Last year, Collectors Universe filed two lawsuits against app manufacturers that allegedly impermissibly used their trading card/coin pricing information. Beckett Media continued this trend on February 26, when it sued COMC, formerly Check Out My Cards, for allegedly misappropriating its trade secret checklist and pricing information.
This lawsuit has a little history.
At a general level, COMC is a consignment platform where users can sell sports memorabilia online. At issue here is that, until very recently, before cards are listed, COMC sellers could view the "Beckett Value" of the cards they wish to sell through COMC and use that information to set a price.
In short, COMC sells cards, and Beckett helped suggest prices for those cards. Sounds like Beckett and COMC should be a match made in heaven, right?
Wrong. This couple has had problems from the start.
Beckett alleges that COMC initially stole Beckett's pricing information by "scraping" the checklists and pricing data from Beckett.com. Although it appears COMC's initial "scraping" of data was not licensed, the two parties did reach a licensing deal that lasted several years. In March 2013, Beckett and COMC entered into the final licensing agreements that allowed COMC to use Beckett's checklist and pricing data.
Legal translation: Interesting that prior to this lawsuit, there was another potential lawsuit between Beckett and COMC over the alleged "scraping" of Beckett information. Despite this potentially rocky start, Beckett and COMC worked that out, held hands and tried to give the relationship a go.
The Beckett/COMC license agreements allegedly prohibited COMC from using Beckett's proprietary data (e.g., its checklist and pricing data) in any manner other than helping the COMC sellers in determining prices.
Legal translation: So, if you could imagine this couple's vows, "To have and to hold, in sickness and in health, and to only use our proprietary information in a very specific way."
Relationship troubles arose again in December, 2013 when COMC allegedly "used an API to take and store Beckett's entire database."
The complaint emphasizes that: "To be clear COMC currently possess Beckett's database."
Around this time, Beckett allegedly informed COMC that it was breaking off the relationship.
Legal translation: It's unclear when the API-scraping took place and when Beckett "broke up" with COMC, but the implication from the complaint is the termination was linked to the December, 2013 scraping. The breakup could also have something to do with Beckett launching a revamped version of their own selling platform to compete more directly with COMC.
In response, COMC informed Beckett that its "termination was invalid."
Legal translation: "I don't accept your break up. We're still dating."
It took a little time for the breakup message to finally sink in with COMC. In January, 2014, COMC announced it would replace the Beckett information with its "new catalogue" and "new price guide" or "suggested list price."
Legal translation: "I don't need you! I can take care of myself!"
Soon thereafter, Beckett filed the current lawsuit.
Legal Translation: "Give me back my couch!"
Beckett's concern is that COMC is allegedly not independently creating its own database. Rather, it is using the "millions of rows of data and millions upon millions of pieces of data within those rows…span several decades" from Beckett as a short cut. In other words, Becket believes COMC is getting a "free ride" off Beckett and avoided the work of generating its own database.
And because using Beckett's data to create a COMC database allegedly violates one of their marriage vows (legal translation: it was not one of the approved ways from COMC to use Beckett's alleged proprietary information), Beckett sued COMC.
In its complaint, Beckett alleges it will seek a temporary restraining order or a preliminary injunction to stop COMC from using this information while the suit is in progress, but it does not appear any such motion has been filed. At least not yet.
Most of this case will likely be fought under seal and away from the public eyes. Beckett will need to prove that its information qualifies as "trade secrets" including what mechanisms it uses to generate and protect its trade secrets. What will be interesting, at least for me, is whether or not the Beckett information qualifies as trade secretes.
So far, I think Beckett has good arguments, but to get a full understanding of the case, we'll need to wait to see what COMC's response is and how it builds its defense. Although, there are hints available on the Internet as to what its position might be.
A while back in its blog, COMC informed its customers that its relationship with Beckett was going to end on March 31, and in the hopes of a "quick and smooth transition, we're calling upon the community to help by participating in a series of Challenges."
The Challenges, in essence, make it look like COMC is trying to build its own checklist and price guide through crowd sourcing.
Legal translation: I guess you can say COMC is on the rebound and dating other people. Actually, through crowd sourcing, it appears COMC is seeing A LOT of other people.
Now, if COMC is building its databases from scratch, Beckett's story of who dumped who might have some problems.
Legal translation: Like any breakup, it's a he said, she said kind of thing.
COMC's first action in this case was to move the case from state court to federal court. It sounds like an impressive step, but really, it's done by just filing a piece of paper.
I hope Beckett doesn't try to move the case back to state court, because that'll slow down the whole process, and stall our ability to gape at this love affair gone wrong.
But sometimes couples like to fight about every issue they can.
Legal translation: Gotta love the billable hour.
If you want to check out (sorry, couldn't resist) the complaint, click here.
Update: COMC Countersues Beckett
The information provided in Paul Lesko's "Law of Cards" column is not intended to be legal advice, but merely conveys general information related to legal issues commonly encountered in the sports industry. This information is not intended to create any legal relationship between Paul Lesko, the Simmons Browder Gianaris Angelides & Barnerd LLC or any attorney and the user. Neither the transmission nor receipt of these website materials will create an attorney-client relationship between the author and the readers.
The views expressed in the "Law of Cards" column are solely those of the author and are not affiliated with the Simmons Law Firm. You should not act or rely on any information in the "Law of Cards" column without seeking the advice of an attorney. The determination of whether you need legal services and your choice of a lawyer are very important matters that should not be based on websites or advertisements.