Clio acquired Fastcase, which sued Alexi for breach of contract, in a $1 billion deal last year
Legal AI platform Alexi has lodged anti-competition claims against Clio, one of Canada’s largest legal tech companies, telling a US federal court that its once-cordial partnership with a third legal tech company only broke down once Clio acquired the latter and pushed for “sham litigation” to extinguish Alexi’s contractual rights.
Filed in the US District Court for the District of Columbia on Friday, Alexi’s allegations were a response to a breach of contract lawsuit that the Clio subsidiary, Fastcase, filed against Alexi in November. Alexi and Fastcase have worked together since late 2021, when the two companies entered into a licensing agreement that gave Alexi access to Fastcase’s database of US historical case law, which Alexi used to produce AI-generated legal memos.
In its filing on Friday, Alexi argued that the partnership stayed cordial after Fastcase merged in 2023 with vLex, another legal research company with a vast legal database. However, Alexi alleged that while Clio was in the process of acquiring the two companies in a $1 billion deal last year, Clio attempted to walk back a provision in the Alexi-Fastcase contract that gave any future acquirer of Alexi the option “to purchase the Fastcase backfile with no restrictions” for an agreed-upon price.
According to Alexi, that provision essentially gave its future acquirer the ability to create “a fourth comprehensive primary-law database.” To date, only Thomson Reuters and LexisNexis have legal databases comparable to the one held by vLex and Fastcase.
Alexi claimed that after Alexi’s chief executive officer, Mark Doble, asked what would happen if the company refused to relinquish its backfile purchase right, vLex Chief Strategy Officer Ed Walters warned there “would be trouble.”
Fastcase filed its lawsuit against Alexi shortly after, alleging that the latter breached the 2021 contract by using Fastcase’s data in ways that went beyond what the parties had agreed to. Fastcase also claimed that Alexi misused its intellectual property, using Fastcase’s trademark and service mark in promotional materials and product interfaces to imply “that Fastcase data appears in Alexi’s product with Fastcase’s authorization.”
However, Alexi said the lawsuit was “sham litigation” whose actual purpose was to extinguish the company’s backfile purchase right.
“It’s really not about a breach of contract,” even though that’s how Fastcase is framing it, Doble told Canadian Lawyer on Monday. “We’ve got lots of evidence to demonstrate that we’ve always acted within the scope of the licensing agreement and that we’ve had a shared understanding of the scope of the licensing agreement and how we’ve used their data.
“Really, this is about them trying to get out of the option that we have to purchase the back[file],” Doble adds. “They’re weaponizing the courts. They’re trying to use litigation to harm us in a very anti-competitive way.”
Alexi’s counterclaim alleges that since Fastcase filed its lawsuit, Alexi customers have cancelled or failed to renew subscriptions to its service while potential buyers – including one who had been pursuing a full acquisition – have backed away. The company has also been forced to lay off two-thirds of its staff.
Doble said the issues boil down to “a large legal technology company suing a smaller Canadian legal technology company just because they want to own the market and avoid competing.
‘If you read their complaints and our counterclaims and try to read them as objectively as possible, I think all the facts [show] that that’s pretty clearly what’s happening.”
A spokesperson for Clio denied Alexi’s allegations, which they called “baseless.”
“Alexi's claims add noise beyond what is, at its core, a dispute about compliance with a straightforward licensing agreement that explicitly prohibits use of the data for commercial or competitive purposes,” the spokesperson said in a statement. “Alexi’s own public statements indicate the data was used for commercial purposes.
“This counterclaim shifts attention away from that misuse and challenges Fastcase for enforcing its contractual rights and protecting intellectual property it has built over many years.”
