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RE: Second Request for Access to Documents and Publication
Dear Mr. Conrath:
As you are aware, I am one of the attorneys representing HyperLaw, Inc. in the New York action against West publishing. In your opposition to HyperLaw's request to the Court for leave for time to file an amicus brief (which Judge Friedman granted despite your position) the Department of Justice (DOJ) sought to minimize the importance of specific statutory requirements. These are mandatory requirements under the statute that you cannot "interpret" or avoid. In the remainder of its reply, the Government simply ignored that which the Government found inconvenient. The problem with the DOJ's omission, is that it ignored its own complaint in this cause.1 While this Court may be restrained from doing what the DOJ characterizes as going off onto tangents—it can certainly review all of the matters specifically raised in the DOJ's own complaint, including the status of the text of caselaw.
HYPERLAW'S TWO SPECIFIC, FORMAL REQUESTS
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. To make its position absolutely clear, with no more wiggle room for DOJ, HyperLaw is making this formal request under the Tunney Act. The request is for disclosure of documents and publication.
The Tunney Act requires that the DOJ provide access to certain documents.
(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.
Thus, our first request is very simple: HyperLaw asks that "copies of . . .any other materials and documents which the United States considered determinative in formulating" be "made available to the public at the district court". This does not leave the DOJ any discretion. This absolutely requires that the DOJ make public any documents that were considered in formulating the proposal. Oddly, DOJ's opposition is completely silent on this point.2
The Tunney Act also 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 subsection (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.
The second formal request, regarding publication is that the DOJ:
(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.
This does not mean that the DOJ should publish the information as it stood several weeks ago. It must publish a " summary of the terms of the proposal for the [actual] consent judgment" as they actually are in the proposal before the Court. There have been significant changes—ones which must be made known to the public. The assertion by DOJ that it need not re-publish for comments because these several changes have "been in the favor of the public" evades the statutory purpose of the publication/comment 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 actually 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. Do what the statute requires you to do.
REASONS FOR THESE REQUESTS
As is shown below, HyperLaw believes that it, as well as the public and the Court, must have access to the "subsection b" documents before there can be an informed judgment as to whether this proposal 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.)3
WHY CRITICAL DOCUMENTS MUST BE MADE PUBLIC&EMDASH;
THE EFFECT OF UNITED STATES V. CENTRAL CONTRACTING CO.
The 1988 secret license agreements between West and Lexis are the central agreements in an interlocking structure that binds together the legal information alliance4 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 the DOJ's consideration. 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 agreement 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 now have 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 makes this worse by orders of magnitude. To hide them is to foist even greater antitrust damage on the public.
Careful reading of the Proposed License Agreement already reveals many problems, but even the most careful reading can never reveal what was left out of the agreement. A thorough understanding is impossible. Comparison of the 1988 agreements to the Proposed License Agreement, and the efforts of Lexis to amend this agreement, will reveal even more flaws in the Proposed License Agreement.
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 industry5 and much of the print portion, are described as follows by Professors Patterson and Joyce6 in the seminal article Monopolizing the Law: The Scope of Copyright Protection for Law Reports and Statutory Compilations, 36 UCLA Law Review 719 (1989):
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).
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! It is a monopoly being supervised off the record, with no judicial record, and no way to even try to unseal the secret industry controlling papers.
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 references 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:
— 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 "Online" 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.)
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 online 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:
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.
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:
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.
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.
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.
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:
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.
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.
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 ...
Thus, although the DOJ, West and Lexis contend that the 1988 agreements are confidential, everyone but the public has discussed them, and this "deal" was negotiated based on them—and it is possible to infer what the agreements contain based upon what the parties have stated publicly: The public is left to infer how the parties have conducted themselves since 1988, what the parties have not done, and what one would expect to find in a heavily negotiated settlement agreement in the type of litigation filed back then.
Following are thirteen (13) provisions we believe to be included in the settlement agreements, followed by specific facts that support these beliefs. If even one or two of these points are correct, it is a breach of the public trust for the DOJ to state that the agreements were not considered.
i. The 1988 Agreement Includes a License by West to Lexis of The Text of Court Opinions
The title of one settlement agreement states that the agreement is a "Text" license.
The agreements settled the action where West sued Lexis for copying cases from its books. Paragraphs 26 and 27 of the complaint in West's 1988 action Civ. 4-88-142, United States District Court, District of Minnesota, states:
26. MDC and Mead have copied for use in their Lexis database a substantial number of the case reports from volumes of West's National Reporter System publications published since 1972 without West's permission and with full knowledge of and with complete disregard for West's copyrights.
27. MDC's and Mead's unauthorized reproduction for use in their Lexis database of a substantial number of the case reports from volumes of West's National Reporter System publications published since 1972 constitutes copyright infringement in violation of the copyright laws of the United States ...
In a 1976 Antitrust Complaint by Mead against West (76 Civ. 3618,United States District Court, Southern District of New York) the following was alleged by Mead:
18. Many of the judicial opinions originally filed by the lower federal courts or the state courts are no longer available from those courts or may only be obtained with extreme difficulty and at great expense. To acquire the full text of federal or state court opinions, particularly past opinions, plaintiff or any potential competitor of West must risk expense, protracted litigation because of West's groundless assertion that it enjoys copyrights on the judicial opinions of these courts published in its reporters.
ii. Lexis Agreed to Cease Copying from West Case Reporter
After 1988, Lexis is know to have ramped up its case collection system.
III. WEST AGREED TO NOT INTERFERE IN LEXIS'S COLLECTION EFFORTS
Lexis had long complained about West's preferential access to court opinions and West's sabotaging Lexis efforts. This is covered in the Lexis anti-trust complaints against West.
In 1988 or 1989, the fighting between Lexis and West became so intense that the parties were asked by the federal judiciary to work out an arrangement. Lexis and West met in Canada and made a deal. Part of the deal was the West would provide electronic versions of Fifth and Eleventh Circuit opinions to Lexis and Lexis would provide electronic versions of Tenth and Fourth Circuit opinions to West. This secret deal remained in effect until the summer of 1993 when it ended after complaints by HyperLaw.
iv. Under the 1988 Text License, Lexis was able to continue to use text that it had copied from West case reporters.
Lexis did not withdraw any opinions from its database, after the 1988 secret agreement became effective.
v. Lexis is not permitted to license to third parties the text of cases copied from West reporters
The conclusion is based upon the experience of a Colorado CD-ROM company which attempted to license the text of federal social security cases from Lexis (West had refused). Lexis was able to provide all post 1988 opinions, but was unable to provide many pre 1988 opinions, even though those provisions were on Westlaw.
vi. Lexis' Access to Judge Made Corrections Provided to West is Not Known
Access to the corrections was a part of Lexis claims against West. One would assume the subject was dealt with in the settlement.
vii. Lexis Agreed Not to Contest the West Copyright Claims Not Only in Litigation and Agreed Not to Seek Changes in the Copyright Laws
Lexis did not in any way support the efforts of Thomson in 1992 to amend the copyright law, although Lexis was known to favor the proposed amendment. At the same time, Lexis was vigorously supporting the federal judiciary's electronic citation system.
viii. Lexis Agreed To Not Make Further Statements About the Department of Justice's Juris and FLITE's keying in case law for West in 1976
Lexis has made not public comment since 1988 concerning DOJ's subsidizing the creation of Westlaw. Lexis had included allegations concerning DOJ/FLITE and West in its previous anti-trust complaints, which were settled by the 1988 agreements. In the 1976 Complaint referred to above, Mead alleged:
38. The monopoly power that defendant has acquired through its aforesaid acts of monopolization and monopolistic practices has enabled defendant to enter into certain contracts with agencies of the United Sates, the Department of the Air Force and the Department of Justice...
40. ... By the terms of the agreement dictated by defendant, the Air Force is required to insure that no other persons, other than persons at the Department of Justice after it signed a similar license agreement, obtain access in whole or in part to the computer tapes of the federal law reports supposedly covered by defendant's purported copyrights. As consideration for granting the Air Force a license to use defendant's allegedly copyrighted materials, defendant has received and is to continue to receive, at no cost to itself, a copy of each computer tape of materials, or machine-readable data in any other form agreed upon by the parties, converted by the Air Force ...
The 1976 complaint also alleged that the Department of Justice placed into the public domain software that could only be used by West.
42. The JURIS Software package is uniquely valuable to West because only West, among commercial competitors, can use it with the government-supplied machine-readable data bank.
43. On February 13, 1976, defendant West executed another agreement with the Department of Justice under which West will provide JURIS with, and license Juris to use, computer tapes of its current publications. In return, the Department of Justice agreed to pay defendant West $150,000 a year. The Department of Justice had thereby agreed to become dependent upon West in perpetuity for the licensed materials, because as a practical matter such material will be worthless without updates and revisions that only West can provide.
In many respects, the Department of Justice was an identified but 'unnamed' defendant in the Lexis action against West. After the 1988 settlement, all Lexis public criticism of the arrangements among West, DOJ, and the Air Force ended.
IX. LEXIS IS NOT PERMITTED TO USE STAR-PAGINATION ON CD-ROMS
Lexis has not included star-pagination on CD-ROMs. CD-ROMs were discussed in testimony in the 1988 West v. Mead trial. It is possible that Lexis may include the star-pagination if it pays a higher license fee, but that the higher license fee makes it economically impractical.
x. Lexis Was Not Permitted to Issue CD-ROMs that Cloned the Federal Reporter or the Federal Supplement
Lexis has issued Circuit Only CD-ROMs of the Federal Reporter, but not all circuit versions.
West offers both all Circuit Federal Reporter CD-ROMs as well as single circuit versions.
XI. LEXIS WAS LICENSED THE USE OF WEST STATUTORY MATERIAL AND CITATIONS
Statutory material is the stated subject of the agreement.
Statutory material was the subject of a copyright litigation filed by West.
This was the subject of antitrust litigation filed by Lexis.
In 1992, the copyright amendment, pushed by a former Lexis executive, included relief concerning statutory material and citations.
xii. Lexis Agreed to Cease Providing Case Text to Lawyers Cooperative's Veralex System
The relationship to the West-Lexis 1988 agreement and Thomson ceasing to offer Veralex is shown by this statement between the letter from Harris of Thomson to Lexis cited above:
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.
Thus, a by-product of the 1988 settlement agreements was to prevent LCP from continuing with VERALEX, and, this is what happened, and there was no longer a third competing on-line system.
XII. LEXIS CANNOT USE INTERNAL PAGINATION ON THE INTERNET
This is also covered in the Harris letter to Thomson. On the other hand, the language may mean that Thomson pays an entirely new licensee fee for the Internet.
CONCLUSION
HyperLaw will address these issues in more detail in its amicus brief—but cannot do so fully unless the DOJ complies with the law.
Sincerely,
A
_______________________________
[1] [2] [3]
[4] [5]
[6]
Craig W. Conrath, Esq.
U.S. Department of Justice
Antitrust Div. Merger Task Force
1401 H Street N.W.
Washington, D.C. 20005