Bloomberg Fin. L.P. v. UBS AG

358 F. Supp. 3d 261
CourtDistrict Court, S.D. Illinois
DecidedDecember 19, 2018
Docket18-CV-6334 (VEC)
StatusPublished
Cited by8 cases

This text of 358 F. Supp. 3d 261 (Bloomberg Fin. L.P. v. UBS AG) is published on Counsel Stack Legal Research, covering District Court, S.D. Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Bloomberg Fin. L.P. v. UBS AG, 358 F. Supp. 3d 261 (S.D. Ill. 2018).

Opinion

VALERIE CAPRONI, United States District Judge

Plaintiff Bloomberg Finance L.P. brought this action to recover damages for, and to obtain injunctive relief to prevent, the alleged unauthorized use and dissemination of its proprietary financial data by Defendant UBS AG in violation of various written agreements between the parties. See Dkt. 1 (Compl.) ¶ 1. Defendant UBS has moved (1) to dismiss this action on grounds of forum non conveniens, see Dkt. 18, and (2) in the alternative, to dismiss Bloomberg's first, second, and fourth causes of action under Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6), see Dkt. 21. UBS's motions are DENIED.

BACKGROUND1

Plaintiff Bloomberg Finance L.P. ("Bloomberg") is a Delaware limited partnership with its principal place of business in New York City. Dkt. 1 (Compl.) ¶ 12. Bloomberg uses proprietary methods and processes to aggregate, organize, and curate market and reference data for over fifty million financial instruments across a range of asset classes. Id. ¶¶ 17-18. Defendant UBS AG ("UBS") is a Swiss joint-stock company with its principal place of business in Switzerland. Id. ¶ 13. UBS operates a federally regulated Federal Branch in New York City. Id.

Bloomberg offers its data via "Bloomberg Terminal" subscriptions to individual consumers and via data licenses that allow institutional consumers to access and use the data within the institution's own internal applications and systems. Dkt. 1 (Compl.) ¶ 3. In 1998, Bloomberg and UBS entered into two such data-license agreements, one permitting UBS to use Bloomberg's market data on a fee-per-request basis and the other permitting UBS to download entire Bloomberg data sets in exchange for a monthly recurring fee. Id. ¶¶ 5, 19-22, 24-27; see also id. ex. 1 (Per-Security License), ex. 2 (Bulk-Data License). Because the text of the two agreements is identical in every way relevant to resolving UBS's motions to dismiss, this opinion refers to them collectively as the "Global Agreements" and cites to them collectively. Each Agreement contains identical restrictions on UBS's use of the licensed data, including a prohibition on redistribution of that data to third parties. See id. ex. 1 (Per-Security License) §§ 4, 6, ex. 2 (Bulk-Data License) §§ 4, 6. The Agreements also contain provisions specifying that the Agreements were "made and entered into in the State of New York"; that they shall be governed by "the laws of the State of New York without giving effect to the conflicts-of-law provisions thereof"; and that the parties "consent *266to the jurisdiction of the courts of the State of New York with respect to any legal proceedings that may result from a dispute as to the interpretation or breach of any of the [Agreements'] terms and conditions...." Id . ex. 1 § 15, ex. 2 § 15.

In 2005, in an agreement referred to as the "2005 Addendum," the parties amended the 1998 Global Agreements to grant UBS limited use of a specified subset of the licensed data "within" certain applications that UBS had developed that would be made available to third-party UBS clients-most relevant here, a risk and portfolio-management system called "UBS Delta." Dkt. 1 (Compl.) ¶¶ 35-37; id. ex. 3 (2005 Addendum). In exchange for this additional usage right, UBS agreed to pay Bloomberg an annual fee of $ 300,000. Id. ¶ 39. The provisions of this Addendum are recited in more detail below.

In April 2017, StatPro, an English company that provides cloud-based portfolio-management and analytics services, announced that UBS had agreed to sell its UBS Delta application to StatPro. Dkt. 1 (Compl.) ¶ 40. According to a StatPro press release and representations by UBS to Bloomberg, the transaction was scheduled to occur over a period of three to five years. Id.

Concerned (1) that as part of the sale transaction, UBS Delta personnel with UBS-purchased Bloomberg Terminal subscriptions would become employees of StatPro in violation of the Terminal subscription agreements, and (2) that because of StatPro's acquisition of UBS Delta, StatPro-a competitor of Bloomberg-would get access to proprietary data Bloomberg had provided to UBS solely for use within UBS Delta, Bloomberg contacted UBS to determine the deal's implications for Bloomberg's data. Dkt. 1 (Compl.) ¶ 41-43. Over the next several months, UBS confirmed, as relevant here, (1) that former UBS Delta employees who had become StatPro employees because of the acquisition were still using Bloomberg Terminal accounts licensed by UBS, id. ¶ 44; (2) that although UBS Delta clients "cannot download the datasets associated with the [risk] calculations per se (i.e., the inputs)," UBS Delta enabled them "to extract their portfolio information on the screen, via pdf or excel" and to "see ... the end result which is a blend of data from various Market data suppliers and UBS data sets (including Bloomberg-for example pricing data for a bond comes from Reuters and reference data such as the Coupon comes from Bloomberg)," id. ¶ 52-53 (emphasis omitted).

In February 2018, Bloomberg notified UBS that Bloomberg was terminating the ten Bloomberg Terminal subscriptions UBS had obtained for its former UBS Delta employees. Dkt. 1 (Compl.) ¶ 56. Bloomberg also demanded that UBS "cease and desist using Bloomberg data within UBS Delta or any other application made available to UBS customers or other third parties"; "cease and desist sharing, making available, and/or allowing access to current and historical data by any third party"; and "ensure that all such parties delete and purge any such Bloomberg data." Id. ¶ 57.

Between February and June 2018, Bloomberg exercised its right under the Global Agreements to audit UBS's use of its data. Dkt. 1 (Compl.) ¶¶ 60-73; see also id. ex. 1 § 8, ex. 2 § 8. In March 2018, Bloomberg's auditors attended a demonstration of UBS Delta performed by UBS and StatPro at UBS's offices in London. Id. ¶ 66. This demonstration confirmed that UBS Delta allowed UBS clients to access and download the entire universe of proprietary Bloomberg data made available to UBS under the 2005 Addendum, regardless of whether those clients had *267Bloomberg data licenses that covered the data. Id. ¶¶ 67-68. UBS confirmed this state of affairs in writing in May 2018. Id. ¶ 69.

In July 2018, UBS notified Bloomberg that it was replacing Bloomberg as a source of data for UBS Delta and expected that the transition to a new data provider would be completed by August 2018. Dkt. 1 (Compl.) ¶¶ 10, 74. According to its complaint, Bloomberg does not contest UBS's right to replace Bloomberg as a source of market data for UBS Delta but contends that without appropriate safeguards, the process of migrating the application from Bloomberg to another data provider poses a substantial risk of exposing Bloomberg's data to a competitor who may, in turn, use that data to "validate" or otherwise improve its own data. Id. ¶¶ 75-81. Despite Bloomberg's requests, UBS has refused to confirm that it will "delete and purge all Bloomberg data from customer-facing instances of UBS Delta" and ensure that unauthorized third-party recipients of redistributed Bloomberg data also delete and purge all such data. Id. ¶¶ 82-83.

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Bluebook (online)
358 F. Supp. 3d 261, Counsel Stack Legal Research, https://law.counselstack.com/opinion/bloomberg-fin-lp-v-ubs-ag-ilsd-2018.