Sports and Trade Secrets: Are Analytics a Secret in the NBA? | McGuireWoods LLP
As the NBA season heats up, so does some interesting trade secret litigation among NBA teams. On Aug. 21, 2023, New York Knicks LLC sued a former Knicks employee named Ikechukwu Azotam and Maple Leaf Sports & Entertainment Ltd. (i.e., the Toronto Raptors), claiming they misappropriated the Knicks’ analytical materials, including scouting reports. The Knicks also sued several employees of the Raptors — including the team’s head coach.
The Heated Lawsuit Tips Off
According to the Knicks’ complaint, former Knicks employee Ikechukwu Azotam was part of the team’s analytics and video department for years before joining the Raptors. The Raptors began recruiting Azotam in June and July 2023. Then, in August, Azotam allegedly sent emails from his Knicks email account to a Raptors email account already set up for him. Among other things, those emails included:
- Advanced scouting reports for the Indiana Pacers and Denver Nuggets players, with statistics, key plays and play frequency data, specific player tendencies and scouting, strategy analyses with offensive/defensive notes, play breakdowns, opposition play research, and transition.
- Comprehensive diagrams of more than 250 Pacers and Nuggets plays and a spreadsheet containing play frequency statistics.
- Spreadsheets containing the Pacers’ and Nuggets’ play calls broken down by game time.
Azotam allegedly sent more confidential information to his personal email, including (i) a prep book for the 2022-23 season with the Knicks’ process for planning its season, and (ii) a play frequency report for the Dallas Mavericks, which consisted of a spreadsheet showing the plays and how often the Mavericks ran those plays during specific games.
The Knicks claimed this information was “secret proprietary information compiled by the Knicks coaching staff.” More broadly, the Knicks claimed “[s]couting reports, play frequency data, opposition research, opposing play tendencies, lists of opponents’ key plays, diagrams of opponents’ key plays, and the Knicks’ prep book” constitute the Knicks’ confidential information and trade secrets. As remedies for the Raptors’ alleged misconduct, the Knicks sought injunctive relief and monetary damages.
The Raptors Responded, Calling a Foul
Before the lawsuit could go very far, the Raptors filed a motion to dismiss, claiming the Knicks’ claims were subject to an arbitration clause in the NBA’s constitution. Further, the Raptors argued that the NBA constitution gives jurisdiction to the NBA commissioner — not the court — to decide arbitrability (i.e., whether the Raptors’ claims are subject to arbitration in the first place). According to the Raptors, even if the court did decide arbitrability, the court would come to the same conclusion — the Knicks’ claims are subject to arbitration under the NBA constitution.
Because the Raptors moved to dismiss on procedural grounds, it made only a small note of whether the Knicks owned valid trade secrets. As one might expect, the Raptors disputed this assumption:
“These [alleged secrets] were not the Knicks’ team and player statistics, play frequency data, player tendencies or play calls, but rather those of other NBA teams — including particularly the Raptors’ own game film — compiled from video of their games accessible to all NBA teams (and, indeed, the general public). In other words, they were far from confidential, let alone trade secrets.” (emphasis added).
Notably, the Knicks’ complaint likely saw the Raptors’ challenge to its trade secrets coming, preemptively citing to several authorities in its complaint, including: Nat’l Football Scouting, Inc. v. Rang, 912 F. Supp. 2d 985, 995–96 (W.D. Wash. 2012) (concluding that scouting reports of players’ abilities are potentially protectable under trade secret law); see also Matthew J. Frankel, HACKERS STRIKE OUT: RECENT CASES OF ALLEGED SPORTS ANALYTICS IP THEFT, 1 J. SPORTS ANALYTICS 83, 84 (2015) (noting the sensitivity of a “team’s confidential player-evaluation programs”); Lara Grow and Nathaniel Grow, PROTECTING BIG DATA IN THE BIG LEAGUES: TRADE SECRETS IN PROFESSIONAL SPORTS, 74 Wash. & Lee L. Rev. 1567, 1605 (2017).
Sports Teams Take Note: Protect Playbooks and Investigate Employee Departures
If the Knicks-Raptors dispute goes to arbitration, the industry may never know whether a court or jury would agree that the Knicks’ analytical reports were protectable trade secrets. But at the very least, the Knicks made a facially effective argument that they were. In other NBA cases, the alleged holder of sports “secrets” was not so successful. McGuireWoods previously wrote of an NBA star’s triumph over his former marketing agency related to claims that public endorsement deals and sports branding ideas were trade secrets.
Other sports teams — whether amateur, elite, college or professional — should take note and take affirmative steps to protect their analytics materials. Sports teams must be prepared to investigate key employee departures and conduct forensic investigations of their computers for potential leaks of confidential information. This is especially essential in an age where coaches and scouts frequently move from team to team. Teams do not want opponents to get their hands on their playbooks, especially at the start of a season.
The full case title is New York Knicks, LLC v. Maple Leaf Sports & Entertainment LTD., et al., No. 1:23-cv-07394 in the U.S. District Court for the Southern District of New York. Additional details are available in the complaint.
