NEWS9 April 2013

Judge throws out Affinity’s case against GfK MRI

Legal North America

US — A New York District Court has dismissed a lawsuit brought against GfK Mediamark Research and Intelligence (MRI) by its former rival, the now-defunct magazine researcher Affinity.

Affinity sued GfK MRI last year alleging that GfK stole trade secrets while engaged in acquisition talks with Affinity and used the information to deliver a cut-price alternative to Affinity’s own ad effectiveness service, Vista, thus putting the company out of business.

GfK MRI was accused of predatory pricing, monopolisation and attempted monopolisation. Affinity also brought a number of state law claims relating to breach of a non-disclosure agreement, theft of trade secrets and unfair competition.

However, in response to GfK’s motion to dismiss, District Court Judge Richard Sullivan said Affinity had failed to plead facts necessary to support a claim of predatory pricing. Although GfK priced its competitive product, Starch Syndicated, below that of Vista, Judge Sullivan said Affinity had offered “no facts to demonstrate that [GfK’s] prices ‘are below an appropriate measure’ of its costs.”

Indeed, he said Affinity had inverted the theory of economics of scale “by asserting that [GfK] likely incurred higher costs due to its size”.

“[Affinity] provides no reason… to undercut the obvious inference that [GfK] realised efficiencies in developing, marketing and delivering its services due to its size,” said Sullivan.

As to the monopolisation claims, the judge said Affinity had “failed to adequately define the relevant market and thus has not alleged that [GfK] possesses monopoly power”.

In addition, Judge Sullivan said Affinity’s claims that GfK MRI used information obtained during acquisition talks to develop Starch Syndicated and another rival product, Ad Measure, amounted to “little more than a declaration that Defendant must have breached the NDA”.

“Plaintiff does not state facts that plausibly explain why Defendant could not have, on its own merits, developed a competitor to a web-based survey system that Plaintiff itself took mere months to build,” said Judge Sullivan, adding that Affinity’s assertion that GfK MRI used confidential information to target Affinity’s customers “is equally unsubstantiated”. He said: “The customers who abandoned Vista for Defendant’s products are well-known publishing houses and advertising agencies that no market research company would need confidential information to identify.”

Judge Sullivan dismissed all federal claims, and declined to exercise supplemental jurisdiction over Affinity’s remaining state law claims.