"We have always believed that NYMEX's lawsuit was more about squelching competition than about protecting any valid intellectual property right," said ICE's Chairman and Chief Executive Officer 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. This is a positive ruling not only for ICE, but for all energy market participants who use the derivatives markets to manage risk. We are pleased to put this matter behind us, ensuring that our customers may continue to settle their energy contracts using prices that are required to be publicly disseminated by Federal law."
ICE introduced the use of clearing for OTC energy derivative and swap contracts. After having its proposal of a cooperative arrangement for clearing ICE's contracts through the NYMEX clearinghouse rebuffed, ICE entered into a services agreement with the London Clearing House (now LCH.Clearnet) and launched the first OTC cleared contract in March 2002. Notwithstanding that NYMEX is required to make its settlement prices available to the public under the Commodity Exchange Act (CEA), NYMEX attempted to register a copyright in its settlement prices in March 2002. The U.S. Copyright Office declined to approve NYMEX's initial application on the basis that individual settlement prices are not copyrightable. In April 2002, NYMEX filed a second application and was granted copyright protection in the composition of the NYMEX website -- which, among other information, contains a "click-through" to view NYMEX settlement prices.
In November 2002, NYMEX sued ICE for infringement, claiming that NYMEX held a registered copyright in individual settlement prices resulting from their inclusion on the NYMEX website, and further claiming misuse of NYMEX's trademarks by virtue of ICE's use of International Swaps and Derivatives Association (ISDA) settlement definitions (which reference NYMEX as the exclusive source of settlement prices for certain energy futures contracts) in ICE's swap contracts. In a statement of interest filed with the Court earlier this year, the U.S. Copyright Office reiterated its position that NYMEX should not be afforded copyright protection in individual settlement prices, citing strong public policy reasons against providing intellectual property protection to what are essentially facts.
In his ruling terminating the lawsuit, Judge Koeltl held that NYMEX's settlement prices are not copyrightable, that ICE's citation of NYMEX as the source of those settlement prices represents fair use of NYMEX trademarks, and that because all of the federal claims in the lawsuit had been dismissed, NYMEX's New York state law claims should be dismissed. Addressing NYMEX's copyright claim, Judge Koeltl cited United States Supreme Court authority in support of his position, writing: "That there can be no valid copyright in facts is universally understood. The most fundamental axiom of copyright law is that no author may copyright his idea or the facts he narrates. (citation omitted)." Addressing NYMEX's settlement prices, he wrote: "The argument that NYMEX settlement prices do not embody facts is without merit. The numerical settlement price that arises from NYMEX's judgment and discretion reflects no more than a pure fact or idea of the present price of a futures contract." He later added: "....(B)ecause NYMEX's settlement prices are the actual prices and are the only way to express the idea of a settlement price stated in numbers--the expression of the price is therefore not sufficiently distinct from the idea of the price to warrant copyright protection."
Regarding the NYMEX trademark claim, Judge Koeltl wrote: "Because ICE uses NYMEX marks merely to describe economic aspects of its OTC derivative contracts, ICE's use of NYMEX's marks constitutes fair use of those marks." He added, "The term 'NYMEX' is plainly used to describe the source of settlement prices."
Judge Koeltl also pointed out that there was no evidence to indicate customer confusion, writing: "NYMEX acknowledges that all of the participants on ICE's trading platform are 'eligible commercial entities' under the CEA. Because these entities are sophisticated commercial or institutional organizations with substantial assets under management, these customers are not likely to believe that ICE's OTC derivative contracts are sponsored or endorsed by NYMEX because ICE refers to a NYMEX final settlement price to describe contract specifications....NYMEX offered no evidence that ICE's descriptive use of the NYMEX mark created actual customer confusion."
IntercontinentalExchange(R) (ICE)(R) operates the leading electronic global futures and OTC marketplace for trading a broad array of energy commodity contracts on its trading platform. These contracts include crude oil and refined products, natural gas, power and emissions. ICE conducts its markets for futures trading through its subsidiary, the International Petroleum Exchange (IPE), Europe's leading energy futures and options exchange. The IPE provides regulated marketplaces in which participants manage their price risk exposure. ICE offers a range of services to support trading and risk management, including cleared OTC products, electronic trade confirmations and market data. ICE is based in Atlanta, Georgia with offices in Calgary, Chicago, Houston, London, New York and Singapore. For more information, please visit www.theice.com.