In a 2-1 decision, the 8th U.S. Circuit Court of Appeals panel ruled that CBC Distribution and Marketing Inc. doesn't have to pay the players, even though it profits by using their names and statistics.
The Major League Baseball Players Association had argued that companies like CBC are essentially stealing money from players, who charge big fees to endorse things like tennis shoes and soft drinks. The ruling could have a broad impact on the fantasy league industry, which generates more than $1.5 billion annually from millions of participants.
If CBC had lost, The MLBPA would have gained monopoly rights over publicly available statistics and other information that is used as fodder for fantasy leagues across the country, said CBC attorney Rudy Telscher.
Telscher said the facts and figures are public information. He said it's no different from media outlets that print game tallies to draw readers and make money.
"When you're using mass information, it's protected under the First Amendment," he said.
Big media companies like Yahoo, ESPN and CBS pay MLB millions in annual fees to operate online fantasy leagues. Players make fake teams comprised of real MLB players. Over the course of a season, fantasy league players crunch statistics to judge how well the players on their team are performing.
MLBPA attorney Virginia Seitz didn't return a message seeking comment Tuesday. She argued before the court panel that online fantasy games exploit players by effectively turning them into game pieces and using their names to draw more customers.
"There's no way of escaping the fact that players' names are on the product," Seitz argued at a hearing before the appeals panel in June.
The court found that fantasy leagues' broad use of statistics isn't the same as faking an endorsement.
"... the fantasy baseball games depend on the inclusion of all players and thus cannot create a false impression that some particular player with 'star power' is endorsing CBC's products," said the ruling written by judges Morris Arnold and James Loken.
Judge Steven Colloton dissented from the opinion, but he didn't disagree with CBC's claim of First Amendment protection.
Colloton took issue with the fact that CBC initially signed a contract with MLB Advanced Media to pay fees for the players' information, but then backed out of the contract when it filed a lawsuit claiming that MLB didn't have a right to collect the fees.
"That CBC later decided it did not need a license, and that it preferred instead to litigate the point, does not relieve the company of its contractual obligation," Colloton wrote.
MLB's record in court sends a message that "statistics are in the public domain," Greg Ambrosius, editor of Fantasy Sports Magazine told USA Today.
MLB and the union, he notes, were supported in legal briefs from player associations and licensing arms for which sizable potential licensing fees are at stake. Among those filing were the NFL Players Association, NBA Properties, WNBA Enterprises, NHL Enterprises, NASCAR and the PGA Tour.