Case 1:16-cv-08629-VM Document 1 Filed 11/07/16 Page 1 of 17

Robert P. LoBue
Julia Stepanova
Terra Hittson
PATTERSON BELKNAP WEBB & TYLER LLP
1133 Avenue of the Americas
New York, NY 10036-6710
Telephone: (212) 336-2000
Fax: (212) 336-2222
rplobue@pbwt.com
jstepanova@pbwt.com
thittson@pbwt.com
Attorneys for World Chess US, Inc. and World Chess Events Ltd.
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
------------------------------X
:
Index No. 16 Civ. ____
:
WORLD CHESS US, INC., and WORLD CHESS
EVENTS LTD.
:
Plaintiffs,
- against -

:

COMPLAINT AND DEMAND FOR
JURY TRIAL

:

CHESSGAMES SERVICES LLC, E-LEARNING :
LTD., and LOGICAL THINKING LTD.,
:
Defendants.
:

-------------------------------

:
X

Plaintiffs World Chess US, Inc. and World Chess Events Limited (collectively, “World
Chess”), by and through their attorneys Patterson Belknap Webb & Tyler LLP, for their
complaint against Defendants Chessgames Services LLC (“Chessgames”), E-Learning Limited,
and Logical Thinking Ltd. (E-Learning Ltd. and Logical Thinking Ltd. are collectively referred
to herein as “Chess24”), allege as follows:

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NATURE OF THE CASE
1.

World Chess seeks the aid of this Court in protecting its right to

disseminate in real time the chess moves played at the upcoming World Chess Championship,
scheduled to commence in New York City on November 11, 2016, from internet piracy. This is
an action to restrain the defendants from (1) misappropriation of hot news, and (2) breach of
contract or, in the alternative, tortious interference with contractual relations. World Chess also
seeks declaratory relief to confirm the enforceability of World Chess’s website and admission
ticket terms and conditions and that the defendants’ retransmission of the chess moves is in
violation of one or both of these contracts and also constitutes actionable misappropriation.
2.

World Chess is in the business of organizing championship-level

tournaments and publicizing those tournaments, including the moves played by the contestants, in
a modern and speedy way. To do so, World Chess has partnered with the Fédération
Internationale des Échecs (“FIDE”), a non-profit entity recognized by the International Olympic
Committee as the supreme body responsible for the organization of chess and its championships
at global and continental levels. Gaining such unique access to championship-level chess events
requires the outlay of significant funds and effort. Thus, by arrangement with FIDE, World Chess
will stage the 2016 World Chess Championship Match (the “Championship”) and finance the
prize fund. In order to reap the financial rewards of such efforts, World Chess regulates by
contract the terms of access to both its website and live admission of persons to the event space,
and prohibits any such viewers from publishing updates of the games for the duration of each
game.
3.

There are other entities that compete directly with World Chess in the real-

time reporting of updates from prominent chess matches. These entities expend no time, effort, or
money of their own in organizing, producing, or hosting the chess events for the World

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Championship and instead reap economic benefit from free-riding on the work and effort of
World Chess. By live redistribution on their own websites of the reports of chess moves that
World Chess has produced and distributed at significant investment and expense, these free-riders
offer a pirated product at a cheaper price. Chessgames and Chess24 (collectively, “Defendants”)
are such pirates.
4.

To combat this unauthorized free-riding, and to maintain the incentives

necessary to continue coverage of this venerated sport, World Chess is seeking relief for
Defendants’ misappropriation of hot news and breach of contract, or, in the alternative, tortious
interference with contract. The misappropriation of the chess moves not only devalues the
dissemination of such events, it also threatens the continued viability of chess tournaments and
the enjoyment of such events by chess fans around the world.
THE PARTIES
5.

Plaintiff World Chess US, Inc. is a Delaware corporation, with its

principal place of business currently located at 433 Broadway, New York, New York 10013.
6.

Plaintiff World Chess Events Limited is a British Virgin Islands limited

company, with its principal place of business located at Tropic Isle Building, P.O. Box 3423,
Road Town, Tortola, BVI.
7.

On information and belief, Defendant Chessgames is a Florida limited

liability company. It claimed when registering its website to have a principal office at 646 93rd
Ave North, Naples, Florida 34108-2439.
8.

On information and belief, Defendant E-Learning Limited is a Gibraltar

limited company. It claimed when registering the chess24 website to have a principal office at 4
Pitman’s Alley, Gibraltar, GX111AA.

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9.

On information and belief, Defendant Logical Thinking Limited is a

Gibraltar limited company with its principal office at Suite 7, Hadfield House, Library Street,
Gibraltar GX11 1AA.
JURISDICTION AND VENUE
10.

This Court has subject matter jurisdiction over this action pursuant to 28

U.S.C. § 1332(a)(3) as an action between citizens of different states and in which citizens of
foreign states are additional parties. The matter in controversy exceeds $75,000, exclusive of
interest and costs.
11.

Venue in this judicial district is proper pursuant to 28 U.S.C. § 1391(b),

(c), and (d), because a substantial part of the events or omissions giving rise to World Chess’s
claims occurred in this district; because Defendants are subject to personal jurisdiction in this
district; and because the alien defendants may be sued in any district.
FACTS
A.

World Chess
12.

Through agreement with FIDE, World Chess Events Limited is the

exclusive disseminator of the 2016 World Chess Championship Match (the “Championship”).
13.

In order to obtain unique access to this competition and report on it, World

Chess Events Limited agreed to produce the event and underwrite the expenses of staging it,
including the prize fund.
14.

World Chess Events Limited assigned some of its rights and obligations

for the 2016 Championship to its wholly-owned subsidiary, World Chess US, Inc.
15.

World Chess, at great expense and as a result of effort and labor, has thus

obtained unique access to and rights to disseminate the moves from the 2016 Championship.

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16.

The Championship will take place at South Street Seaport in New York,

New York through twelve rounds commencing on November 11, 2016, between the current
World Champion Mr. Magnus Carlsen of Norway and the challenger Mr. Sergey Karjakin of
Russia. The event is scheduled to end no later than November 30, 2016. The Championship is
expected to attract a large global audience and the Grandmasters will be competing for a Prize
Fund of at least €1 million.
17.

World Chess will not only produce the Championship—including securing

a venue and selling admission to a live audience—but will also promote, commercialize, and
distribute the updates from the match by webcast on www.worldchess.com. This year, World
Chess has created a new online viewing experience on its website including through a 360º view
via any smartphone, tablet, or computer; a “Virtual Reality” view using a stereoscopic live video;
a multi-camera view; live commentary from grandmasters and guest celebrity chess fans; and an
interactive dashboard. World Chess’s live webcast of the chess moves from the Championship
will be a primary feature and the chief attraction of its website.
18.

Chess fans will be able to view the moves from the Championship live on

www.worldchess.com, as well as pay for one of several premium memberships which offer other
value-added features. The revenues earned make the Championship commercially viable and
support World Chess’s continuing ability to host chess tournaments and create and improve
distribution technology for the sport.
19.

The upcoming November 2016 Championship is expected to attract a

large global audience. For many of these viewers, receiving instantaneous updates of the progress
of each game is of paramount importance and a major selling point. World Chess’s real-time
dissemination of the chess moves from championship matches is thus a time-advantaged service

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and is promoted as such.
20.

Because World Chess stages the tournament and controls access to it, it

necessarily controls the ability of others to obtain information about the progress of the games.
The exclusive ability to control the publication of the chess moves from these events is one of
World Chess’s most valuable and proprietary assets. In addition to generating subscriber fees,
World Chess’s unique position as disseminator of Championship updates enables it to attract and
retain commercial sponsors, revenues from which make the hosting of the Championship
economically viable for World Chess. This in turn stimulates the global appeal of chess for the
benefit of all fans of the sport.
21.

Subscribers to the World Chess website are required to enter into a

contract before gaining access to the chess moves posted on the website. The agreement permits
users to access and use the website content “for private noncommercial use.” The agreement
requires, however, that users “not copy or communicate any information concerning the chess
moves of the broadcasted games during such games” to any third party, or to make the moves
available for any such use. All those who access the chess moves or other content must click “I
agree” to the website terms and conditions restricting their ability to redistribute World Chess
content. World Chess has also contractually authorized a limited number of other websites to
carry the live reports of the Championship games by incorporating a software “widget” on the
authorized websites which retransmits the information as originally presented on the World Chess
website. All authorized websites are contractually required by World Chess to deploy terms of
use with the same restrictions on subscribers—i.e., for private personal use only, and no
retransmission of the games allowed.
22.

Likewise, all who purchase in-person tickets to the Championship are

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required as a condition of admission to agree to substantially the same terms, prohibiting them
from transmitting to others outside the venue any information about the match.
B.

Chessgames and Chess24
23.

Both Defendants operate websites that offer, inter alia, a display of “live

events,” such as the chess tournaments covered by World Chess. Neither of these Defendants has
expended any time, money, or effort in the organization of the Championship. Rather, both of
these Defendants intend to free-ride on the reports of the games made by World Chess. For
example, both of these Defendants promptly copied updates of the Candidates’ Tournament in
March 2016 from and in direct competition with the reports offered by World Chess, causing
enormous damage to World Chess.
24.

Chessgames operates a website at www.chessgames.com. On information

and belief obtained from the website WHOIS.com, the generic top-level domain registry of the
Chessgames website is Verisign, Inc., based in Reston, Virginia. Verisign is recognized by
ICANN (The Internet Corporation for Assigned Names and Numbers) as the registry for all toplevel domains bearing the extension “.com.” According to WHOIS, Network Solutions, LLC
based in Herndon, Virginia is the registrar of chessgames.com (the company that acts on behalf of
Chessgames in securing its web address).
25.

Chessgames offers a premium subscription on its website for those who

wish to view “live chess broadcasts” and it freely admits that in order to cover the “very newest
games” it takes the chess moves “from the official websites of the chess events.” In other words,
Chessgames operates one of the most profitable aspects of its website through the systematic and
unauthorized reproduction and redistribution of chess moves from World Chess’s website.
Though Chessgames has existed since as early as 2002, it was originally only “a database of
historical chess games” and it was not until the Dutch Championship in 2003 when the

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disseminator’s website distributed the chess moves live that Chessgames was able to add the live
distribution of chess moves from current events. This real-time dissemination “w[as] such a
success” that Chessgames decided to live disseminate future chess matches if available from the
disseminators’ websites. Late in the day on October 31, 2016, despite being on notice of World
Chess’s rights, Chessgames announced that it would provide live coverage of the Championship
and advertised that its website users would be able to “watch the games as they happen” on
chessgames.com.
26.

On information and belief, Defendants E-Learning Ltd. and Logical

Thinking Ltd. own and/or operate a website and do business under the name “Chess24” and are
collectively referred to herein as “Chess24.”
27.

Chess24 operates a commercial website, www.chess24.com. On

information and belief obtained from the website WHOIS.com, the generic top-level domain
registry of the Chess24 website is Verisign, Inc. According to WHOIS, united-domains AG,
based in Munich, Germany, is the registrar of chessgames.com.
28.

Chess24 boasts it is “the world’s fastest growing chess website” that lets

consumers “watch major chess events live.” It further states that it “will cover all the best chess
events with a state-of-the-art live broadcast system, bringing viewers close to the action with
lightning-fast move transmission.” This “coverage” is intended to attract viewers to the site,
where they are offered a $99 per year “Premium” subscription. On November 3, 2016, despite
being on notice of World Chess’s rights, Chess24 announced that it would provide live coverage
of the Championship and advertised that its website users would be able to “follow every twist in
the tale here on chess24.” Chess24’s website did not exist in its current form until, upon
information and belief, June 2013, and its live coverage of major chess events heavily depends on

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World Chess and its website.
C.

The Unique Nature of Chess Moves
29.

Chess is a purely intellectual sport and thus differs from other widely

followed sporting events in that reporting of the chess moves conveys the playing of the game.
That is why the moves themselves are the very essence of the game. Whereas basketball games,
concerts, dance, and theatrical performances may only be fully appreciated when watched live or
in video form where the audience can see and hear the performers, a chess game is fully
comprehended through the notation of the moves. At the end of a chess game, the score
represents a complete record of a game for all time—quite unlike an athletic contest or a ballet.
30.

Since the first international chess tournament in 1851, tournament

organizers have noted the considerable expense required to host and create a chess tournament
and thus have contracted for the rights to publish in the first instance the chess moves of each
game. Indeed, today the ability to control and profit from the first publication of the chess moves
determines an organizer’s ability to finance other chess tournaments. Ever since that first
international tournament, tournament organizers have struggled to generate enough capital to host
more tournaments and their struggles are due in large part to an inability to control the
dissemination of the chess moves in the first instance.
31.

As William Henry Watts of the British Chess Federation, and an amateur

chess player himself, lamented in 1925: “Under our existing arrangements a few papers send their
reporters and reproduce a game – other papers which do not go to the expense, copy this game
from the first newspaper, knowing that is free ‘copy.’ . . . The fact remains that there is an
untapped source of revenue and one which if properly . . . developed should go far to provide the
means towards holding” more frequent chess tournaments. At the time Watts made this
observation, twenty years often separated one international tournament from the next, because

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more frequent tournaments were not financially feasible.
32.

The problem Watts described in 1925 remains an issue today. And though

Watts was concerned with the republication of chess moves in a newspaper, the modern analog is
the republication of the chess moves on the World Wide Web. Today, the most valuable aspect of
hosting and generating content for a chess tournament is the ability to profit from publication of
the chess moves and to publish the moves in real time.
33.

Defendants have made a pattern and practice of copying and redistributing

in real time the chess moves from tournaments covered by World Chess shortly after the moves
appear on World Chess’s website, and unless restrained by this Court will do the same with
respect the November 2016 Championship.
34.

Defendants are direct competitors of World Chess for live updating of

chess tournament matches on the Internet. These Defendants market themselves to the same
customer base as World Chess and their activities divert both subscriber and advertising revenue
from World Chess. Defendants’ free-riding on World Chess’s extensive efforts in organizing,
publicizing, and webcasting the Championship is likely to undermine World Chess’s economic
incentive to invest in the costly organization of chess tournaments and the real-time dissemination
of chess moves. The predictable result of the Defendants’ piracy is that chess tournaments will be
mounted less frequently and dissemination of news in the form of updates and commentary on
those matches will be degraded.
D.

Defendants Threaten Immediate Harm to World Chess
35.

Defendants are well aware that World Chess objects to and contractually

prohibits the re-dissemination from its website and live venue of updates of the matches it covers.
Defendants are also well aware that World Chess has an exclusive arrangement with FIDE for the
right to disseminate updates from the Championship.

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36.

Despite having such awareness, Defendants willfully flouted World

Chess’s rights and redistributed in real time the chess moves from the March 2016 Candidates
Tournament.
37.

Defendants have announced that they plan to webcast real-time updates of

the moves from the Championship to be played in New York in November 2016. Upon
information and belief, Defendants plan to obtain these updates from the World Chess website,
and refuse to recognize World Chess’s rights to control access to and redistribution of those
updates.
FIRST CLAIM FOR RELIEF
(Hot News Misappropriation)
38.

World Chess re-alleges and incorporates by reference paragraphs 1

through 37 of this Complaint.
39.

Through substantial efforts and at a significant cost to World Chess,

World Chess disseminates real-time moves from leading chess tournaments through its website.
40.

The updating of chess moves is time-sensitive in nature and derives

particular value from its immediacy in light of the many chess fans who would like to follow the
game in real time.
41.

Defendants’ threatened copying and redistribution of chess moves

obtained either from the World Chess website or from a visitor present at the live venue
constitutes free riding on World Chess’s significant and costly efforts to organize, publicize, and
disseminate major chess tournaments.
42.

Defendants plan to publicize the copied chess moves to Defendants’

customers in direct competition with World Chess, thus diverting a material portion of World
Chess’s profit.
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43.

If Defendants and similar entities continue to free-ride on World Chess’s

costly efforts to organize, publicize, and disseminate major chess tournaments and to maintain the
infrastructure necessary for doing so, World Chess’s incentives for undertaking these costly
efforts will be significantly reduced, if not entirely eliminated.
44.

Defendants’ actions constitute actionable misappropriation of hot news.

45.

Defendants’ actions were undertaken in bad faith, maliciously, willfully,

wantonly, and in utter disregard of World Chess’s rights.
46.

As a consequence of Defendants’ misappropriation of hot news, World

Chess is entitled to recover compensatory and punitive damages, in an amount to be determined at
trial but no less than $4.5 million.
47.

As a consequence of Defendants’ misappropriation of hot news, World

Chess is entitled to disgorgement to it of Defendants’ profits occasioned by its unlawful conduct.
48.

The persistent misappropriation of World Chess content by Defendants is

not fully compensable in money damages. World Chess is therefore entitled, in addition to
damages for past misappropriation, to injunctive relief to restrain Defendants from continuing
their acts of misappropriation.
SECOND CLAIM FOR RELIEF
(Breach Of Contract, Or Alternatively, Tortious Interference With Contractual
Relationships)
49.

World Chess re-alleges and incorporates by reference paragraphs 1

through 37 of this Complaint.
50.

World Chess is not aware of precisely how each Defendant acquires or

plans to acquire access to the chess moves. It is likely, however, and discovery will likely
confirm, that each Defendant will either cause an individual operating on its behalf to purchase an

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admission ticket to attend the live event where moves can be viewed as they occur, and somehow
transmit those moves from the venue in violation of the conditions of admission, or to subscribe
to the World Chess or another authorized website and redistribute the moves as they are posted on
that website in violation of the contractual Terms of Use of that website. Nor is World Chess
aware of whether each Website Defendant causes its own employees to acquire the chess moves,
or induces a third party to do so. Nonetheless, the Defendants will likely acquire real time access
to the entirety of World Chess’s real-time updates by breaching the contractual terms of such
access established by World Chess, or inducing a third party to do so and then to supply the
information. Accordingly, the World Chess content distributed by Defendants will likely be
acquired in breach of, or by inducing breach of, such contractual terms.
51.

Users of the World Chess website must agree to, and are bound by, the

terms of the World Chess Terms of Use, which prohibit redistribution of the chess moves.
52.

The World Chess Terms of Use constitute valid and enforceable contracts.

53.

All persons who purchase an admission ticket to the live venue for the

Championship are bound by the written Visitor Rules, which prohibit redistribution of the chess
moves.
54.

The Visitor Rules constitute valid and enforceable contracts.

55.

Defendants each have notice of the World Chess Terms of Use and the

conditions of admission to the live event.
56.

By reproducing World Chess’s content and redistributing it to its

customers without World Chess’s permission, Defendants have either breached the express
contractual restrictions of World Chess’s Terms of Use to which it agreed or, in the alternative,
with knowledge of the existence of the express contractual restrictions of the World Chess Terms

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of Use and without justification, intentionally induced a third party to breach the World Chess
Terms of Use by transmitting the moves to Defendants.
57.

By reproducing World Chess’s content and redistributing it to its

customers without World Chess’s permission, Defendants have either breached the express
contractual conditions on admission to the live event or, in the alternative, with knowledge of the
existence of the restrictions and without justification, intentionally induced a third party to breach
the conditions on admission to the live event by transmitting the moves to Defendants.
58.

Defendants’ breach of contract, or, alternatively, inducement of a third

party to breach his or her contract, has caused and continues to cause significant damage to World
Chess, not all of which is readily calculable.
59.

Defendants’ persistent interference with World Chess’s contractual

relationships even after being specifically placed on notice of the relevant terms of those contracts
constitutes willful misconduct not adequately compensable in money damages. Accordingly,
World Chess is entitled to injunctive relief restraining Defendants from continuing such
misconduct.
THIRD CLAIM FOR RELIEF
(Declaratory Judgment)
60.

World Chess re-alleges and incorporates by reference paragraphs 1

through 37 of this Complaint.
61.

To clarify its rights under the law and avoid any uncertainty surrounding

the enforceability of its terms for live admission and use of its website, World Chess seeks a
declaratory judgment that (1) its Terms of Use, once accepted by a website user by clicking “I
agree” in the course of subscribing to the website, constitute valid and enforceable contracts, (2)
its conditions of admission to the live Championship event constitute valid and enforceable
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contracts once accepted by an attendee by purchasing an admission ticket or entering the premises
where the Championship is played, (3) Defendants’ retransmission of the moves obtained directly
or indirectly from World Chess’s website or through live attendance is in violation of one or both
of these contracts, and (4) irrespective of the source from which they obtain the moves,
Defendants’ retransmission of the moves at substantially the same time as they are published by
World Chess constitutes actionable hot news misappropriation.
PRAYER FOR RELIEF
WHEREFORE, World Chess demands judgment:
A.

awarding to World Chess its actual compensatory and punitive damages

with respect to each cause of action in an amount to be determined at trial but not less than $4.5
million;
B.

requiring disgorgement to World Chess of the profits made by Defendants

attributable to its unlawful conduct on all Claims for Relief to the extent not taken into account
in computing World Chess’s actual damages;
C.

temporarily restraining, and preliminarily and permanently enjoining

Defendants from continuing to misappropriate World Chess’s hot news and continuing to induce
breach of and interfere with World Chess’s contracts with its subscribers and employees;
D.

ordering that Verisign, Inc., Network Solutions, LLC, and united-domains

AG shall take all actions necessary to ensure that they and any other registrars and the generic
top level domain registries responsible for Defendants’ websites transfer, change the registrar of
record, and/or disable Defendants’ websites as directed by the Court. Verisign, Inc., Network
Solutions, LLC, united-domains AG, and any other registrars and registries shall be required to
transfer the domain names associated with Defendants’ websites to a registrar to be appointed by

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World Chess to re-register the domain names in the name of World Chess’s authorized
representative or agent and under World Chess’s ownership;
E.

ordering that those in privity with Defendants and those with notice of the

injunction, including any Internet search engines, Web hosts, Web servers, domain-name
registrars, and domain-name registries or their administrators that are provided with notice of the
injunction, cease facilitating access to any or all domain names and websites through which
Defendants engage in the distribution of World Chess’s hot news;
F.

canceling or, at World Chess’s election, transferring Defendants’ websites

and any other domain names used by the Defendants to engage in their misappropriation of
World Chess’s hot news to World Chess’s control so they may no longer be used for illegal
purposes;
G.

declaring that (1) its Terms of Use, once accepted by a website user by

clicking “I agree” in the course of subscribing to the website, constitute valid and enforceable
contracts, (2) its conditions of admission to the live Championship event constitute valid and
enforceable contracts once accepted by an attendee by purchasing an admission ticket or entering
the premises where the Championship is played, (3) Defendants’ retransmission of the moves
obtained directly or indirectly from World Chess’s website or through live attendance is in
violation of one or both of these contracts, and (4) irrespective of the source from which they
obtain the moves, Defendants’ retransmission of the moves at substantially the same time as they
are published by World Chess constitutes actionable hot news misappropriation.
H.

awarding World Chess its costs in this action, including reasonable

attorney’s fees;

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I.

awarding World Chess such other and further relief as this Court deems

just, proper, and equitable.
Dated: New York, New York
November 7, 2016
Respectful submitted,

Robert P. Logue
Julia Stepanova
Terra Hittson
PATTERSON BELKNAP WEBB &TYLER LLP

JURY DEMAND
Plaintiffs hereby demand trial by jury of all issues as to which jury trial is available.
Respectfull submitted,

Robe P. Logue
Julia Stepanova
Terra Hittson
PATTERSON BELKNAP WEBB &TYLER LLP

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