SBJ/September 19 - 25, 2005/Other News

Mediator to hear evidence in MLBAM fantasy sports dispute

A Missouri mediator is scheduled this week to hear a dispute between MLB Advanced Media and St. Louis-based CDM Fantasy Sports that could have far-reaching consequences in the fantasy sports industry.

CDM filed suit against MLBAM in February, seeking a declaratory judgment allowing it to use player names and statistics without fear of violating baseball’s intellectual property rights. MLBAM asserts that the commercial use of the player names without a license infringes upon their rights.

The sides were unable to reach a license agreement last winter, with CDM saying MLBAM’s only offer was to assume CDM’s client base in exchange for a 10 percent commission.

The non-binding mediation hearing before attorney Richard Sher, set for Tuesday in Clayton, Mo., represents the first movement on the case beyond legal filings.

“This is still about who owns bare statistics associated with player names,” said Charlie Wiegert, CDM executive vice president. “There is a very fundamental issue at play here, and we obviously believe these things belong in the public domain.”

MLBAM officials declined comment, citing the ongoing litigation. MLBAM President Bob Bowman previously has said a desire exists to reduce third-party licenses in order to move fantasy sports efficiently into a new era that includes wireless applications, options for more casual play and video highlights.

The case is expected to have huge ramifications on the fantasy sports industry regardless of its outcome. If MLBAM prevails, there is a strong likelihood that most fantasy sports companies not directly aligned with major sports leagues would soon go out of business.

There is a chance the mediation hearing, not uncommon as a first step for cases filed in the U.S. District Court’s Eastern Division of Missouri, could get pushed back to October because of scheduling conflicts.

The MLB Players Association, now aligned with MLBAM in a five-year, $50 million partnership, also has joined the lawsuit, believing CDM’s activities could pose a commercial threat.

After a long and not dissimilar legal dispute, CDM now holds a license with the NFL Players Association to operate football fantasy leagues. CDM pays a royalty rate of 7.5 percent to the union.

Sher, mutually selected by CDM and MLBAM, is a well-known figure in Midwest legal circles for being an active advocate of mediation and alternative dispute resolution.

Wiegert said the dispute with MLBAM has had a predictably negative effect on his business as CDM continues to operate baseball games without MLBAM approval. The company claims about 35,000 players in its various baseball fantasy leagues, down nearly 20 percent from a year ago.

Despite Wiegert’s frustration with MLBAM, he said he would be open to a purchase offer for CDM. Gannett Co., which has used CDM extensively to run fantasy leagues through USA Today, neared a purchase of the company last year, but backed off as the legal dispute with MLBAM heightened, Wiegert said.

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