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Matthew Bender Letter to DOJ Re Thomson/West, August 31, 1996


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[Irell & Minella Letterhead]

August 31, 1996

VIA FEDERAL EXPRESS

Craig W. Conrath, Chief, Merger Task Force
Antitrust Division
1401 H Street, N.W.
Suite 4000
Washington, D.C. 20530

Re:

United States v. The Thomson Corporation and West Publishing Company, No. 96-1415 (D.D.C.)

Dear Mr. Conrath:

Introduction

Matthew Bender & Company, Inc. submits the following comments in opposition to the terms of the Proposed Final Judgment in the above-mentioned matter relating to "star pagination." These comments are intended to supplement and amplify comments made by Lexis-Nexis in a letter dated August 30, 1996.

As the Department is well aware, defendant West Publishing Company claims that its copyright interests are infringed by competitors who use "star pagination" to West's reporters. The Complaint identifies this assertion of an intellectual property right as a significant barrier to entry into the relevant legal publishing markets. Moreover, the Department, acting as an amicus in copyright litigation between Matthew Bender and defendant West Publishing Company in the Southern District of New York, has recently expressed its views on behalf of the United States that West's copyright claim is without merit. Yet despite recognizing that West has imposed a barrier to entry through the erroneous assertion of a legally cognizable intellectual property interest, the Department has not sought to remove that barrier. Rather, the Proposed Final Judgment seeks to ameliorate the problem by mandating that West offer a license to its non-existent rights. Not only does this solution not remove the barrier to entry, it creates new anti-competitive effects through license terms that would cause harm both to licensees and to other potential competitors of the merged Thomson/West entity in the markets at issue. Matthew Bender accordingly urges that the proposed Final Judgment not be approved by the Department or the Court without modification to prohibit Thomson/West from enforcing any alleged rights with respect to star pagination.

The Importance of Star Pagination

Matthew Bender is one of this country's leading publishers of legal secondary literature, including such well known treatises as Moore's Federal Practice, Nimmer on Copyright, Collier On Bankruptcy, and Weinstein's Evidence. In recent years, Matthew Bender has offered many of its titles on CD-ROM. In order to remain competitive in the legal secondary source market, Matthew Bender must offer its CD-ROM titles in conjunction with pertinent primary materials. By having primary materials available together with secondary sources, a person using Matthew Bender's legal secondary source product will be able to move, at the touch of a button, from a citation to a primary source to the primary source itself. Thus, for example, if Moore's Federal Practice cites a particular page of an appellate decision as stating a particular holding, a person using an integrated CD-ROM product will be able to go from citation to the cited portion of the opinion, and then go back to the treatise (or to another authority cited in the opinion). Consumers of legal products benefit from this integration of secondary and primary sources through improved secondary source products.

In order to integrate judicial opinions with the existing base of legal secondary literature, and to make them competitive primary sources in their own right, those judicial opinions must include information about the location of page breaks from the version of the opinion appearing in the National Reporter System published by defendant West Publishing Company. This page break information is typically provided via the efficient shorthand of "star pagination."[FNR1]

It is necessary to provide information about the location of page breaks in West's reporters for three primary reasons: (1) to allow users of Matthew Bender products to cite cases in the form that is mandated by law, practice and necessity; (2) to allow users of Matthew Bender products to locate the portion of a judicial opinion that is cited in a secondary or primary source; and (3) to allow the integration of primary sources with secondary sources that contain pinpoint citations to West's reporters.

The necessity of providing information about the page breaks in West's reporters emerges from many factors. West's federal reporters (i.e., Federal Cases, Federal Reporter, Federal Reporter - Second Series, Federal Reporter - Third Series, Federal Supplement, Federal Rules Decisions and Bankruptcy Reporter) are the de facto official reporters of the U.S district courts and courts of appeals and thus are the standard citation source for the bench and bar. Only West publishes in book form a comprehensive collection of the published decisions of the lower federal courts. Consequently, the rules adopted by many of the federal courts require that citations in briefs be to the appropriate volume and page number of West's federal reporters. See, e.g., Third Cir. R. 28.3(a). The preeminent legal citation manual also requires citation to West's federal reporters, including pinpoint citation. See generally The Bluebook: A Uniform System of Citation at 34-36, 165-67 (15th ed. 1991) (the "Bluebook"). The Bluebook citation form, which the legal community regards as setting the standards for citations in legal writing, has been formally adopted by the local rules of various courts, thereby further extending the official status of West's federal reporters. See, e.g., Eleventh Cir. R. 28-2(k).

The de facto official status of citations to the volume and page numbers of West's federal reporters is further reflected in their use as the standard citation form in the printed opinions of the United States Supreme Court and the printed slip opinions of the lower federal courts. In the United States Reports, for example, the government's official reporter of Supreme Court decisions, citations to lower federal court decisions almost invariably consist of a citation to the volume and appropriate page numbers, including the pinpoint citation, of the West federal reporter in which the decision and pertinent passages were published.

The primacy of citations to West state court judicial reports is also a condition dictated by the requisites of legal practice. The judicial decisions of at least nineteen state court systems are not currently published in any "official" reporter. See Robert C. Berring, On Not Throwing Out the Baby: Planning the Future of Legal Information, 83 Cal. L. Rev. 615, 633 n.66 (1995). Citations to judicial authority in states such as Texas are by necessity to an unofficial reporter, such as the reporters in West's National Reporter System. In yet other states, West is the official reporter. For example, in Florida, West publishes the official Florida Cases, which is a collection of Florida judicial opinions reprinted -- including volume and page numbers -- from West's Southern Reporter. A citation to Florida's "official" reporter is thus identical to a citation to West's "unofficial" Southern Reporter.

Even in the remaining states, such as New York, where there are non-West "official" reporters of judicial opinions (owned, in this case, by Thomson's subsidiary, Lawyers Cooperative Publishing Co.), law and practice nonetheless require parallel citations to West's New York reporters. For example, the rules adopted by certain federal courts require citations to West's New York reporters. See, e.g., D.C. Cir. R. 28(b). The Bluebook (which, as noted above, various local rules of court adopt by reference) also requires citation to West's New York reporters, including pinpoint citation, in documents submitted to federal and state courts. See id. at 195- 97. In accord with the standards promulgated by the Bluebook, citation to West's National Reporter System volumes, including pinpoint citation, is considered by the legal community to be the proper method of citation in memoranda of law submitted to the federal and state courts. Indeed, the Bluebook requires citation to West's reports of state judicial opinions in the National Reporter System in documents submitted to federal and state courts in every single state. See generally Bluebook at 169-216.

In sum, the bench and bar must (and do) cite to West's reporters. Pinpoint citations to West's National Reporter System volumes are thus ubiquitous in the U.S. state and federal corpus juris, in submissions to the courts, as well as in the vast secondary literature about our laws. Information about the location of page breaks in West National Reporter System volumes has thus become a standard frame of reference for discussion, debate and advocacy about the law of this country. Primary sources that do not contain information about the location of page breaks in West's National Reporter System volumes are cut-off from this ubiquitous frame of reference.

West's Use Of Its Alleged Copyright To Destroy Competition

As the Complaint recognizes, a significant barrier preventing Matthew Bender and other potential competitors from using star pagination to create better secondary source products, and to create new enhanced primary source products, has been erected by West's assertion of claims that star pagination infringes West's purported copyright in the arrangement of its reporters. See Complaint ¶¶ 32, 43. West aggressively pursues litigation against competitors who use star pagination. It also relies on jurisdictional machinations to make that litigation more expensive for those competitors and to confine examination of its alleged copyright interest in star pagination to its home base.

West's first action of this type was its successful litigation against Mead Data Central to enjoin Mead's intended inclusion of star pagination in the Lexis database. That suit resulted in the much-criticized West Publishing Co. v. Mead Data Central, Inc., 799 F.2d 1219, 1227 (8th Cir. 1986), cert. denied, 479 U.S. 1070 (1987) decision, in which a two-judge majority of an Eighth Circuit panel held, over a vigorous dissent, that the internal page numbers of opinions published in West reporters are subject to copyright, and that a competitor that provided star pagination to those internal page numbers was liable for copyright infringement.[FNR2]

The West v. Mead decision has been roundly denounced by copyright scholars,[FNR3] the U.S. Copyright Office,[FNR4] and most recently by the U.S. Department of Justice,[FNR5] as wrongly decided and clearly overruled by the subsequent U.S. Supreme Court decision in Feist Publications, Inc. v. Rural Tel. Service Co., 499 U.S. 340, 111 S. Ct. 1282 (1991), which uprooted the "sweat-of-the- brow" copyright doctrine undergirding West v. Mead.

Nonetheless, the West v. Mead decision has not yet been explicitly overturned, and West has in fact continued its use of litigation to prevent competitors from using star pagination. See, e.g., Matthew Bender & Co., Inc. v. West Publishing Co., 39 U.S.P.Q.2d 1079, 1082 (S.D.N.Y. 1996) (noting "West's history of litigation against other legal publishers" and its employees' testimony "that they do not know of any companies that have used West's star pagination that West has not sued"); Susan Hansen, Fending Off the Future, American Lawyer 73, 73 (September, 1994) ("West's lawyers have earned a reputation for menacing letters and quick-strike lawsuits, hunting down infringers from coast to coast. One by one, `copyists,' as [Vance] Opperman[, West's president,] likes to call them, have been marched into court and crushed.").

Having succeeded before Feist in obtaining one favorable ruling in its home forum, West has attempted even past Feist to prevent courts outside the Eighth Circuit from examining its "scarecrow" copyright. As Professor Craig Joyce, a strong critic of the Mead decision, explained to Congress:

The West Publishing Company is an able litigator. If it decides on a `preemptive strike,' it sues competitors asserting the right to use `its' identifying matter -- that is, the matter for which it claims protection by virtue of the Mead case -- in the federal trial court for the District of Minnesota, the very jurisdiction in which it filed and won in Mead. For quite proper reasons, West's likelihood of success in that court, or anywhere in the Eighth Circuit, is very high.

If, however, West is sued elsewhere by a potential competitor seeking to employ in its own works the identifying matter in which West claims ownership, West can in all likelihood get the case transferred to the District of Minnesota. Again, West's chances there are good. Exclusion of Copyright Protection for Certain Legal Compilations: Hearings on H.R. 4426 Before the Subcomm. on Intellectual Prop. and Judicial Admin., 102nd Cong., 2d Sess., Serial No. 105 at 39-40 (1992) (footnotes omitted) (emphasis original).

Recently, West's project of confining examination of its pagination copyright to the Eighth Circuit has been implemented through the attempted manipulation of federal jurisdiction. In two declaratory judgment actions brought by Matthew Bender against West in the Southern District of New York, Matthew Bender & Co., Inc. v. West Publishing Co., 94 Civ. 0589 (JSM) (S.D.N.Y.) and Matthew Bender & Co., Inc. v. West Publishing Co., 95 Civ. 4496 (JSM) (S.D.N.Y.) (seeking declarations that Matthew Bender's use of star pagination does not infringe any West copyright), West moved to dismiss for lack of subject matter jurisdiction on the ground that the actions allegedly do not involve actual controversies.[FNR6] After extensive discovery, briefing and oral argument on the jurisdictional issue, the court denied West's motions, see Matthew Bender & Co., Inc. v. West Publishing Co., 39 U.S.P.Q.2d 1079, 1082 (S.D.N.Y. 1996), as well as West's subsequent motion for reconsideration or interlocutory review. West's failed jurisdictional ploy delayed adjudication of the merits by at least two years and caused significant litigation costs.

The purposes animating West's attempts to evade the jurisdiction of the Southern District of New York become clear when evaluated in light of West's conduct in a concurrent proceeding now on appeal from the United States District Court for the District of Minnesota to the Eighth Circuit -- Oasis Publishing v. West Publishing Co., CV3-95-563. In that action, West has taken a dramatically contrary stance regarding the conditions under which justiciability is established for the purpose of obtaining an advisory ruling in its forum-of-choice regarding a hypothetical product.

In Oasis, plaintiff Oasis Publishing, Inc., a CD-ROM publisher, initiated suit against West in the United States District Court for the District of Florida seeking a declaration that West does not have a copyright in the page numbers contained in Florida court decisions published in West's Southern Reporter and that Oasis' intended use of star pagination to West's Southern Reporter in Oasis' planned CD-ROM product will not infringe West's copyright. West responded to the Oasis complaint by moving to dismiss the declaratory judgment claim for lack of a justiciable controversy and alternatively to transfer the action from Florida to the District of Minnesota. Before ruling on West's motion to dismiss, the court granted West's motion to transfer the case to the District of Minnesota.

Once West succeeded in transferring the Oasis case to Minnesota, West withdrew its motion to dismiss for lack of a justiciable controversy. It did so even though there had been no intervening change in the facts or law. But West did not simply withdraw its motion. Rather, it entered a stipulation filed with the Minnesota court in which it dismissed "with prejudice" from its answer the affirmative defense that the case was not justiciable and all allegations in West's answer based upon that defense. In other words, once West successfully transferred the case to Minnesota, West not only withdrew its motion challenging justiciability, but actively attempted to expunge the issue from the record.

After West in effect stipulated to jurisdiction, the parties submitted cross-motions for summary judgment on Oasis' copyright declaratory judgment claim. Just four weeks after oral argument, West's jurisdictional strategy to obtain a favorable opinion from its forum-of-choice paid off. The Minnesota court followed the much-criticized West v. Mead and granted West's motion for summary judgment. See Oasis Publishing Co. v. West Publishing Co., 924 F. Supp. 918, 925-926 (D. Minn. 1996). In rendering its opinion, the court below never examined the existence of subject matter jurisdiction.[FNR7]

In sum, a comparison of West's actions in response to Matthew Bender's New York declaratory judgment actions with its stance in the Oasis case suggests that West's simultaneous assault on jurisdiction outside the Eighth Circuit and attempted stipulation to jurisdiction in the Eighth Circuit is based on a deliberate strategy to confine examination of its alleged copyright in star pagination to courts in the Eighth Circuit. This strategy decreases the likelihood that the Mead decision will be critically examined, and increases costs for potential challengers of West's copyrights who must engage in lengthy jurisdictional fights against a well-heeled and aggressive adversary.

In its recently filed opposition to Matthew Bender's motion for summary judgment in Matthew Bender v. West, West has taken its game playing to new heights -- contending, despite numerous public statements to the contrary, that it has a copyright interest in the initial parallel citations (i.e., the cite to the first page of a case) in the National Reporter System that may be infringed when a competitor uses such citations.[FNR8] See West Publishing Company's Memorandum of Law In Opposition To Plaintiff Matthew Bender & Company's Motion For Summary Judgement at 5 ("West has not conceded that copying of first page citations by Matthew Bender is non-infringing.") (emphasis original). West apparently wishes to backtrack from its admissions and leave the door open to suing a competitor for infringement based on its use of initial parallel citations.

In the summary judgment proceedings in Matthew Bender v. West, the Department filed an amicus curiae brief in that suit on behalf the United States arguing, that "Bender's star pagination to West's National Reporter System does not infringe any copyright interest West may have in the arrangement of the National Reporter System." Explaining why the Department had taken the unusual step of filing an amicus brief at the district court level in a copyright action, the Department explained,

The United States has a substantial interest in the resolution of the issue discussed in this Memorandum. It has numerous responsibilities related to the proper administration of the intellectual property laws and to advancement of the public interest. The standards for copyright protection embody a balance struck between protecting private ownership of expression as an incentive for creativity and enabling the free use of basic building blocks for future creativity. . . . The United States therefore has an interest in properly maintaining the "delicate equilibrium" . . . Congress established through the copyright law.

The interest of the United States in ensuring the proper preservation of that balance also reflects the fact that it has primary responsibility for enforcing the antitrust laws, which establish a national policy favoring economic competition as a means to advance the public interest. Moreover, the United States is a substantial purchaser of legal research materials of the kind at issue in this case.

Finally, the United States has recently taken actions relating to the issue discussed. On June 19, 1996, the United States, together with seven states, filed an antitrust suit challenging the acquisition of West Publishing Co. by The Thomson Corp., together with a proposed settlement of that suit. Part of that settlement requires Thomson to license to other law publishers the right to star paginate to West's National Reporter System. United States v. The Thomson Corp., No. 96-1415 (D.D.C. filed June 19, 1996), Proposed Final Judgment, 61 Fed. Reg. 35250, 35254 (July 5, 1996). In announcing the settlement, the U.S. Department of Justice stated:

Today's settlement, with its open licensing requirement, does not suggest . . . that the Department believes a license is required for use of such pagination. The Department expressly reserves its right to assert its views concerning the extent, validity, or significance of any intellectual property right claimed by the companies [West and Thomson]. The Department also said that the parties agree that the settlement shall have no impact whatsoever on any adjudication concerning such matters.

U.S. Dept. of Justice, Press Release No. 96-287, at 3- 4, 1996 WL 337211 (DOJ) *2 (June 19, 1996). This memorandum asserts those views. Memorandum of United States of America as Amicus Curiae, Matthew Bender & Co., Inc. v. West Publishing Co., 95 Civ. 0589 (JSM) (S.D.N.Y.) at 1-2 (citations omitted) ("U.S. Amicus Memorandum").

As a result of West's substantive positions and procedural game playing, potential competitors in the primary and secondary legal product markets use star pagination at the risk that they will be sued by West for copyright infringement. The Department recognizes this reality. See Competitive Impact Statement, 61 Fed. Reg. 35250, 35261-62 (July 5, 1996) ("[E]xisting or potential participants in the markets for primary law products cannot offer products with star pagination without the threat of costly infringement litigation."). As the former President and COO of Thomson Electronic Publishing, testified before Congress in 1992 on behalf of numerous Thomson legal publishing entities,[FNR9] the West v. Mead Data Central "decision has made it commercially impossible for Thomson or anyone else to publish, with page number citations, the decisions of the lower federal courts. . . ." Exclusion of Copyright Protection for Certain Legal Compilations: Hearings on H.R. 4426 Before the Subcomm. on Intellectual Prop. and Judicial Admin., 102nd Cong., 2d Sess., Serial No. 105 at 82 (1992) (testimony of Kathryn M. Downing); see also Gary Wolf, Who Owns the Law?, Wired 98, 138 (May 1994) ("West's provisional victory [in West Publishing] has kept other electronic publishers at bay."). From an antitrust perspective, West's repeated, even dogged, attempts to assert its baseless copyright have greatly reduced competition by erecting a huge barrier to entry in legal publishing markets. Neither the Department Nor the Court Should Approve The Final Judgment Unless It Is Modified To Preclude The Merged Entity From Enforcing Its Alleged Star Pagination Copyrights

In light of the foregoing, the deficiency in the Proposed Final Judgment's remedy to West's star pagination claims becomes apparent.[FNR10] The Complaint recognizes that West's assertion of its claim that star pagination infringes its copyright has an anti-competitive effect by serving as a barrier to entry into the relevant markets. See Complaint ¶¶ 32, 43. The Department further recognizes that West's copyright claim is baseless. See generally U.S. Amicus Memorandum. Yet, the Department has not taken the obvious and desirable step of removing that barrier by forbidding West from asserting its baseless copyright interest as a tool to stifle competition. This failure flies in the face of the Department's recognition that West's copyright claim is baseless. It also deviates from the remedies the federal government has demanded in other merger cases. See, e.g., Hoechst AG; Proposed Consent Agreement, 60 Fed. Reg. 49609, 49611 (September 26, 1995)(filed by FTC); United States v. Borland Int'l, Inc., 56 Fed. Reg. 56096 (October 31, 1991). In both Hoechst AG and Borland, Int'l, the government conditioned approval of the merger on the consent of the merging entity not to enforce an intellectual property right. In neither of those instances did the government dispute the validity of the intellectual property at issue. One is therefore left to wonder why the government has chosen to settle for less where it believes that the intellectual property interest asserted is invalid.

Matthew Bender believes that the Department should not let Thomson/West consummate their merger unless Thomson/West agrees that it will not seek to enforce any star pagination copyrights.[FNR11] In its Competitive Impact Statement, the Department recognizes that, in light of the proposed Thomson/West merger, it is critical to lower the barriers to entry in legal publishing markets to maintain the vigorous competition that currently exists. 61 Fed. Reg. at 35263.

Moreover, Matthew Bender believes that the maintenance of vigorous competition after the consummation of the Thomson/West merger requires elimination of the barrier to entry caused by the erroneous assertion of the star pagination copyright for a reason not mentioned by the Department in its Competitive Impact Statement. By merging West's virtual monopoly position in enhanced primary law products with Thomson's capability in secondary law products, the merged Thomson/West entity will be able to use its market power in the enhanced primary law product markets to gain an unfair competitive advantage in the secondary law product markets. No longer will West have to develop its own secondary law products. Instead, Thomson/West will be able to marry West's primary law products with Thomson's secondary law products to create products that competitors in the secondary law product markets cannot match without the right to use West's star pagination. The newly achieved strength of Thomson/West in the secondary law product markets will thus greatly increase the anticompetitive effects of continued attempts to enforce West's star pagination copyright.

For these reasons, the Thomson/West merger presents a compelling example of the need to condition government approval of a merger on an agreement not to enforce an alleged intellectual property right. The merger here, like the mergers in Hoechst AG and Borland Int'l, increases concentration in already concentrated markets. However, unlike those cases, the intellectual property right at issue is baseless, and the merger itself increases the harm from assertion of the intellectual property right.

The Department is apparently under the impression that the proposed mandatory license will fulfill the objective of removing the barrier to entry caused by West's assertion of the star pagination copyright. For several reasons, the Department is wrong. First, the terms of the license are so onerous that few, if any, competitors of West will be able to take advantage of it. As noted in the letter submitted to the Department by Lexis-Nexis, the pricing is very high (of course, any fee for what even the Department recognizes is a non-existent right is too high). Indeed, if the information cited by Lexis-Nexis is correct, the price is being set at a level that West negotiated as a settlement after its courtroom victory in West v. Mead.[FNR12] In light of the Supreme Court's decision in Feist, it is inconceivable that West could insist on that high a royalty again.[FNR13] The license is also not absolute. West apparently can still challenge a licensee's use of star pagination if West contends that the licensee has not made its own selection, coordination and arrangement of cases. See License at ¶ 1.03.[FNR14] And, as discussed more fully below, the license contains at least two terms that will reduce, not enhance, a licensee's ability to compete with Thomson/West in the marketplace. See License ¶ 1.04 (which effectively requires a licensee to preview its products for Thomson/West) and ¶ 3.01 (requiring the licensee not to challenge West's copyright during the term of the license). Matthew Bender submits that, under these conditions, the Department cannot and should not rely upon the mandatory license feature of the Proposed Final Judgment as a vehicle for preserving vigorous competition in legal publishing markets following a Thomson/West merger.

Finally, Matthew Bender notes that the Proposed Final Judgment will actually result in positive injury to third parties who compete with the merged Thomson/West entity. The star pagination License Agreement mandated by Section IX of the Proposed Final Judgment effectively requires licensees to provide West with an advance description of the product or service in which they intend to include star pagination. See License ¶ 1.04. Thomson/West will thus be in a position to modify its products to address the enhancements offered by its competitor even before its competitor's product can be sold. Not only will this give Thomson/West a competitive advantage over the particular competitor seeking a license, but it will also give it an advantage over other competitors in the market who will have to wait until the new product is sold to develop a competitive response.

The star pagination license also results in positive injury to third parties who compete with Thomson/West because it provides that "[d]uring the term of this Agreement, Licensee (i) shall respect and not contest the validity of the copyrights claimed by Licensor in Licensor's arrangements of case reports in NRS Reporters as expressed by NRS Pagination; . . . ." License ¶ 3.01. This provision will effectively prevent a licensee from challenging West's copyright.[FNR15] This not only harms the licensee by subjecting it to an expensive, highly restrictive license for a non-existent copyright, but it harms all competitors of Thomson/West and all consumers of legal research material because it reduces the likelihood that an effective court challenge will be mounted that invalidates West's copyright claims. Thus, the Proposed Final Judgment simultaneously fails to take the opportunity that now exists to remove the artificial barrier to entry caused by West's improper assertion of its star pagination copyright and diminishes the likelihood the problem will be solved later by private litigation.

For the reasons stated in this letter, Matthew Bender urges the Department not to approve the proposed Final Judgment without modification to prohibit Thomson/West from enforcing any alleged star pagination copyright. In the event that the Department does give its approval, Matthew Bender urges the Court to recognize the positive injury to third parties caused by the proposed final judgment and to refuse to approve it absent the same modification.

Sincerely, IRELL & MANELLA LLP
Morgan Chu
Alex Wiles
Elliot Brown

James Imbriaco
Associate General Counsel
and General Counse
Professional Publishing
The Times Mirror Company
780 Third Avenue, 40th Floor
New York, New York 10017

FOOTNOTES

[FNT1]>

The Complaint recognizes this business reality. See Complaint 43 ("Particularly for CD-ROM products, where it is possible to include both primary and secondary law products on the same CD-ROM, the ability to include star pagination is an important competitive factor.").

[FNT2]>

The matter came before the Eighth Circuit on interlocutory appeal of a grant of preliminary injunction. The case settled before a decision was rendered after trial on the merits.

[FNT3]>

See, e.g., William F. Patry, Latman's The Copyright Law 63, n.212 (1986) (case is "a most extreme misreading" of the Copyright Act); 1 Nimmer on Copyright 3.03 ("this case extends compilation copyright too far"). Two scholars devoted a hundred-page article to criticizing the West v. Mead case and decrying the majority's position as disturbing "a century-and-a-half of precedent dating from the Supreme Court's first copyright decision, Wheaton v. Peters, in 1834." L. Ray Patterson & Craig Joyce, Monopolizing the Law: The Scope of Copyright Protection for Law Reports and Statutory Compilations, 36 UCLA L. Rev. 719, 723 (1989). In Feist Publications, Inc. v. Rural Tel. Service Co., 499 U.S. 340, 111 S. Ct. 1282 (1991), the Supreme Court cites repeatedly to the Patterson and Joyce article in reaching the conclusion that no compilation copyright protected the telephone book there at issue. See Feist, 499 U.S. at 347, 348-349, 351, 361-362, 111 S. Ct. at 1288, 1289 (twice), 1291, 1296 (twice).

[FNT4]>

The Register of Copyrights (the senior official of the U.S. government charged with the formulation of copyright policy) testified before Congress regarding proposed legislation to amend the U.S. Copyright Act to clarify that there is no copyright in the volume and page numbers of judicial reporters that in the view of the Copyright Office, West v. Mead was a "substantial departure" from "150 years of settled contrary precedent." Testimony of Ralph Oman, Exclusion of Copyright Protection for Certain Legal Compilations: Hearings on H.R. 4426 Before the Subcomm. on Intellectual Prop. and Judicial Admin., 102nd Cong., 2d Sess., Serial No. 105 at 6, 12 (1992). He further elaborated that even if that ruling had been consistent with previous doctrine, its reliance on sweat-of-the-brow considerations means that Feist "tolled the death knell" for West v. Mead. Id. at 6. In fact, the Copyright Office labeled H.R. 4426 "unnecessary legislation" on the basis that the old Eighth Circuit ruling represented bad law post- Feist. Id. at 21, 31.

[FNT5]>

On August 20, 1996, the Department filed a memorandum amicus curiae on behalf of the United States in Matthew Bender & Co., Inc. v. West Publishing Co., 94 Civ. 0589 (JSM) (S.D.N.Y.) arguing that West v. Mead "rests on the discredited `sweat-of-the-brow' theory of copyright and cannot be reconciled with Feist. . . . [T]o follow the [West v.] Mead analysis is to eviscerate Feist, with substantial, and undesirable, consequences for the progress of science and art in the modern technological era." Memorandum of United States of America as Amicus Curiae at 10-11 (filed August 20, 1996). The Department's brief is discussed in greater detail below.

[FNT6]>

To underscore West's desperation to avoid a decision outside the Eighth Circuit, West originally took the remarkable position in Matthew Bender v. West that the action should be dismissed, or transferred to Minnesota, on the ground of improper venue because West -- the nation's largest legal publisher -- purportedly "does not do business in the Southern District of New York." See Report of Parties' Planning Meeting dated March 8, 1994 at 6.

[FNT7]>

On appeal, neither party in Oasis intends to discuss the threshold jurisdictional issue. West is attempting to cover up its attempted manipulation of the District of Minnesota's jurisdiction by refusing to consent to Matthew Bender briefing the issue to the Eighth Circuit. See Letter of Joseph Musilek to Elliot Brown, dated July 22, 1996 ("West Publishing Company, like Oasis, has no objection to Matthew Bender filing an amicus curiae brief in the Eighth Circuit on the merits of the appealed issues. However, West does not consent to an amicus brief on any jurisdictional or justiciability issue.")

[FNT8]>

West's counsel have repeatedly admitted that no such copyright interest exists. See, e.g., Statement of West's outside counsel, James E. Schatz, Transcription of American Association of Law Libraries 1995 Annual Meeting in Pittsburgh, Pennsylvania, July 15-20, 1995 at 14 ("West has made it very clear it has no objection to, never has, doesn't now and never will to the use of initial West citations, the volume and first page number by other publishers or by anybody else."; "[T]he initial citations are in the public domain because West has no objection to anybody using them. West has said that for a long time. West has basically said that since 1876."); Transcript of Hearing, In the Matter of the Amendment of Supreme Court Rules: Electronic Archive of Appellate Opinions, Rules and Orders, Case No. 95-01 (March 21, 1995) at 114:6-8, 118:13- 14 ("The volume and first page number of every case report published by West is in the public domain."; "West's volume and initial page number are matters of public domain") (testimony of West's counsel Brady Williamson); Supplemental Brief of West Publishing Co., In the Matter of the Amendment of Supreme Court Rules: Electronic Archive of Appellate Opinions, Rules and Orders, Supreme Court of Wisconsin, Case No. 95-01 (April 3, 1995), at 8 ("Since West has no objection to the use of initial citations to its case reports, even by its competitors, those initial citations are effectively `in the public domain.'").

[FNT9]>

Ms. Kathryn M. Downing testified on behalf of Thomson Professional Publishing, Lawyers Cooperative Publishing Company, Clark Boardman Callaghan Company, Bancroft-Whitney Company, Research Institute of America Inc., Warren, Gorham and Lamont and Thomson Electronic Publishing. In 1995, Ms. Downing left Thomson to serve as Matthew Bender's CEO.

[FNT10]>

Neither the Complaint, the Proposed Final Judgment nor the License addresses the use by competitors of initial parallel citations to West's National Reporter System. This is not surprising given West's public statements that initial parallel citations are in the "public domain." Nevertheless, in light of the position that West has taken in Matthew Bender v. West, the Department should put an end to this game playing and not approve the merger unless Thomson/West agrees that it will never assert that any of its rights have been infringed by a competitor's use of initial parallel citations.

[FNT11]>

Recent reports suggest that Thomson has done a complete flip-flop on this issue. Thomson previously backed legislation to amend the U.S. Copyright Act that would have removed the star pagination barrier by clarifying there is no copyright in the volume and page numbers of judicial reporters. See generally Exclusion of Copyright Protection for Certain Legal Compilations: Hearings on H.R. 4426 Before the Subcomm. on Intellectual Prop. and Judicial Admin., 102nd Cong., 2d Sess., Serial No. 105 at 91 (1992) (Thomson supports legislation because it "would overrule the West [v. Mead] decision and enable Thomson and others to publish . . . primary legal texts.") (Testimony of Kathryn Downing). West's then outside counsel and later president, Vance K. Opperman, proving yet again the lengths to which West will go to protect its sham copyright, outrageously derided the bill as an attempt by Canadian Thomson to rob an American company's assets. See, e.g., Prepared Statement of Vance Opperman, id. at 159 ("Perhaps more disturbing is the motive of the primary proponent of H.R. 4426, Lord Thomson and his foreign-based Thomson conglomerate. We have all witnessed past efforts by foreign firms, acting under the guise of the U.S. subsidiaries they have bought up, to alter or dismantle fundamental American laws for their own profit and at the expense of American jobs and prosperity."); see also Testimony of Minnesota Congressman James Ramstad, id. at 5 ("The legislation being considered today represents an effort by one of the largest and most powerful foreign conglomerates in the world, led by an English lord, to win in the U.S. Congress what it knows it cannot win in the courts."). The prospect of merger appears to have caused Thomson to adopt West's views on star pagination. See Vera Titunik, That Was Then, This Is Now, American Lawyer 21 (April 1996) (quoting Thomson's general counsel Michael Harris as saying, "We believe star pagination is copyrightable"). Accordingly, Matthew Bender expects that Thomson will continue West's aggressive assertion of claims that star pagination infringes West's copyrights.

[FNT12]>

The problem is exacerbated by the term calling for a payment of fees for every "format." License 2.03. This means that licensees will have to repay fees each time they make their content available in a new format, so that the CD- ROM, HDCD and Internet versions of a work each will require a repayment of fees for the same data. This provision will discourage licensees from servicing their installed base as it migrates to new formats and act as a barrier to providing products in all but the most popular formats.

[FNT13]>

Nonetheless, West has already demonstrated, in a brief filed in the Matthew Bender v. West litigation, that it will attempt to use these License terms against adversaries by contending that the royalties are "rates which the Antitrust Division approved as commercially reasonable," and that "the negotiation of the Proposed Final Judgment does resolve any possible antitrust concern regarding the availability of star pagination licenses to West competitors." West Publishing Company's Memorandum Of Law In Opposition To The Memorandum Of The Antitrust Division Of the Department Of Justice As Amicus Curiae at 1 (filed August 26, 1996) (emphasis added).

[FNT14]>

West has left the License intentionally ambiguous as to whether it applies if a licensee creates a compilation of cases that West contends mirrors West's selection of cases. For example, if a licensee created a compilation that contains the same selection of opinions as found in West's Federal Reporter (i.e., all published federal appellate opinions), West could contend that those opinions were not independently "selected for reporting by Licensee," 1.03, and therefore are beyond the purview of the License.

[FNT15]>

There is some question about whether this provision is enforceable. Compare, Lear v. Adkins, 395 U.S. 653 (1969) ( a patent case invalidating on public policy grounds the doctrine of "licensee estoppel," i.e., the doctrine that a licensee may not challenge the validity of the licensed patent), with Saturday Evening Post Co. v. Rumbleseat Press, Inc., 816 F.2d 1191, 1200 (7th Cir. 1987)(allowing enforcement of a no contest clause in a copyright license). Rumbleseat in turn has been criticized by the leading copyright commentator. See, 3 Melville Nimmer & David Nimmer Nimmer on Copyright 10.15[B]).