Authorized analysis know-how firm Fastcase, which is now owned by Clio, has filed a federal lawsuit towards AI-powered authorized analysis platform Alexi, alleging breach of contract, trademark infringement and commerce secret misappropriation, referring to its use of information licensed from Fastcase.
The grievance, filed Nov. 26 within the U.S. District Court docket for the District of Columbia, accuses the Canadian firm of remodeling a restricted knowledge license right into a competing business product.
Though Alexi has not but formally responded to the lawsuit, its founder and CEO Mark Doble instructed me yesterday afternoon that he denies any wrongdoing and that he believes the lawsuit is predicated on a misunderstanding of the unique licensing settlement that got here to gentle throughout Clio’s latest closing of its purchase of vLex, which had merged with Fastcase in 2023.
In keeping with the grievance, Fastcase and Alexi (previously generally known as Alexsei) entered into an information license settlement in December 2021. At the moment, the grievance says, Alexi operated as what it described as a “analysis establishment,” using workers attorneys who used AI-assisted passage-retrieval know-how to arrange authorized analysis memoranda for purchasers inside 24 hours.
The settlement, the grievance alleges, granted Alexi entry to Fastcase’s proprietary authorized database solely for “inside analysis functions” — particularly, analysis carried out by Alexi’s personal attorneys in getting ready shopper memoranda. The license explicitly prohibited utilizing the info for business functions, aggressive functions or publishing or distributing the info in any type, Fastcase alleges.
(Though Fastcase filed a replica of the licensing settlement with the courtroom, it did so underneath seal, so it can’t be seen by the general public.)
Fastcase, based in 1999, merged with vLex in 2023 and was subsequently acquired by Clio for $1 billion in a transaction that closed Nov. 10 — described within the grievance as “one of the vital important transactions in authorized know-how historical past.”
At Concern Is Fastcase Knowledge
The lawsuit facilities on Fastcase’s declare that Alexi basically modified its enterprise mannequin whereas persevering with to depend on Fastcase’s knowledge underneath the unique restricted license.
Starting in 2023, Fastcase alleges, Alexi shifted away from its lawyer-staffed memorandum service and commenced constructing a direct-to-consumer AI authorized analysis platform that competes with Fastcase. In keeping with the grievance, Alexi eliminated the “inside analysis” part solely and commenced publishing Fastcase-sourced case legislation straight to finish customers.
The grievance cites public statements by Alexi’s CEO Doble, together with a March 2024 LinkedIn put up during which he described Alexi as “more and more a legit different to incumbent authorized analysis suppliers.”
Doble reportedly said that relative weaknesses together with “entry to further content material (main & secondary) and first legislation meta-data (e.g. shepardizing)” have been “simply solvable within the subsequent 3-6 months.”
Following an $11 million Series A funding round in June 2024, the grievance alleges, Alexi expanded its platform to incorporate doc evaluation, case administration instruments and different options typical of full-scale authorized analysis suppliers.
Proof Cited within the Criticism
As proof of Alexi’s unauthorized use, Fastcase’s grievance factors to a number of public demonstrations of Alexi’s platform — together with one I recorded with the company last May for my How It Works video sequence. In that video, in line with the grievance, Alexi’s Chief Income Officer Daniel Diamond “showcased direct entry to Fastcase Knowledge and continued to make use of Fastcase’s registered marks inside its platform.”
The grievance contains this screencap of my ‘How It Works’ interview with Alexi, allegedly to point out unauthorized use of Fastcase knowledge and logos.
The grievance additionally cites an October 2024 demonstration for HeyCounsel during which Diamond offered Alexi’s AI chat interface, stating that Alexi’s mannequin was “skilled on over 30 million pairs of questions and solutions which are derived from caselaw.”
The grievance contains screenshots from these two demos that present Alexi’s interface displaying full-text case legislation with a button stating “View this doc on Fastcase,” which Fastcase characterizes as unauthorized use of its trademark and an implied affiliation that was by no means approved.
Diamond additionally reportedly acknowledged that Alexi had moved past its authentic passage-retrieval instrument and now acted “as a wrapper on high of third-party AI fashions utilizing Fastcase Knowledge,” the grievance alleges.
Alexi CEO Denies Wrongdoing
In an interview yesterday, Alexi CEO Doble denied that the corporate had violated its settlement with Fastcase and expressed his hope that the lawsuit may be resolved rapidly.
Though he instructed me that he’s restricted in what he can say due to the pendency of the lawsuit, he attributed it to a “large miscommunication” and stated that Alexi is “doing all the things we will to try to resolve it as quick as we will.”
The complete textual content of the license settlement is underneath seal within the lawsuit at Clio’s request. However Doble stated he has at all times been cautious by no means to function past the license’s scope.
The explanation it got here to a head now, Doble advised, is that Clio solely turned conscious of the settlement through the last weeks earlier than the Nov. 10 date on which it completed its acquisition of vLex.
Till then, he stated, nobody at Fastcase or vLex had ever earlier than questioned the licensing settlement or Alexi’s actions underneath it. His relationship with each firms had at all times been cordial and cooperative, he stated, even to the purpose of their engineers having labored collectively to develop a few of the performance now at challenge.
He disputes the grievance’s allegation that Alexi shifted its enterprise mannequin after coming into into the licensing settlement. From the corporate’s founding, he stated, its mission was at all times to completely automate the manufacturing of analysis memos. Whereas it initially employed attorneys to regulate the accuracy of its memos, its purpose was at all times to develop into totally automated, and that was clearly communicated to Fastcase, he stated.
Doble describes the misunderstanding across the phrases of the settlement as being the results of a “little bit of damaged phone” within the transitions through the years from Fastcase to vLex after which vLex to Clio.
“It’s clear there’s lots of info that Clio doesn’t have that we’ve that now we’re simply making an attempt to undergo and work with them on explaining,” he stated.
October Discover of Breach
Doble stated the primary he heard of any drawback was in late October, when he obtained a telephone name from a vLex govt, which was then adopted on Oct. 27 by vLex sending Alexi a “Discover of Materials Breach” demanding the corporate remedy its breaches inside 30 days as required by the settlement.
In keeping with the grievance, Alexi’s counsel responded on Nov. 3, denying any breach and expressly admitting that Alexi had used Fastcase knowledge to coach its generative AI fashions.
The response said: “The intention of the Settlement was by no means to preclude Alexi from utilizing Fastcase Knowledge as supply materials for Alexi’s generative AI product; that’s precisely what Alexi was paying Fastcase almost 1 / 4 million {dollars} for yearly.”
Fastcase characterizes this as an acknowledgment of conduct prohibited by the settlement’s plain phrases and notes that Alexi said its intention to proceed utilizing the info “because it had been.”
After the 30-day remedy interval expired with out decision, Fastcase terminated the settlement and filed this lawsuit.
A Clio spokesperson declined to say something extra concerning the allegations of the lawsuit past what’s alleged within the grievance.
“Clio takes its contractual obligations and our accountability as stewards of our mental property very critically,” the spokesperson stated. “We comply with established processes to make sure our licensed knowledge is used appropriately with a purpose to defend the integrity of our content material library.”
Authorized Allegations
The grievance alleges that Alexi materially breached the Knowledge License Settlement by utilizing Fastcase knowledge to coach and develop Alexi’s business AI authorized analysis product and in different methods.
It additionally asserts that Alexi violated Fastcase’s logos and used the Fastcase title and logos in its interface and advertising and marketing supplies.
Maybe most importantly the grievance alleges that Alexi misappropriated commerce secrets and techniques via its unauthorized use of Fastcase’s database.
Fastcase is in search of in depth cures, together with a declaratory judgement that Alexi materially breached the contract, a everlasting injunction, compensatory damages, and disgorgement of all revenues and earnings from unauthorized use.
‘A Big Misunderstanding’
A few of you studying this can be questioning if that is déjà vu yet again, as this weblog continues to comply with the long-running litigation of Thomson Reuters v. ROSS Intelligence.
Sure, that lawsuit entails a longtime, Canada-based authorized analysis firm suing a Canada-based authorized analysis startup, a lot as this one entails the Canada-based authorized tech big Clio suing the Canada-based Alexi.
However on this case, Doble expressed hope that Canada connection would work in favor of a fast decision.
“We’re a Canadian authorized tech firm and Clio is the Canadian darling authorized tech firm,” he stated. “I nonetheless have a ton of respect for what they’ve accomplished — all of us at Alexi look as much as them. They’re a tremendous firm. …
“I simply assume there’s an enormous misunderstanding, miscommunication, and I’m assured it’ll be resolved fairly rapidly.”
The case is assigned to Decide Richard J. Leon within the U.S. District Court docket for the District of Columbia, case #1:25-cv-04159.
Fastcase is represented by attorneys from Wilson Sonsini Goodrich & Rosati, together with Paul N. Harold within the agency’s Washington, D.C., workplace.
