On Monday, August 21, 2023, the New York Knicks sued their Atlantic Division rival the Toronto Raptors in an action that could set a precedent for how sports franchises protect proprietary information and resolve disputes in an era defined by data-driven competition.
In their lawsuit filed in the Southern District of New York, the Knicks allege that Ikechukwu Azotam – a former Knicks employee working in the team’s video and analytics departments – misappropriated Knicks trade secrets. The Knicks claim that, prior to leaving his job with the Knicks to start a new role with the Raptors, Azotam wrongfully transferred scouting reports, opposition research, analytics reports and other proprietary materials from his Knicks account to the Raptors organization.
In addition to Azotam, the Knicks also named as defendants newly hired Raptors head coach Darko Rajakovic, video coordinator Noah Lewis, and the team itself for its alleged participation in the scheme to obtain a competitive advantage.
Being one of the few states that has not adopted the Uniform Trade Secrets Act, New York’s trade secret law is governed by common law. New York courts have adopted the definition of trade secret from Section 757 of the Restatement of Torts: “A trade secret consists of a formula, process, device, or compilation which one uses in his business and which gives him an opportunity to obtain an advantage over competitors who do not know or use it.”
In addition to misappropriation of trade secrets, the Knicks allege violations of the Computer Fraud and Abuse Act and the Defend Trade Secrets Act, as well as conversion, unfair competition, breach of contract, tortious interference, and unjust enrichment. Lastly, the Knicks allege that Azotam violated confidentiality provisions in his employment agreement.
As a remedy, the Knicks are seeking a permanent injunction to bar the Raptors from using the information that they allegedly stole, along with an unspecified amount of damages.
Should the Knicks’ allegations be substantiated, the Raptors face the possibility of significant league punishments in addition to any damages ordered by a judge. In 2017, Major League Baseball stripped the St. Louis Cardinals of their two top draft picks and levied a $2 million fine for hacking the Houston Astros’ email system and analytics database.
It is rare for professional sports franchises to sue one another. The Raptors will likely argue that NBA Commissioner Adam Silver, rather than a federal court judge, is the proper arbiter of this dispute. Pursuant to Article 24 of the NBA Constitution, the Commissioner has “exclusive, full, complete and final jurisdiction of any dispute involving two (2) or more Members of the Association.”
Regardless of how this dispute unfolds, this case should serve as a reminder to all sports franchises to regularly review and update their data privacy and security protocols. As the analytics movement continues to gain steam in the sports world, it is doubtful that this will be the last instance of misappropriation of proprietary data.