
trial court ***.”); Clifford v. Wharton Business Group, L.L.C., 353 Ill. App. 3d 34, 43 n.4
(2004) (plaintiffs’ “argument, *** not raised in the trial court in plaintiffs’ response to the
motion for summary judgment,” is forfeited (citing Ray v. City of Chicago, 19 Ill. 2d 593(1960) (matters not raised or presented in the trial court cannot be argued for the first time
in a reviewing court))). In any event, our review of the record discloses no dispute as to the
material facts; the dispute between the parties centers on the legal effect of settled facts.
¶ 51 Nor are we persuaded by ISE’s attempts to distinguish Board of Trade to avoid its
holding as binding precedent. There, as here, an exchange sought to use a major index listing
as a basis for a derivative contract without permission. Board of Trade, 98 Ill. 2d at 110-11.
We fully agree with the circuit court that there is no material difference between the facts of
this case and those of Board of Trade. We agree that one nonmaterial difference in the
-15-
supreme court’s case actually favors the plaintiffs. Unlike the case at bar, the DJIA in Board
of Trade had not been licensed to another exchange for the creation of financial products
based thereupon, and there is no indication that Dow Jones had intentions of pursuing such
a license at that time. Had the index providers demonstrated the ability to monetize the use
of their indexes for options trading, as they can do now given their licenses with CBOE, the
Board of Trade court would likely have been all the more likely to protect the providers’
interest in the indexes.
¶ 52 The reasoning underlying the supreme court’s decision in Board of Trade remains viable.
“We conclude that the possibility of any detriment to the public which might result from our
holding that defendant’s indexes and averages may not be used without its consent in the
manner proposed by plaintiff are outweighed by the resultant encouragement to develop new
indexes specifically designed for the purpose of hedging against the ‘systematic’ risk present
in the stock market.” Id. at 121. The court affirmed the appellate court’s holding that the
Board of Trade’s use of the index for its own financial products constituted misappropriation.
Id. at 123. In the decades since the decision, our supreme court has not questioned its holding
in Board of Trade, and, as an intermediate court of review, we are bound by that holding.
Reliable Fire Equipment Co. v. Arredondo, 405 Ill. App. 3d 708, 722 (2010) (“[W]e are
bound to follow decisions of the Illinois Supreme Court.”).
¶ 53 The court in Board of Trade was prescient in stating its holding would encourage new
indexes. ISE does not deny that dozens of new competitors have since entered the index
marketplace and tens of thousands of new indexes have been created. In fact, the circuit court
aptly pointed out that “ISE unabashedly admits that it attempted to create a competitive
[index] product” of its own, which was ultimately unsuccessful. We share the circuit court’s
puzzlement at “how ISE’s failure somehow entitles it to profit for free from the efforts,
skills, and reputation of the Index Providers.”
¶ 54 To be sure, ISE is not without compelling economic arguments on its side. There is
evidence that CBOE’s grip on the index options trading market is monopolistic. The index
providers have not extended index options trading licenses to any exchange other than
CBOE, and ISE points out there is evidence that the DJIA and S&P 500 have “become
entrenched in the public mind as the sole acceptable measures of the overall U.S. stock
market.” CBOE handles over 90% of all United States index options by volume. The SEC
has concluded that “one of the more palpable results of enhanced competition in the options
markets is the narrowing of [bid-ask] spreads,” which “can provide better prices for
investors.” According to ISE’s expert, the Index Providers’ restriction of their indexes to
CBOE alone costs investors between $2 billion and $9.7 billion annually. The argument that
competition and price are inversely correlated in this respect is supported by the uncontested
fact that CBOE’s ETF trading fees were reduced after the court in Dow Jones denied Dow
Jones the right to exclusively license ETF trading.
¶ 55 In addition, some case law and commentaries have viewed with disfavor the Board of
Trade decision and the tort of misappropriation itself. See McKevitt, 339 F.3d at 534-35(noting that “[r]ecent cases, *** in recognition of the nebulousness of misappropriation
doctrine, place tight limitations on it,” and stating “that legal protection for the gathering of
facts is available only when unauthorized copying of the facts gathered is likely to deter the
-16-
plaintiff, or others similarly situated, from gathering and disseminating those facts”); United
States Golf Ass’n v. St. Andrews Systems, Data-Max, Inc., 749 F.2d 1028, 1039 n.17 (3d Cir.
1984) (labeling as “speculative” our supreme court’s reliance on the likelihood that
protecting the DJIA from unauthorized use would encourage new index options, and
declining to engage in such “speculative inquiry”); Richard A. Posner, Misappropriation: A
Dirge, 40 Hous. L. Rev. 621, 629 (2003) (Board of Trade is “unsound”; permitting
unlicensed use of the indexes was “unlikely to kill the goose that lays the golden eggs
because [the Board of Trade] was free riding on a merely potential derivative work unlikely
to generate essential income for the owner of the primary work”); Restatement (Third) of
Unfair Competition § 38 cmt. c (1995) (“Only rarely have courts applied the doctrine [of
misappropriation] to appropriations of intangible trade values for use in secondary or
derivative markets.”). Our supreme court is equipped to address these concerns should it be
disposed to review this decision. Our own inquiry need advance no further. We are bound
by Board of Trade; we hold ISE’s proposed actions constitute misappropriation in Illinois
under that decision.
¶ 56 OCC’s Appeal
¶ 57 OCC appeals to ensure that if the injunction against ISE is lifted, the injunction against
OCC is lifted as well. OCC contends separately that the circuit court had no jurisdiction to
impose an injunction against it where the plaintiffs sought only a declaratory judgment
against it. OCC acknowledges it did not participate in the cross-motions for summary
judgment before the circuit court. Nor does OCC provide any support for its contention that
the circuit court had no jurisdiction to enter an injunction while not challenging the court’s
jurisdiction to enter a declaratory judgment against it. At best, OCC’s claim of “no
jurisdiction” amounts to a claim of trial court error, which we decline to address because
OCC took no stance before the circuit court regarding the cross-motions for summary
judgment; OCC is “not entitled to relief for any possible error caused by its own failure to
act.” Siwek v. White, 388 Ill. App. 3d 152, 158 (2009).
¶ 58 While we decline to reach the merits of the injunction against OCC, we note our
agreement with the authority relied upon by the plaintiffs to uphold the injunction against
OCC. “[I]n exercising its discretion to choose an appropriate remedy in a declaratory
judgment action, the trial court may grant consequential relief and the court should grant the
relief that is necessary and proper for the determination of the controversy before it.” Mayfair
Construction Co. v. Waveland Associates Phase I Ltd. Partnership, 249 Ill. App. 3d 188, 205
(1993).
¶ 59 CONCLUSION
¶ 60 The plaintiffs’ claims, which are based on the unauthorized use of their skills, expertise,
and goodwill in the creation of certain indexes, are not claims that fall within the scope of
the federal copyright law. Because there is no conflict between New York and Illinois law
on the issue of misappropriation, Illinois law applies. Under the existing law of this state, as
dictated by the clear mandate of Board of Trade, the plaintiffs are entitled to injunctive relief
-17-
under counts I and III of their complaint.
¶ 61 Affirmed.
-18-