BanxCorp v. Costco Wholesale Corp.
BanxCorp v. Costco Wholesale Corp.
Opinion of the Court
OPINION AND ORDER [REDACTED]
Consider the percentage “3.95%.” It seems to be a totally ordinary percentage.
For Plaintiff, then, 3.95% is not such an ordinary percentage. Rather, Plaintiff initiated this lawsuit in part because it claims it has a valid federal copyright in that particular percentage — or, at least, that it has a copyright in its series of percentages of national average interest rates, of which 3.95% on December 21, 2005 is one part. And it claims that it is entitled to substantial money damages because Defendants Costco and Capital One — a large retailer and a large bank, respectively — unlawfully copied those percentages in a series of individual advertisements touting how much higher their particular deposit rates were than the national average, as reported by Plaintiff. Defendants’ copying of individual averages is conceded; at issue for the copyright claim in this case is whether the percentages themselves are entitled to federal protection under the Copyright Act.
The Court previously determined, on Defendants’ motion to dismiss, that Plaintiff plausibly had alleged that its works of authorship had certain features that could, drawing all inferences in Plaintiffs favor, lead to the conclusion that its works of authorship were entitled to copyright protection. See BanxCorp v. Costco Wholesale Corp., 723 F.Supp.2d 596, 601-09 (S.D.N.Y. 2010). But now the evidence is in, and, on cross-motions for summary judgment, the Court determines that, even drawing all reasonable inferences from the evidénce in Plaintiffs favor, the averages are unprotectable because they are uncopyrightable facts, because they are too short to be copyrighted, and because the so-called merger doctrine — which applies where there is “only one ... or so few ways of expressing an idea, that protection of the expression would effectively accord protection to the idea itself,” id. at 608 (internal quotation marks and alterations omitted) — bars copyright protection.
But that is not the only claim in this case. Plaintiff also contends that Defendant Capital One exceeded the scope of a License Agreement it signed that allowed it to use Plaintiffs data for certain marketing purposes. The Court finds that the
I. Background
A. Factual Background
1. The Parties
Plaintiff Banxcorp is a Delaware corporation that does business under the name “Banxquote.”
Defendant Capital One Financial Corporation is a Delaware corporation that is the parent company of co-Defendants Capital One Bank (USA), N.A., and Capital One, N.A., which are nationally chartered banks with principal places of business in Virginia. (DSUF ¶¶ 1-4.) The Court refers to these entities collectively as “Capital One” except where expressly noted. Capital One, a well-known national bank, provides so-called national direct banking products and services directly to consumers from its national headquarters. (DSUF ¶¶ 5, 8.)
Defendant Costco Wholesale Corporation, a Washington corporation, is the second largest retailer in the United States. (DSUF ¶ 11.) Costco operates over 600 warehouse-style retail stores worldwide and has approximately 66.5 million cardholders. (DSUF ¶ 12.) In addition to the products sold at its warehouses, Costco markets a variety of services to its members. (DSUF ¶ 16.) Nearly all of these services are provided by third parties that have marketing agreements with Costco. (DSUF ¶ 17.)
2. The Use of Plaintiffs Data in Capital One and Co-Branded Advertisements and Marketing Materials
Capital One markets its banking products nationally. During the time period relevant to this case, its marketing materials frequently provided the Capital One rate being offered for a particular financial product alongside one or more comparison rates, such as a competing bank’s rates or a national average rate. (DSUF ¶¶ 65, 67.) Capital One used comparison rates in many ads because it found that consumers often responded favorably to advertisements that provided a point of reference. (DSUF ¶ 71.)
Beginning in May 2003, Costco and Capital One entered into a series of marketing agreements. (DSUF ¶¶22, 24.) Costco and Capital One referred to this relationship as a “partnership,” whereby Costco would facilitate the marketing of Capital One products and services to Costco mem
Prior to January 2004, Capital One had been using national averages provided by a company called Bankrate in many of its advertisements. (DSUF ¶ 76.) But, for a variety of reasons — including the fact that Plaintiff published its rates for free online, which allowed potential consumers to verify the accuracy of the national averages, (DSUF ¶¶ 80, 81) — Capital One decided to switch to Plaintiffs averages. (DSUF ¶ 84.) On January 28, 2004, Capital One entered into a license agreement with Plaintiff to use Plaintiffs savings and jumbo CD averages, as well as its savings and jumbo money market averages, in many of its marketing materials, both online and in print. (DSUF ¶¶94, 115.) Capital One agreed to pay $6,000 per year for this privilege. (DSUF ¶ 115.) During the course of the agreement, Capital One obtained the national averages by copying the relevant data directly from Plaintiffs website. (DSUF ¶ 99.)
Soon after the license agreement became effective, Capital One began using Plaintiffs data in its standard national marketing materials. (DSUF ¶ 97.) Later, Capital One began using Plaintiffs averages in marketing materials, both online and in print, that were created and distributed as part of the partnership agreement with Costco. (DSUF ¶ 98.)
The record contains many examples of these partnership advertisements. An entirely typical one from 2006 states at the top: “Earn more with exclusive rates for Costco members!” (Decl. of Michael Kiernan, Ex. C, at COB0000194.) On the left side of the ad, there are several bullet points touting features of the account, and an offer stating that “Costco Executive Members receive $25 credited to their first new account opened.” (Id.) On the right side are two bar graphs. The first says “Money Market Account ($5,000 account balance),” and below that are two bars of different heights. (Id.) The left bar, in large numbering, states that Capital One’s rate is 4.26%, and, in smaller print to the right of this, the ad notifies the reader that 4.26% is the “Annual Percentage Yield,” or “APY,” and there is a single asterisk next to that definition. (Id.) The right bar is much lower, and, above it in slightly smaller lettering and numbering, the ad states that the “National Average” is 1.20% APY, and there are two asterisks next to “APY.” (Id.) The second bar graph, which is reproduced just below, is similar to the first, except the second graph gives the Capital One and national average rate for a “Certificate of Deposit ($5,000 deposit, 5-year term).” (Id.) In this graph, the Capital One rate is 5.16% APY, and the National Average is 3.95% APY. (Id.) The comparative height of the bars is adjusted accordingly.
The single asterisk and the double asterisk are defined in small print on the left side of the page. (Id.) The text following the single asterisk gives further details of the offer. (Id.) It is typical of the fine print that many people have encountered in the industry: the minimum daily balance requirement, minimal initial deposits, and the obligatory disclosures that the “terms and conditions of this offer” and the “rates” advertised are “subject to change without notice.” (Id.) Meanwhile, more relevant for purposes of this case, the text following the double asterisk contains the source of the national average representation. It reads, in full: “National average of APYs for CDs and money market accounts as published by Banxquote.com as of 12/21 /05.” (Id.)
Below the two graphs on the right side of the ad is marketing copy. “I love the exclusive perks Capital One offers Costco Executive Members, like the $25 I received when I opened my account,” says “Jeffrey S.” who is, presumably, a satisfied customer. (Id.) On the left side of the page, the ad implores the reader that he or she should “Open an account today!”, and it instructs the reader either to visit costco.com or call a toll-free number to do so. (Id.) The logos of both Capital One and Costco are featured, and there are additional disclosures, fine print — i.e., “Member FDIC” — -and even a copyright invocation by “Capital One Services, Inc.” (Id.)
Defendants used the national average data reported by Plaintiff frequently and essentially continuously during the 2004-OS period that is at issue in this suit. (PSUF ¶¶ 96, 100.) In particular, the then-current Capital One interest rate was continually displayed next to a relevant national average rate from Plaintiff on a
B. Procedural History
1. Prior Determinations
Originally, Plaintiffs CEO Norbert Mehl was also a Plaintiff in this case, and, proceeding pro se, Plaintiffs filed their Complaint on February 25, 2009. BanxCorp, 723 F.Supp.2d at 600. After retaining counsel, Plaintiffs filed the SAC on September 2, 2009. Id.
The SAC alleges seven causes of action. Id. There are two federal causes of action: Count One, which alleges copyright infringement based upon Defendants’ improper use of the BanxQuote Indices, (id. ¶¶ 106-16); and Count Three which alleges violation of the Digital Millennium Copyright Act (“DMCA”), based on allegations that when Defendants copied the BanxQuote Indices they altered or removed the copyright management information BanxCorp. had associated with the data, (id. ¶¶ 126-33). The remaining five causes of action arise under New York law: Count Two alleges hot news misappropriation of the time-sensitive data contained in the BanxQuote Indices, (id. ¶¶ 117-25); Count Four alleges fraud based on allegations that Defendants materially misrepresented their intentions with respect to their use of the BanxQuote Indices pursuant to the license agreement, (id. ¶¶ 134^13); Count Five alleges breach of contract against Capital One only, based on the alleged distribution to, and use of the BanxQuote Indices by, Costco in violation of the License Agreement, (id. ¶¶ 144-51); Count Six alleges unfair competition based on allegations that Defendants’ use of the BanxQuote Indices gave Defendants an unfair competitive advantage both in terms of decreased web traffic at Plaintiffs’ websites and in terms of direct competition in providing savings accounts and CDs, (id. ¶¶ 121, 152-57); and Count Seven alleges unjust enrichment based on allegations that Defendants received value due to their wrongful use of the BanxQuote Indices, (id. ¶¶ 158-61).
Defendants moved to dismiss each claim for failure to state a claim, and the Court granted the motion in part and denied the motion in part. In particular, the Court dismissed as preempted by the Copyright Act Count Four, alleging fraud; Count Six, alleging unfair competition; and Count Seven, alleging unjust enrichment. BanxCorp, 723 F.Supp.2d at 617-20. The Court also dismissed Mehl personally as a Plaintiff, because Mehl conceded he lacked standing. Id. at 621.
On July 8, 2011, the Parties stipulated that Count Two, alleging hot news misappropriation, and Count Three, alleging the DMCA violation, would be dismissed with prejudice. (Dkt. No. 68.) Thus, two claims now remain in the case: Count One, the federal claim for copyright infringement; and Count Five, the state claim for breach of contract against Capital One only.
2. Copyright Registrations
Plaintiffs copyrights were unregistered during the time of Defendants’ allegedly infringing activity. On March 5, 2009, after Plaintiff filed this lawsuit, Mehl submitted to the Register of Copyrights twenty applications for a federal copyright in the averages. (Mertzel Decl. Ex. T.) Each individual application covers a three-month
C. The Instant Motions
The Parties conducted discovery on the remaining claims. The Parties have now cross-moved for summary judgment on both claims. Plaintiff also submitted objections under Federal Rule of Civil Procedure 56(c)(2) to the admissibility into evidence of certain materials, and it moved for sanctions against Defendants for violation of the discovery rules. The Court held oral argument on all outstanding motions on September 17, 2018.
II. Discussion
A. Standard of Review
Before the Court are cross-motions for summary judgment. Summary judgment shall be granted where the movant shows that there is “no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R.Civ.P. 56(a); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). “When ruling on a summary judgment motion, the district court must construe the facts in the light most favorable to the non-moving party and must resolve all ambiguities and draw all reasonable inferences against the movant.” Dall. Aerospace, Inc. v. CIS Air Corp., 352 F.3d 775, 780 (2d Cir. 2003); see also Tufariello v. Long Island R.R. Co., 458 F.3d 80, 85 (2d Cir. 2006) (noting that a court must draw all reasonable inferences in the nonmovant’s favor).
A party seeking summary judgment bears the burden of establishing that no genuine issue of material fact exists. See Atl. Mut. Ins. Co. v. CSX Lines, L.L.C., 432 F.3d 428, 433 (2d Cir. 2005). “When the burden of proof at trial would fall on the nonmoving party, it ordinarily is sufficient for the movant to point to a lack of evidence to go to the trier of fact on an essential element of the nonmovant’s claim. In that event, the nonmoving party must come forward with admissible evidence sufficient to raise a genuine issue of fact for trial in order to avoid summary judgment.” Jaramillo v. Weyerhaeuser Co., 536 F.3d 140, 145 (2d Cir. 2008) (citations omitted).
Importantly for this case, “[w]hen the moving party has carried its burden under Rule 56(c), its opponent must do more than simply show that there is some metaphysical doubt as to the material facts.” Matsushita Electric Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) (footnote omitted); see also Wrobel v. Cnty. of Erie, 692 F.3d 22, 30 (2d Cir. 2012) (“To survive a
At the summary judgment stage, it is the “duty of district courts not to weigh the credibility of the parties.” Jeffreys v. City of N.Y., 426 F.3d 549, 554 (2d Cir. 2005). Thus, even when a plaintiff has relied exclusively on his own testimony, courts have denied summary judgment— but only as long as the plaintiffs “testimony was not contradictory or rife with inconsistencies such that it was facially implausible.” Fincher v. Depository Trust & Clearing Corp., 604 F.3d 712, 726 (2d Cir. 2010); see also Bridgewater v. Taylor, 832 F.Supp.2d 337, 345 (S.D.N.Y. 2011) (denying summary judgment for plaintiff where defendant’s evidence consisted “solely of his own testimony,” but this testimony offered “a plausible alternate version of events”); Bennett v. Vaccaro, No. 08-CV-4028, 2011 WL 1900185, at *7-8 (S.D.N.Y. Apr. 11, 2011) (denying summary judgment where defendants did not establish that plaintiffs “testimony is, either on its face or in light of any other statements he has made, so self-contradictory or implausible as to rule out crediting it,” and there was no evidence that plaintiff “ever contradicted his current version of [events]”).
B. Copyright Infringement Claim
1. Overview
“ ‘To prevail on a claim of copyright infringement, the plaintiff must demonstrate both (1) ownership of a valid copyright and (2) infringement of the copyright by the defendant.’ ” Cameron Indus., Inc. v. Caravan, Ltd., 676 F.Supp.2d 280, 283-84 (S.D.N.Y. 2009) (quoting Yurman Design, Inc. v. PAJ, Inc., 262 F.3d 101, 109-10 (2d Cir. 2001)); see also Porto v. Guirgis, 659 F.Supp.2d 597, 608 (S.D.N.Y. 2009) (requiring “ ‘ownership of a valid copyright, and [] copying of constituent elements of the work that are original’ ” (quoting Williams v. Crichton, 84 F.3d 581, 587 (2d Cir. 1996))). It is undisputed that Defendants actually copied Plaintiffs individual averages. But Defendants vigorously dispute that they have copied anything protectable under federal copyright laws, because, among other arguments, the individual averages are unprotectable, discovered facts; they are uncopyrightable short phrases; and, even assuming the final values are in some sense “expressions,” the merger doctrine precludes their protection.
In resolving these issues, the Court first determines what material facts are in genuine dispute. Then, the Court surveys the law of copyright in factual material. Next, taking the facts in the light most favorable to the non-moving party, the Court explains why the averages are uncopyrightable facts. Finally, the Court explains additional why the averages are uncopyrightable under various other doctrines.
2. Plaintiff’s Products
Because the legal lines are so carefully drawn in this area, it is vital to understand
a. The Computation of Plaintiff s National Average Rates
According to Plaintiffs own website, Plaintiff “provides a family of widely followed indices and benchmarks that measure the rates and performance of banking, depository, mortgage, home equity and consumer loan markets.” (Mertzel Decl. Ex. 0, at BX 0048.) In other words, Plaintiff regularly surveys the interest rates or other prices offered by particular financial institutions across the country, and then compiles this data into various indices that represent “averages” or other important financial benchmarks.
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Descriptive Statement - Subject and origins of the data:
U.S. national average rates quoted by the largest banks in all 50 states and Washington DC. as provided to BanxQuote and published continuously online at www.banxquote.com.
Approximate number of total data records: 400
Nature and frequency of changes: weekly updates
(Martial Deck Ex. S, at BX002125.)
Plaintiff compiles tables of averages organized by date, such as the one at the top of the following page. A variety of industry and general news publications described Plaintiffs product in a manner similar to that in which Plaintiff presented
The way the Banxquote indices are produced reflects their stated purpose: They are mathematical averages of the rates advertised by certain major financial institutions, updated at least weekly. Thus, a former software developer at Banxcorp named Abu Thomas testified that “if there are five banks,” then, to calculate its average rate, Banxcorp would “take the average of five banks.” (Lipkis Decl. Ex. 11, at 41.) The deposition continued:
Q: So you take the rate that each of the five banks is paying on money markets, add it up, and divide?
A: Yes.
Q: Simple mathematical average?
A: Yes.
Q: Is there any weighting of the banks included in the national average?
A: No.
(Id.) This method was independently confirmed by Defendants’ expert Bruce Webster, a computer scientist who examined Plaintiffs source code.
So the computational process is uncomplicated, and the output is but a single number on any given date. It turns out the inputs are equally straightforward: Plaintiff maintains a database into which someone inputs the interest rate or other relevant, publicly available financial information from one big bank in each state,
The evidence supporting many of the facts above comes primarily from Plaintiffs own website, the deposition of its own former employee, and the sole expert report submitted on this issue. Plaintiff in its 56.1 statement and Mehl in his deposition dispute some aspects of this account, but — in addition to being extremely confusing and rife with legal propositions couched as factual differences — Plaintiffs factual account, to the extent it differs from anything discussed above, is “contradictory [and] rife with inconsistencies such that it [is] facially implausible.” Fincher, 604 F.3d at 726. In other words, Plaintiffs deposition testimony fails to create any genuine dispute regarding the facts of how the averages are created, or of their perception as factual representations of the national average rates by the financial and general interest media. See Fed. R.CivJP. 56(a).
Defendants offered the following as a statement of undisputed material fact: “Banxquote provides benchmark rates and pricing information on financial institutions throughout the United States.” (DSUF ¶ 132.) As explained above, that statement is amply supported by the record. But Plaintiff attempts to create some factual dispute over that fact:
BanxCorp does not dispute this statement, to the extent that the BanxQuote indices pertain to the creation of nonbinding indices used to predict or estimate the performance of bank money market savings and CD rates in the United States, rather than the discovery of facts or actual national average bank rates in a literal sense. The phrase “national average bank rates” or “benchmark rates” is a paradoxical colloquial or figurative expression or arguably an oxymoron since there are thousands of banks in the United States. In addition, the disclosure of individual bank rates or recording of national average interest rates paid by banks are not compulsory or required by law, [and] there is a broad range of numerous possible variations not based on the same or substantially similar underlying market facts or singular form of expression. BanxCorp further refers to its response to [16 other factual statements]. [Citing its Response to Request for Admission and its Copyright Registrations.]
(Ph’s Resp. to DSUF ¶ 132.)
The actual disputed facts are mostly obscured in that confusing response, and the explanation Mehl gives in his deposition is no more straightforward. Consider the following important exchange. The question that triggers the response that Mehl provides at the beginning of the quotation below pertains to what he thinks it means when Banxquote reports that, for instance,
A: First of all, we just put numbers there. People use it for different purposes. So what they try to measure or how they try to measure, we cannot control. So we use a certain system to show their performance over time.
Q: What is .23 telling me? What are you trying to tell me?
A: I don’t know what it tells you. I know what it tells me.
Q: What are you saying when you say .23? What is .23?
A: It shows an index based on certain banks that we track and certain indices that we track that are in our system. And then it uses — and it shows it over time.
Q: But today the .23 is not over time. I’m asking what the .23 is telling me. What are you telling me is .23?
A: It could be what it would have been if you had left the money invested for a year.
Q: Is the average that banks are paying on money markets something that can be measured?
A: Theoretically, it could be____ First of all, it depends on what the meaning of the word “average” is, okay. So when it comes to the average for money markets, the word “average” has been used as a colloquial term by various publishers and media, including us. And each one attempts to show some index of certain banks that they track. So that’s why the word “average” in that context has a different meaning than what the word “average” would have in another context....
So that’s one qualification. The second is that in order to compute an average, you would have to track the interest rate of every bank in the United States. So in theory, it may be possible, but in reality, it does not seem to be possible, because of the number of banks and the number of — and the variety of money market products. So there is no set convention that would allow somebody to measure an actual average. So you could measure an estimate at best.
(Lipkis Decl. Ex. 6. at 88-91.)
Plaintiff thus appears to be putting forth a contrary factual account of how Plaintiffs averages were described by Plaintiff, by Mehl, and by the media. But Mehl’s testimony on this point has no actual support in the record, and indeed is directly contradicted by a variety of documentary evidence. For instance, Mehl’s statement that Banxcorp “just puffs] numbers there” is patently wrong: as explained above, Plaintiff published not only “numbers”— Plaintiffs tables of average rates — but Plaintiffs own website contains a variety of detailed explanations of what the data represents. (Mertzel Decl. Ex. 0, at BX0048.) And its standard License Agreement, which both Plaintiff and Capital One signed, states that “Banxquote agrees to take all reasonable actions necessary to keep BanxQuote data current, accurate, true and complete, and to notify [Capital One] of any errors or omissions.” (Lipkis Decl. Ex. 1-A, at 2.) Thus, Mehl’s testimony that he held out the BanxCorp averages as only estimates or predictions is belied by his own promise on a document he personally signed to keep his “data current, accurate, true and complete.” No reasonable jury could believe Plaintiffs testimony on this point.
Also facially implausible is the statement in Plaintiff’s Response to Defendants’ Statement of Undisputed Material Facts
In addition, Plaintiff and Mehl get quite philosophical about the nature of an “average.” But the point they are making about the “hypothetical” nature of an average is both factually wrong and logically fallacious; this testimony, too, fails to create a genuine dispute of material fact about Plaintiffs product. For one thing, Plaintiffs statement is facially implausible as a matter of describing the way the term “average” was actually used, as the record shows that both Plaintiff as a company, Mehl himself, and the media used the term “average” in more than the “colloquial” sense; rather, every relevant piece of documentary evidence in the record other than Mehl’s self-serving deposition testimony reveals that, to those well-versed in financial markets, Plaintiffs data was treated as an “average” in the non-colloquial, mathematical sense. (E.g., Mertzel Decl. Ex. N, at BX0091.) And that media treatment was entirely justified, because Mehl’s statement is fallacious as a matter of mathematics. After all, the numbers that Plaintiff produced are unquestionably averages in the technical sense: any given data point reported by Plaintiff is an exact, mathematical average of the rates that form the input into the database, computed using the database function “AVG().” (Webster Deck Ex. A, at 1, 20.) Indeed, there is no testimony that contradicts Defendant’s factual account of how the averages were calculated. True, there is an entirely separate question of whether Plaintiffs particular average, taken from a set of large, geographically diverse banks, is a good approximation of what Mehl refers to as the “actual average” of “every bank in the United States.” But the answer to that question in no way affects the mathematical reality and the incontrovertible fact that Banxcorp’s data points are simple averages. Thus, no reasonable jury could conclude that each data point is anything other than a mathematical average. The legal consequences of the fact that Plaintiffs input does not include data from every single bank in the United States are discussed in the next sub-section.
Plaintiffs assertion that somehow the data are predictions of future performance — that, in Mehl’s words, an individual average of “.23%” in fact “shows performance over time” — is also without support. As explained, all the evidence in the record is that “,23%” is the average of the roughly current rate that certain financial institutions are paying on their deposits. (E.g., Mertzel Deck Ex. Q, at BX0065 (showing the “Banxquote Money Markets” table of average yields in the Wall Street Jour
As a final matter with regard to the factual characterization of the data, Plaintiff makes much of the fact that competing providers of data — namely, those provided by the companies Informa or Bankrate, Plaintiffs competitors — produced national average rates that differ somewhat from Plaintiffs data. Plaintiff includes an expert report on damages containing an exhibit showing “Differences between Banxquote, Bankrate, and Informa Indices.” (Lipkis Decl. Ex. 77, at Ex. C.) In this section, there are a few exhibits that do indeed show some variation in reported rates: On one particular date in August 2008, the three indices diverged by anywhere from approximately .20 to .59 percentage points, depending on the index. (Id. at COB0014998.)
The Court, of course, takes this evidence at face value, and the Court construes the divergence to be as large as Plaintiffs evidence permits. But it should be clear that any comparison with other averages does not change the nature of Plaintiff’s calculation at all: that is, how others might calculate a national average CD rate does not change the nature of the evidence regarding how Plaintiff actually produces its data.
b. Summary: Undisputed Material Facts Regarding Plaintiffs Averages
In sum, the record shows that the following material facts regarding Banxquote’s national averages for the money market and CD data are not in genuine dispute:
1. Plaintiffs input to the averages was, for over four years, the most recently published rates of major banks. These rates were always publicly available and are objectively verifiable facts about what interest rate a given bank is offering at a particular moment in time. These rates are inputted into Banxquote’s database approximately weekly. The particular banks used as inputs changed infrequently, if ever, during the period at issue. Some essentially trivial conversion of published bank rates may have been necessary to ensure that the rates were entered in a standard format.
2. Once the rates were inputted and standardized, the software calculated a simple mathematical average of the rates. No weighing or any other, sophisticated calculation or algorithm was used. The built-in “AVG( )” function was the only meaningful computer function used. No financial data was used as part of the input to the calculation except the particular interest rate of a particular financial institution as of a particular date.
3. The output of the calculation was a single number that is the exact mathematical average of the inputted rates as of a particular date. These outputs could then be compiled into a table, organized by date.
4. Plaintiff represented to consumers, customers, and the financial media that the averages were objective facts about aver
As described, the only evidence that might contradict these facts comes entirely from Mehl’s own affidavits or deposition testimony. “But a self-serving, contradictory affidavit fails to raise a triable issue of fact when it conflicts with documentary evidence.” Christiana Bank & Trust Co. v. Dalton, No. 06-CV-3206, 2009 WL 4016507, at *4 (E.D.N.Y. Nov. 17, 2009); see also Dzanoucakis, 2009 WL 910691 at *8 (where the “uncontroverted record clearly supports a [particular] finding,” then “[plaintiffs own self-serving declaration to the contrary is insufficient, under the circumstances, to raise a triable issue of fact”). There is no triable issue of fact regarding how Plaintiffs data is computed or how it has been presented to and understood by the public. Like many other cases implicating copyright in largely factual material, this case is ripe for decision at summary judgment. See New York Mercantile Exchange, Inc. v. IntercontinentalExchange, Inc., 497 F.3d 109, 119 (2d Cir. 2007) (deciding on summary judgment a case presenting the question whether settlement prices for futures contracts are entitled to copyright protection); RBC Nice Bearings, Inc. v. Peer Bearing Co., 676 F.Supp.2d 9, 24 (D.Conn. 2009) (deciding on summary judgment a case presenting the question whether load ratings for ball bearings are entitled to copyright protection).
3. The Legal Landscape of Copyright in Factual Material
With the details of how Plaintiffs averages are computed and perceived in mind, it is time to turn to the legal question of whether Plaintiffs averages are protectable under the Copyright Act. The Court discussed the general legal landscape regarding copyright protection of factual material at some length in its earlier decision in this case. BanxCorp., 723 F.Supp.2d at 601-09. The discussion here tracks that discussion in many ways but also adds to it to include recent developments and additional analysis now that the issues in the case have been crystallized.
The key legal starting point is the deceptively simple proposition that “facts are not copyrightable.” Feist Publ’ns, Inc. v. Rural Tel. Serv. Co., Inc., 499 U.S. 340, 344, 111 S.Ct. 1282, 113 L.Ed.2d 358 (1991). In Feist, the seminal Supreme Court precedent regarding the copyright-ability of factual material, the Court theorized that no copyright can exist in facts “because facts do not owe their origin to an act of authorship[,] ... [and are] not created[,] ... [but] merely discovered....” Id. at 347, 111 S.Ct. 1282. But while originality “remains the sine qua non of copyright,” “[fjactual compilations ... may possess the requisite originality ... [where] [t]he[ ] choices as to selection and arrangement ... are made independently by the compiler and entail a minimum degree of creativity.” Id. at 348, 111 S.Ct. 1282. So the key line the Court drew in Feist is the one between uncopyrightable facts themselves and their arrangement, which may contain some elements of protectable originality. As applied by the Court in Feist, the white pages in a telephone directory contained only unprotectable facts arranged in an entirely unoriginal way. See Feist, 499 U.S. at 362, 111 S.Ct. 1282. The defendant was found not liable for copying at least 1,309 entries from the plaintiffs
The cases applying Feist have made clear that some propositions are less obviously factual than the indisputably factual proposition that, say, the President of the United States resides at 1600 Pennsylvania Avenue in Washington, D.C. For instance, in New York Mercantile Exchange, Inc. v. IntercontinentalExchange, Inc., 497 F.3d 109 (2d Cir. 2007), the Second Circuit was presented with the question of whether settlement prices for futures contracts were uncopyrightable facts. Id. at 114. While it might seem that the answer should be “yes, of course settlement prices are facts,” it turns out that the determination of the settlement prices by the plaintiff exchange is fairly complicated. According to the Second Circuit,
A futures contract requires the delivery of a commodity at a specified price at a specified future time, though most contracts are liquidated before physical delivery occurs.... The settlement prices are used to value the open positions---Unlike on a securities exchange, the settlement price may not be the final trade, for two reasons. First, because of the nature of trading, it is not always clear which trade was the closing trade.... Second, ... [flor the “outer” months, those further from the trading date, there is often little or no trading on a particular day---- For high-volume months, settlement prices are based on a formula: “a weighted average of all trades done within the closing range.” ... For low-volume months, the extent of the ... creative judgment is disputed.
Id. at 110-11 (footnotes omitted). The Second Circuit ultimately decided the case on the alternative ground that the merger doctrine barred copyright protection, id. at 115, but the Second Circuit stated in well-considered dicta that “there [wa]s a strong argument” that the settlement prices were unprotectable facts, id. at 114, though that conclusion was less certain for the low-volume months, id. at 116. For those low-volume months, the Court stated that, because “there is no real market to speak of,” the settlement prices “appear[ ] closer to creation, to making predictions of expected values.” Id. (internal quotation and ellipsis omitted). By contrast,
For high-volume months, settlement prices are determinations of how the market values a particular futures contract ... [,] not how the market should value them or will value them. Under this view, the market is an empirical reality, an economic fact about the world.... So characterized, there is one proper settlement price; other seemingly-accurate prices are mistakes which actually overvalue or undervalue the futures contract.
Id. at 115 (emphasis in original). Therefore, consistent with the dicta in New York Mercantile, when confronted with raw data that have been converted into a final value through the use of a formula, courts should put significant weight on the degree of consensus and objectivity that attaches to the formula to determine whether the final value is fundamentally a “fact.” See Columbia Broad. Sys., Inc. v. Am. Soc. of Composers, Authors & Publishers, 620 F.2d 930, 935 (2d Cir. 1980) (“[Appellate courts ... have an entirely legitimate function of elucidating principles of law, fairly raised by litigation, even if the resulting pronouncements are not absolutely required for the precise decision reached. Appellate guidance is not valueless because it is dictum.”).
In New York Mercantile, the Second Circuit contrasted the settlement prices at issue with a “compilation of estimated projections for used car prices” that the Sec
New York Mercantile and Maclean Hunter together provide helpful guideposts in determining the copyright status of price data. If the data purports to represent actual objective prices of actual things in the world — the actual price of an actual settlement contract on a particular day — it is an unprotectable fact; if the data purports to represent an estimated price of a kind of idealized object — for instance, what a hypothetical, mint condition 2003 Ford Taurus with approximately 60,000 miles might be worth — then the hypothetical price may be eligible for some form of copyright protection in the right circumstances. See Maclean Hunter, 44 F.3d at 71 (distinguishing between “building-block” ideas “that undertake to advance the understanding of phenomena or the solution of problems ... and those ... that do not undertake to explain phenomena or furnish solutions, but are infused with the author’s taste or opinion”).
To illustrate this distinction, this Court gave the following example in its previous opinion. If a scientist knew an object’s mass and the force acting upon the object, this raw data could be converted into the object’s acceleration due to that force by using the “formula” known as Newton’s Second Law of Motion. This use of a formula would merely discover an “empirical reality,” and therefore the result would be uncopyrightable. This is true even if the resulting output is not completely accurate, so long as the formula used is generally accepted and quintessentially objective. Thus, the output data generated by using Newton’s Second Law of Motion — force equals mass times acceleration, or “F=ma” — would be a series of uncopyrightable facts, even though the output is in some sense an estimation because Newton’s formula fails does not consider relativistic effects. See Albert Einstein & the Theory of Relativity, http://csepl0.phys. utk.edu/astrl61/lect/history/einstein.html (last visited September 26, 2013) (lecture from “Astronomy 161” course at the University of Tennessee, Knoxville).
Since New York Mercantile, there has been one published opinion from a district court in the Second Circuit that has attempted to navigate these tricky waters. In RBC Nice Bearings, Inc. v. Peer Bearing Co., 676 F.Supp.2d 9, 21 (D.Conn. 2009), the court considered the copyright-ability of “load ratings” of ball bearings, which are measures of the “radial force a particular bearing having known geometric and physical attributes, such as size and quantity of balls, can withstand.” Id. at 16 (internal quotation marks omitted). The exact values of the load ratings were “mainly a function of the geometry of the bearing and material, [but also accounted for] certain other ‘life factors’ enumerated in published industry guidelines ... [such as] tolerances, material cleanliness, lubrication, hardness, and operating temperature.” Id. The plaintiffs strongest argument that the load ratings were not mere uncopyrightable facts was that “creativity [wa]s used in developing the load ratings ... [, because] certain bearing manufacturers use the various ‘life factors’ ... to adjust their load rating calculations from a standard calculation based only upon the
[w]hile there may be some level of judgment involved in selecting which particular “life factors” to utilize in adjusting the standard load rating calculation, based upon the record before the Court such judgment is very minimal given that the relevant life factors are published in industry guidelines. The level of judgment necessary to calculate the load rating information is undoubtedly no more than that needed to determine the settlement prices at issue in New York Mercantile ....
Id. Just as in New York Mercantile, though, the court did not rest its decision solely on this ground, and it stated that it would reach the same decision even if “the load bearing ratings are expressions rather than facts,” because of the court’s application of the merger doctrine. Id. at 23. The court’s reasoning, therefore, like the reasoning in New York Mercantile, could be considered dicta in some sense.
All of the authorities discussed so far were available to the Court at the time of its earlier decision in this case. Since then, the Second Circuit has not decided any additional on-point copyright cases, but its decision in Barclays Capital Inc. v. Theflyonthewall.com, Inc., 650 F.3d 876 (2d Cir. 2011), provides some additional illumination. In that case, the Second Circuit held that the defendant was not liable under the state-law doctrine of hot news misappropriation for reproducing plaintiffs’ “actionable” stock ratings — for example, an analyst’s downgrade of or recommendation to buy a particular stock— without authorization. Id. at 881. While the majority did not discuss whether the ratings were uncopyrightable facts for purposes of the Copyright Act in particular, the majority opinion described the defendant as “collecting, collating and disseminating factual information — the facts that [plaintiff brokerage firms] and others in the securities business have made recommendations with respect to the value of and the wisdom of purchasing or selling securities — and attributing the information to its source. The [plaintiffs] are making the news; [the defendant], despite the [plaintiffs’] understandable desire to protect their business model, is breaking it.” Id. at 902 (emphasis removed).
In 2010, the Court summarized the doctrine as follows. Where: (1) the raw data used to create the final value were unprotectable facts; (2) the method of converting raw data into the final value was an industry standard, or otherwise widely accepted as an objective methodology; and (3) the final value attempted to measure an empirical reality, then the final value produced from raw data ordinarily is not protected by copyright. BanxCorp, 723 F.Supp.2d at 604. That summary not only appears to remain good law today, but it has been reinforced by the idea in Bar-
A Plaintiff’s Averages Are Uncopyrightable Fads
Plaintiffs legal argument that any given individual average is protectable as a sufficiently original work withers away in light of the evidence of what Plaintiffs data is and the factual findings explained above. Each average is a fact, plain and simple: It is the national average rate of interest offered by major U.S. banks on a given financial product at a given point in time based on publicly available data. See supra Section II.B.2. That is how Plaintiff held out its averages over the relevant time period, how the media interpreted and reported on them, and how any relevant consumer would have understood them. Thus, on the spectrum from fact to estimate suffused with judgment and opinion outlined above, Plaintiffs data is legally equivalent to the unprotectable load ratings in RBC Nice Bearings, the likely unprotectable settlement prices in New York Mercantile, and the likely unprotectable analyst recommendations in Bardays. By the same token, Plaintiffs list of averages are unlike the protectable list of estimated prices of hypothetical used cars at issue in Maclean Hunter.
Plaintiff has not created a genuine dispute of fact that the type of judgment that would infuse the data with “originality” goes into the calculation of each individual average. Rather, Plaintiff inputs the relevant rates and the software runs an average, which Plaintiff then publishes verbatim. And any “judgment” that went into the initial selection of banks was both extremely straightforward — one large bank in each state and the District of Columbia — and infrequent — Plaintiffs list of banks did not change at all for four years for one of the averages at issue. Applying the specific three-part test stated above, (1) the raw data used to create the final value consists entirely of unprotectable facts; (2) the method of converting raw data into the final value is an industry standard and widely accepted as an objective methodology, because the method involves merely tracking the interest rates offered by large banks and computing a “simple mathematical average” of the inputted rates; and (3) the final value clearly attempts to measure an empirical reality. See BanxCorp, 723 F.Supp.2d at 604. Each individual average is thus an uneopyrightable fact.
Instead of trying to parse the doctrine differently, Plaintiff instead claims that the averages are protectable based solely on its factually unsupported view of its averages. “The Banxquote Indices are Purely Estimates or Predictions,” states one subheading in Plaintiffs principal brief. (Pl.’s Mem. 13.) But, as explained, this statement is contradicted by the record. In fact, Plaintiffs averages are not predictions at all; they are reports of historical interest rates offered by financial institutions. And, mathematically, they are not estimates at all; they are computed by computing the exact arithmetic mean of all the input values.
The only possible sense in which these averages could be considered “estimates” is by taking into account the representation or purpose of the data as it is pre
For instance, no white pages directory lists every single person living in a particular area, or gets every address, phone number, and name exactly right — indeed, the white pages at issue in Feist even contained four fictitious listings, inserted to detect copying — but that does not make the white pages a work of opinion regarding who lives in a given area. See Feist, 499 U.S. at 344, 111 S.Ct. 1282. Likewise, in a case about the census that did not address copyright issues, the Supreme Court acknowledged that no population census can possibly capture everything about the population it surveys with complete accuracy. See Dep’t of Commerce v. U.S. House of Representatives, 525 U.S. 316, 322, 119 S.Ct. 765, 142 L.Ed.2d 797 (1999) (describing the Census Bureau’s methods for compensating for the “under-count,” which is the portion of the population not directly surveyed either in person or by mail). And yet the Supreme Court stated in Feist that “[cjensus data ... do not trigger copyright” because “[cjensus takers ... do not ‘create’ the population figures that emerge from their efforts; in a sense, they copy these figures from the world around them.” Feist, 499 U.S. at 347, 111 S.Ct. 1282. So too here. Each average at issue in this case is a fact about the world — an “empirical reality” — even though it is in some sense an imperfect representation of some platonic ideal of a “national average bank rate.”
This explains why the fact that there are several competing companies that measure national average rates, all of which regularly computed slightly different final values, does not mean that Plaintiffs output is not fundamentally factual in nature. The difference between two particular values, according to an email in the record, likely arises “due to the fact that the Informa national average is $10k [i.e., for accounts with a minimum balance of $10,000] and Bankrate’s has no min [i.e., no minimum balance].” (Lipkis Decl. Ex. 77, at COB0014996.) Though not entirely clear from the record, the best inference is that each provider of national averages is actually collecting and computing a slightly different average, perhaps because each provider thinks that its own input is more relevant to its consumers. For one company, the relevant metric is the interest rate large banks pay on CDs with a $10,000 minimum deposit, and, for another, it is the interest rate large banks pay on CDs with no minimum deposit. These differences do not undermine the conclusion that Plaintiff’s data is fundamentally an attempt to represent an empirical fact about the world.
Returning to the census analogy helps illuminate this point. In creating census data, two different census takers might produce slightly different population figures, because there is some component of estimation and approximation that must
While the judgment here regarding “estimation” is minimal, even if it were more involved, it is still judgment of a fundamentally different character than the kind that can lead to potentially copyrightable price “estimates” like that ones at issue in Maclean Hunter. As the Second Circuit stated in New York Mercantile, “[t]he values [in Maclean Hunter] were based on assumptions about ‘average’ cars; as these cars did not exist, there could be no actual market to discover.” N.Y. Merc., 497 F.3d at 115 n. 5. But the settlement prices at issue in New York Mercantile “can be seen as ‘pre-existing facts’ about the outside world which are discovered from actual market activity.” Id. The New York Mercantile court therefore drew a line between two kinds of price estimates: those prices that estimate the hypothetical value of a non-existent product, and those prices that estimate the current or historical value of an existent product. The former price estimate is an estimate because it must be estimated; there is no true corresponding thing-in-the-world. The latter price estimate, though, is only an estimate because of resource constraints or imperfect, incomplete information. The decision in New York Mercantile implies that the former type of estimates are much more likely to merit copyright protection, not only because of the amount of judgment involved in the estimation but also because of the very nature of the judgment. Plaintiffs averages fall on the side of the line where copyright protection is not available.
5. The Tables of Averages Are Not Copyrightable As Compilations
Defendants also do not own a valid copyright in their compilation of weekly averages. In the Copyright Act, a “compilation” is defined as “a work formed by the collection and assembling of preexisting materials or of data that are selected, coordinated, or arranged in such a way that the resulting work as a whole constitutes an original work of authorship.” 17 U.S.C. § 101. In light of this definition, a single number that is the outcome of a process that takes preexisting materials as inputs is not itself a compilation; once a calculation is done, that single output is no longer merely the result of “the collection and assembling of preexisting materials.” That is, despite some confusion on this score, it is now clear on this record and from additional legal development that the only possible expression protectable as a compilation is Plaintiffs list of averages, organized by date. But because that shows no more creativity in selection and arrangement than the white pages at issue in Feist, Plaintiff is not entitled to this form of copyright protection.
a. Clarifying What Compilations Are
The statutory definition of a “compilation” given in 17 U.S.C. § 101 was elaborated in Feist. The Court noted that “[m]any compilations consist of nothing but raw data.” Feist, 499 U.S. at 345, 111 S.Ct. 1282. Thus, the Court asked rhetorically, “[o]n what basis may one claim a copyright in such a work? Common sense
By contrast, a single output that takes as input more than one data point is not itself a compilation; instead, the complete expression of a selection and arrangement of factual matter is what may be protected as a “compilation.” For example, in Key Publications, the entirety of a yellow pages directory featuring only businesses and categories particularly relevant to Chinese-Americans had a sufficiently original arrangement for the whole directory to be protectable as a compilation. Id. at 514. To be sure, the idea of an author’s creativity in the “selection” of preexisting materials, which is so crucial for a compilation copyright, is also relevant to the question whether an individual price or some other individual piece of data is an uncopyrightable fact or a copyrightable expression. See N.Y. Merc., 497 F.3d at 115-16 (analyzing the degree of judgment that goes into determining the settlement price of a futures contract for purposes of determining whether it is a fact or opinion, but not a compilation); RBC Nice Bearings, 676 F.Supp.2d at 22 (noting that “[t]he level of judgment necessary to calculate the load rating information” of the ball bearings goes to whether the load ratings are purely factual). The more judgment that goes into the production of a price or a rating — as opposed to mere observation or calculation' — the more likely the price or rating may be “original” and “creative,” and hence possibly protectable on its own. Icl; see also BanxCorp., 723 F.Supp.2d at 605 (noting that the Court’s test for protection of the averages “captures the Second Circuit’s observation that ‘the exercise of judgment in choosing [ ] facts’ is sufficient to warrant protection under the Copyright Act” (quoting Key Publ’ns, 945 F.2d at 513) (internal alteration in original)). But the crucial point is that the single output of a complex calculation is not itself a compilation.
Properly understood, then, Defendants are not liable for copyright infringement of any potential compilation copyright. Each individual average is not a compilation, because, as should be clear from the foregoing, each average value is not itself a “collection and assembly of preexisting data,” but rather each is a single number that is the result of performing a mathematical operation on a collection of preexisting data. Key Publ’ns, 945 F.2d at 512. Each average is derived from a set of preexisting facts, but not composed of those facts. See Grimmelman, 14 Vand. J. Ent. & Tech. L. at 862 n. 71. Indeed, though Plaintiff draws on the compilation cases to attempt to shed light on the required threshold of creativity and originality that goes into its computation of a given national average, it never actually proffers a theory of how each individual average might be protect-able as a compilation. Plus, as Defendants point out, “Banxquote has not obtained a copyright registration for a list of banks and products, nor has it established that Defendants had access to or copied such a list.” (Defs.’ Reply 8.) Thus, whether Plaintiffs actual list of input banks is protectable as a compilation is not at issue.
Instead, in its Reply brief, Plaintiff notes that Defendants’ taking of “final values ... from January 12, 2004 through December 31, 2008” infringes its copyright in the entire series of weekly averages, which it claims is protectable as a compilation. (Pl.’s Reply 2.) Plaintiff goes so far as to say that “because the Banxquote compilations were copyright-protected, it is not necessary to also establish that the underlying individual estimated Banxquote indices or averages were copyrightable.” (PL’s Reply 3.)
Plaintiffs confidence is misplaced. Plaintiffs arrangement of its averages in tables listing each week’s average after the previous one does not “meet[ ] the constitutional minimum for copyright protection” because it does not “feature[ ] an original selection or arrangement.” Feist, 499 U.S. at 345, 350, 111 S.Ct. 1282. Rather, Plaintiffs selection of raw data — its own weekly averages — and Plaintiffs arrangement of the data in tables — chronologically by week — are the numeric equivalent of the plaintiffs selection of address entries for its white pages in Feist: there is no creativity at all. In fact, as the Second Circuit noted in Key Publications, the arrangement of weekly averages is exactly the kind of arrangement that is not original enough to be copyrighted, as “[a]rrangement ‘refers to the ordering or grouping of data into lists or categories that go beyond the mere mechanical grouping of data as such, for example, the alphabetical, chronological, or sequential listings of data.’” 945 F.2d at 513 (quoting Copyright Office, Guidelines for Registration of Fach-Based Compilations 1 (Rev. Oct. 11, 1989)). But Plaintiff has done just exactly what the Second Circuit said did not merit copy
Moreover, unlike the defendants in Key Publications, Feist, and Maclean Hunter, Defendants here are not competitors of Plaintiffs that have lifted wholesale entire portions of Plaintiffs compilation. See Key Publ’ns, 945 F.2d at 511; Feist, 499 U.S. at 348, 111 S.Ct. 1282; Maclean Hunter, 44 F.3d at 64. Rather, Defendants have selected relevant entries of Plaintiffs data to feature one or two numbers in a given advertisement. Thus, even if Plaintiffs tables of data were protectable in their arrangement, Defendants would not be liable for infringement, because they have not copied that arrangement.
Plaintiffs copyright registrations do not change this conclusion. The only works that Plaintiff even attempted to register are twenty quarterly tables of averages, each as its own compilation. See supra Section I.B.2. Defendants question the validity of the registrations in the first place, (Defs.’ Mem. 11), but, even assuming the registrations are valid, the result is unchanged. The “Copyright Office’s examination of copyright applications is necessarily limited,” and so a registration does nothing more than create a rebuttable evidentiary presumption of a copyright. Estate of Burne Hogarth v. Edgar Rice Burroughs, Inc., 342 F.3d 149, 166 (2d Cir. 2003) (internal quotation marks omitted); see also 3 Nimmer on Copyright § 12.11(a)(3) (“Once the Register of Copyrights has issued a certificate, although certain prima facie presumptions are thereby created, the courts are free to examine the underlying facts and to rebut those presumptions, should the facts so warrant.”). Here, Defendants have rebutted that presumption and have shown that they did not copy Plaintiffs arrangement of data in any event.
6. The Merger Doctrine Also Precludes Copyright Protection
In its previous opinion, the Court noted that courts in the Second Circuit have decided similar cases under the merger doctrine, which holds that ‘“expression is not protected in those instances where there is only one or so few ways of expressing an idea that protection of the expression would effectively accord protection to the idea itself.’ ” BanxCorp, 723 F.Supp.2d at 608 (quoting N.Y. Merc., 497 F.3d at 116-17). But the Court determined that it was not appropriate to address that issue in the context of a motion to dismiss, because the nature of the inquiry “argues in favor of allowing parties to present evidence on this issue.” Id. (citing N.Y. Merc., 497 F.3d at 116-17). Now that the evidence is in, the Court holds that the merger doctrine does indeed bar protection of Plaintiffs averages, even if they were to be considered “expressions” that have some other hallmarks of eopyrightability.
a. The Merger Doctrine as Applied to Numbers
The merger doctrine originates with the proposition that “ideas cannot be copyrighted. Instead, only the manner of an idea’s expression is copyrightable.” N.Y. Merc., 497 F.3d at 116 (internal quotation, citation, and brackets omitted). The works at issue in New York Mercantile, like the works here, were economic indicators expressed in numerical form. See id. at 110-11. Ultimately, after issuing the previously discussed dicta regarding the copyrightability of facts, the New York Mercantile court decided the case on the grounds that protection for the plaintiff exchange’s settlement prices was prohibited by the merger doctrine. See 497 F.3d at 117.
In applying this rule, the Second Circuit instructed that courts should “exercise considerable care in analyzing merger,” and the New York Mercantile court held the merger doctrine was satisfied there because “any settlement price for a particular futures contract would be determined based on the same underlying market facts, [and] any dissension would be exceptionally narrow.” Id. at 116-17 (internal quotation marks omitted). Finally, the Second Circuit explicitly held that policy considerations weighed in favor of applying the merger doctrine to bar copyright protection, notably because the plaintiff exchange already had an incentive to produce the settlement prices so that it could carry out its primary business function: after all, to “establish a functioning commodities market, [the plaintiff exchange] must have a price at which to settle open positions.” Id. at 118.
The court in RBC Nice Bearings reached the same conclusion as applied to the facts there. See 676 F.Supp.2d at 23. The court first noted that “it cannot be disputed that all possible expressions take the form of a number,” and so it stated that the “question then becomes whether the range of possible load ratings for a particular bearing ‘is broad enough that any possible expression will not necessarily be substantially similar.’ ” Id. (quoting N.Y. Merc., 497 F.3d at 117). The court held that the plaintiffs there had “not met their burden of demonstrating a range of possible variations in the load ratings for a particular bearing that would preclude application of the merger doctrine.” Id. That is, plaintiffs mere assertion that the ratings were the product of some amount of “creativity” was not enough to survive a motion for summary judgment “absent illustrative or demonstrative facts” to that effect. Id.
b. Application here
Following New York Mercantile and RBC Nice Bearings, the Court holds that, even assuming the averages are expressions and not facts, the merger doctrine renders them unprotectable. This conclusion follows easily if the “idea” that Plaintiff is attempting to protect is described as the representation of the “average interest rate for CDs with a certain minimum value, as computed from the particular banks that comprise Plaintiffs input.” For then there is one and only expression: 3.95% on December 21, 2005, say. (Decl. of Michael Kiernan, Ex. C, at COB0000194.) Surely the merger doctrine applies to bar copyright of the expression
But if Plaintiffs idea is described at a higher level of generality — if the idea is any representation of “the national average interest rate for CDs with a certain minimum value” — then it is a harder case. It is undisputed that there is some variation in the possible expression of this idea. For instance, the much-discussed average five-year CD rate on August 20, 2008 was reported as “3.51%” by Bankrate; “3.54%” by Informa; and “4.10%” percent by Banxquote. (Lipkis Decl. Ex. 77, at COB0014998.)
But it is hard to know what to make of this difference, which is among the largest in the record — .59 percentage points between Banxquote and Bankrate, or 14.4% percent of Banxquote’s quoted rate — because the Parties provide very little context for it. Plaintiff, for its part, does not tell the Court whether this spread was representative of a typical spread between the companies or whether it was anomalously low or high, though there is some evidence in the record that Banxquote’s rates were usually lower than those of its competitors, and that the various published rates were more often within .14 to .30 percentage points than the .59 percentage seen in the specific example from August 20, 2008. {See Bermudez-Cisneros Decl. Ex. C, at 7 (discussing spreads between Banxquote and Bankrate data of between .14 and .30 percentage points for a certain national average, and noting that [REDACTED] ).) Defendants’ discussion of the legal relevance of the differences in reported data, by contrast, simply begs the question. “[A]ny differences between competitors’ national averages and the BanxQuote national averages do not render the BanxQuote averages copyrightable,” they contend, “since the competitors may have different ideas regarding how to calculate a national average.” (Defs.’ Mem. 25.) That is correct but unhelpful, because the very question is whether competitors’ modestly different ideas about the relevant inputs for a “national average bank rate” creates enough variation in possible expression such that the merger doctrine would not apply.
Ultimately, the range of expression is not wide enough such that, if considered expressions, Plaintiffs averages would be distinct enough from their idea to prevent application of the merger doctrine as it is described in New York Mercantile. The key to the application of merger in New York Mercantile was that “any settlement price for a particular futures contract would be determined based on the same underlying market facts, [and] any dissension would be exceptionally narrow.” 497 F.3d at 118 (internal quotation marks omitted)). Though the record in New York Mercantile did not contain particular possible ranges, the court noted that the record there demonstrated that, at times, “[c]ommittee members [of plaintiff exchange] have disagreed on the exact settlement price.” Id.
Here, too, there is a range of possible values that a given national average rate can take, and, viewing the record here in the light most favorable to Plaintiff, the ranges can vary by as much as .59 percentage points, though they seem typically to vary less than that. But the crucial point is that their expressive variation is very low, even negligible, because the purpose of computing and publishing a national average rate is to give the consumer or the customer insight into the fact of
7. The Averages Are Uncopyrightable Short Phrases
As a final alternative to denying copyright protection, the Court could hold that the national average rates are unprotectable as “analogous to short phrases or the titles of works.” Southco, Inc. v. Kanebridge Corp., 390 F.3d 276, 285 (3d Cir. 2004) (en banc). This alternative ground was also offered by Judge Koeltl in the district court opinion in New York Mercantile as an additional reason to deny copyright protection to the settlement prices, and indeed the United States filed an amicus brief in the Second Circuit agreeing with that theory, but the Second Circuit did not reach that aspect of the district court’s reasoning in its decision affirming Judge Koeltl. See N.Y. Merc., 497 F.3d at 113, 118. Nonetheless, Judge Koeltl’s reasoning is persuasive, and the arguments there about individual numbers being too short to be entitled to copyright protection is equally applicable here.
As Judge Koeltl noted, “[t]he Copyright Office’s long-standing practice is to deny copyright protection to words and short phrases, and courts have found that the policies and interpretation of the Office are entitled to deference.” N.Y. Mercantile Exch., Inc. v. IntercontinentalExchange, Inc. (“N.Y.Merc.D.Ct.”), 389 F.Supp.2d 527, 543 (S.D.N.Y. 2005). He cited two circuit cases that have expressly denied copyright protection to numbers. See id. (citing ATC Distrib. Grp., Inc. v. Whatever It Takes Transmissions & Parts, Inc., 402 F.3d 700, 709-10 (6th Cir. 2005) (holding that transmission part numbers that could vary from five to nine digits were too short to merit copyright protection); Southco, 390 F.3d at 286-87 (holding that nine-digit part numbers which could be mechanically generated by a specific numbering process were too short to merit copyright protection)).
The principle embodied in those cases applies with equal force here. As Judge Koeltl perceptively observed, if a “price in dollars constituted copyrightable subject matter, public conduct would be limited, regardless of the use of the price and regardless of the context.” N.Y. Merc. Exchange, 389 F.Supp.2d at 544. That is because “[ajlthough the fair use doctrine might be used to protect users who had used the copyrighted price, it would be highly inefficient to litigate over the use of the price.” Id. Indeed, if courts begin to grant copyright protection to very
However, because the Second Circuit has never discussed the short phrases doctrine in this context, and because the Second Circuit has not officially adopted the Government’s position that short works like those here are uncopyrightable regardless of the amount of creativity expended to create them, the Court is reluctant to rely expressly on this doctrine. Restraint is especially appropriate here, because the Court is able to dispose of this case on several alternative theories.
C. State-law Contract Claim
1. Jurisdiction
The remaining claim in this case is a state-law breach-of-contract claim against only the three Capital One entities. Before argument, the Court issued an Order bringing to the Parties’ attention that, were the copyright claim to be dismissed, there may not be original diversity jurisdiction over the contract claim because the Parties are in fact not completely diverse from one another. (See Dkt. No. 116.) In response, Plaintiff proposed dropping Defendant Capital One Financial Corporation, a Delaware corporation, because it was not an “indispensable” party under the Federal Rules of CM Procedure. (Dkt. No. 118 at 2 (quoting CP Solutions PTE, Ltd. v. Gen. Electric Co., 553 F.3d 156, 159 (2d Cir. 2009) (per curiam) (“Federal Rule of Civil Procedure 21 allows a court to drop a nondiverse party at any time to preserve diversity jurisdiction, provided the nondiverse party is not ‘indispensable’ under Rule 19(b).” (internal citation omitted))).) The remaining two Capital One Defendants, Capital Bank (USA), N.A., and Capital One, N.A., are both national banks with main offices located in Virginia. (See DSUF ¶¶2, 3.) For purposes of diversity jurisdiction, these two entities are considered citizens only of Virginia, see Wachovia Bank v. Schmidt, 546 U.S. 303, 307, 126 S.Ct. 941, 163 L.Ed.2d 797 (2006), and thus there would be complete diversity for this claim if Capital One Financial Corporation were dismissed.
Defendants, in their letter, do not dispute that Capital One Financial is not an indispensable party. (Dkt. No. 120 at 1.) But they do claim that there would not be diversity jurisdiction anyway because the amount in controversy is not at least $75,000. The Court has determined, however, that Plaintiff has met this threshold.
“[I]n order for there to be diversity jurisdiction, the amount in controversy must exceed $75,000, exclusive of interest and costs.” Fierro v. Gallucci No. 06-CV-5189, 2010 WL 1223122, at *5 (E.D.N.Y. Mar. 24, 2010) (citing 28 U.S.C.
On the face of the Complaint, Plaintiff requested damages on the contract claim that include “any profits of Defendant Capital One, together with prejudgment and post judgment interest, the costs and disbursements of this action, and all other and further relief the Court deems just and proper.” (SAC ¶ 151.) Later in the Complaint, in the prayer for relief, Plaintiff requested “[cjompensatory, incidental, consequential, statutory and punitive damages in a sum to be determined at trial on each Count.” (SAC at 42.)
Though Plaintiff has not alleged any particular amount of damages, Defendants have not shown to a legal certainty that Plaintiff would not entitled to contract damages in excess of $75,000. To be sure, Defendant may well be correct that some classes damages Plaintiff has requested on this claim, such as Plaintiffs request for Defendants’ profits, are unavailable to Plaintiff as a matter of New York contract law. See Topps Co. v. Cadbury Stani S.A.I.C., 380 F.Supp.2d 250, 269 (S.D.N.Y. 2005) (“Disgorgement of profits is not an appropriate remedy for a breach of contract.”).
Plaintiff has proffered that it would be entitled as damages to the value of what Costo would have paid for a yearly license fee, and that these damages could be more than $75,000 in total for the five years at issue. Defendants have countered that Plaintiffs annual license fee was $5,000 to $6,000 — except for one higher fee paid by the company Discover Bank that Defendants call an “outlier” — and therefore the damages on this claim would at most be $30,000. (Dkt. No. 120 at 2; see also Dkt. No. 122 at 4 (in second supplemental submission, Defendants claim that Plaintiffs damages could be at most “the value of the license fee paid by Capital One, which was $6,000 per year”).) But, assuming arguendo this is a proper measure of damages, the existence of the Discover Bank outlier proves that Defendants cannot meet their burden: A reasonable jury could value the
Even if that component of the amount in controversy alone would render the question close, though, a potential award of attorney’s fees pursuant to the contract puts Plaintiff over the amount in controversy threshold. “The Second Circuit has held that attorney’s fees may be used to satisfy the amount in controversy ... where they are recoverable as of right pursuant to statute or contract.” In re Ciprofloxacin Hydrochloride Antitrust Litig., 166 F.Supp.2d 740, 755 (E.D.N.Y. 2001); see also Maxons Restorations, Inc. v. Newman, 292 F.Supp.2d 477, 482 (S.D.N.Y. 2003) (same). Here, the contract provides that “[sjhould any action be brought to enforce this Agreement, the losing party shall pay ... reasonable attorneys fees [sic ] incurred by the prevailing party to enforce this agreement.” (Lipkis Decl. Ex. 1-A (“License Agreement”) ¶ 10.) Though the Court cannot say with certainty what Plaintiffs attorney’s fees related to the contract claim would be, this has been a substantial and lengthy litigation, and attorney’s fees on this claim almost surely would total in the tens of thousands of dollars at least. When added to the potential contract damages, Plaintiff has met its burden to show that more than $75,000 is in controversy on this claim.
Of course, it almost goes without saying that none of the forgoing means that Plaintiff will definitely recover more than $75,000 in damages if it prevails on the contract claim — far from it. Rather, the Court’s determination stands for the much more modest claim that it is not legally certain that the claim is worth less than $75,000, especially when the potential attorney’s fees are considered. And that is enough to put Plaintiff over the amount-in-controversy threshold.
2. The Beach of Contract Claim Is Not Preempted
First, without directly acknowledging the Court’s holding in its earlier Opinion that the contract claim was not preempted by the Copyright Act, Defendants contend now that “Banxquote’s claim for breach of contract is preempted.” (Defs.’ Mem. 27.) Defendants’ attempt to relitigate to this issue is barred by the law-of-the-case doctrine. Under that doctrine, a court, “[a]s a general matter ... will adhere to its own decision at an earlier stage of the litigation.” United States v. Plugh, 648 F.3d 118, 123 (2d Cir. 2011) (internal quotation marks omitted); see also Bergerson v. N.Y. State Office of Mental Health, 652 F.3d 277, 288 (2d Cir. 2011) (noting that “there is a strong presumption against amendment of prior orders”). The law-of-the-case doctrine is “subject to limited exceptions made for compelling reasons.” Plugh, 648 F.3d at 123 (internal quotation marks omitted). In their opening memorandum of law, Defendants proffer no reason other than mere disagreement with the Court’s ruling that the Court should reverse its earlier ruling. (Defs.’ Mem. 31-35.) Their reply, however, cites an intervening Second Circuit case, (Defs.’ Reply 26-27 (citing Forest Park Pictures v. Universal Television Network, Inc., 683 F.3d 424 (2d Cir. 2012))), which raises the specter that the law of the case exception for an “intervening change in controlling law” might apply. Plugh, 648 F.3d at 120. In fact, though, Forest Park supports the Court’s earlier determination that the contract claim is not preempted.
In Forest Park, the Second Circuit addressed “the extent to which the Copyright Act, 17 U.S.C. § 101 et seq., preempts contract claims involving copyrightable property” — in other words, the question presented here. See 683 F.3d at 427. That case was brought by plaintiffs who contended that they had an implied-in-fact contract with a television studio according to which the studio would pay the plaintiffs if the studio produced a television series based on plaintiffs’ idea, and the court held that the state law contract claim was not preempted. In applying the so-called “equivalency requirement” of copyright preemption — the doctrine that a state law claim is preempted if, among other requirements, it vindicates a “ ‘legal or equitable right[ ] that [is] equivalent to any of the exclusive rights within the general scope of copyright,’ ” id. at 430 (quoting 17 U.S.C. § 301(a)) (brackets in original) — the Forest Park court noted that there “are several qualitative differences between such a contract claim and a copyright violation claim,” id. at 431. The Court described at least three differences:
First, the Copyright Act does not provide an express right for the copyright owner to receive payment for the use of a work. It simply gives the copyright owner the right to prevent distribution, copying, or the creation of derivative works (though, of course, the copyright owner may cede all [or] part of these rights for payment). See 17 U.S.C. § 106. Second, a plaintiff suing for fail*316 ure to pay under a contract must prove extra elements beyond use or copying, including mutual assent and valid consideration. Third, a breach of contract claim asserts rights only against the contractual counterparty, not the public at large. As the Seventh Circuit explained in ProCD [v. Zeidenberg, 86 F.3d 1447 (7th Cir. 1996) ], “A copyright is a right against the world. Contracts, by contrast, generally affect only their parties; strangers may do as they please, so contracts do not create ‘exclusive rights.’ ” 86 F.3d at 1454.
Id.
All three of those differences between a breach-of-contract claim and a copyright claim apply here. Thus, the intervening decision in Forest Park cuts in favor of adhering to the Court’s earlier determination, not against it. Indeed, while this Court earlier noted that “[c]ourts in this district have continued to disagree as to how to analyze preemption of breach of contract claims,” BanxCorp, 723 F.Supp.2d at 614-15 (collecting cases), the early returns from Forest Park show that it has provided necessary clarity to this area: Both of the district court opinions from within the Second Circuit to have cited Forest Park in addressing the question have held that the contract claims under consideration were not preempted. See Paramount Pictures Corp. v. Puzo, No. 12-CV-1268, 2012 WL 4465574, at *1 (S.D.N.Y. Sept. 26, 2012); Bill Diodato Photography LLC v. Avon Prods., Inc., No. 12-CV-847, 2012 WL 4335164, at *8 (S.D.N.Y. Sept. 21, 2012); cf. Muller v. Anderson, 501 Fed.Appx. 81, 84 (2d Cir. 2012) (summary order) (noting that “[b]e-cause [plaintiff] has properly alleged that defendants violated an implied-in-fact contract by using his ideas without remuneration, his breach of implied contract claim is arguably not preempted,” but affirming the district court’s judgment in favor of the defendants on an alternative ground). This Court too follows that course, and reaffirms its prior conclusion that the breach-of-contract claim is not preempted.
S. The Merits
On the merits of the breach-of-contract claim, the Court finds that granting summary judgment is inappropriate for either Party on this claim. The relevant contractual language is ambiguous, and there is a genuine dispute of material fact regarding whether Defendants breached the contract.
a. Governing Law
The License Agreement at issue is governed by New York Law. (License Agreement ¶ 10.) Under New York contract law, “ ‘the intention of the parties should control, and the best evidence of intent is the contract itself.’ ” Gary Fried-
A court is to give all words and phrases their plain meaning, and it should interpret words and phrases not in isolation but “in light of the parties’ intent as manifested by the contract as a whole.” Gary Friedrich, 716 F.3d at 313. Contractual language is “unambiguous only if it ‘has a definite and precise meaning, unattended by danger of misconception in the purport of the contract itself, and concerning which there is no reasonable basis for a difference of opinion.’ ” Id. (quoting John Hancock Mut. Life Ins. Co. v. Amerford Int’l Corp., 22 F.3d 458, 461 (2d Cir. 1994)). By contrast, “if the terms ‘suggest more than one meaning when viewed objectively by a reasonably intelligent person who has examined the context of the entire integrated agreement,’ then the agreement is ambiguous and extrinsic evidence may be considered to determine the parties’ intent.” Id. at 313-14 (quoting Law Debenture Trust Co. of N.Y. v. Maverick Tube Corp., 595 F.3d 458, 466 (2d Cir. 2010)). The examination of extrinsic evidence to give meaning to an ambiguous term is of course subject to the framework of Rule 56, according to which the factual record is construed in the light most favorable to the non-moving party, and with all inferences drawn in the non-moving parties’ favor. See id. at 308. In sum, because “ ‘resolution of the ambiguity is a question for the trier of fact,’” under New York law, “contract claims are generally not subject to summary judgment if the resolution of a dispute turns on the meaning of an ambiguous term or phrase.” Fed. Ins. Co. v. Am. Home Assurance Co., 639 F.3d 557, 567 (2d Cir. 2011) (quoting State v. Home Indem. Co., 66 N.Y.2d 669, 495 N.Y.S.2d 969, 486 N.E.2d 827, 829 (1985) (per curiam)).
b. The Contract Is Ambiguous
The first question is whether the contract either unambiguously provides for or unambiguously prohibits “Capital One’s use [of the data] in co-branded marketing materials distributed to Costco members.” (Defs.’ Mem. 31.) The answer is it does not; the contract is ambiguous on this score. The scope of Defendants’ license to reproduce Plaintiffs averages is described by three different provisions in the operative License Agreement, and a fair reading of the plain meaning of the provisions could support either side’s interpretation.
First, in a series of boxes at the top of the agreement, the Agreement contains various important details, such as the physical address of “Capital One” — identified as “Company” for purposes of the Agreement — what series of Plaintiffs data Defendants are entitled to use, the annual license fee, the commencement date, and the payment method. There is also a box captioned “Banxquote Licensing Service,” and in the box, the Agreement states: “Licensed Data to be retrieved by the Company from the BanxQuote website at http:// www.banxquote.com for use in direct mail, print advertisements, newspaper advertisements, Company website, and marketing presentations.” (License Agreement
Second, in the preamble, in a non-numbered paragraph directly under the bold heading “Terms of Conditions,” the contract says: “Company is hereby contracting with BanxCorp (‘Banxquote’) for the display and dissemination of Banxquote’s proprietary market data and indices, to be provided by Banxquote as indicated above. Subject to the Terms and conditions of this Agreement, BanxQuote hereby grants Company a non-exclusive, limited, and non-transferable license to electronically disseminate the BanxQuote Data on the Company’s Web site.” (Id.) The Court will refer to this as the “preamble.”
Third, Paragraph One states: “Company agrees and understands that it is not permitted to sublicense, transfer, or assign its rights hereunder and that it shall not permit the redistribution of the BanxQuote Data by any other third party without the express prior authorization of BanxQuote pursuant to a separate agreement or by mutually agreeable amendment executed and attached hereto. Except as otherwise specifically provided herein, this Agreement shall not transfer to Company any right to, or interest in, the BanxQuote Data, or in any related trademark, service mark or proprietary rights of BanxQuote.” The Court will refer to this as “Paragraph One.” (Id. at ¶ 1.)
The first thing to notice about these provisions is that, on their face, the boxed provision and the preamble are contradictory. The boxed provision allows for Capital One to use the data in “direct mail, print advertisements, newspaper advertisements, Company website, and marketing presentations.” But the preamble states the Agreement grants Capital One a “non-exclusive, limited, and non-transferable license to electronically disseminate the BanxQuote Data on the Company’s Web site,” with no mention of any other potential marketing channels. So which governs?
On this question, the answer is clear: The boxed provision trumps, because the Court must construe the contract “in light of the parties’ intent as manifested by the contract as a whole.” Gary Friedrich, 716 F.3d at 313. Here, the four corners of the document reveal the clear intent for the Agreement to cover Capital One’s use of Plaintiffs data in the marketing materials in the boxed provisions, not just the website, as stated in the preamble. First, the boxed provision is clearly more “customizable” — it is in the boxes at the top where the signatures of both Parties appear, for instance — and so any reader of the contract would assume that the Parties paid much more attention to the language there than the language in what appears to be a standard contract for the remainder. Second, Paragraph Nine states that “Company agrees a) to include the name ‘Banxquote.com’ on all materials which show Banxquote data....” (License Agreement ¶ 9 (emphasis added).) But to what “materials” does Paragraph Nine refer if the contract is limited only to advertisements on Capital One’s website? The only reading that makes sense of the contract as a whole therefore demands that these “materials” should indeed include all of the materials listed in the boxed provision.
But though that apparent ambiguity is resolvable, the boxed provision itself is ambiguous regarding whether Defendants were authorized to use Plaintiffs data in co-branded marketing materials. Consider the phrase “Company website” in the boxed provision. It is perfectly possible that this could mean that Capital One could use the data on any website that, say, is funded and operated day-to-day by Capital One, regardless if there are any
Paragraph One does nothing to clarify the ambiguity. That provision prevents the “Company” from “permitting] the redistribution of the BanxQuote Data by any other third party.” Its plain language does not broaden or narrow the License Agreement either way, because “third party” is not defined. Further, any prohibition on further distribution cannot broaden the express rights granted in the boxed provision discussed earlier. In other words, whether Paragraph One bars the data’s redistribution through what Defendants refer to as their Costco “marketing channel” does not alter whether the boxed provision authorizes Capital One to display the data on a co-branded website. If the latter action was never authorized in the first place, then whether Paragraph One also bars that conduct is irrelevant.
Thus, the Court finds that the scope of the License Agreement is ambiguous on the question whether the License Agreement authorizes Capital One to use Plaintiffs data in co-branded marketing materials.
c. There Is No Extrinsic Evidence That Determines This Question
“Given [this Court’s] conclusion that the ... license agreement is ambiguous, [the Court] look[s] next to the record to determine whether any relevant extrinsic evidence is so one-sided in [the moving party’s] favor as to allow [the moving party’s] interpretation to prevail on summary judgment.” Topps Co., Inc. v. Cadbury Stani S.A.I.C., 526 F.3d 63, 68 (2d Cir. 2008). Despite the fact that Costco and Capital One began negotiations regarding their marketing partnership prior to Capital One’s contract with Plaintiff, (DSUF ¶ 22), they have pointed to no evidence that they mentioned or contemplated this issue at the time of contracting. The sole relevant piece of extrinsic evidence from the time of contracting submitted by Defendants to aid the Court’s interpretation of the agreement is evidence that the boxed provision was added specifically at Capital One’s request, and Plaintiff does not dispute this. (DSUF ¶ 114.) This evidence provides further support that the broader scope of the Agreement in the boxed provision should trump the narrower scope in the preamble, but it does nothing to resolve the ambiguity regarding whether the authorized uses in the boxed provision include co-branded marketing agreements.
By contrast, Mehl testified that his understanding was that “[i]t didn’t matter to us on what medium Capital One would use [the data], except that they would just use it for their own product on their own website.” (Lipkis Ex. 6 at 246.) While the Court accepts that this was his understanding, Mehl did not testify that the Parties discussed this issue and that Capital One expressly assured him that the contract would prohibit Capital One from using the data through co-branded marketing channels, including a co-branded website. This evidence is not so one-sided that it demands the Court adopt Plaintiffs interpretation of the ambiguity. See Topps, 526 F.3d at 68.
d. A Reasonable Jury Could Find In Either Party’s Favor On The Question of Breach
In their briefs, the Parties have not separated the question of whether
In particular, a reasonable jury could find that Capital One breached the contract by using Plaintiffs data on a co-branded website, though such a conclusion is not compelled by the evidence. Defendants note that “Capital One developed, hosted and maintained at its own cost a website dedicated to the deposit products that were marketed to Costco members.” (DSUF ¶ 39.) Defendants also state that, while “Costco approved the initial co-branded website, Capital One could modify it without Costco’s approval.” (Defs.’ Resp. to PSUF ¶ 89.) Moreover, “[t]he only published Internet link to the co-branded Costco/Capital One website appears when a user visits costco.com and clicks services.” (PSUF ¶ 97.) From there, a user’s click on the “High Yield Service Accounts” link “opens a new browsing window displaying the co-branded website, and a co-branded header appears in a frame on all pages within the co-branded website.” (Id.) In fact, the entire marketing arrangement was expressly designated as “partnership” arrangement, as opposed to “Business As Usual.” (DSUF ¶ 9.)
There is thus evidence that points in either direction regarding whether Capital One's use of Plaintiffs data on this co-branded website went beyond the license granting Capital One the right to use the data on the “Company website.” Construing the evidence in Plaintiffs favor for purposes of Defendants’ summary judgment motion, the following facts could lead a reasonable jury to find that Capital One breached the Agreement: 1) Costco had to approve the website before it went online; 2) The website was not accessible through traditional company marketing channels; 3) The website had a co-branded header on every page; and 4) Capital One internally designated the arrangement as a partnership and not “Business As Usual.” Indeed, Defendants themselves describe “a website dedicated to the deposit products that were marketed to Costco members.” (DSUF ¶ 39.) But that sounds like a description of an entirely separate website— one that is not part of the “Company website.”
On the other hand, construing the evidence in Defendants’ favor for purposes of Plaintiffs summary judgment motion, the following facts could lead a reasonable jury to find that Capital One did not breach the Agreement: 1) Capital One paid the entire cost of hosting and maintaining the website; 2) Capital One could modify the website without approval from Capital One; and 3) The agreement was described as a marketing partnership, not a joint venture or anything that conveys a legal identity that is definitively separate from Capital One.
Thus, a reasonable factfinder could take the facts produced by the Parties and find in favor of either party on the question whether the creation of the co-branded website breached the terms of the Agreement. Summary judgment is therefore inappropriate for either party.
D. Plaintiff’s Rule 56(c)(2) Objections and Application for Sanctions
Finally, Plaintiff has moved to exclude the expert report, deposition testimony, and declaration of Defendants’ expert Bruce Webster, as well as the declarations and accompanying exhibits of Defendants’ witnesses Bermudez-Cisneros, Haigh,
1. Expert Report and Other Materials of Bruce Webster
Plaintiff states that it “objects to the admissibility of Webster’s Declaration, expert report, and testimony as they are utterly biased, flawed, and inadmissible.” (PL’s 56(c)(2) Mem. 7.) Then, in a legal memorandum that exceeds the page limit provided by this Court’s individual rules, Plaintiff lists ten “fallacies” in the expert report and the testimony. But Plaintiff fundamentally misunderstands the relevant legal standard: Plaintiffs mere disagreement with the conclusions of an opposing expert is not sufficient grounds for exclusion of his testimony.
In considering a summary judgment motion, “the district court may rely on any material that would be admissible or usable at trial.” Major League Baseball Props., Inc. v. Salvino, Inc., 542 F.3d 290, 309 (2d Cir. 2008) (internal quotation marks omitted). Federal Rule of Evidence 702, which governs expert testimony like Webster’s, states:
A witness who is qualified as an expert by knowledge, skill, experience, training, or education may testify in the form of an opinion or otherwise if:
(a) the expert’s scientific, technical, or other specialized knowledge will help the trier of fact to understand the evidence or to determine a fact in issue;
(b) the testimony is based on sufficient facts or data;
(c) the testimony is the product of reliable principles and methods; and
(d) the expert has reliably applied the principles and methods to the facts of the case.
Fed.R.Evid. 702. In the Supreme Court’s seminal decision in Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579, 113 S.Ct. 2786, 125 L.Ed.2d 469 (1993), the Court noted that “the inquiry envisioned by Rule 702 is ... a flexible one.” Id. at 594, 113 S.Ct. 2786; see also Floyd v. City of N.Y., 861 F.Supp.2d 274, 287 (S.D.N.Y. 2012) (“Generally, ‘the rejection of expert testimony is the exception rather than the rule.’ ” (quoting Fed.R.Evid. 702 Adv. Comm. Notes (2000))). Because the Rule’s “overarching subject is the scientific validity — and thus the evidentiary relevance and reliability — of the principles that underlie a proposed submission,” a district court’s “focus ... must be solely on principles and methodology, not on the conclusions that they generate.” Daubert, 509 U.S. at 594-95, 113 S.Ct. 2786; see also Major League Baseball, 542 F.3d at 310-11 (“The Daubert principles apply not only to testimony based on scientific knowledge, but also to testimony based on technical and other specialized knowledge.” (internal quotation marks omitted)).
Next, courts ask whether “a proffered opinion passes the required measure of scientific reliability.” Id. Plaintiff objects at this prong on the ground that “Webster’s expert reports and testimony are unreliable because they are not based on ‘sufficient facts or data,’ ” (Pl.’s 56(c)(2) Mem. 10 (quoting Fed.R.Evid. 702)), but this contention is without support. Indeed, most of the supposed “fallacies” in Webster’s testimony do not even purport to reveal any flaw in Webster’s principles and methodology, nor on his reliance on sufficient facts or data. For instance, fallacies two and three are respectively titled “ ‘Misconstrued Functionality of ‘bankupdate.asp,’ ” and “Misconstrued Functionality of ‘Update’ Button,” referring to two pieces of Plaintiffs software that Webster examined. (PL’s 56(c)(2) Mem. 11-14.) But these are objections to Webster’s “conclusions,” not to his “methodology”— and thus Plaintiff has put forward exactly the type of argument the Supreme Court held irrelevant to admissibility in Daubert. Instead, objections to an expert’s conclusions go to the weight of the evidence, not its admissibility. See Cohalan v. Genie Indus., Inc., No. 10-CV-2415, 2013 WL 829150, at *5 (S.D.N.Y. Mar. 1, 2013) (“ ‘Disputes as to the strength of [an expert’s] credentials, faults in his use of different etiology as a methodology, or lack of textual authority for his opinion, go to the weight, not the admissibility of his testimony.’ ” (quoting McCullock v. H.B. Fuller Co., 61 F.3d 1038, 1044 (2d Cir. 1995))).
Other “fallacies” nominally couched in terms of methodology or reliability fare no better. For instance, Plaintiff contends that Webster’s alleged “sole and disproportionate focus on BanxQuote’s computer systems and programs appears to be misguided.” (PL’s 56(c)(2) Mem. 25.) This is puzzling. An expert in “computer systems and programs” is supposed to focus his expert testimony on, well ... computer systems and programs. Indeed, in the one prior case that Plaintiff brings to the Court’s attention in which Webster’s expert testimony was excluded, the testimony was excluded in part because the report “merely eite[d] deposition testimony” and did not “seek to explain complex technical issues.” LinkCo, Inc. v. Fujitsu Ltd., No. 00-CV-7242, 2002 WL 1585551, at *2 (S.D.N.Y. July 16, 2002). Perhaps Webster learned from that experience, for he has limited his testimony and report to technical explanation here.
Indeed, a comparison with that case is instructive. In LinkCo, Judge Scheindlin excluded Webster’s expert testimony because of the reason given above — that the report was not an attempt to explain complex technical issues — plus the additional reasons that testimony by fact witnesses would be more appropriate in many cases and that the report contained mostly legal “conclusions that are the exclusive prov
Fundamentally, Plaintiffs objections go to the weight of Webster’s report and other testimony. But, as Defendants point out, Plaintiff has not offered its own software expert nor offered any evidence to contradict Webster’s conclusions that the software computes little more than a mathematical average, and that the set of input banks was relatively stable over the relevant period of time. {See Defs.’ Mem. 13.) The Court has found this evidence to have been reliably obtained, persuasive, and, as already explained, corroborated where possible. Thus, Plaintiffs motion to exclude Webster’s testimony, report, and declaration is denied.
2. The Bermudez-Cisneros, Haigh, Kieman, and Wiederhom Materials
Plaintiff also moves to preclude the Court from considering the declarations and accompanying exhibits of Defendants’ witnesses Bermudez-Cisneros, Haigh, Kiernan, and Wiederhorn. (PL’s 56(c)(2) Mem. 2, 8.) Plaintiff contends that Defendants “failed to identify these witnesses and certain information in their Declarations as required by Rule 26(a) or (e)” of the Federal Rules of Civil Procedure. But Plaintiff has not shown that Defendants violated these Rules, nor, even assuming a violation, that the remedy of sanctions or preclusion is appropriate. In any event, much of the evidence is duplicative of other evidence, so, even assuming purely for the sake of argument that Defendants failed to comply with certain discovery obligations, any error would be harmless and not prejudicial to Plaintiff.
Rule 26 governs discovery generally, and it requires parties to make initial disclosures of “the name and, if known, the address and telephone number of each individual likely to have discoverable information — along with the subjects of that information — that the disclosing party may use to support its claims or defenses, unless the use would be solely for impeachment.” Fed.R.Civ.P. 26(a). Under Rule 26(e), a party must supplement or correct its initial Rule 26 disclosures “if the additional or corrective information has not otherwise been made known to the other parties during the discovery process or in writing.” Fed. R.Civ.P. 26(e)(1)(A). See generally Lujan v. Cabana Mgmt., Inc., 284 F.R.D. 50, 67-68 (E.D.N.Y. 2012) (describing Rule 26). But the obligation to supplement a Rule 26 initial disclosure is “only necessary when the omitted or after-acquired information has not otherwise been made known to the other parties during the discovery process.” 8A Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 2049.1 (3d ed. 2010) (internal quotation marks omitted). Thus, “there is no need as a matter of form to submit a supplemental disclosure to include information already revealed by a witness in a deposition or otherwise through formal discovery.” Id.; see also Sealy v. Gruntal & Co., No. 94-CV-7948, 1998 WL 698257, at *2 (S.D.N.Y. Oct. 7, 1998) (“Since the identities of seven of these individuals were disclosed in deposition testimony, together with at least some information about their potential significance, plaintiff cannot demonstrate a clear-cut violation of [Rule 26] with respect to them.”). The
With regard to the witnesses themselves, Defendants provide compelling evidence that, even if these witnesses’ names were not in the initial disclosures, Plaintiff had “had ample notice of the witnesses and categories of documents” but “elected not to pursue discovery.” (Defs.’ Sanctions Resp. 8; see also id. at 2-3 (citing particular documents where these witnesses were identified).). Plaintiff does not dispute this assertion, but instead states that it had “had no reason to engage in a fishing expedition and depose other employees of Defendants at random.” (PL’s Reply 4.) This statement is non-responsive. Plaintiff had these witness’s names and roles, and it could have easily deposed them if it chose to. And, if Plaintiff thinks something is missing from the record, it could ask to depose them now. That would be a more appropriate possible remedy than sanctions or preclusion, but Plaintiff has not made such a request. See Sealy, 1998 WL 698257, at *3 (“In any event, with respect to each of the eight witnesses, there are remedial measures far less drastic than preclusion that would protect plaintiff from any conceivable unfair prejudice. Specifically, plaintiff may be authorized to conduct depositions of each of these individuals, if she so chooses....”).
Plaintiff also contends that five exhibits attached to the respective declarations should be excluded because they were improperly withheld during the course of discovery. (Pl.’s 56(c)(2) Mem. 4.). Plaintiff faces a steep uphill battle on this point: “Because ‘refusing to admit evidence that was not disclosed during discovery is a drastic remedy, courts will resort to preclusion only in those rare cases where a party’s conduct represents flagrant bad faith and callous disregard of the Federal Rules of Civil Procedure.’” Arista Records LLC v. Lime Grp. LLC, 784 F.Supp.2d 398, 417 (S.D.N.Y. 2011) (quoting Ward v. Nat’l Geographic Soc’y, No. 99-CV-12385, 2002 WL 27777, at *1 (S.D.N.Y. Jan. 11, 2002) (emphasis in original)). But Plaintiff has not alleged any bad faith — nor does Plaintiff even appear to be aware of this standard, as, remarkably, Plaintiff has not cited any caselaw in the particular sections of its two legal memoranda addressing this question. (See PL’s 56(c)(2) Mem. 4-8; PL’s 56(c)(2) Reply 3-6.) In any event, even assuming these documents were improperly excluded, they are mostly duplicative or similar to other evidence in the record. Indeed, as Defendants make clear, Plaintiff relies extensively on supposedly inadmissible evidence in its own statement of undisputed material facts. (Defs.’ Sanctions Resp. 10.) In such a circumstance, it is clear that any alleged error would be harmless. See Fed.R.Civ.P. 37(c)(1) (“If a party fails to provide information or identify a witness as required by Rule 26(a) or (e), the party is not allowed to use that information or witness to supply evidence on a motion, at a hearing, or at a trial, unless the failure was substantially justified or is harmless. ” (emphasis added)); EMI Music Mktg. v. Avatar Records, Inc., 334 F.Supp.2d 442, 445-46 (S.D.N.Y. 2004) (sanctions inappropriate where it was clear that one party who may not have “adhere[d] to the letter of the discovery rules” nonetheless did not subject the other party “to trial by ambush”).
For those reasons, Plaintiffs request to exclude evidence and for sanctions is denied.
For the reasons explained, Defendants’ motion for summary judgment is granted on the copyright claim, and Plaintiffs cross-motion for summary judgment on that claim is denied. Both Parties’ summary judgment motions are denied as to the contract claim, though, as mentioned, Defendant Capital One Financial Corporation has been dismissed from the case with prejudice to preserve diversity jurisdiction. Finally, Plaintiffs motion for sanctions and preclusion of evidence is also denied.
The Clerk is directed to terminate the pending motions, (Dkt. Nos. 87, 99).
SO ORDERED.
. On September 30, 2013, this Court issued an Order and Opinion under seal and directed the Parties to submit proposed redactions within 14 days. (See Dkt. No. 125). By letter
. Kellie Woodhouse, Eastern Michigan University hikes tuition 3.95%, sets $290.6M operating budget, AnnArbor.com (Jun. 19, 2012), http://www.annarbor.com/news/easternmichigan-university-hikes-tuition395-sets2906m-operating-budget/.
. John Davis, City Garbage Fee Would Jump $13.50 a Month to $39 in Budget Plan, LoHud.com (Sept. 17, 2013), http://www.lohud. com/article/BK/20130917/NEWSO1/ 309170019/Proposedcity-budget-increases-tax-levy-3-95-percent.
. Sugar prices extend gain in futures trade, climbs 3.95%, The Indian Express (Nov. 20, 2012), http://www.indianexpress.com/news/ sugar-prices-extend-gainin-futures-tradeclimbs-3.95-/1033610/.
. (Decl. of Michael Kiernan, Ex. C, at COB0000194.)
. Plaintiff stated in its Second Amended Complaint that it is a "New York corporation,” (SAC ¶ 1), but it now disputes its own statement and states that it "is a corporation organized under the laws of the State of Delaware.” (Pl.’s Resp. to DSUF ¶ 131 (citing Lipkis Decl. Ex. 76).) As explained further in Section II.B., Plaintiff's state of incorporation matters for jurisdictional purposes.
. "DSUF” refers to Defendants’ Statement of Undisputed Material Facts, and "PSUF,” refers to the analogous document filed by Plaintiff. Both of these documents have been filed under seal because they allegedly contain details of confidential business practices and arrangements.
. Plaintiff challenges the admissibility of this expert report. For the reasons given below, the Court finds the expert report to be admissible.
. A user of Plaintiff’s database software must of course ensure that all rates are entered in a standard format. That is, a user must be sure that each rate entered is for a comparable product, or has the same account minimum, or that all rates are given in the same unit of time — i.e., that the rates are converted to APY, or "Annual Percentage Yield,” which is an industry standard metric. This means that either the user or the software sometimes may have to undertake a fairly trivial conversion process before the average rate can be computed. (DSUF ¶ 152; Lipkis Decl. Ex. 6, at 153-55 (Mehl describing the APY conversion process, which involves taking a rate reported in one of "three different day bases” and converting them all to APY).)
. At oral argument, the Court asked counsel for Plaintiff what the phrase “paradoxical colloquial” means. Counsel had no response. Instead, she told the Court that her co-counsét had drafted that phrase — but co-counsel was not in the courtroom that day to explain what he meant.
. Judge Raggi, in a concurring opinion, also hinted that the recommendations were not copyrightable. She called the stock recommendations "uncopyrightable opinions,” citing Hochling v. Universal City Studios, Inc., 618 F.2d 972, 978 (2d Cir. 1980), which she described as "noting that copyright does not protect ideas or interpretations of facts.” Barclays, 650 F.3d at 907 (Raggi, J., concurring).
. Confusion on this point appears to have originated on the basis of a Ninth Circuit case, CDN Inc. v. Rapes, 197 F.3d 1256 (9th Cir. 1999), that has received some criticism. That case concerned whether individual entries in a price guide for collectable coins were "sufficiently original as compilations to sustain a copyright.” Id. at 1259. As Professor Grimmelmann forcibly argues, "[d]octrinally and taxonomically, the court is confused: the prices may be original, and they may be elements of a compilation, but they are not themselves compilations, which are defined as the 'collection and assembling of preexisting materials.' A rating may be derived from other materials, but unlike a com
. In the Court’s earlier opinion, the Court granted Defendants’ Motion To Strike Plaintiff’s request for punitive damages on the contract claim. See BanxCorp, 723 F.Supp.2d at 620 ("Plaintiffs cannot receive punitive damages on their state law claims."). The Court notes, though, that Defendants have not moved to strike from the Complaint any other class of damages. Thus, the Parties should not construe anything in this Opinion to be a binding determination of what measure of contract damages are legally available to Plaintiff. The Court need not parse the potential damages so finely to determine the amount in controversy, so it has not done so.
. Tongkook America, Inc. v. Shipton Sportswear Co., 14 F.3d 781 (2d Cir. 1994), does not support a contrary conclusion. In Tongkook, the Second Circuit vacated the district court’s judgment and dismissed for lack of jurisdiction where an undisputed factual discovery revealed after the plaintiff filed the complaint made clear that plaintiff's contract claim was worth less than $75,000 to a legal certainty from the moment the case was filed. Id. at 786. That case stands for the proposition that where a factual discovery reveals that “the amount claimed was never in controversy,” then the amount-in-controversy minimum has not been met. Wolde-Meskel v. Vocational Instruction Project Cmty. Servs., Inc., 166 F.3d 59, 63 (2d Cir. 1999) (emphasis added). But here, the amount in controversy remains in dispute, and Tongkook itself states that "[wjhere the damages sought are uncertain, the doubt should be resolved in favor of the plaintiff’s pleadings.” 14 F.3d at 785.
. Because the Court has determined that diversity jurisdiction is proper over this claim standing alone, the Court need not address Defendants’ contentions that the doctrine of “complete preemption” gives the Court federal question jurisdiction or that the Court should exercise discretionary supplemental jurisdiction. (See Dkt. No. 120 at 2-5.) Likewise, the Court need not address the somewhat tricky question whether Plaintiff may include previously dismissed state claims in the amount-in-controversy calculation, since this case presents the unusual situation where diversity jurisdiction did not actually exist when those claims were dismissed because there was no complete diversity between the Parties.
. Defendants, in their first supplemental letter, requested that Capital One Financial Corporation be dismissed with prejudice, {see Dkt. No. 120), and Plaintiff did not object to a dismissal with prejudice, either at oral argument or in its second supplemental letter, {see Dkt. No. 123). The Court construes this silence as Plaintiff’s consent to Capital One Financial Corporation’s dismissal with prejudice.
. In a supplemental brief on jurisdictional issues filed one week before oral argument, Defendants for the first time ask the Court to assume jurisdiction over the state-law claim and then dismiss it based on the “complete preemption” doctrine, according to which the "preemptive force of federal law is so extraordinary that it converts an ordinary state common-law complaint into one stating a federal claim for purposes of the well-pleaded complaint rule.” Briarpatch Ltd., L.P v. Phoenix Pictures, Inc., 373 F.3d 296, 304 (2d Cir. 2004) (internal quotation marks omitted) (cited at Defs.' Letter of Sept. 10, 2013 at 2). But even if Defendants are correct that the Court could assume original jurisdiction on this basis — in addition to diversity jurisdiction — the conclusion that the claim should then immediately be dismissed because "Banxquote’s claim for breach is coextensive with its alleged copyright violation,” (Dkt. No. 120 at 3), does not follow. Rather, that is a rehash of its substantive argument on preemption, which the Court rejects for the reasons already explained.
. At oral argument, Plaintiff did not address these issues even in a cursory fashion. The Court, however, does not take Plaintiff's silence to constitute its formal withdrawal of these claims, and so the Court addresses them fully on the merits.
. Plaintiff’s attempt to rely on LinkCo also makes its argument internally contradictory. Plaintiff elsewhere states that "Webster’s expert reports and testimony are unreliable because they are not based on sufficient facts or data,’ ” (Pl.’s 56(c)(2) Mem. 10 (quoting Fed. R.Evid. 702)). But Plaintiff cannot have it both ways: either Webster should stick to just the facts and data, or he should go beyond them. His method cannot be unreliable on both grounds.
Reference
- Full Case Name
- BANXCORP d/b/a BanxQuote v. COSTCO WHOLESALE CORPORATION
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- 11 cases
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- Published