Banxcorp v. Costco Wholesale Corp.

• Decision Date: 17 October 2013
• Docket Number: Case No. 09–CV–1783 (KMK).
• Citation: 978 F.Supp.2d 280
• Parties: BANXCORP d/b/a BanxQuote, Plaintiff, v. COSTCO WHOLESALE CORPORATION, et al., Defendants.
• Court: U.S. District Court — Southern District of New York

978 F.Supp.2d 280

BANXCORP d/b/a BanxQuote, Plaintiff,

v.COSTCO WHOLESALE CORPORATION, et al., Defendants.

Case No. 09–CV–1783 (KMK).

United States District Court,

S.D. New York.

Oct. 17, 2013.

Kristen E. Renzulli, Esq. (argued), Law Offices of Kristen Renzulli, P.C., Chappaqua, NY, Mordechai I. Lipkis, Esq., New York, NY, 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, for Defendants.

OPINION AND ORDER [REDACTED]¹

KENNETH M. KARAS, District Judge.

Consider the percentage “3.95%.” It seems to be a totally ordinary percentage. It is the amount by which Eastern Michigan University increased its tuition and fees for the 2012–13 school year relative to the previous one.² It is how much the Mayor of Poughkeepsie proposes to increase the city tax levy for 2014.³ It is the amount by which sugar prices rose in India one day in November 2012.⁴ And, according to Plaintiff Banxcorp, it was the United States national average interest rate for five-year certificates of deposit as of December 21, 2005.⁵

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 Plaintiff's 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 evidence in Plaintiff's 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 Plaintiff's data for certain marketing purposes. The Court finds that the contract is ambiguous in relevant part and that a reasonable jury could decide in favor of either Party on this claim. Accordingly, summary judgment is not appropriate for either party on the contract claim.

I. Background

A. Factual Background

1. The Parties

Plaintiff Banxcorp is a Delaware corporation that does business under the name “Banxquote.” ⁶ (Pl's. Resp. to DSUF ¶ 131 (citing Lipkis Decl. Ex. 76).) ⁷ Plaintiff touts online that it “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. O, 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 “national averages” of the rates.

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 Plaintiff's 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 members,and Capital One would provide Costco members with certain financial products and services at a “premium” rate. (DSUF ¶ 36.)

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 Plaintiff's averages. (DSUF ¶ 84.) On January 28, 2004, Capital One entered into a license agreement with Plaintiff to use Plaintiff's 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 Plaintiff's website. (DSUF ¶ 99.)

Soon after the license agreement became effective, Capital One began using Plaintiff's data in its standard national marketing materials. (DSUF ¶ 97.) Later, Capital One began using Plaintiff's 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.

IMAGE

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...