IP Law Daily, COPYRIGHT—D. Del.: Antitrust counterclaims against Thomson Reuters defeated, (Sep 30, 2024)

By Martin A. Steinberg, J.D.

Ross Intelligence accused Thomson of tying various products related to its Westlaw platform in violation of the Sherman Act.

The Delaware federal court dismissed antitrust counterclaims raised by Ross Intelligence Inc. in Thomson Reuters Enterprise Centre GmbH and West Publishing Corp.’s copyright suit accusing Ross of improper use of its intellectual property. Ross attempted to build a legal search tool using artificial intelligence to compete with Thomson’s WestLaw platform. Ross counterclaimed by asserting that Thomson, though its WestLaw product illegally tied various components of WestLaw to force consumers to purchase the bundled product. The court, however, found that Ross failed to show that Thomson was tying separate products and failed to define the markets for them (Thomson Reuters Enterprise Centre Gmbh v. Ross Intelligence Inc., No. 1:20-cv-613-SB (D. Del. Sept. 27, 2024)).

Legal publishing and research company West Publishing Corporation and its parent company, Thomson Reuters Enterprise Centre GmbH (together, Thomson) filed suit in May 2020 against legal research startup ROSS Intelligence Inc. for copyright infringement and tortious interference with contract. West created its Westlaw product, which has a comprehensive database of public law comprised of federal and state court decisions, federal and state statutes, and administrative rules and guidance. Westlaw includes the unique features of West Key Number System and West Headnotes. The complaint alleged that ROSS attempted to create a competing business which copied those features without permission from or compensating West and induced Westlaw licensee LegalEase Solutions to copy Westlaw content in bulk and give it to ROSS.

After the court denied ROSS’ motion to dismiss the complaint for failure to state a claim, ROSS answered the complaint and asserted several counterclaims, including violations of the Sherman Act and the unfair competition laws of California and Delaware. The counterclaims alleged that West holds a monopoly in the legal search platform market in the U.S. and restrains trade in the market through sham lawsuits and restrictive licensing conditions. In April 2022, the court denied Thomson’s motion to dismiss the antitrust and state unfair competition counterclaims.

Presently before the court was Thomson’s motion for summary judgment on five issues: separate products, market definition and power, statute of limitations, injunctive relief, and damages relating to testimony from Thomson’s expert. Thomson Reuters also moved to preclude certain opinions of two of Ross’s experts. Ross moved to exclude certain opinions of one of Thomson’s expert witnesses.

Tying of products. The court found that Ross failed to show that Thomson was tying separate products and failed to define the markets for them. Ross’s remaining antitrust counterclaims are all based on tying theories. Ross claimed that Thomson forces people to buy its Westlaw search tools if they want to use its caselaw database. Ross asserted that this arrangement is both per se illegal under the Sherman Act and illegal under a rule-of-reason theory of liability.

Ross failed to show that the two products are separate. To show that a seller is illegally tying two products, one must first show that the two products are separate. Ross needed to show at least one of three things to meet its burden on separate products: (1) that consumers bought the items separately, (2) that consumers requested or wanted the items separated, or (3) that some customers would have requested or wanted the items separated but for the fact that they were “intimidated” not to make such a request or were deprived of the information that would have made them want the items separated.

The facts, however, taken in the light most favorable to Ross did not make any of these three showings. Ross pointed out that Thomson used to sell its public-law database in books versus online without the legal search tools that are now packaged with Westlaw. The idea behind historical market analogues is that they are evidence of consumer preferences from a time when the markets were competitive. But the analogy to books suffered from two flaws.

First, Ross was wrong that books were sold without search tools. Books were sold without Westlaw’s current technological capacity but its database was not sold unbundled from search tools. Second, consumer preferences, production costs, and quality concerns vary over time. The evolution from book search tools to Westlaw’s digital search tools is similar to how the horse-drawn carriage market evolved into the car market. Likewise, few consumers want caselaw separated from the sophisticated search tools that make it digestible. A market for public law in book form used to exist, but that does not mean that a market for separate caselaw still exists in a world with more sophisticated search tools.

There must be sufficient consumer demand so that it would be efficient for a firm to sell the two products separately. Ross referenced two emails from Baker Hostetler and Skadden. The Baker Hostetler email chain did not ask about buying public law separately. And the Skadden email alone was not enough to infer “sufficient consumer demand.” The court noted that Ross could have done more to try to develop the record during discovery, including perhaps subpoenaing Skadden representatives.

The court further rejected Ross’s argument that Thomson’s decision to make some Westlaw content available via application programming interfaces (API) showed separate consumer demand for public law. These interfaces are another method that customers use to access Thomson Reuters’ platforms. Some of them let customers search internal firm data and external Westlaw data through a single search.

Ross reference to an interrogatory response and depositions of its own employees that showed that most Ross employees gestured toward unspecified “customers” who wanted to buy Ross’s search product without the public law. These statements did not suggest many interested buyers nor allege a specific number of consumers, and the only one named specifically was the U.S. Department of Justice. By even taking these statements as true, they did not show “sufficient consumer demand so that it is efficient for a firm to” sell the two products separately. Westlaw’s offer of three plans, each bundling its public-law collection with a different search tool, showed demand for different levels of search-tool sophistication, versus demand for a public-law database with no search tool at all or for a search tool on its own.

Defined markets. Even if Ross’s allegation of tying had not failed on separate products, it would still fail because Ross failed to properly define the market in which Thomson allegedly exercised excessive power, either on a per se tying theory or on a rule-of-reason theory. At a minimum, Ross needed to define either the tying market or the tied market. For per se tying, Ross must properly define the tying product market and show that Thomson possessed market power in the tying product market. For a rule-of-reason tying theory, Ross needed to define only the market for the tied product.

Ross had to define the market for both its per se and rule-of-reason theory, but it failed to define either the tying or tied product market. Ross offered the opinion of its expert; however, this was not enough. The expert spent three short paragraphs defining the market for electronically searchable collections of U.S. law and six short paragraphs defining the market for legal search tools. Yet, he failed to analyze in any depth companies or products that were interchangeable with the products here. This made it difficult to understand the scope of the market he was attempting to interact with.

To be admissible, qualified experts’ opinions must be based on reliable methodology and must fit the facts of the case. Ross’s expert essentially had no methodology for defining the relevant markets. He included no math or economic modeling and he never analyzed potential competitors in any depth. All he did was make brief, conclusory assertions.

Other outstanding motions. The court did not need to reach Thomson’s other summary-judgment motions, because granting summary judgment on either separate products or market definition alone resolved the outstanding antitrust counterclaims.

Regarding the expert motions, the portions of Plaintiffs’ Motion to Preclude Dr. James Ratliff and Dr. Gillian Hadfield that I did not already exclude for failing to meet Daubert are moot. These expert reports were submitted concerning the antitrust counterclaims and no longer relevant because those counterclaims are no longer viable. For the same reason, Defendant’s Motion to Exclude Certain Opinions of Plaintiffs and Counter Defendants’ Expert Chad Syverson was also moot. Should either party try to use these expert opinions in the copyright portion of this case, the parties may resubmit motions to exclude them.

The Case is No. 1:20-cv-613-SB.

Judge: Bibas, S.

Attorneys: Jack B. Blumenfeld (Morris, Nichols, Arsht & Tunnell LLP) for Thomson Reuters Enterprise Centre GmbH. David Ellis Moore (Potter Anderson & Corroon, LLP) for Ross Intelligence Inc.

Companies: Thomson Reuters Enterprise Centre GmbH; Ross Intelligence Inc.

Cases: Copyright TechnologyInternet DelawareNews