Alexi Countersues Fastcase Over Clio's $1B Acquisition, Alleges Antitrust Violations

Alexi Technologies has filed a counterclaim against Fastcase, vLex, and Clio, alleging anticompetitive conduct following Clio’s $1 billion acquisition of vLex/Fastcase. The lawsuit, initially brought by Fastcase, accuses Alexi of breach of contract, trademark infringement, and trade secret misappropriation. However, Alexi denies these claims and argues that Clio’s acquisition violates federal antitrust law, aiming to eliminate competition in the AI legal research market.

The counterclaim highlights a dramatic shift in the relationship between Alexi and Fastcase, which operated collaboratively for nearly four years under a data license agreement. Alexi used Fastcase’s caselaw updates to develop its AI-powered legal memo service, a collaboration that was celebrated when vLex named Alexi CEO Mark Doble a Fastcase 50 honoree in 2023. However, Alexi alleges that Clio’s acquisition of Fastcase led to aggressive litigation and attempts to undermine Alexi’s business.

The Backfile Purchase Right: A Key Issue

Central to Alexi’s counterclaim is a provision in the original 2021 data license agreement that guarantees any acquirer of Alexi the right to purchase the Fastcase backfile—a complete database of U.S. caselaw—at a nominal cost. Alexi argues this right is critical for competitors to create new comprehensive legal databases and accuses Clio of attempting to eliminate this provision during due diligence.

Alexi alleges that Clio discovered this provision and immediately sought to remove it, with former Fastcase CEO Ed Walters demanding Alexi relinquish the backfile purchase right without compensation. When Alexi refused, Walters allegedly warned of "trouble." Seven days after this demand, vLex sent Alexi a notice claiming breach of contract, the first such allegation in their four-year relationship.

Antitrust Allegations and Market Impact

Alexi’s counterclaim goes beyond licensing disputes, arguing that Clio’s acquisition of Fastcase and vLex violates Section 7 of the Clayton Act, which prohibits mergers that substantially lessen competition. Alexi identifies two relevant markets where competition will be reduced: the comprehensive legal database market and the AI legal-analysis services market.

In the database market, Alexi notes that there are only three comprehensive primary-law databases worldwide: Westlaw (Thomson Reuters), LexisNexis, and Fastcase/vLex (now Clio). Fastcase, Alexi alleges, was the only one of the three that licensed its database programmatically to independent AI legal research companies, making it essential for innovation and competition in the AI legal services market.

Alexi argues that Clio now has both the ability and incentive to foreclose rivals from accessing essential caselaw data, stifling innovation and increasing prices. The counterclaim warns that if not enjoined, Clio’s actions will reduce consumer choice, worsen terms, and harm the legal AI services market.

The lawsuit has already taken a significant toll on Alexi’s business. Following the litigation and termination of daily caselaw updates, Alexi has been forced to lay off two-thirds of its staff, and its growth trajectory, revenue, and valuation have been materially impaired. Despite these setbacks, CEO Mark Doble remains resilient, emphasizing the company’s determination to weather the storm and continue building its AI legal research platform.