Chicago Board Options Exchange v. International Securities Exchange
973 N.E.2d 390
Ill. App. Ct.2012Background
- ISE and OCC sought to offer index options based on DJIA and S&P 500 without license.
- Indexes are owned/licensed by CME and McGraw-Hill; CBOE operates under exclusive licenses with those providers.
- Plaintiffs alleged misappropriation and unfair competition under Illinois law, not copyright infringement.
- District court remanded/reconsidered; preemption issue was central to summary judgment.
- Circuit court held the claims were not preempted by copyright and upheld injunctive relief against ISE and OCC.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Preemption of misappropriation/unfair competition by copyright law | Claims are not based on original works; focus is unauthorized use of research/goodwill | Claims fall within copyright as misappropriation of index data | Not preempted; Illinois misappropriation survives |
| Choice of law for misappropriation (Illinois vs New York) | New York law should apply due to location of conduct | Potential conflict; New York law may differ | No outcome-determinative conflict; Illinois law applies |
| Whether summary judgment was proper on misappropriation/unfair competition | Record shows no genuine facts; misappropriation protected by Board of Trade | Material facts contested; preemption or choice-of-law issues unresolved | Summary judgment for plaintiffs sustained; injunction affirmed against ISE and OCC |
Key Cases Cited
- Board of Trade v. Dow Jones & Co., 98 Ill.2d 109 (1983) (misappropriation protection for index use; not preemption issue (binding state precedent))
- Dow Jones & Co. v. International Securities Exchange, Inc., 451 F.3d 295 (2d Cir. 2006) (copyright not preemptive where misappropriation focuses on information outside copyright scope)
- Comex I, 538 F. Supp. 1063 (S.D.N.Y. 1982) (misappropriation of index data not preempted; later affirmed as Comex II)
- Comex II, 683 F.2d 704 (2d Cir. 1982) (affirmed misappropriation not preempted; use of S&P 500 index for futures contracts)
- National Basketball Ass’n v. Motorola, Inc., 105 F.3d 841 (2d Cir. 1997) (test for preemption: extra elements beyond copying may avoid preemption)
- Nash v. CBS, Inc., 704 F. Supp. 823 (N.D. Ill. 1989) (Congress preserved misappropriation after 1976 amendments; cautionary language cited (not controlling here))
- McKevitt v. Pallasch, 339 F.3d 530 (7th Cir. 2003) (commentary on misappropriation doctrine limits; binding persuasive authority)