Chess24 Wins Court Case; Agon To Appeal

The Commercial Court of the City of Moscow rejected AGON's claim that Chess24 was not allowed to transmit the moves of the Candidates' Tournament. Agon will appeal that decision.

Shortly before the start of the Candidates' Tournament in March of this year, Agon announced that the games would be available exclusively on the website WorldChess.com. Its motive was to gather all chess fans, normally a diffuse audience watching different sites, to its own website, thus maximizing viewership.

“This is simply a way to protect commercial value,“ said Agon's Ilya Merenzon back then.

Karjakin vs Caruana in March in Moscow. | Photo WorldChess.

It was emphasized that any site ignoring the prohibitions would be sued. Eventually Agon started legal action against three sites that ignored its threats: Chess24, Chessbomb and Chessgames.

Now, the first court decision is in. On October 25, the Commercial Court of the City of Moscow ruled against Agon on almost all major points. Chess24 gave the details:

"[E]arlier this year Turnir Pretendentov LLC (a company set up by Ilya Merenzon and a lawyer – the name is the Russian for Candidates Tournament), sued eLearning Ltd (a Gibraltar company owning chess24’s intellectual property) for 20 million roubles, or around 290,000 euros at current exchange rates. The claim alleged unfair competition based on disclosing trade secrets.

"After one preliminary hearing in September the final hearing in the Commercial Court of the City of Moscow took place on 25 October, with the judge announcing his verdict at the end. He rejected chess24’s motion to cease proceedings based on the court lacking jurisdiction, but then went on to reject Agon’s claim in full."

A few days later, on November 1, the court published its reasoning, where it upheld all the arguments made by Chess24's lawyers about the case except for their claim that the court lacked jurisdiction:

"Having studied the submitted documents in the case file, having heard the arguments of the representatives of the parties, the court came to the conclusion that the claims in the lawsuit were unfounded since,

• The Defendant is not the owner of the site http://chess24.com and therefore is not responsible for the content of the site;
• The Plaintiff’s claims are not based on the facts of the case and there is no evidence to support his arguments in the case file;
• The legal provisions on unfair competition on which the Plaintiff relies to support his arguments do not apply to the legal relationship in dispute:
  A) Art. 14.7 of the Competition Act does not apply in particular since the Plaintiff did not establish a regime of commercial secrecy for the information about the chess moves. On the contrary, this information was in the public domain (as the Plaintiff himself admits on page 6 of the statement of claim). Consequently, information about the chess moves is not a trade secret and is not protected by law. Accordingly, the Defendant did not receive, use or disclose information that was a trade or other secret protected by law i.e. he did not violate Art. 14.7 of the Competition Act.
  B) The Defendant is not a competitor of the Plaintiff;
• No damage in the form of a loss of profits for the Plaintiff exists;
• No causal relationship between the onset of damage to the Plaintiff and the alleged actions of the Defendant exists;
• The demand of the Plaintiff to cease the broadcast of information about moves from the Event cannot be satisfied since the Event is already over. Besides, information about the chess moves is in the public domain and is not protected by law;
• The disputed relationship is not governed by the law of the Russian Federation."

The first point, about ownership, is a technicality that was surprisingly included in the reasoning. Agon (or rather Turnir Pretendentov LLC) sued the Gibraltar-based company eLearning Ltd. although it is a different company called Logical Thinking that operates the website.

The key point in the court's reasoning seems to be that Agon did not "establish a regime of commercial secrecy for the information about the chess moves." This is related to the "clickwrap license agreement" Agon had set up on the Candidates' Tournament website. Before watching, online viewers had to accept the terms of use, which stated that viewers were not allowed to share the moves. 

The court's decision seems to imply that the clickwrap agreement doesn't change the fact that chess moves are in the public domain. Similarly, the information that Barcelona scored the first goal against Real Madrid in the seventh minute is in the public domain. As Chess24's CEO, Enrique Guzman, put it:

"[Y]ou can no more stop people reporting a Magnus Carlsen move than a Lionel Messi goal. An Agon win would have established a dangerous precedent."

The final round of the Moscow Candidates'. | Photo Lennart Ootes.

Agon has always acknowledged that chess moves are in the public domain—That was the reason it used the clickwrap agreement. In its fight against chess websites, it also claimed that the "hot news doctrine" was applicable. This involves a list of five requirements that need to be fulfilled for “hot news” misappropriation to survive copyright preemption:

1. The plaintiff generates or gathers information at a cost.
2. The information is time-sensitive.
3. A defendant’s use of the information constitutes free-riding on the plaintiff’s efforts.
4. The defendant is in direct competition with a product or service offered by the plaintiffs.
5. The ability of other parties to free-ride on the efforts of the plaintiff or others would so reduce the incentive to produce the product or service that its existence or quality would be substantially threatened.

The Moscow court seems to have addressed these points as well and rejected Agon's claim. It's not clear whether a U.S. court would have ruled the same. Still, Agon decided not to take legal action against the American chess website ICC, which also transmitted the games of the Candidates' Tournament live. (Only two major chess websites refrained from live transmission: Chess.com and Chessbase.)

Meanwhile, Agon has announced that it will appeal the Moscow court's ruling.

"We did not fully expect a judgement in our favour due to the complicated nature of the case and limited time the judge has to consider the case (the average time that a judge in the Moscow Arbitration Court can spend on one case is only 48 minutes). We believe that the court has not properly addressed the documents and arguments and has declined to consider some of them in breach of procedural requirements, all of which has greatly affected the decision.

"We will appeal the verdict this month and continue to protect our rights as the commercial rights holder to the World Chess Championship. We remain confident of a favourable outcome on appeal."

The news comes a week before the world championship match between Magnus Carlsen and Sergey Karjakin. Agon's pay-per-view broadcast will face competition from Chess24, Chessbomb, Chessgames and possibly more chess websites that believe that chess moves are in the public domain. With Agon's appeal, and the court cases against Chessbomb and Chessgames pending, the chess world still awaits a final legal verdict on the matter.