Fair Isaac Corp.. v. Experian Info. Solutions Inc.

• Decision Date: 17 August 2011
• Docket Number: 10–2409.,Nos. 10–2281,s. 10–2281
• Citation: 2011 Trade Cases P 77567,650 F.3d 1139,99 U.S.P.Q.2d 1776
• Parties: FAIR ISAAC CORPORATION; myFICO Consumer Services, Inc., Plaintiffs/Appellants,v.EXPERIAN INFORMATION SOLUTIONS, INC.; VantageScore Solutions, LLC; Does I through V, Defendants/Appellees.Fair Isaac Corporation; myFICO Consumer Services, Inc., Plaintiffs/Appellees,v.Experian Information Solutions, Inc.; VantageScore Solutions, LLC, Defendants/Appellants.
• Court: U.S. Court of Appeals — Eighth Circuit

650 F.3d 1139

2011-2 Trade Cases P 77,567

99 U.S.P.Q.2d 1776

FAIR ISAAC CORPORATION; myFICO Consumer Services, Inc., Plaintiffs/Appellants,

v.EXPERIAN INFORMATION SOLUTIONS, INC.; VantageScore Solutions, LLC; Does I through V, Defendants/Appellees.Fair Isaac Corporation; myFICO Consumer Services, Inc., Plaintiffs/Appellees,

v.Experian Information Solutions, Inc.; VantageScore Solutions, LLC, Defendants/Appellants.

Nos. 10–2281

10–2409.

United States Court of Appeals, Eighth Circuit.

Submitted: May 12, 2011.Filed: Aug. 17, 2011.

Ronald J. Schutz, Minneapolis, MN, and Charles F. Rule, Washington, D.C., argued, Joseph J. Bial, Washington, D.C., David W. Beehler, Randall Tietjen, Christopher K. Larus, Michael A. Collyard, and Laura E. Nelson, Minneapolis, MN, on the brief, for appellants/cross-appellees.Robert A. Milne, argued, New York, NY, Christopher J. Glancy and Jack E. Pace, III, New York, NY, Mark A. Jacobson, Barbara Podlucky Berens, and Justi Rae Miller, Minneapolis, MN, on the brief, for appellees/cross-appellants.Before WOLLMAN, BYE, and SHEPHERD, Circuit Judges.WOLLMAN, Circuit Judge.

Fair Isaac Corporation and myFICO Consumer Services, Inc. (FICO) brought suit against three credit bureaus: Experian Information Solutions, Inc. (Experian), Equifax, Inc. (Equifax), and Trans Union LLC (TransUnion), as well as against VantageScore Solutions, LLC (VantageScore), the credit bureaus' joint venture.¹ The suit alleged antitrust, trademark infringement, false-advertising and other claims. FICO appeals from the district court's ² grant of summary judgment dismissing FICO's antitrust and false-advertising claims and its ruling that FICO's registered trademark was merely descriptive. FICO also appeals from the judgment entered on the jury verdict that it had obtained its trademark registration through fraud on the United States Patent and Trademark Office (PTO). Experian and VantageScore appeal from the district court's denial of their post-trial motion for attorneys' fees. We affirm.

I. Background

FICO was the first company to develop sophisticated algorithms for generating credit scores that characterized consumer financial creditworthiness. FICO credit scores are composed of aggregated credit data, provided by a credit bureau, and a credit-scoring algorithm provided by FICO. FICO's credit score is the most widely used score in the industry. Experian, Equifax, and TransUnion aggregate and sell consumer credit data that shows consumer debt-paying history. FICO's credit scores are referred to as “tri-bureau” because regardless of which credit bureau data is used, the scores are “highly consistent and predictive.” This result is accomplished through algorithms based on each credit bureau's aggregated data, which account for data differences and produce credit scores that fall within a credit-score range of 300–850. In 2004, FICO applied for trademark registration for “300–850,” which was later issued. The credit bureaus have developed their own credit scores, based only on their data, which are therefore less desirable to lenders.

The credit bureaus began meeting to develop a joint venture for the purpose of creating a tri-bureau credit score algorithm that could compete with FICO and reduce the amount the credit bureaus paid as royalty for using FICO's algorithms. They ultimately introduced VantageScore in March 2006. The VantageScore credit-score algorithm was created using data common to the three bureaus. The algorithm is licensed to each bureau for a flat monthly royalty. The credit bureaus reduced the price of VantageScore credit scores to entice “key” lenders to adopt the new scores, which the credit bureaus hoped would create momentum in the industry for others to follow.

FICO filed this suit in October 2006. The district court dismissed FICO's antitrust and false-advertising claims. It also determined that FICO's registered trademark, “300–850,” was merely descriptive and found that a genuine issue of material fact existed regarding whether the mark had acquired secondary meaning. The credit bureaus and VantageScore counterclaimed, asserting that FICO had procured its trademark registration by fraud. A jury determined that FICO's mark had not acquired secondary meaning and was therefore invalid. It also found that FICO had procured the registration through fraud on the PTO. The district court denied Experian and VantageScore's post-trial motion for attorneys' fees.

II. Analysis

A. Antitrust

We review de novo the district court's grant of summary judgment dismissing FICO's antitrust claims and view the evidence in the light most favorable to FICO. Nitro Distrib., Inc. v. Alticor, Inc., 565 F.3d 417, 422 (8th Cir.2009). Summary judgment is appropriate “if 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). “Material facts are those which might affect the outcome of the lawsuit. A dispute over an issue of fact is ‘genuine’ if there is sufficient evidence to allow a reasonable jury to find for the non-moving party on that issue.” Marksmeier v. Davie, 622 F.3d 896, 899–900 (8th Cir.2010).

FICO's antitrust claims against Experian and VantageScore sought damages and injunctive relief. FICO asserts that the district court failed to consider the merits of its antitrust claims, did not view the evidence in the light most favorable to it, and committed reversible error by determining that FICO had not suffered antitrust injury and lacked standing to pursue the claims. FICO asserts that it has suffered two antitrust injuries: (1) in the credit-scoring market, it was the specific target of the credit bureaus' unlawful conspiracy, and (2) in the market for aggregated credit data, as a customer of the credit bureaus' data, the conspiracy resulted in reduced data quality.

“A private plaintiff may not recover damages under § 4 of the Clayton Act merely by showing ‘injury causally linked to an illegal presence in the market.’ ” Atl. Richfield Co. v. USA Petroleum Co., 495 U.S. 328, 334, 110 S.Ct. 1884, 109 L.Ed.2d 333 (1990). Instead, “a private plaintiff must demonstrate that he has suffered an ‘antitrust injury’ as a result of the alleged conduct of the defendants, and that he has standing to pursue a claim under the federal antitrust laws.” In re Canadian Import Antitrust Litig., 470 F.3d 785, 791 (8th Cir.2006). An antitrust injury is “injury of the type that the antitrust laws were intended to prevent and that flows from that which makes defendants' acts unlawful.” Brunswick Corp. v. Pueblo Bowl–O–Mat, Inc., 429 U.S. 477, 489, 97 S.Ct. 690, 50 L.Ed.2d 701 (1977).

FICO asserts that its dependency on the credit bureaus for access to credit data and its customers “is what gives rise to FICO's antitrust injury.” For support, FICO relies on Full Draw Productions v. Easton Sports, Inc., 182 F.3d 745 (10th Cir.1999), to demonstrate that a plaintiff has suffered antitrust injury when it is dependent on competitors who control its essential inputs or distribution chains. But the Tenth Circuit found that Full Draw Productions had suffered antitrust injury because its competitors acted in concert to achieve a boycott that “reduced the number of competitors in the market from two to one, thereby decreasing competition and harming consumers,” id. at 754, not solely because Full Draw Productions was dependent on its competitors for access to inputs and customers. The record supports FICO's assertion that it has been denied access to credit data in the past, but not that the credit bureaus used a concerted effort to deny FICO access to its customers and credit data. Instead, FICO's alleged damages—losses stemming from VantageScore's mere existence in the market and from FICO lowering its prices to compete—do not constitute antitrust injury.

Nevertheless, FICO argues that it has suffered an antitrust injury because “[w]hen a plaintiff is the target of an illegal conspiracy or an effort to monopolize a market, the plaintiff ipso facto has suffered an injury that is cognizable under the antitrust laws.” In the cases cited to support this assertion, however, the plaintiffs were not only the target of an allegedly illegal conspiracy but had also suffered antitrust injury.³ Indeed, a plaintiff may be targeted and found to have not suffered an injury that is cognizable under the antitrust laws. See, e.g., Atl. Richfield Co., 495 U.S. at 331–39, 110 S.Ct. 1884 (describing strategy designed to compete “more effectively with discount independents such as [the plaintiff]” and holding that “[a]lthough a vertical, maximum-price-fixing agreement is unlawful under § 1 of the Sherman Act, it does not cause a competitor antitrust injury unless it results in predatory pricing.”); Rockbit Indus. U.S.A., Inc. v. Baker Hughes, Inc., 802 F.Supp. 1544, 1549 (S.D.Tex.1991) (“Under this principle, since [plaintiff] could not have suffered injury as a result of a price-fixing conspiracy, it cannot prevail even if it were a target of the conspiracy.”).

FICO's second alleged antitrust injury that it, as a customer, has been harmed from reduced credit-data quality and thus has standing also fails. FICO utilizes credit data for developing new credit score algorithms or modifying those in existence. FICO asserts that the credit bureaus' agreement to use only part of their data for the VantageScore credit-score algorithm—a process FICO calls “leveling”—alters the bureaus' incentives to compete on the quality and content of the remaining data not utilized by the algorithm. According to FICO, “[b]ecause the predictive capacity and value of FICO scores depends directly on the quality and improvement of the underlying data supplied by the bureaus, FICO as a direct customer is injured as a result of this reduction in competition among the bureaus.”

To support this assertion, FICO presented an expert's report, which stated that the “failure to...