On October 18, 2013, a panel of the U.S. Court of Appeals for the Second Circuit unanimously affirmed the dismissal of an antitrust and trade dress infringement action against Davis Polk clients Insurance Services Office, Inc. (“ISO”) and Xactware Solutions, Inc. (“Xactware”), which are subsidiaries of Verisk Analytics, Inc.

The action was brought by Vedder Software Group, Ltd. (“Vedder”) – a manufacturer of software used by insurers, claims adjusters, and contractors to estimate the cost of repairing damaged property – against ISO and Xactware. According to the complaint, Xactware’s competing software obtained an 85% share of the market through a conspiracy among ISO, Xactware, and named and unnamed insurance companies to boycott Vedder’s software and to require claims adjusters and others to use only Xactware’s software. Vedder alleged that this conspiracy violated the federal and New York state antitrust laws. Vedder also alleged that Xactware had intentionally copied elements of the visual interface of Vedder’s software, infringing on Vedder’s trade dress in violation of the Lanham Act and New York state law.

On March 22, 2013, Judge Glenn Suddaby of the Northern District of New York granted defendants’ motion to dismiss the case with prejudice. Expressly incorporating by reference significant portions of our briefs, Judge Suddaby held that the complaint failed to adequately allege either an antitrust conspiracy or a trade dress infringement claim. Vedder appealed.

The Second Circuit (Judges Winter, Jacobs, and Straub) affirmed the district court in all respects. The court held that the insurers’ ownership of shares in Verisk did not support an inference of conspiracy, and that Vedder’s complaint lacked any other “plus factors” sufficient to support a conspiracy claim. In particular, the court noted that the insurers’ alleged parallel activity of insisting that their vendors use Xactware’s software would allow each insurer “to achieve consistency in estimates and ease in sharing data” and thus “could be expected of an insurer acting independently from its competitors.” The court likewise affirmed the district court’s decision that Vedder’s trade dress infringement allegations did not state a valid claim under federal or state law.

The Davis Polk team included partner Joel M. Cohen (who argued the appeal for ISO and Xactware), counsel Gina Caruso, associates David C. Newman and Jami Johnson and former associate Seth Caffrey. All members of the Davis Polk team are based in the New York office.

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