Searching over 5,500,000 cases.

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Board of Trade v. Dow Jones & Co.





Appeal from the Circuit Court of Cook County; the Hon. James C. Murray, Judge, presiding.


Plaintiff Board of Trade of the City of Chicago (the Board) brought a declaratory judgment action in the circuit court of Cook County seeking a declaration that its proposed stock market index contract, which is based on the stock market index and averages devised and published by defendant Dow Jones & Company, Inc. (Dow Jones), would not violate any proprietary rights of Dow Jones. After a bench trial, the court held that the proposed actions of the Board would violate no rights of Dow Jones. On appeal, Dow Jones contends that: (1) the trial court erred by placing the burden of proof on Dow Jones; (2) the circuit court should have declined to hear the case; (3) the trial court's decree requires correction; (4) the contract between the parties, which is termed a "subscription agreement," does not authorize the Board's proposed use of the Dow Jones Averages; (5) the Board is guilty of unfair competition under the law of New York and Illinois; (6) the Board is guilty of a violation of section 43(a) of the Lanham Act; (7) the Board is guilty of contributory trademark infringement; and (8) the Board is guilty of common law misappropriation.

The Board of Trade of the City of Chicago is a not-for-profit, non-stock membership corporation created in 1859 pursuant to a special charter from the Illinois legislature. The corporation was organized for the purpose of maintaining an exchange for the trading of commodity futures contracts. The Board is the oldest and largest such exchange in the United States, and today the Board offers a wide variety of contracts in agricultural products, precious metals and financial instruments. The business of the Board, and all trading on its exchange, is conducted at the Board of Trade building on Jackson Boulevard in Chicago. The activities of the Board, and of all other commodity exchanges in the United States, are regulated by the Commodities Futures Trading Commission (CFTC), a Federal agency. The CFTC must approve any futures contract which is traded on an exchange, and no exchange may trade in a contract until the CFTC has designated it as a contract market for that contract.

Dow Jones is a Delaware corporation with its principal office in New York City. It is primarily a news gathering and publishing organization. Dow Jones publishes the Wall Street Journal, Barron's and the Asian Wall Street Journal, and operates several wire services which transmit financial news to subscribers by means of ticker tape, computer linkups and the like. The Dow Jones activity which is relevant to this case is its computation of the Dow Jones Averages, in particular the Dow Jones Industrial Average. Dow Jones has been producing and publishing a price average of industrial stocks since 1896. The average has encompassed the stock issues of 30 separate highly capitalized industrial companies since 1928. The identity of the firms whose stocks make up the average has changed from time to time over the years. The selection of stocks used to compute the average is arrived at through the use of considerable financial expertise and experience and is based on Dow Jones' determination of which stocks are likely to reflect the overall activity of the stock market in their individual fluctuations in price. The Dow Jones Industrial Average is computed by adding together the current prices of the 30 constituent stocks and dividing the total by a number called the "divisor." The purpose of the divisor is to retain continuity in the overall average. The divisor is adjusted to account for changes in per-stock value which are caused by technical factors such as stock splits or stock dividends. The use of the divisor keeps the average within a range of numbers which is recognizable as the "Dow Jones Average" to the public. The divisor, list of stocks and method of calculating the average are all made public by Dow Jones. Dow Jones itself computes the value of its index once a day. Licensees of Dow Jones compute the value of the index on a "real time" basis throughout the day and disseminate that information via television, tape and electronic readouts to a large number of subscribers, including banks, brokerage houses, securities exchanges and commodities exchanges. The Board is a subscriber to such a service and, pursuant to that subscription, it displays the "real time" Dow Jones Average on its trading floor in order to aid its traders in making investment decisions. It is undisputed, as are most of the facts in this case, that the Dow Jones Averages have achieved high public regard as a source of information about the current performance of the stock market.

The events leading up to this litigation began in February 1980 when the Board submitted a proposal to the CFTC which asked that it be designated as a contract market for several new futures contracts which were to be based on indices composed of groups of stocks listed on the New York Stock Exchange. The indices were formulated entirely by the Board after two years of research and labor. In December 1981, the CFTC entered into a jurisdictional agreement with the Securities and Exchange Commission. Part of that agreement allowed the CFTC to permit trading on stock market index contracts only if the contracts were based on widely known and well established stock market indices. This agreement effectively precluded CFTC approval of a contract based on any new indices, including the indices which had been devised by the Board.

The Board approached Dow Jones with a proposal that would have paid between $1 million and $2 million yearly to Dow Jones in return for its sponsorship of a contract based on its index. Dow Jones turned down the proposal for the asserted reason that it determined that any connection on its part with the speculative field of futures trading would damage its image as an advocate of conservativism in investment policy. Other prominent stock market indices, notably Standard & Poor's 500 and the Value Line Index, were licensed by their publishers to commodity futures exchanges for the purpose of trading a contract based on those indices at about the time that the parties here were negotiating.

On February 26, 1982, the Board submitted a proposal to the CFTC asking that it be designated as a contract market for a stock market index futures contract that would be based on the Dow Jones Industrial Index and Average. The contract would be called the Chicago Board of Trade Stock Market Index (CBT Index). The proposal specifies that the CBT Index is identical to the Dow Jones Industrial Index and Average. The contracts are to be settled four times a year, and the value of the CBT Index will be calculated only on the last day of each of those trading periods. The value of the contract is $50 times the value of the index (i.e., the average) on the last day of trading, with "longs" (buyers) and "shorts" (sellers) settling the contracts through an exchange of certified promissory notes for the appropriate sum. Because the value of the CBT Index will be calculated only when the contracts are to be settled, the "spot" value of the contracts during the trading period will be ascertainable only through reference to the current Dow Jones Average. On May 13, 1982, the CFTC designated the Board as a contract market for the CBT Index contract.

While the Board's proposal was pending before the CFTC, the Board filed this action in the circuit court of Cook County, seeking a declaration that its proposed contract would violate no proprietary rights of Dow Jones in the index and averages. On June 4, 1982, the trial court issued a 27-page opinion, holding that the burden of proof in the declaratory judgment action should be on Dow Jones; that Dow Jones has a property right and a valuable interest in the Dow Jones Index and Averages and a wrongful use of that property is actionable at law and in equity; and that the Board's proposed use of the averages was not a misappropriation of Dow Jones' property and therefore the Board was free to offer its CBT Index contract for trading. The court made this ruling conditioned on the use of a disclaimer on the CBT Index contract disavowing any association with or sponsorship by Dow Jones.

Dow Jones' first contention on appeal is that the trial court erred in determining that the burden of proof in the action should be placed on Dow Jones despite the fact that it was the nominal defendant in the declaratory judgment action. In allocating the burden of proof to Dow Jones, the trial court relied on Caley v. Manicke (1961), 29 Ill. App.2d 323, 173 N.E.2d 209, rev'd on other grounds (1962), 24 Ill.2d 390, 182 N.E.2d 2096, which stated:

"The general rule is that the burden of proof rests on the party who has the affirmative of the issue, as determined by the pleadings, and the usual test employed to determine on which side the burden of proof lies, is to ascertain which party would be entitled to a verdict if no evidence were offered." 29 Ill. App.2d 323, 327.

• 1 As the trial court noted, what is generally termed "the burden of proof" has two aspects: (1) the burden of producing evidence as to a particular matter; and (2) the burden of persuading the trier of fact as to the existence of the fact asserted. The burden of producing evidence, which is sometimes called the burden of going forward, shifts from party to party during the course of a trial, but the burden of persuasion is always firmly allocated to one of the parties and does not shift. (Arrington v. Walter E. Heller International Corp. (1975), 30 Ill. App.3d 631, 639, 333 N.E.2d 50; see McCormick, Evidence sec. 336, at 784 (2d ed. 1972).) The trial court held that both of these burdens belonged to Dow Jones. The trial court stated that "[e]ven though Dow Jones is the defendant it has the affirmative issue. It must establish that certain of its proprietary rights in its Averages will be violated by the Board's proposed activity."

The pleadings in this case show the Board praying for a declaration that "[b]y offering the commodity futures contract described in paragraph 4, the Board of Trade will not violate any legal or proprietary right of Dow Jones." Dow Jones' answer sets forth several proprietary rights which allegedly will be violated by the Board's actions.

It is true that Dow Jones has the affirmative of the issue as it is framed by the Board. It has sometimes been said that a party is not required to prove a negative averment. (See Williams v. Franks (1973), 11 Ill. App.3d 937, 939, 298 N.E.2d 401.) However, allowing the presence of a negatively phrased averment in a complaint to shift the burden of persuasion to the other party places "an entirely undue emphasis on what is ordinarily purely a matter of choice of forms." (McCormick, Evidence sec. 337, at 786 (2d ed. 1972).) The ease of devising a positive phrasing of the issue is demonstrated in the paragraph of the Board's complaint which states that "this action * * * seeks a declaration of the right of the Board of Trade to proceed to offer a commodity futures contract, as described below, without interference by Dow Jones." Our supreme court has stated:

"The burden of proof does not depend upon the form of the proposition. The weight of authority is, that whoever asserts a claim or defense which depends upon a negative must establish the truth of the allegation [citation] for that particular fact is essential to ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.