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`Case No. 09-CV-1783 (KMK)
`
`OPINION AND ORDER
`[REDACTED]1
`
`UNITED STATES DISTRICT COURT
`SOUTHERN DISTRICT OF NEW YORK
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`BANXCORP d/b/a BANXQUOTE,
`
`Plaintiff,
`
`-v-
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`COSTCO WHOLESALE CORPORATION, et al.,
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`Defendants.
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`Appearances:
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`Kristen E. Renzulli, Esq. (argued)
`Law Offices of Kristen Renzulli, P.C.
`Chappaqua, NY
`
`Mordechai I. Lipkis, Esq.
`New York, NY
`Counsel for Plaintiff
`
`Nancy J. Mertzel, Esq. (argued)
`Stacy Ceslowitz, Esq.
`Schoeman Updike Kaufman Stern & Ascher LLP
`New York, NY
`
`Sarah Kickham, Esq.
`Donovan & Lee, LLP
`New York, NY
`Counsel for Defendants
`
`KENNETH M. KARAS, District Judge:
`
`Consider the percentage “3.95%.” It seems to be a totally ordinary percentage. It is the
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` On September 30, 2013, this Court issued an Order and Opinion under seal and
`1
`directed the Parties to submit proposed redactions within 14 days. (See Dkt. No. 125). By letter
`dated October 9, 2013, Defendants proposed one redaction. By letter dated October 16, 2013,
`Plaintiff confirmed that it had no objections to Defendants’ proposed redaction and that it
`proposed no additional redactions. This Order and Opinion incorporates the redaction proposed
`by Defendants, and is otherwise identical to the September 30, 2013 Order and Opinion issued
`under seal.
`
`
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`Case 1:09-cv-01783-DEW Document 130 Filed 10/17/13 Page 2 of 69
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`amount by which Eastern Michigan University increased its tuition and fees for the 2012–13
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`school year relative to the previous one. It is how much the Mayor of Poughkeepsie proposes to
`2
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`increase the city tax levy for 2014. It is the amount by which sugar prices rose in India one day
`3
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`in November 2012. And, according to Plaintiff Banxcorp, it was the United States national
`4
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`average interest rate for five-year certificates of deposit as of December 21, 2005.5
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`For Plaintiff, then, 3.95% is not such an ordinary percentage. Rather, Plaintiff initiated
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`this lawsuit in part because it claims it has a valid federal copyright in that particular percentage
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`— or, at least, that it has a copyright in its series of percentages of national average interest rates,
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`of which 3.95% on December 21, 2005 is one part. And it claims that it is entitled to substantial
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`money damages because Defendants Costco and Capital One — a large retailer and a large bank,
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`respectively — unlawfully copied those percentages in a series of individual advertisements
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`touting how much higher their particular deposit rates were than the national average, as reported
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`by Plaintiff. Defendants’ copying of individual averages is conceded; at issue for the copyright
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`claim in this case is whether the percentages themselves are entitled to federal protection under
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`the Copyright Act.
`
` Kellie Woodhouse, Eastern Michigan University hikes tuition 3.95%, sets $290.6M
`2
`operating budget, AnnArbor.com (Jun. 19, 2012), http://www.annarbor.com/news/eastern-
`michigan-university-hikes-tuition-395-sets-2906m-operating-budget/.
`
` John Davis, City Garbage Fee Would Jump $13.50 a Month to $39 in Budget Plan,
`3
`LoHud.com (Sept. 17, 2013), http://www.lohud.com/article/BK/20130917/NEWS01/
`309170019/Proposed-city-budget-increases-tax-levy-3-95-percent.
`
` Sugar prices extend gain in futures trade, climbs 3.95%, The Indian Express (Nov. 20,
`4
`2012), http://www.indianexpress.com/news/sugar-prices-extend-gain-in-futures-trade-climbs-
`3.95-/1033610/.
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`5
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` (Decl. of Michael Kiernan, Ex. C, at COB0000194.)
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`2
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`Case 1:09-cv-01783-DEW Document 130 Filed 10/17/13 Page 3 of 69
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`The Court previously determined, on Defendants’ motion to dismiss, that Plaintiff
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`plausibly had alleged that its works of authorship had certain features that could, drawing all
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`inferences in Plaintiff’s favor, lead to the conclusion that its works of authorship were entitled to
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`copyright protection. See BanxCorp v. Costco Wholesale Corp., 723 F. Supp. 2d 596, 601–09
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`(S.D.N.Y. 2010). But now the evidence is in, and, on cross-motions for summary judgment, the
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`Court determines that, even drawing all reasonable inferences from the evidence in Plaintiff’s
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`favor, the averages are unprotectable because they are uncopyrightable facts, because they are
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`too short to be copyrighted, and because the so-called merger doctrine — which applies where
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`there is “only one . . . or so few ways of expressing an idea, that protection of the expression
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`would effectively accord protection to the idea itself,” id. at 608 (internal quotation marks and
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`alterations omitted) — bars copyright protection.
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`But that is not the only claim in this case. Plaintiff also contends that Defendant Capital
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`One exceeded the scope of a License Agreement it signed that allowed it to use Plaintiff’s data
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`for certain marketing purposes. The Court finds that the contract is ambiguous in relevant part
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`and that a reasonable jury could decide in favor of either Party on this claim. Accordingly,
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`summary judgment is not appropriate for either party on the contract claim.
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`I. Background
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`A. Factual Background
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`1. The Parties
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`Plaintiff Banxcorp is a Delaware corporation that does business under the name
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`“Banxquote.” (Pl’s. Resp. to DSUF ¶ 131 (citing Lipkis Decl. Ex. 76).) Plaintiff touts online
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`7
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` Plaintiff stated in its Second Amended Complaint that it is a “New York corporation,”
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`(SAC ¶ 1), but it now disputes its own statement and states that it “is a corporation organized
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`3
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`Case 1:09-cv-01783-DEW Document 130 Filed 10/17/13 Page 4 of 69
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`that it “provides a family of widely followed indices and benchmarks that measure the rates and
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`performance of banking, depository, mortgage, home equity and consumer loan markets.”
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`(Mertzel Decl. Ex. O, at BX 0048.) In other words, Plaintiff regularly surveys the interest rates
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`or other prices offered by particular financial institutions across the country, and then compiles
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`this data into various indices that represent “national averages” of the rates.
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`Defendant Capital One Financial Corporation is a Delaware corporation that is the parent
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`company of co-Defendants Capital One Bank (USA), N.A., and Capital One, N.A., which are
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`nationally chartered banks with principal places of business in Virginia. (DSUF ¶¶ 1–4.) The
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`Court refers to these entities collectively as “Capital One” except where expressly noted. Capital
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`One, a well-known national bank, provides so-called national direct banking products and
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`services directly to consumers from its national headquarters. (DSUF ¶¶ 5, 8.)
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`Defendant Costco Wholesale Corporation, a Washington corporation, is the second
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`largest retailer in the United States. (DSUF ¶ 11.) Costco operates over 600 warehouse-style
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`retail stores worldwide and has approximately 66.5 million cardholders. (DSUF ¶ 12.) In
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`addition to the products sold at its warehouses, Costco markets a variety of services to its
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`members. (DSUF ¶ 16.) Nearly all of these services are provided by third parties that have
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`marketing agreements with Costco. (DSUF ¶ 17.)
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`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,”
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`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.
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`Case 1:09-cv-01783-DEW Document 130 Filed 10/17/13 Page 5 of 69
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`2. The Use of Plaintiff’s Data in Capital One and Co-Branded Advertisements and
`Marketing Materials
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`Capital One markets its banking products nationally. During the time period relevant to
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`this case, its marketing materials frequently provided the Capital One rate being offered for a
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`particular financial product alongside one or more comparison rates, such as a competing bank’s
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`rates or a national average rate. (DSUF ¶¶ 65, 67.) Capital One used comparison rates in many
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`ads because it found that consumers often responded favorably to advertisements that provided a
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`point of reference. (DSUF ¶ 71.)
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` Beginning in May 2003, Costco and Capital One entered into a series of marketing
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`agreements. (DSUF ¶¶ 22, 24.) Costco and Capital One referred to this relationship as a
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`“partnership,” whereby Costco would facilitate the marketing of Capital One products and
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`services to Costco members, and Capital One would provide Costco members with certain
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`financial products and services at a “premium” rate. (DSUF ¶ 36.)
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`Prior to January 2004, Capital One had been using national averages provided by a
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`company called Bankrate in many of its advertisements. (DSUF ¶ 76.) But, for a variety of
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`reasons — including the fact that Plaintiff published its rates for free online, which allowed
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`potential consumers to verify the accuracy of the national averages, (DSUF ¶¶ 80, 81) — Capital
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`One decided to switch to Plaintiff’s averages. (DSUF ¶ 84.) On January 28, 2004, Capital One
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`entered into a license agreement with Plaintiff to use Plaintiff’s savings and jumbo CD averages,
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`as well as its savings and jumbo money market averages, in many of its marketing materials,
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`both online and in print. (DSUF ¶¶ 94, 115.) Capital One agreed to pay $6,000 per year for this
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`privilege. (DSUF ¶ 115.) During the course of the agreement, Capital One obtained the national
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`averages by copying the relevant data directly from Plaintiff’s website. (DSUF ¶ 99.)
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`Case 1:09-cv-01783-DEW Document 130 Filed 10/17/13 Page 6 of 69
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`Soon after the license agreement became effective, Capital One began using Plaintiff’s
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`data in its standard national marketing materials. (DSUF ¶ 97.) Later, Capital One began using
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`Plaintiff’s averages in marketing materials, both online and in print, that were created and
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`distributed as part of the partnership agreement with Costco. (DSUF ¶ 98.)
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`The record contains many examples of these partnership advertisements. An entirely
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`typical one from 2006 states at the top: “Earn more with exclusive rates for Costco members!”
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`(Decl. of Michael Kiernan, Ex. C, at COB0000194.) On the left side of the ad, there are several
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`bullet points touting features of the account, and an offer stating that “Costco Executive
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`Members receive $25 credited to their first new account opened.” (Id.) On the right side are two
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`bar graphs. The first says “Money Market Account ($5,000 account balance),” and below that
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`are two bars of different heights. (Id.) The left bar, in large numbering, states that Capital One’s
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`rate is 4.26%, and, in smaller print to the right of this, the ad notifies the reader that 4.26% is the
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`“Annual Percentage Yield,” or “APY,” and there is a single asterisk next to that definition. (Id.)
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` The right bar is much lower, and, above it in slightly smaller lettering and numbering, the ad
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`states that the “National Average” is 1.20% APY, and there are two asterisks next to “APY.”
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`(Id.) The second bar graph, which is reproduced just below, is similar to the first, except the
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`second graph gives the Capital One and national average rate for a “Certificate of Deposit
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`($5,000 deposit, 5-year term).” (Id.) In this graph, the Capital One rate is 5.16% APY, and the
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`National Average is 3.95% APY. (Id.) The comparative height of the bars is adjusted accordingly.
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`Case 1:09-cv-01783-DEW Document 130 Filed 10/17/13 Page 7 of 69
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`The single asterisk and the double asterisk are
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`defined in small print on the left side of the page.
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`(Id.) The text following the single asterisk gives
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`further details of the offer. (Id.) It is typical of the
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`fine print that many people have encountered in the
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`industry: the minimum daily balance requirement,
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`minimal initial deposits, and the obligatory
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`disclosures that the “terms and conditions of this
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`offer” and the “rates” advertised are “subject to
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`change without notice.” (Id.) Meanwhile, more
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`relevant for purposes of this case, the text following
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`(Decl. of Michael Kiernan, Ex. C, at
`COB0000194.)
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`the double asterisk contains the source of the national average representation. It reads, in full:
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`“National average of APYs for CDs and money market accounts as published by Banxquote.com
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`as of 12/21/05.” (Id.)
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`Below the two graphs on the right side of the ad is marketing copy. “I love the exclusive
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`perks Capital One offers Costco Executive Members, like the $25 I received when I opened my
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`account,” says “Jeffrey S.” who is, presumably, a satisfied customer. (Id.) On the left side of
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`the page, the ad implores the reader that he or she should “Open an account today!”, and it
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`instructs the reader either to visit costco.com or call a toll-free number to do so. (Id.) The logos
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`of both Capital One and Costco are featured, and there are additional disclosures, fine print —
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`i.e., “Member FDIC” — and even a copyright invocation by “Capital One Services, Inc.” (Id.)
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`Defendants used the national average data reported by Plaintiff frequently and essentially
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`continuously during the 2004–08 period that is at issue in this suit. (PSUF ¶¶ 96, 100.) In
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`7
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`Case 1:09-cv-01783-DEW Document 130 Filed 10/17/13 Page 8 of 69
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`particular, the then-current Capital One interest rate was continually displayed next to a relevant
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`national average rate from Plaintiff on a co-branded website, and Defendants regularly
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`distributed brochures and marketing campaigns similar to the advertisement described above
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`during the relevant time period. This co-branded website, which Defendants acknowledge was
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`initially subject to Costco’s approval, was advertised to the public as being accessible solely by
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`visiting Costco’s website at costco.com and clicking on “Services.” (Defs.’ Resp. to PSUF,
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`¶¶ 89, 97.)
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`B. Procedural History
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`1. Prior Determinations
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`Originally, Plaintiff’s CEO Norbert Mehl was also a Plaintiff in this case, and,
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`proceeding pro se, Plaintiffs filed their Complaint on February 25, 2009. Banxcorp, 723 F.
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`Supp. 2d at 600. After retaining counsel, Plaintiffs filed the SAC on September 2, 2009. Id.
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`The SAC alleges seven causes of action. Id. There are two federal causes of action:
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`Count One, which alleges copyright infringement based upon Defendants’ improper use of the
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`BanxQuote Indices, (id. ¶¶ 106–16); and Count Three which alleges violation of the Digital
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`Millennium Copyright Act (“DMCA”), based on allegations that when Defendants copied the
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`BanxQuote Indices they altered or removed the copyright management information BanxCorp
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`had associated with the data, (id. ¶¶ 126–33). The remaining five causes of action arise under
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`New York law: Count Two alleges hot news misappropriation of the time-sensitive data
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`contained in the BanxQuote Indices, (id. ¶¶ 117–25); Count Four alleges fraud based on
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`allegations that Defendants materially misrepresented their intentions with respect to their use of
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`the BanxQuote Indices pursuant to the license agreement, (id. ¶¶ 134–43); Count Five alleges
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`breach of contract against Capital One only, based on the alleged distribution to, and use of the
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`8
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`Case 1:09-cv-01783-DEW Document 130 Filed 10/17/13 Page 9 of 69
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`BanxQuote Indices by, Costco in violation of the License Agreement, (id. ¶¶ 144–51); Count Six
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`alleges unfair competition based on allegations that Defendants’ use of the BanxQuote Indices
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`gave Defendants an unfair competitive advantage both in terms of decreased web traffic at
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`Plaintiffs’ websites and in terms of direct competition in providing savings accounts and CDs,
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`(id. ¶¶ 121, 152–57); and Count Seven alleges unjust enrichment based on allegations that
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`Defendants received value due to their wrongful use of the BanxQuote Indices, (id. ¶¶ 158–61).
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`Defendants moved to dismiss each claim for failure to state a claim, and the Court
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`granted the motion in part and denied the motion in part. In particular, the Court dismissed as
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`preempted by the Copyright Act Count Four, alleging fraud; Count Six, alleging unfair
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`competition; and Count Seven, alleging unjust enrichment. Banxcorp, 723 F. Supp. 2d at
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`617–20. The Court also dismissed Mehl personally as a Plaintiff, because Mehl conceded he
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`lacked standing. Id. at 621.
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`On July 8, 2011, the Parties stipulated that Count Two, alleging hot news
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`misappropriation, and Count Three, alleging the DMCA violation, would be dismissed with
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`prejudice. (Dkt. No. 68.) Thus, two claims now remain in the case: Count One, the federal
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`claim for copyright infringement; and Count Five, the state claim for breach of contract against
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`Capital One only.
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`2. Copyright Registrations
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`Plaintiff’s copyrights were unregistered during the time of Defendants’ allegedly
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`infringing activity. On March 5, 2009, after Plaintiff filed this lawsuit, Mehl submitted to the
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`Register of Copyrights twenty applications for a federal copyright in the averages. (Mertzel
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`Decl. Ex. T.) Each individual application covers a three-month span from January 1, 2004 to
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`December 31, 2008. (Id.; id. at Ex. U, at 1.) Each “work” consists of five tables of rates for
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`Case 1:09-cv-01783-DEW Document 130 Filed 10/17/13 Page 10 of 69
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`various financial products, totaling approximately 400 different rates. (Id. Ex. S, Ex. U, at 1.)
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`Mehl described the set of weekly tables that comprise each individual registration as a “[g]roup
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`registration for database titled BANXQUOTE INDEX.” (Id. at Ex. S, at BX002117.) He
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`identified each quarterly group of tables as a derivative work, and in the space where a registrant
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`is required to identify any “preexisting work or works that this work is based on incorporates,”
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`he wrote “Previously published database.” (Id. at BX002118.) Where he was asked to “give a
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`brief general statement of the material that has been added to this work and in which copyright is
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`claimed,” he typed “Weekly updates.” (Id.) Later, a representative of the Copyright Office
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`notified Mehl that “the application does not clearly describe the new material on which the claim
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`may be based.” (Id. at Ex. U.) The representative suggested that an appropriate statement of the
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`new material in the work would be “‘revised compilation,’” and Mehl agreed. (Id.) The twenty
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`works were then registered. (Id. at Ex. V.)
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`C. The Instant Motions
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`The Parties conducted discovery on the remaining claims. The Parties have now cross-
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`moved for summary judgment on both claims. Plaintiff also submitted objections under Federal
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`Rule of Civil Procedure 56(c)(2) to the admissibility into evidence of certain materials, and it
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`moved for sanctions against Defendants for violation of the discovery rules. The Court held oral
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`argument on all outstanding motions on September 17, 2013.
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`II. Discussion
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`A. Standard of Review
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`Before the Court are cross-motions for summary judgment. Summary judgment shall be
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`granted where the movant shows that there is “no genuine dispute as to any material fact and the
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`movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a); see also Celotex Corp.
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`10
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`Case 1:09-cv-01783-DEW Document 130 Filed 10/17/13 Page 11 of 69
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`v. Catrett, 477 U.S. 317, 322–23 (1986). “When ruling on a summary judgment motion, the
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`district court must construe the facts in the light most favorable to the non-moving party and
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`must resolve all ambiguities and draw all reasonable inferences against the movant.” Dall.
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`Aerospace, Inc. v. CIS Air Corp., 352 F.3d 775, 780 (2d Cir. 2003); see also Tufariello v. Long
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`Island R.R. Co., 458 F.3d 80, 85 (2d Cir. 2006) (noting that a court must draw all reasonable
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`inferences in the nonmovant’s favor).
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`A party seeking summary judgment bears the burden of establishing that no genuine
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`issue of material fact exists. See Atl. Mut. Ins. Co. v. CSX Lines, L.L.C., 432 F.3d 428, 433 (2d
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`Cir. 2005). “When the burden of proof at trial would fall on the nonmoving party, it ordinarily is
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`sufficient for the movant to point to a lack of evidence to go to the trier of fact on an essential
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`element of the nonmovant’s claim. In that event, the nonmoving party must come forward with
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`admissible evidence sufficient to raise a genuine issue of fact for trial in order to avoid summary
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`judgment.” Jaramillo v. Weyerhaeuser Co., 536 F.3d 140, 145 (2d Cir. 2008) (citations
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`omitted).
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`Importantly for this case, “[w]hen the moving party has carried its burden under Rule
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`56(c), its opponent must do more than simply show that there is some metaphysical doubt as to
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`the material facts.” Matsushita Electric Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586
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`(1986) (footnote omitted); see also Wrobel v. Cnty. of Erie, 692 F.3d 22, 30 (2d Cir. 2012)
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`(“To survive a motion under Rule 56(c), [plaintiff] need[s] to create more than a metaphysical
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`possibility that his allegations were correct; he need[s] to come forward with specific facts
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`showing that there is a genuine issue for trial.” (internal quotation marks and emphasis omitted)).
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`A fact is material when “it might affect the outcome of the suit under governing law.” McCarthy
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`v. Dun & Bradstreet Corp., 482 F.3d 184, 202 (2d Cir. 2007) (internal quotation marks omitted).
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`11
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`Case 1:09-cv-01783-DEW Document 130 Filed 10/17/13 Page 12 of 69
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`At summary judgment, “[t]he role of the court is not to resolve disputed issues of fact but to
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`assess whether there are any factual issues to be tried.” See Brod v. Omya, Inc., 653 F.3d 156,
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`164 (2d Cir. 2011) (internal quotation marks omitted). Thus, a court’s goal should be to “isolate
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`and dispose of factually unsupported claims.” Celotex, 477 U.S. at 323–24.
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`At the summary judgment stage, it is the “duty of district courts not to weigh the
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`credibility of the parties.” Jeffreys v. City of N.Y., 426 F.3d 549, 554 (2d Cir. 2005). Thus, even
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`when a plaintiff has relied exclusively on his own testimony, courts have denied summary
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`judgment — but only as long as the plaintiff’s “testimony was not contradictory or rife with
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`inconsistencies such that it was facially implausible.” Fincher v. Depository Trust & Clearing
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`Corp., 604 F.3d 712, 726 (2d Cir. 2010); see also Bridgewater v. Taylor, 832 F. Supp. 2d 337,
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`345 (S.D.N.Y. 2011) (denying summary judgment for plaintiff where defendant’s evidence
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`consisted “solely of his own testimony,” but this testimony offered “a plausible alternate version
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`of events”); Bennett v. Vaccaro, No. 08-CV-4028, 2011 WL 1900185, at *7–8 (S.D.N.Y. Apr.
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`11, 2011) (denying summary judgment where defendants did not establish that plaintiff’s
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`“testimony is, either on its face or in light of any other statements he has made, so
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`self-contradictory or implausible as to rule out crediting it,” and there was no evidence that
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`plaintiff “ever contradicted his current version of [events]”).
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`B. Copyright Infringement Claim
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`1. Overview
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`“‘To prevail on a claim of copyright infringement, the plaintiff must demonstrate both
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`(1) ownership of a valid copyright and (2) infringement of the copyright by the defendant.’”
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`Cameron Indus., Inc. v. Caravan, Ltd., 676 F. Supp. 2d 280, 283–84 (S.D.N.Y. 2009) (quoting
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`Yurman Design, Inc. v. PAJ, Inc., 262 F.3d 101, 109–10 (2d Cir. 2001)); see also Porto v.
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`Case 1:09-cv-01783-DEW Document 130 Filed 10/17/13 Page 13 of 69
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`Guirgis, 659 F. Supp. 2d 597, 608 (S.D.N.Y. 2009) (requiring “‘ownership of a valid copyright,
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`and [] copying of constituent elements of the work that are original’” (quoting Williams v.
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`Crichton, 84 F.3d 581, 587 (2d Cir. 1996))). It is undisputed that Defendants actually copied
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`Plaintiff’s individual averages. But Defendants vigorously dispute that they have copied
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`anything protectable under federal copyright laws, because, among other arguments, the
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`individual averages are unprotectable, discovered facts; they are uncopyrightable short phrases;
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`and, even assuming the final values are in some sense “expressions,” the merger doctrine
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`precludes their protection.
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`In resolving these issues, the Court first determines what material facts are in genuine
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`dispute. Then, the Court surveys the law of copyright in factual material. Next, taking the facts
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`in the light most favorable to the non-moving party, the Court explains why the averages are
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`uncopyrightable facts. Finally, the Court explains additional why the averages are
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`uncopyrightable under various other doctrines.
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`2. Plaintiff’s Products
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`Because the legal lines are so carefully drawn in this area, it is vital to understand in
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`detail the nature of how Plaintiff’s averages are computed, how they are presented to the public,
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`and how they are used. Despite Plaintiff’s efforts to muddy some of the waters, few material
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`facts are in genuine dispute.
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`a. The Computation of Plaintiff’s National Average Rates
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`According to Plaintiff’s own website, Plaintiff “provides a family of widely followed
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`indices and benchmarks that measure the rates and performance of banking, depository,
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`mortgage, home equity and consumer loan markets.” (Mertzel Decl. Ex. O, at BX 0048.) In
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`other words, Plaintiff regularly surveys the interest rates or other prices offered by particular
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`Case 1:09-cv-01783-DEW Document 130 Filed 10/17/13 Page 14 of 69
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`financial institutions across the country, and then compiles this data into various indices that
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`represent “averages” or other important financial benchmarks.
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`(Mertzel Decl. Ex. S, at BX002125.)
`Plaintiff compiles tables of averages organized by date, such as the one at the top of the
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`following page. A variety of industry and general news publications described Plaintiff’s
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`product in a manner similar to that in which Plaintiff presented its own data. For instance, the
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`record reveals that, in 2001, the Wall Street Journal’s “Banxquote Banking Center” reported that
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`Plaintiff “provides benchmark rates and pricing information of financial institutions throughout
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`14
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`Case 1:09-cv-01783-DEW Document 130 Filed 10/17/13 Page 15 of 69
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`the United States.” (Mertzel Decl. Ex. N, at BX0091.) Newsweek, in an article on savings rates
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`around the country, noted that Plaintiff’s CEO Norbert Mehl “surveys rates on savings deposits
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`nationwide.” (Mertzel Decl. Ex. P., at BX0105.) American Banker reported that Banxcorp is a
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`firm that “monitors CD [i.e., certificate of deposit] rates,” and featured in its front-page story a
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`graph representing “[y]ields on 6-month CDs” from January to September of 1989, crediting
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`“Banxquote” as the data’s source. (Mertzel Decl. Ex. Q, at BX00107.) Indeed, the Wall Street
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`Journal regularly included in its print edition a table of benchmark rates provided by Banxquote,
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`such as one in the record titled “Banxquote Money Markets,” which has a subheading stating
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`“Average Yields of Major Banks.” (Mertzel Decl. Ex. Q, at BX0065.)
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`The way the Banxquote indices are produced reflects their stated purpose: They are
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`mathematical averages of the rates advertised by certain major financial institutions, updated at
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`least weekly. Thus, a former software developer at Banxcorp named Abu Thomas testified that
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`“if there are five banks,” then, to calculate its average rate, Banxcorp would “take the average of
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`five banks.” (Lipkis Decl. Ex. 11, at 41.) The deposition continued:
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`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.
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`(Id.) This method was independently confirmed by Defendants’ expert Bruce Webster, a
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`computer scientist who examined Plaintiff’s source code. (See Webster Decl. Ex. A, at 1.)
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` Plaintiff challenges the admissibility of this expert report. For the reasons given below,
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`the Court finds the expert report to be admissible.
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`15
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`Case 1:09-cv-01783-DEW Document 130 Filed 10/17/13 Page 16 of 69
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`Webster noted that the national average values copied by Defendants “are simple mathematical
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`averages of reported rates, with no weighting or other calculations involved.” (Id.) In fact, only
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`one actual computational function is used: a built-in database function called “AVG(),” which
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`adds up the total of the values and divides by the number of entries. (Id. at 20.) Plaintiff has
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`proffered no evidence that would show that the computation process is any more complex.
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`So the computational process is uncomplicated, and the output is but a single number on
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`any given date. It turns out the inputs are equally straightforward: Plaintiff maintains a database
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`into which someone inputs the interest rate or other relevant, publicly available financial
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`information from one big bank in each state, plus one in Washington, DC, and then the software
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`calculates an average. (Id. at 27.) From November 2002 to May 2007, for instance, the set of
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`banks remained entirely consistent for the 5-year national average CD rate. (Id. at 28.) That is,
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`the input is simply the 5-year CD rate from “exactly the same set of banks, week after week, for
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`233 weeks.” (Id.) The story is nearly the same for the other average relevant to this case, the
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`national money market rate. For that average, Plaintiff made only three changes to the input
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`banks from November 2002 to May 2007. (Id.; see also Mertzel Reply Decl. Ex. K, at 1 (Mehl,
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`in an email to Capital One representatives, stating that “BanxQuote calculates the average rates
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`based on the largest banks in each of the 50 states and DC”); Mertzel Decl. Ex. S, at BX002125
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` A user of Plaintiff’s database software must of course ensure that all rates are entered in
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`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).)
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`16
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`Case 1:09-cv-01783-DEW Document 130 Filed 10/17/13 Page 17 of 69
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`(Plaintiff’s submission to the Copyright Office stating that the data consisted of the “U.S.
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`national average rates quoted by the largest banks in all 50 states and Washington DC”).)
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`The evidence supporting many of the facts above comes primarily from Plaintiff’s own
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`website, the deposition of its own former employee, and the sole expert report submitted on this
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`issue. Plaintiff in its 56.1 statement and Mehl in his deposition dispute some aspects of this
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`account, but — in addition to being extremely confusing and rife with legal propositions
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`couched as factual differences — Planitiff’s factual account, to the extent it differs from
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`anything discussed above, is “contradictory [and] rife with inconsistencies such that it [is]
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`facially implausible.” Fincher, 604 F.3d at 726. In other words, Plaintiff’s deposition testimony
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`fails to create any genuine dispute regarding the facts of how the averages are created, or of their
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`perception as factual representations of the national average rates by the financial and general
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`interest media. See Fed. R. Civ. P. 56(a).
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`Defendants offered the following as a statement of undisputed material fact: “Banxquote
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`provides benchmark rates and pricing information on financial institutions throughout the United
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`States.” (DSUF ¶ 132.) As explained above, that statement is amply supported by the record.
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`But Plaintiff attempts to create some factual dispute over that fact:
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`BanxCorp does not dispute this statement, to the extent that the
`BanxQuote indices pertain to the creation of non-binding 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
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