Rapaport v. Nivoda — Second Circuit Revives Copyright Claim Over Diamond Price List

Background

Rapaport USA publishes a weekly diamond price list for paid subscribers. The list organizes diamonds by characteristics such as carat weight, color, and clarity, then assigns values to the resulting categories. Rapaport describes those figures as its expert opinion about what diamonds should sell for—not a report of actual transaction prices—and says the list is built from extensive market research, proprietary knowledge, and decades of industry relationships.

Rapaport alleged that online diamond marketplace Nivoda copied prices from the list. Nivoda displayed percentages showing how the price of a diamond offered on its website compared with the corresponding Rapaport benchmark. The district court dismissed the copyright claim, reasoning that the idea of a diamond’s market price could be expressed only by the number corresponding to that price. Under the merger doctrine, copyright does not protect expression when there are so few ways to express an idea that protecting the expression would effectively monopolize the idea itself.

Rapaport appealed. The Second Circuit considered whether the merger doctrine could resolve the case at the motion-to-dismiss stage, before discovery had shown how Rapaport actually generated the numbers in its list.

The Court’s Holding

The Second Circuit vacated the dismissal and sent the case back for further proceedings. Judge William Nardini, writing for a unanimous panel, emphasized that the ruling does not establish that Rapaport’s prices are ultimately copyrightable or that Nivoda infringed them. It holds instead that the limited pleading-stage record could not support a definitive merger ruling.

The district court framed the underlying idea too broadly as the market price of diamonds. Accepting the complaint’s allegations as true, the relevant idea was Rapaport’s opinion about the value of diamonds with specified characteristics. That distinction matters because an opinion-based valuation may involve editorial judgment and may have a meaningful range of possible numerical expressions. The district court asked only whether a price is expressed as a number; it did not perform the additional inquiry required by Second Circuit precedent into the possible range of that number.

The court contrasted two earlier decisions. Settlement prices derived largely from fixed market data had merged with the underlying idea because different calculators would reach nearly identical values. By contrast, projected used-car values were potentially protected because editors used assumptions and professional judgment to predict the values of hypothetical average vehicles. Rapaport alleged a process closer to the second model: its list reflected expert judgment, could differ substantially from actual sales, and valued categories of hypothetical diamonds. Discovery is needed to test whether that description is accurate.

The panel also considered copyright’s competing policies. Giving ownership over facts or necessary expressions can obstruct the free circulation of ideas. But works infused with taste and opinion raise a weaker concern, while denying protection may reduce the incentive to invest in producing them. Rapaport alleged that subscriptions finance a costly, expertise-driven product. On those allegations, the policy balance did not justify applying merger before the factual record was developed. The district court must also consider Nivoda’s alternative arguments, including registration, actionable copying, and fair use, on remand.

Key Takeaways

• A numerical output is not automatically an uncopyrightable fact. Courts must examine what the number represents and the possible range of ways the underlying idea can be expressed.
• The merger doctrine is often fact-intensive. Dismissal at the pleading stage is risky when the work’s methodology and degree of editorial judgment remain unknown.
• Calling a publication an industry benchmark does not by itself show that it mechanically reports market facts.
• The decision revives Rapaport’s claim but does not decide copyright validity, infringement, fair use, or whether discovery will ultimately support merger.

Why It Matters

The opinion is important for publishers of price guides, ratings, forecasts, and other data products. A number may look factual while actually embodying selection, prediction, or professional judgment. Businesses that invest in proprietary benchmarks now have stronger grounds in the Second Circuit to demand a factual examination of their methodology before a court treats their outputs as freely copyable under merger.

At the same time, the ruling preserves limits on copyright. Rapaport still must establish a valid registered work and actionable copying, and Nivoda may renew the merger argument after discovery. The practical message is procedural as much as substantive: courts should identify the asserted idea carefully and understand how a valuation was produced before deciding that idea and expression are inseparable.

Surfaced via Law360 IP.