Lexpert magazine features articles and columns on developments in legal practice management, deals and lawsuits of interest in Canada, the law and business issues of interest to legal professionals and businesses that purchase legal services.
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www.lexpert.ca 9 flagged one such trend winding through US courts: class action claims alleging anti-competitive AI-powered pricing schemes. These claims allege that busi- nesses are using AI-powered algorithms to generate pricing recommendations. These algorithms – which analyze consumer data and market conditions like supply, demand, and competitor prices to generate pricing recommenda- tions – are not new, having been used for years by travel and retail websites. This type of "dynamic pricing" is typically traced back to the 1980s, when airlines developed systems for adjusting airline fares in real time, based on factors like the number of remaining seats on a flight or how close the departure date is to a booking date. However, problems arise when this technology is used for anti-competitive purposes. In August 2024, for example, the US Department of Justice and multiple state attorneys general filed a civil lawsuit against property management soft- ware company RealPage, alleging it used an AI-powered algorithm to illegally coor- dinate rental housing prices. According to the DOJ's complaint, RealPage contracted with competing land- lords who agreed to share non-public, competitively sensitive information about their apartment rental rates and lease terms, which was then used to train and run RealPage's AI-powered algorithmic pricing software. That software generated recommendations on apartment rental pricing and other lease terms for the participating landlords. In a press release about the complaint, a prosecutor said that "by feeding sensi- tive data into a sophisticated algorithm powered by artificial intelligence, RealPage has found a modern way to violate a century-old [antitrust] law through system- atic coordination of rental housing prices – undermining competition and fairness for consumers in the process." "Training a machine to break the law is still breaking the law," the prosecutor added. Months later, Canadian renters filed a proposed class action alleging similar claims against rent pricing software YieldStar, which RealPage owns. McCoomb says one way to understand these schemes is by thinking of a group of business owners targeting the same market and saying, "'Let's get together and discuss how we can best price our prod- ucts to make sure we can make the most profitable sales.'" "That conversation potentially gets into the territory of competitors conspiring with one another to arrive at the right pricing model, which potentially could be illegal depending on how they go about doing it and what they agree," McCoomb says. "It's one thing to share information. It's another thing to make an agreement with other people on the basis of that information as to what you're going to do." The central thrust of antitrust claims involving AI-powered algorithmic pricing is that those models "potentially give you the ability to do indirectly through a GenAI model what you shouldn't be able to do directly," the lawyer adds. "That potentially gives rise to class action, antitrust liability." According to McCoomb, "a very, very common path" for antitrust class action litigation is for US litigants and courts to "set the precedent and often start the major conspiracy claims." The same claims are then often brought to Canadian courts. Canada and the US abide by similar antitrust principles. He says that while antitrust cases are less likely to go to trial in Canada than in the US, he's not aware of any structural or legal reasons that would prevent the concepts "animating those US antitrust claims [from having] some traction potentially in Canada, at least as far as the business of plaintiff-side class action lawyers putting together a claim and trying to advance it for some kind of recovery for their class." AI copyright infringement claims For claims involving AI products in Canada, those alleging copyright infringe- "A big substantive issue that the courts will have to grapple with … is whether the use of copyrighted work by AI companies … constitutes fair use of that material or not" Nicole Henderson BLAKE, CASSELS & GRAYDON LLP "[The central thrust of antitrust claims involving AI-powered algorithmic pricing is that those models] potentially give you the ability to do indirectly through a GenAI model what you shouldn't be able to do directly" Andrew McCoomb NORTON ROSE FULBRIGHT CANADA LLP