2/21/97 HyperLaw, Inc.®
"Back to DOJ Antitrust Review of Thomson/West Merger Page"
Amicus Hyperlaw's First Amended Memorandum In Support Of Its Motion To Intervene, February 12, 1997
HyperLaw seeks the leave of the Court to intervene: (1) for the limited purpose of appeal[1], or (2) in the alternative, as a party—for the purpose of taking limited pre-determination discovery, and an expedited analysis of industry effects. HyperLaw seeks to carry out the congressional intent which compelled passage of the Tunney Act.
Given the high rate of settlement in public antitrust cases, it is imperative that the integrity of and public confidence in procedures relating to settlements via consent decree procedures be assured. The bill seeks precisely to accomplish this objective and focuses on the various stages of consent decree procedures, including the process by which proposed settlements are entered as a court decree by judicial action. . . .Various abuses in consent decree procedures by the Antitrust Division and by district courts are, however, sought to be remedied as a matter of priority since as the Senate Report on the bill, Senate Report No. 93-208[[2]], aptly observed, "by definition antitrust violators wield great influence and economic power."
House Judiciary Committee Report No. 93-1463 (October 11, 1974), 1974 U.S.C.C.A.N. 6535, 6536-37.[3]
I. LIMITED INTERVENTION FOR APPEAL
HyperLaw initially seeks intervention in this matter for limited purpose of appeal. As an amicus curiae in this case, HyperLaw is mindful of the fact that this Court's decision of December 23, 1996 did completely deny the proposed consent decree, and in so doing, did address certain inherently anti-competitive effects that are of significant concern to the public and smaller legal publishers.
Nonetheless, HyperLaw believes that decision reflected a view of the Court's latitude to act that is erroneously constricted[4], and failed to require full compliance by the parties with the Tunney Act. Now, the Joint Status Report of Defendants, dated January 28, 1997, demonstrates the disastrous practical effects of the two inherent flaws in the Court's opinion:
Although the Court has not allowed the consent decree, it has allowed the parties a means to move forward in some sort of hybrid proceeding. In doing so, the Court apparently did finally decide certain matters relating to procedure, notice and disclosure under the Tunney Act. These are, however, not simply procedural niceties—they contain the means to allow the public and the smaller competitors in the industry to know what is truly happening. The Court stated:
Amicus curiae Hyper Law, Inc., requested the Court to require disclosure of more documents by the government, including previously undisclosed investigative documents, and further publication in the Federal Register before the decree is approved, as well as certain modifications to the decree. There is, however, nothing in the statute or in the case law that requires additional disclosure of documents or further publication and opportunity for comment. Furthermore, since the enactment of the Tunney Act no Court has required the United States to disclose its investigatory files as a condition for approving a decree. Cf. United States v. Microsoft Corp., 56 F.3d at 1459.
United States Of America, et al. v. The Thomson Corporation and West Publishing Company, 1996 U.S. Dist. Lexis 19197, 22 (fn. 7) (D.D.C. 1996). Regardless of the finality of the approval of the consent, as these issues will be outside of the reach of review at the end of 60 days after the Court's opinion, HyperLaw seeks leave to intervene pursuant to Rule 24(b)(2) for the purpose of appeal. This leave is within the discretion of the Court as the Antitrust Procedures and Penalties Act, 15 U.S.C. 16(b—h), does not provide for intervention as matter of right, and because intervention is left by 16(f) to the discretion of court. United States v American Tel. & Tel. Co., 552 F Supp. 131 (D.D.C. 1982) affirmed 460 U.S. 1001, 75 L.Ed.2d 472, 103 S.Ct. 1240.
HyperLaw submits that the issue before the Court was not solely requiring "the United States to disclose its investigatory files as a condition for approving a decree." Rather the issue is the minimal level of disclosure of industry controlling necessary under the Tunney Act—regardless of how "secret" a party may feel the documents are.
Thus, HyperLaw respectfully submits that the Court erred as a matter of law, and that the effects of that error are now being magnified by the actions of West/Thomson and Lexis/Reed-Elsevier.[5] Moreover, HyperLaw submits that the Court failed to address the failure of the parties to satisfy mandatory statutory procedural requirements—which the Court cannot, and should not waive—most particularly in this case of national importance.
Even within the close confines of the Microsoft decision, this Court did not require statutorily mandated notice and disclosure (which would allow meaningful comment.) As the running metamorphosis[6]of the proposed final decree demonstrates, this error makes it impossible for the public to understand the situation, and for the Court to know what it is being asked to approve. This case is rapidly becoming a "poster child" for the reasons the Tunney Act exists, and why overly narrow construction of the statute works against meaningful understanding of potentially predatory and disastrous back room deals.
1. EVEN WITHIN THE COURT'S INTERPRETATION OF
MICROSOFT, THERE HAS BEEN INADEQUATE
NOTICE AND DISCLOSURE, RESULTING IN INSUFFICIENT COMMENT
HyperLaw believes that the Court's failure to require revised notice and disclosure of documents, as required by the Tunney Act, impairs the public's rights under the Act.[7] This has been exacerbated by the apparent position of the Justice Department (although even that remains to be seen) that the most recent round of controlling documents are likewise unimportant to an understanding of what is happening.[8] Now instead of a resolution which draws on and extends two sets[9]of secret, industry controlling documents—the Court is confronted with three sets—and is being asked to disregard all three. This was not the intent of the Tunney Act
The added language expresses, further, the intentions of not replacing one mechanical procedure with another of similar nature, of emphasizing the truism that in examining proposals of settlements of particular cases, case by case judicial scrutiny is necessary; and, of insuring that in remedying the abuse of judicial rubber stamping of proposed consent decrees, flexible judicial procedures evolve
Language is added to Section 2(g) of the bill to insure that no loopholes exist in the obligation to disclose all lobbying contacts made by defendants in antitrust cases culminating in a proposal for a consent decree. . .
House Judiciary Committee Report No. 93-1463 (October 11, 1974), 1974 U.S.C.C.A.N. 6535, 6543. It is telling that just one week ago, HyperLaw wrote the following with regard to what this Court and the public do and do not know:
Indeed, those disclosure provisions are especially important in a situation such as this one where the final transaction that may be approved by the Court is going to be substantially different than the original proposed decree of June, 1996. HyperLaw suggests that the public reaction to the original announcement of 1996 proposed decree had stated what now appears to be the arrangement. That is, that :
Thomson and West will transfer all of the divested products to Reed Elsevier (Lexis-Nexis) now the second largest legal publisher. Smaller publishers will be unable to bid on any single divested products. Thomson and West will seek approval of the court of a mutual anti-trust release. All basic operative documents will be either filed under seal, or withheld from the Court.[10]
In the recent January 28, 1997 submission, the Joint Status Report of Defendant Thomson and West and Amicus Curiae Reed Elsevier (Lexis-Nexis), it appears that West (Thomson) and Lexis (Reed Elsevier) are seeking to obtain the blessing of a federal court to an anti-competitive arrangement.
Now, in 1997, Reed Elsevier and Thomson state in their Joint Status Report:In conjunction with the Definitive Agreements, the parties also agreed on a form of mutual antitrust release to be executed by both parties at the closing of the Definitive Agreements (the "Closing").
HyperLaw's (first, unamended) Motion for Leave to Intervene, February 5, 1997. Since the situation has worsened by an order of magnitude. There has been yet another completely new description of what it is that the parties intend, what the license agreements will do, how the present form will be changed to meet new concerns and how this will (or will not) affect the industry. The Court and counsel present will get a week or two to consider these complete changes—the public and smaller publishers will get no meaningful opportunity whatsoever. This will be over before the transcript of that conference is even available![11]
Counsel for Thomson and Reed Elsevier, in bringing the anti-trust release to the Court, are simply seeking the Court's blessing of their back-room deal, which appears to be merely a renegotiation of their prior 1988 and 1996 back-room deals.
This Court must take notice of the fact, or allow HyperLaw to place before the Court, the facts of the 1988 fiasco—so that it will not be repeated. In 1988, what is now Thomson/West had their original agreement with what is now Lexis/Reed-Elsevier similarly blessed (out of the public eye) by a Minnesota federal district court which permitted them to share the on-line legal market to the exclusion of all others with respect to star-pagination and the text of legal opinions and statutes[12].
In short, HyperLaw submits that this Court is being hoodwinked into approving something that it cannot even begin to understand, in light of the paucity of information it has been given by the parties. And if the Court is ignorant of these things, the public is far behind—the public doesn't even know what the issues are, much less the facts relating to those issues.
In the instant case, there are now several new agreements as well as several new, major portions of the consent decree between both the government and the parties, and between Thomson/West and Lexis/Reed-Elsevier—not the subject of any public notice or comment. There have been no hearings, no examinations, no gathering and testing of evidence before the public. There has not even been an assertion by the DOJ that it understands the possible effects of these new schemes. HyperLaw does not believe that the intent of Congress, expressed in the Tunney Act, will be served in any way by having a federal district court once again preside over an secret market splitting agreement which apparently continues forward the original 1988 agreement.
Unstudied application of Microsoft which does not take into account that Microsoft's facts are not these facts is offensive. In a sense, that case does not apply here—or more accurately, the Microsoft ruling is limited to a set of facts which may not always be present [13] —and when those facts are not present, there must be either an exception to (or a refinement of) Microsoft. If any case calls for that interpretation or refinement it is this one.
Microsoft does not anticipate a three-giant, controlled industry becoming a two-giant industry where, as is the case here, 100% of the entire on-line market would be shared by those contracting two entities—and where the Justice Department simply refuses to release any of the relevant information.[14] What could have been the meaning of the Tunney Act if both the Court and the public can be kept completely in the dark? The legislative history of the Tunney Act is critical here:
Testimony of Hon. J. Skelly Wright, before the Subcommittee on Antitrust and Monopoly of the Committee on the Judiciary, April 5, 1973.
The mutual antitrust release between Thomson/West and Lexis/Reed Elsevier merely underscores the problem. The Court has stated in its opinion that there are additional points not reachable by this Court which others will have to pursue in other forums and at other times. However, additional action by the Court is mandated even under this restrictive reading of the statute.[15]
First, even within the confines of Microsoft, the Court can allow HyperLaw to appeal the lack of notice and non-disclosure of documents basic to the consent decree.
Second, and most critical, the Court must make it clear in any decision reached that in approving a revised form of the consent agreement, the Court is in no way expressing an opinion that the new arrangements between Thomson and Reed Elsevier are not themselves violative of the anti-trust laws.
Third, the license wasn't in the complaint, and it shouldn't be in the decree.
Fourth, the issues that underlay the license have been decided by the decision in the Southern District of New York, and an effort to re-litigate them here is begging for more delay and obfuscation by the Defendants.
STANDARD OF LAW As set forth so clearly in the Memorandum of Lexis-Nexis in Support of its Renewed Motion for Leave to Intervene Under Rule 24(b)(2), there are four grounds for such an intervention:
Each of these points is discussed in detail at pages 2-11 of the referenced memorandum, and those arguments are renewed here—as it seems quite unlikely that Lexis-Nexis will continue to champion the concerns for the public's rights now that it has successfully renegotiated its position within the cartel. HyperLaw briefly discusses each of these points.
The Tunney Act embodies the concept of "meaningful public comment".[16] Now that Lexis is removed as a disinterested critic (or at least a sufficiently powerful critic) of these proceedings, HyperLaw asks to be allowed to do what it has done throughout—to argue on appeal that for any public comment to be "meaningful", there must be public notice of a significantly changed decree and disclosure of the central, industry controlling agreements between the major players.[17] In addition, HyperLaw should be allowed to appeal the assumptions about the strictures of Microsoft which it believes are not applicable here.
Shortly after the Government filed its antitrust complaint in June 1996, defendants Thomson Corporation and West Publishing Company consummated their merger. Now Thomson/West intends to divest solely to Lexis/Reed Elsevier, the other party to the secret 1988 agreements. This comes despite the fact that both this Court and Judge Martin in the Southern District of New York have expressed severe reservations about the copyright rights which constitute the underpinnings of those agreements—questionable legal claims of copyright which do not survive in the post-Feist era..
B. LACK OF NOTICE & DISCLOSURE; -- FACTS
HyperLaw asked the Court to assure that the specific statutory requirements of the Tunney Act be met. HyperLaw's letter to DOJ dated October 10, 1996, which was Exhibit J to its amicus brief, sets forth the several ways in which the Act's requirements have not been met. In its amicus brief, HyperLaw noted
Thomson/West has now enhanced and extended the secret agreements as a part of the "divestiture". They, along with their partners in the control of the legal on-line research industry, Lexis/Reed-Elsevier, now want this Court to provide a determination which will effectively provide an eternal lock on this information.
More to the point, however, is the fact that by not requiring disclosure of the industry controlling documents as specifically mandated in the Tunney Act, the Court has seriously compromised the ability of anyone to intelligently understand the situation. There can be no effective review or opposition to the matters before the Court if the Act's disclosure provisions are effectively negated. There can be no "meaningful public comment".
As set forth in detail below, West and the next largest legal publisher, Lexis, had entered into the secret 1988 cross-licensing agreements with West—agreements which created the copyright equivalent of a clandestine "patent pool"—giving Lexis access to the West citations and text to both case law and statutes, and (it appears) vice versa.[20] They are the only real competitors in the on-line legal research market, and they have a deal. Together they control almost 100% of that market. Somehow the prices of legal research are more than quadruple the cost of other, similar proprietary databases. The merger has the undeniable result of significantly expanding this copyright cartel to include the other large legal publisher, Thomson. The result is that, in the post-merger period, even without the problem presented by the license proposal, West, Thomson, and Lexis will be able to use the intellectual property pool to the virtual exclusion of all other legal publishers. The cost of this to the public is staggering. Now West/Thomson and Lexis/Reed Elsevier have played musical chairs. The cartel is as strong as ever, and this Court is being asked to approve a divestiture and possibly other agreements when the public cannot even begin to understand the true relationships here. This is the exact reason for the Tunney Act disclosure provisions. If this is not the exact situation anticipated, it is difficult to imagine what would be.
The statute not only allows the Court to require disclosure, it mandates such a disclosure. The parties themselves made constant reference before this Court—to these as critical, central documents. HyperLaw described the many references to these 1988 agreements made in connection to the proposed consent decree—and provides (below) an analysis of the probable contents of these agreements.[21] For the reasons set forth in the unsealing motion papers that HyperLaw sought to file in the United States District Court, District of Minnesota, it is in the public interest that the Court require these 1988 agreements to be made public. (HyperLaw did not file this motion because West advised HyperLaw that the agreements are not in the possession of the Minnesota court that apparently still supervises the operation of the major industry players under these agreements.[22] Further, the docket sheets in these matters do not reflect that the agreements were ever actually filed with the Court.[23])
C. LACK OF COMMENT & DISCLOSURE&EMDASH;
The Tunney Act requires that the DOJ provide access to certain documents.
This should include, but certainly not be limited to: (a) the 1988 agreements between West and Lexis, (b) a readable copy of the March 1996 agreement and accompanying letters between Thomson and Lexis (filed in D.C. action in illegible form by Mr. Harris), (c) the new agreements and anti-trust waiver, and (4) any documents reflecting the market impact of such agreements. See United States v Central Contracting Co., 537 F Supp 571 (E.D.Va. 1982) (Court cannot countenance plaintiff's claim that though Congress enacted sunshine legislation, courts may blandly accept government certification in case after case that no documents or materials, by themselves or in aggregate, led to determination by government that it should enter into consent decree.)
House Judiciary Committee Report No. 93-1463 (October 11, 1974), 1974 U.S.C.C.A.N. 6535, 6537. (The Court's attention is directed to the discussion of what abuses led to the sunshine requirements, why the notice and disclosure provisions are critical, and, most particulalrly, how this case reflects the worst of exactly what the Tunney Act was designed to address. This discussion appears at pages 6536-6543. This was in no way affected by the Microsoft decision which is about latitude in determination, not latitutde in effectuating the notice, disclosure and comment requirements.)
DOJ did not contradict the fundamental point made in HyperLaw's papers that DOJ has not complied with either the publication or the document disclosure requirements of the Tunney Act. The Tunney Act requires disclosure of certain documents. These documents have been referred to repeatedly by the parties in making their arguments.
This absolutely requires that the DOJ make public documents that were considered central in formulating the proposal. Moreover, DOJ's opposition was completely silent on this point.[24] The opposition offered no suggestion as to how soon the government expects to comply with this requirement.
II. PUBLICATION
The DOJ was also required to:
It must publish a " summary of the terms of the proposal for the consent judgment" as they actually are. There were significant changes. The assertion by DOJ that since these several changes had "been in the favor of the public" evaded the statutory purpose of the publication requirement: DOJ does not get to decide for us what is "good for us". The law was written to avoid just this attitude. Even if the DOJ were neutral, even if it did believe that these changes were "good for us", the law was specifically written to allow the public to decide what is and is not good for it.
Specifically, with respect to the publication requirement, DOJ's opposition to HyperLaw's papers downplays the importance of the requirement but does state that publication of the comments and the DOJ response "should be completed soon." Until it is published, with the present information, the statutory requirements have not been met and—even this is rushed to judgment—any order obtained will be void ab initio.
HyperLaw believes that it must have access to the "subsection b" documents before there can be an informed judgment as to whether the proposal (or any subsequent modifications the parties may not put before the Court) is in the public interest. (This should include, but certainly not be limited to: (a) the 1988 agreements between West and Lexis, and, (b) a readable copy of the March 1996 agreement and accompanying letters between Thomson and Lexis— instead of the unsigned version filed in this action in illegible form by Thomson, as part of the Harris Affidavit.)[25]
In 1988, West Publishing Company and Mead Data Central (the former owner of Lexis) entered into agreements to settle litigation between the companies. The settlement agreements did not just settle the well-known West v. Mead action, but also settled two other actions between the companies. These agreements, which have effectively controlled all of the on-line legal research portion of the industry[27]and much of the print portion, are described as follows by Professors Patterson and Joyce[28]in the seminal article Monopolizing the Law: The Scope of Copyright Protection for Law Reports and Statutory Compilations, 36 UCLA Law Review 719 (1989):
Id., 720, n. 1. See also description of license agreement at 722, n. 6.
The docket sheets in these matters, which describe the agreements similarly, do not indicate that the Minnesota District Court considered whether it was appropriate that these agreements be confidential. Moreover, there is no entry to show that the agreements were filed in court, notwithstanding that the court retained jurisdiction to supervise the agreements. Subsequent docket entries show the court did supervise settlement enforcement—although any docket entries simply end. West has expressly told HyperLaw that although the court in Minnesota "supervises" the agreements, there is no copy of the agreements that can be obtained, because even the court does not have copies!
The 1988 secret agreements are featured prominently in the papers filed by DOJ and the other two members of the big three in this action. These agreements are mentioned frequently both in filings with the Court and out-of-court statements. These statements establish that the government relied on these documents in its investigation and in framing the proposed relief. Some examples may refresh your recollection of the repeated reference to, and reliance on these documents.
Lexis-Nexis' Motion to Intervene and Opposition to the Entry of the Proposed Final Judgment mentions the agreements several times. In an August 30, 1996 letter from the General Counsel of The Thomson Corporation to the General Counsel of Reed-Elsevier, Thomson states:
Letter, dated August 30, 1996, from Michael S. Harris to Louis Andreozzi, attached as Exhibit D to Declaration of Michael A. Jacobs filed in support of Lexis-Nexis Motion to Intervene. (The reference to the definition of on-line suggest that Lexis cannot use star-pagination on the Internet, because the Internet is not encompassed within the "on-line" definition in the original agreement. The reference to VERALEX is interesting because VERALEX had been a Lawyers Cooperative product, using data obtained from Lexis. This sentence establishes the existence of at least one pre-existing connection between Thomson and the 1988 secret agreements. See below.)
The same Lexis-Nexis motion includes a letter dated August 8, 1996, from Michael Jacobs, General Deputy Counsel of Lexis-Nexis to Edward A. Freidland, Esq. of the Thomson Corporation:
The August 29, 1996, comments of Lexis-Nexis to the Government (Tab 1 to Lexis' Motion to Intervene) states on Page 10 "The Department claims that Lexis-Nexis' current license fee is 17 cents per thousand characters. That is not correct." The letter continues:
Id. at 11. Furthermore, the comment letter documents in its footnote public discussion of the 1988 agreements by the Government and by Thomson in various newspaper articles, and, provides those articles to this court. Id. at 11, n. 10. These comments were made by not only the Government, but by Thomson and West.
John E. Morris, How West Was Won, The American Lawyer, September 1996 at 81."
Michael S. Harris, General Counsel of Thomson, states in his September 23, 1996 Declaration filed with this Court:
Not only did HyperLaw repeatedly bring the existence of the 1988 license agreements to the attention of the Department of Justice from February 1996 on, but so did Lexis. Indeed, according to the Declaration of Michael A Jacobs dated September 11, 1996, Lexis provided a copy of this agreement to the Government during its investigation.
In Microsoft, the Court determined that Judge Sporkin had somehow penetrated the outer boundaries of what a Judge should do in second-guessing the Justice Department, and in so doing, intruded into territory reserved to the government. That assumes a first guessing by DOJ. However, that is not be the case here. This Court's December 23, 1996 decision tacitly assumed that Microsoft stands for the proposition that any order submitted to the Court for approval must be given the deference described in Microsoft. That is not the case. What Microsoft stands for is the proposition that a properly investigated and noticed consent decree presented by Justice should be given a certain amount of deference. Even if there once was, there is no such consent decree before this Court any longer. And in the absence of a specific consent decree being on the table, one which the Justice Department can certify it has investigated and noticed within the requirements of the Tunney Act, the Court's discretion is considerably less restricted.
In other words, HyperLaw does not suggest that the Court expand its inquiry, the comment requirements or disclosure with regard to a consent decree which had been through the Tunney Act process, and which had then been brought before the Court by the parties—for there was no such decree by December 23, 1996. And that is even more true now.
Even if there arguably was such a decree, that consent decree never made it to the Court's December 23rd decision. And in any case, that decree was rejected. Now, certainly, it no longer exists.
What was before the Court on December 23rd was not investigated, made subject to comment and then proposed to this Court by the Justice Department. To the extent that the Court found there was adequate notice, comment and disclosure with regard to that document, the Court erred. That should be appealed, but that is now over.
To make the same mistake with regard to the present document would be to totally eviscerate the Tunney Act. The present proposal was not investigated, noticed, or made subject to comment, and it has not even been placed before this Court by Justice.
In the past this Court has been told, and has accepted the concept that "minor" modifications to an already reviewed consent decree would not trigger Tunney Act notice and comment requirements. HyperLaw continue to believe that the Court's perception of what it could inquire into to determine whether the changes were minor, or whether there was effectively a completely new proposal was incorrect. But that point is now moot—again, because there is no longer any such document. What is now before the Court is the present proposal.
As the Court itself has pointed out, the present submission by the defendants (not by the parties, but by the defendants) has radically changed.
Thus, another, completely new issue is before the Court:
Certainly if, after the Court's rejection of the decree, the parties had come back to the Court and had all stated that they had talked about this and were going to alter the decree to form a pool of the interested defendants to completely control the market to a disadvantage of competitors, and which would force smaller competitors out of business, this would be a sufficient change to mandate new notice and comment. Wait a minute. . . that is what they have done. The only question is how far must they go before the extant document is no longer the document which has gone through the Tunney Act process. This requires three lines of inquiry by the Court.
First, the Court can investigate (and allow participation) to any extent necessary to determine what the new agreement actually says or means. It cannot rule on something it does not understand. Microsoft clearly does not limit this.
Second, the Court can determine whether Justice has any knowledge of (or any degree of certainty about) the potential effects of this entirely new decree which can be carried over from, or inferred from the original. The Court is not stopped in this inquiry.
And third, the Court can certainly take testimony, allow inquiry, and demand notice and disclosure if it is determined that this is not substantially the same decree as was originally vetted.
This is not even arguably the same decree. A simple comparison of what the court is being asked to approve and the original notice demonstrates this.
Defendants argue that this will take time.[29] They argue that the Court is duty bound to issue quick decisions in this case. One need only turn again to the legislative history to know that the exact opposite was contemplated in just this type of nationally important, contested situation.
Testimony of Hon. J. Skelly Wright, before the Subcommittee on Antitrust and Monopoly of the Committee on the Judiciary, April 5, 1973. In making these comments, Judge Wright carefully delimited his later, personal, remarks from these comments—which were a direct expression of the views of the Judicial Conference, which had proposed the changes. The complaint by Judge Wright, and the intent of the Congress was to avoid the fact that "it was fair to say that courts 'rubber stamped' proposed consent decrees." Id.
Id.
If the Court of Appeals did intend the result this Court believes, that Court's interpretation of the Tunney Act extended beyond the issue actually before the Court—and was hypothecation and dicta. The Court of Appeals' decision is incorrect to the extent it purports to allow what is occurring here.
II. NO INQUIRY DESPITE EXTENSIVE SUBSEQUENT,
POST-COMMENT MODIFICATION
Moreover, if the Court of Appeals actually intended to say that merely asking for notice and comment for any document immunized all subsequent submissions by the same parties from further scrutiny, that too was dicta—as it was not before that Court. Such a ruling would have disastrous effects. Parties will be able to fully and completely avoid the Tunney Act by simply putting a watered down, incomplete version of the final out for comment. As any revision would be allowed without re-notice or re-approval, and they could then do absolutely anything they wished. No matter how outrageous, how neglectful, how abusive, or how just plain lazy Justice might be in a particular case—the Court would have to accept that the initial notice and comment was sufficient as to all subsequent versions.
At this point we have returned to the pre-Tunney Act "rubber stamp" that Judge Wright and the Congress acted to avoid.
III. DISCLOSURE CERTIFICATION WHICH INSULTS THE INTELLIGENCE
Finally, if the Court of Appeals intended to create a complete carte blanche for the Justice Department, one in which it can repeatedly refer to central, critical, and finally determinative documents in virtually every pleading filed, state that it is making its decisions completely or principally on those specific documents, and then certify that there are no such documents, the court completely went beyond the facts presented there—and in doing so miscomprehended the congressional intent in the Tunney Act.
To have the Justice Department and the parties repeatedly discuss the 1988, 1996 and now the 1997 documents as being the controlling documents in pleadings and to then certify that there were no critical documents truly makes an ass of the law. Trying to convince the public that this is what the Tunney Act intended despite detailed provisions and an extensive congressional history is not only incorrect, it is offensive.
At least one court has stated that this is too much. At least one court stated that there is a limit to the fantasy it would accept. United States v Central Contracting Co., 537 F Supp 571 (E.D.Va. 1982). HyperLaw strongly urges the Court to review that decision, and attempt to find any meaning in the "sunshine legislation" of the Tunney act in the face of being asked to "blandly accept government certification" that the emperor does in fact have clothes on—and that they are wonderful, magnificent ones. This Court is now fully aware of at least the existence. if not the content, of certain documents, and is fully aware of their critical importance in this case. Moreover, the Court must be aware of the extent to which this newest proposal is being advanced in the belief that the Court will continue to consider it substantially the same consent decree that was originally vetted—which it is not.
To allow the government, which was so embarrassed that it originally would not come into Court and support the proposal, to do this is to mock the public.
To refuse to enforce the Tunney Act under these facts would be an error of law, and for the Court of Appeals decision to be read to require an error of law, it is dicta, and would be determined to be an error of law if considered in light of actual facts rather than in the hypothetical.
II. INTERVENTION AS A PARTY
HyperLaw respectfully submits that it should be allowed to participate in this action for the purpose of taking a very limited course of pre-determination discovery, and an expedited analysis of industry effects. This could be accomplished in a week.
HyperLaw is in a unique position among all possible intervenors to provide a speedy and highly directed effort: (1) it has extensive knowledge of the issue of pagination copyright claims and the underlying facts relating to the license at issue, as it has successfully litigated against Thomson/West on this identical matter in the Southern District of New York; (2) HyperLaw is a small publisher and offers the Court a fundamentally different perspective on the issues presented, particularly as the public's interest might be involved or compromised; and (3) HyperLaw has proven itself, in prior submissions to the Court, to be well informed, and legally competent to quickly and concisely obtain and submit the requisite information and arguments.
As an alternative, HyperLaw would request intervention as a party for an even more limited one day hearing before the Court.
In the alternative, HyperLaw would request limited intervention for an even more limited one-half hour (each) examination of representatives of West, Thomson, Lexis, Reed-Elsevier and the Department of Justice. Certainly a total of two hours cannot be considered such a delay as to weigh against the rights of the public.
III. CONCLUSION
For the foregoing reasons, HyperLaw respectfully asks that the Court grant its motion to intervene: (1) for the limited purpose of appeal[30], or (2) in the alternative, as a party—for the purpose of taking limited pre-determination discovery, and an expedited analysis of industry effects
DATED: February 12, 1997
RESPECTFULLY SUBMITTED,
______________________________________
EXHIBITS FILED BY HYPERLAW PRIOR TO THE AMICUS BRIEF
WHICH ARE INCORPORATED BY REFERENCE HEREIN
Exhibit 1 Opinion dated August 5, 1996, Matthew Bender & Company and HyperLaw v. West.
Exhibit 2 Excerpt from Docket Sheet, West Publishing Company v. Mead Data Central, Inc., 4-85-931, United States District Court, District of Minnesota.
Exhibit 3 Article, How West Was Won, American Lawyer, September, 1996.
HyperLaw Exhibit A HyperLaw Motion For Summary Judgment, Matthew Bender & Company Inc. and HyperLaw v. West Publishing Company.
HyperLaw Exhibit B- Letters, from HyperLaw to Attorney General Reno and Lawrence Fullerton dated September 26, 1996 re amicus brief.
EXHIBITS FILED AS A BINDER WITH THE AMICUS BRIEF
HyperLaw Exhibit C Affidavit of Kendall F. Svengallis dated October 7, 1996.
HyperLaw Exhibit D Advertisement, "Only a select few can discuss the specifics of a case with each other", Lawyers Cooperative Publishing Advertisement, Law Technology Product News, September 1994.
HyperLaw Exhibit E Complaint, Mead Data Central, Inc. v. West Publishing Company, 76-Civ. 3618 W.C.C., United States District Court, Southern District of New York, August 16, 1976 (Antitrust including FLITE and JURIS and spurious copyright claims to text of court opinions.)
HyperLaw Exhibit F Complaint, Mead Data Central, Inc. v. West Publishing Company, C-3-87-426, United States District Court, Southern District of Ohio, August 18, 1987. (Antitrust including control of statutes and opinions, FLITE and JURIS, Fifth and Eleventh Circuits, spurious copyright claims to text of court opinions.)
HyperLaw Exhibit G Docket Sheet, West Publishing Company v. Mead Data Central, Inc., 4-85-931, United States District Court, District of Minnesota.
HyperLaw Exhibit H Docket Sheet, West Publishing Company v. Mead Corporation, Mead Data Central, Inc., Civ. 4-88-142, United States District Court, District of Minnesota.
HyperLaw Exhibit I Complaint, West Publishing Company v. Mead Corporation, Mead Data Central, Inc., Civ. 4-88-142, United States District Court, District of Minnesota, February 22, 1988. (Antitrust relating to Lexis exclusive access to regulatory material and copyright infringement for copying from West reporters.)
HyperLaw Exhibit J Letter, dated October 10, 1996, from Carl J. Hartmann, counsel for HyperLaw, to Craig Conrath, Esq. re disclosure of documents.
HyperLaw Exhibit K Letter, dated March 13, 1995, from Carl J. Hartmann to Joseph Musilek, counsel for West, confirming, inter alia, that a copy of the 1988 settlement agreements were not in the possession of the Minnesota United States District Court supervising the settlement.
HyperLaw Exhibit L Draft Motion to Intervene in Minnesota United States District Court, re unsealing by HyperLaw describing facts surrounding the 1988 settlement agreements.
HyperLaw Exhibit M Letter Dated October 3, 1996 from Joel I. Klein, Deputy Assistant Attorney General to Alan D. Sugarman declining to file an amicus brief in Matthew Bender and HyperLaw v. West in support of HyperLaw's motion for a determination that West copyrights are not infringed when a competing publisher keys-in and publishes the text of court opinions from a West case reporter, but does not key-in the West headnotes and syllabi.
HyperLaw Exhibit N HyperLaw Comment Letters Filed Under the Tunney Act with United States Department of Justice, N-1 June 26, 1996 to Assistant Attorney General Anne Bingaman (not in comment letters filed by DOJ), N-2 June 26, 1996 to Craig Conrath, N-3 June 28, 1996 to Craig Conrath, N-4 September 3, 1996 to Craig Conrath.
HyperLaw Exhibit O Tax Analysts' Memorandum in Support of Motion For Reconsideration of Leave to Participate As Amicus Curiae
I hereby certify that on February 12, 1997, I caused true and accurate copies of HyperLaw's Motion, Memorandum and Proposed Notice of Appeal to be served on the following counsel by Federal Express for delivery on February 13, 1997.
_______________________________
[1] Appeal of certain Tunney Act issues decided in the Court's opinion of December 23, 1996.
[2] The Senate Report is discussed in greater detail below.
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[3] Under the heading "Consent Decree procedures".
[4] HyperLaw respectfully submits that this Court is overreading Microsoft's restriction on the Court's authority in Tunney Act proceedings—and that, in turn, the Court of Appeals' decision was excessively broad in scope considering the actual facts of that case, and represented dicta to the extent that it might be applied rigidly here. If, as it seems to be, the Government and Defendants in this case maintain that there can be functional abrogation of the disclosure, comment, and judicial review provisions of the statute, the Court of Appeals must be called upon to clarify its decision in light of these specific facts—perhaps leading to an opportunity for higher courts to explain why Congress would pass a virtually meaningless statute. HyperLaw believes that every word of the legislative history, discussed below, clearly demonstrates that Congress never intended such a "toothless" statute.
[5] Having already avoided any significant disclosure, the Defendants have sold the divestiture assets to the company with whom they already have one set of secret agreements relating to this market, and now seeks to have the Court put its imprimatur on yet another such agreement.
[6] It is doubtful that anyone (including the Court) understood the original disclosures and descriptions of the "resolution" to include approval of a sale of assets by one giant, in toto, to another under the cover of a barely described "mutual antitrust release"—once again without the ability to consider the actual outlines of the deals involved. At the very least, the public and interested publishers should have a minute opportunity to understand the affair and to state how they feel this will completely change an industry.
[7] The Court's decision in this regard compounded the impact of the Department of Justice's conclusory declaration that it had consulted no critical documents which were subject to the disclosure provisions of the Tunney Act. The sum of these two positions was the abandonment of the public interest concerns that were built into the specific requirements of the Tunney Act.
[8] In effect, what is occurring is that the Defendants and the Justice Department are able to openly discuss secret documents, making it clear that they are the central and critical documents in the decisions being made—even discussing what they allegedly do and do not do—and then swear in court documents that these are not critical to their consideration of the case under the Tunney Act. This reduces the Court understanding, its involvement, and the protection of the public embodied in the Tunney Act to a joke.
[9] The secret 1988 agreements which have been administered, at least in part, in secret, out-of-the country meetings—and by off-the-docket court "supervision" of another secret "settlement" where the Court purportedly does not even have a copy of the document being enforced, and thus there can be no motion for unsealing! As set forth in Section II below, leave to intervene to allow a mere two hour deposition of each of the other parties, even if it is initially in camera, would allow this Court the knowledge it really needs to understand the level of industry control it is being asked to endorse blindly. HyperLaw believe the Court would then determine that it was in the public's interest to have that information opened on the record.
[10] The changes from the proposed consent decree are not the only remarkable shift that has occurred in this transaction. A relatively short time ago, West Publishing Company was warning that it was contrary to the public interest to have "American law" in the hands of a foreign publisher. And, Thomson Publishing was testifying before Congress that the West copyright claims were contrary to the public interest. Now, Thomson is defending those same claims, and West is proclaiming the public interest is served by a settlement arrangement which divides the publishing of "American law" between two very large foreign-owned publishers. And, throughout this, the Tunney Act notwithstanding, the Department of Justice asserts that it would be contrary to the public interest to disclose the documents in which the terms of the arrangement between those two large, (and as West would have noted) foreign entities who will control much of U.S. law are set forth..
[11] For example, in open court (for the first time) it was revealed how highly concentrated this industry is. Other than West/Thomson and Lexis/Reed-Elsevier (which control 99% of the on-line market) only three other companies were represented to have sales in excess of just $25 million — CCH, BNA and Matthew Bender. But DOJ did not disclose this degree of concentration to the public or the Court previously. In fact, DOJ did not disclose the sales or HHI figure as to the divested products—although HyperLaw and other have maintained that West/Thomson has loaded the divestiture products with "dogs". Now, in open court, Thomson's counsel admitted that these were "weak products". This confirmed what was suspected, but could not be demonstrated because DOJ played keep-away with the basic facts relating to the sales of the product to be divested.
[12] This was done off-record, is administered off-record, and the supervising court, as would be the case here, does not even have a copy of what it allegedly supervises. HyperLaw once again insists that it is a error of law for this Court to determine that Microsoft does not allow it to at least consider the existence of those agreements, how they came into being, how they were not reported on dockets, how they were supervised under the oddest of circumstances, how they were maintained by extra-territorial meetings: and most importantly—how they are being incorporated into the present deals and consent decree. HyperLaw is not referring to 'implicit' or 'effective' incorporation, rather, it refers to actual, specific, hard text incorporation.
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[13] Could a Judge's range of review be so limited that it could not fully determine whether the Department of Justice's actions were either in bad faith or simply negligent? Would the Court have the latitude to determine those things? If these types of inquiries are constrained, the Court truly is just a rubber stamp, and Your Honor should simply sign off on this and avoid a further waste of the time and attention of HyperLaw, the public, and other small publishers.
[14] This doesn't even begin to get into the vagueness of the actual meaning of what has been supplied. As just one example, does the license agreement that is proposed create a cut-off for companies with $25 Million sales, $25 Million in sales in legal markets, or $25 Million in sales of caselaw related publications? Does this cover the National Law Journal? Does it cover Counsel Connect/American Lawyer. Justice said that it only covered three major publishers—so what does it think the submission means. Where are the financial analyses of these effects—where are the HHI's relative to these markets? What is this deal even about at its most basic levels?
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[15] In section 2, below, HyperLaw discusses why: (a) this Court's reading of Microsoft is unnecessarily restrictive, or in the alternative, the Court of Appeals decision is either inapplicable or simply wrong when applied here.
[16] There must be disclosure of "a list of the materials and documents under subsection (b) which the United States shall make available for purposes of meaningful public comment, and the place where such materials and documents are available for public inspection."
[17] Unless the Court allows such intervention, there can be no appeal of the matters herein by HyperLaw or any other person or entity seeking to act for the interests of the general public and small competitors. See generally, United States v LTV Corp.
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[18] For a description the effect of the 1988 industry controlling documents, see HyperLaw Exhibit K to its Amicus Brief, Letter Dated March 13, 1995 from Carl J. Hartmann to Joseph Musilek, counsel for West. These documents are discussed in more detail, infra.
[19] See Page 5 of the Government's October 15, 1996 reply to the motion submitted by Tax Analysts.
[20] HyperLaw had raised the issue of the 1988 secret agreements in its June 26, 1996 comment letter to DOJ (HyperLaw Amicus Brief, Exhibit N-2). The Government did not provide an answer to these issues in its Response. The 1988 agreements were raised again in paragraphs 9 et seq. of its Amicus Curiae Motion of September 12, 1996. The Government did not respond at all to HyperLaw's Motion.
[21] See HyperLaw Exhibit J to its Amicus Brief, Letter Dated October 10, 1996 from Carl J. Hartmann, counsel for HyperLaw, to Craig Conrath, Esq.
[22] See HyperLaw Exhibit K to its Amicus Brief, Letter Dated March 13, 1995, from Carl J. Hartmann to Joseph Musilek, counsel for West.
[23] See HyperLaw Exhibit G to its Amicus Brief, the Court's Docket Sheet, West Publishing Company v. Mead Data Central, Inc., 4-85-931, United States District Court, District of Minnesota; HyperLaw Exhibit H to its Amicus Brief, Docket Sheet, West Publishing Company v. Mead Corporation, Mead Data Central, Inc., Civ. 4-88-142, United States District Court, District of Minnesota.
[24] [25]
DOJ's own representations to the Court of an exhaustive investigation do not comport with its representation that there are no such documents—none, not even one. This is not a discretionary item—nor is the DOJ the arbiter under the statute. A pro forma statement such as the one the DOJ makes to this Court is simply unacceptable. See United States v Central Contracting Co., 537 F Supp 571 (E.D.Va. 1982) (Court cannot countenance plaintiff's claim that though Congress enacted sunshine legislation, courts may blandly accept government certification in case after case that no documents or materials, by themselves or in aggregate, led to determination by government that it should enter into consent decree.) DOJ repeatedly several critical documents in its papers—documents which neither the Court nor the public can see. The three major players in the industry argue about these documents in their papers!
[26] [27] [28] [29] There original argument that the time laid heavy on the shoulders of the workers involved seems specious in light of the fact that, as predicted with certainty, has come shutdowns in Rochester and Webster, New York, and involuntary "take it or leave it" transfers out of New York to West's Minnesota location. One irony of this is that while California apparently negotiated to protect its workers, but New York, whose representative spoke so eloquently of why this was a good deal and of the strength of California's protections, is rushing to have its citizens put out of work or moved out of state, and to have Western New York facilities close down.
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The rationale behind the legislation is quite simple. The [Judicial] Conference [of the United States, Committee on Revision of the Laws] felt that it would be helpful if the district court could obtain the views of all persons who might be affected by the proposed decree before it was finally formulated and ordered.
antitrust litigation is very complex litigation. . . .unless they [federal judges] have the light from outside, the light from the public as well as from the Attorney General who also, of course represents the public, and the defendants in interest in the case, there is always the possibility that a judge, through his inability to grasp the issues and the importance of concessions being made by both sides in the consent decree, will sign a decree that is not in the public interest. (Emphasis added.)
1. Intervention pursuant to Rule 42(b)(2) is clearly the preferred means by which a party objecting may obtain appellate review of an antitrust consent decree. See United States v LTV Corp., 746 F.2d 51, 1984-2 CCH Trade Cases 66235 (D.C. Cir. 1984)
2. The issues presented raise important issues regarding the scope, and the public's interest under the Tunney Act after United States v. Microsoft, 56 F.3d 1448 (D.C. Cir. 1995).
3. HyperLaw would have status as an intervenor to bring appeal under Lujan v. Defenders of Wildlife, 504 U.S. 555, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992).
4. The limitation imposed by Microsoft, which the Court noted herein, raise important issues controlling this case which would favor review by the Court of Appeals en banc or by the U.S. Supreme Court.
A. LACK OF NOTICE & DISCLOSURE - ;
THE POSTURE OF THE CASE BEFORE THIS COURT
This is not a matter of discretion for either the DOJ or this Court. Just one example of why the Court must insist that these requirements are met can be seen in the statutory requirement that documents central to the DOJ's consideration of this matter be disclosed.[18] This mandates disclosure of specific, critical, industry-controlling documents reviewed by the DOJ. It is clear that the merger/consent decree/proposed license package will severely exacerbate an already highly controlled industry and assist the cartel which has control. The secret 1988 agreements between West and Lexis, the documents which reflect how and where those control agreements have been administered (and subsequent modifications) are a sine qua non to even the most basic understanding of the effects of the proposed consent decree.[19]
THE COURT'S DECISION ON PROCEDURAL
AND DISCLOSURE ISSUES
I. DISCLOSURE
(b) Consent judgments and competitive impact statements; publication in Federal Register; availability of copies to the public. Any proposal for a consent judgment submitted by the United States for entry in any civil proceeding brought by or on behalf of the United States under the antitrust laws shall be filed with the district court before which such proceeding is pending and published by the United States in the Federal Register at least 60 days prior to the effective date of such judgment. Any written comments relating to such proposal and any responses by the United States thereto, shall also be filed with such district court and published by the United States in the Federal Register within such sixty-day period. Copies of such proposal and any other materials and documents which the United States considered determinative in formulating such proposal, shall also be made available to the public at the district court and in such other districts as the court may subsequently direct. Simultaneously with the filing of such proposal, unless otherwise instructed by the court, the United States shall file with the district court, publish in the Federal Register, and thereafter furnish to any person upon request, a competitive impact statement which shall recite—
(1) the nature and purpose of the proceeding;
(2) a description of the practices or events giving rise to the alleged violation of the antitrust laws;
(3) an explanation of the proposal for a consent judgment, including an explanation of any unusual circumstances giving rise to such proposal or any provision contained therein, relief to be obtained thereby, and the anticipated effects on competition of such relief;
(4) the remedies available to potential private plaintiffs damaged by the alleged violation in the event that such proposal for the consent judgment is entered in such proceeding;
(5) a description of the procedures available for modification of such proposal; and
(6) a description and evaluation of alternatives to such proposal actually considered by the United States.
(c) Publication of summaries in newspapers. The United States shall also cause to be published, commencing at least 60 days prior to the effective date of the judgment described in subsection (b) of this section, for 7 days over a period of 2 weeks in newspapers of general circulation of the district in which the case has been filed, in the District of Columbia, and in such other districts as the court may direct—
(i) a summary of the terms of the proposal for the consent judgment,
(ii) a summary of the competitive impact statement filed under subsec. (b),
(iii) and a list of the materials and documents under subsection (b) which the United States shall make available for purposes of meaningful public comment, and the place where such materials and documents are available for public inspection. (Emphasis added.)
The bill, in this respect, is designed to substitute "sunlught" for "twilight" and to regularize and make uniform judicial and public procedures. . .
(1) Publish a list of the materials and documents under subsection (b) which the United States shall make available for purposes of meaningful public comment, and the place where such materials and documents are available for public inspection;
(2) Publish, for 7 days over a period of 2 weeks in newspapers of general circulation of the District of Columbia. . .a summary of the terms of the proposal for the consent judgment.
The 1988 secret license agreements between West and Lexis are the central agreements in an interlocking structure that binds together the legal information alliance[26]that stood before this court on September 30, 1996. These 1988 agreements must have been provided to the Government during its investigation. According to the Government's own papers, these documents were used in its negotiation of the Proposed License Agreement, and thus had to have been central to their considerations. To make any real sense out of the proposed Consent Decree, these 1988 agreements must be reviewed not only by the court, but should be available for review by the public. The proposed license agreements clearly is intended to make available to other legal publishers the benefits that West provided to Lexis in 1988, and which the Thomson companies may not use as a result of the merger.
However, the proposed license agreement covers only ONE of FOUR areas covered in the 1988 secret agreements — the licensing of star-pagination to cases. (The 1988 agreements also licensed to Lexis the right to use the text of cases from West case reporters (an area specifically identified in the Complaint), citations to statutes, and text of statutes.) The 1988 agreements were anti-competitive from their inception; the West-Thomson merger only made this worse by orders of magnitude.
West Publishing Co. v. Mead Data Central, Inc., 616 F. Supp. 1571 (D. Minn. 1985)(grant of preliminary injunction on copyright issue), aff'd. 799 F.2d 1219 (8th Cir. 1986), cert. denied, 479 U.S. 1070 (1987). Trial of the matter was held on April 4-15, 1988 in the United States District Court for the District of Minnesota. Prior to the decisions on the merits, however, the parties resolved their dispute, and executed and entered into a Confidential Settlement and Caselaw License Agreement and a Confidential Statutes License Agreement, all with the approval of the District Court. Order No. 4-85-931. (D. Minn. July 21, 1988).
In addition to ending the foregoing litigation, the parties' comprehensive settlement resolved two other cases pending between them: West Publishing Co. v. Mead Corp., No. 4-88-142 (D.Minn. filed Feb. 22, 1988) (antitrust, copyright infringement, unfair competition and unfair trade practices) (settled by Order NO. 4-85-931); and Mead Data Central, Inc. v. West Publishing Co., No. C-3-87-426 (S.D. Ohio filed Aug. 18, 1987) (antitrust action) (settled by Agreed Order Dismissing Action With Prejudice, filed July 21, 1988).
— Paragraphs 4 and 5. Contrary to your assertion that these paragraphs "merely change the definitions in the existing agreements to reflect the technology changes from 1988 to 1966," the definitions proposed for the first time in your letter would amount to major substantive changes in provision that were, I am told, hotly contested, negotiated and compromised in 1988. For instance, your proposed new definition of "On-line" would omit the requirement that "long distance telecommunications resources" be the link between "the system of computers of computer terminals" and the "central processing unit or units." This is a huge change that would permit multiple and local uses far beyond what is permissible under the present agreement. Another example is your proposed deletion of the present requirement that LEXIS "must include the ability to search for words included in the database." This is another significant change that would allow you to create and distribute a separate retrieval by citation only service such a VERALEX, something not permitted under the present agreement. (Emphasis added.)
I have not received any substantive comments from you regarding (i) the amendment modifying the pagination license to, among other things, effectuate the agreed upon royalty rate reduction that Loud Andreaozzi sent to Michael Harris two weeks ago, or (ii) the Thomson/Folio agreement.
In fact, the rates set forth in the Proposed Final Judgment are approximately equal (but may under some circumstances exceed) the current Lexis royalty rate. It is worth emphasizing that the Lexis license was entered into only (i) after a Court of Appeal decision had been entered in favor of West and against Lexis, but (ii) before the Supreme Court's 1991 decision in Feist Publications v. Rural Telephone, which rejected the principal rationale underlying the Court of Appeals decision which found in West's favor.
Likewise, West's chief lawyer on the deal, James Schatz—to whom Shearman & Sterling deferred on pagination issues—says the new form agreement is "not analogous at all" to the Lexis agreement with West—"[it is] different in almost every way—and thus determining what LEXIS might or might not save is "a very difficult calculation." Moreover, he says, there are drawbacks to the mandatory licenses for LEXIS, which he would not specify. "But they have to ask the whole; they cannot cherry-pick," he says. "it would be something they'd have to look at carefully.
7. Second, Lexis-Nexis intends to use the threat of intervention to obtain concessions in business dealings with Thomson/West unrelated to the divestiture products. For example, it has already sought to reduce the license rate on West's star pagination product, which Thomson/West licenses to Lexis-Nexis. Until today, Lexis-Nexis has refused to discuss an extension of the Thomson/West license for Shepard's legal citation service.
14. During our August 14 meeting with the Justice Department, we also noted that the proposed license decree created a licensing regime under which a company could license the West Publishing "Star Pagination" for a rate beginning at $0.09 per thousand characters of material to be paginated in the first year, and increasing thereafter to $0.11 and $0.13 in the subsequent two years. In announcing the decree and the Star Pagination license regime, the Department had stated publicly that this rate was "significantly" lower that the current rate paid by Lexis-Nexis to West as part of a licensing agreement reached in 1988. ...
15. Although Lexis-Nexis produced a copy of its Star Pagination License with West to the Justice Department pursuant to a Civil Investigative Demand ...
2. THE COURT HAS OVERSTATED THE BOUNDARIES OF
THE MICROSOFT DECISION OR, IT HAS CORRECTLY STATED
WHAT THE COURT OF APPEALS SET AS THE STANDARD, AND
THAT STANDARD IS NOT COMPLETELY APPLICABLE UNDER
THE FACTS PRESENTED
A. THE COURT OVERSTATES THE
BOUNDARIES OF THE MICROSOFT DECISION
When a proposed consent decree has been presented to the Court, and thereupon rejected as not being in the public's interest, how much modification to that decree creates a completely different decree—requiring new notice, comment and disclosure?
In the routine antitrust settlement situation, there really won't be a lot of expertise required to approve or disapprove intelligently the proposed consent decree.
Indeed, in many cases, I would think, and have seen, no opposition filed, where the case is of great national importance, then time should be taken—court's time and counsel's time should be taken to study the decree, to get information from the public concerning the ramifications of the decree, the anticipated results of the decree and, in my judgment this time is well spent, even though it might take days, even though it might take weeks; it could have a trial that would last months and months.
So to suggest that S.782 will not require judicial time and counsel time would be misleading. In important cases, S.782 would require judicial time, necessarily so, and I believe rightfully so.
And because the powerful influence of antitrust defendants and the complexity and importance of antitrust litigation, the public reasonably asks in many instances whether, in reaching a settlement the government gave up more than it should have or need have.
B. ALTERNATIVELY, THE COURT DID NOT
MISAPPLY THE MICROSOFT DECISION,
THAT DECISION WAS DICTA TO THE
EXTENT IT EXCEEDED THE FACTS PRESENTED
I. LIMITATION ON DISTRICT COURT JUDGES
OF THE COURT AND THE PUBLIC
Lorence L. Kessler (D.C. Bar # 203521)
Counsel for HyperLaw, Inc.
Suite 400
1825 I Street, N.W.
Washington, D.C. 20006
202-857-8067
OF COUNSEL:
Carl J. Hartmann, III
New York, NY
Paul J. Ruskin
Douglaston, NY
Craig W. Conrath, Esq.
U.S. Department of Justice
Antitrust Division
Merger Task Force
1401 H Street N.W.
Washington, D.C. 20005
Wayne D. Collins, Esq.
Shearman & Sterling
153 East 53rd Street
Citicorp Center
New York, New York 10022
Gary L. Reback, Esq.
Wilson Sonsini
650 Page Mill Road
Palo Alto, CA 94304
James E. Schatz, Esq.
Oppenheimer Wolff & Donnelly
45 South Seventh Street, Suite 3400
Minneapolis, MN 55402-1609
A Representative of the Pool
of All State Attorneys General