09/17/96 HyperLaw, Inc.®
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HyperLaw notes re letter from Thomson to Lexis Nexis, which was owed by Mead Data.
The following letter was attached to the motion of Lexis-Nexis in support of its motion to intervene in the West-Thomson DOJ proceeding. The letter is a window into the tangled interelationships amongst the legal publishers, and the somewhat questionable cross-agreements between arch competitors.
The reference in the paragraph titled "paragraph 1" to the March 22 letter agreement most likely to and agreement between Reed (Lexis) and Thomson dated March 22, 1996, shortly after Thomson announced it was merging with West.
The discussion in the paragraph titled "paragraph 4-5" refers to the settlement agreement and license agreements entered into in 1988 between West and Mead. This agreement and the license agreements were "approved" by Judge Rosenbaum. U.S.D.J, D. Minn., who has been supervising the settlment since. This is interesting because it suggests that the Lexis license may not apply to the Internet, since the language describes dial-up access to a centralized database. It also suggest that Lexis agreed not to compete with West in certain areas, i.e., a Veralex type service. For a discussion of this agreement, See the Star-Tribune Series, Page down to the subheading The Electronic Market"
The final paragraph titled "Folio" is another glimpse at the negotiations relating to Folio which is controlled by Reed Elsevier. Folio provide CD-Rom publishing software which had as an investor Mead. Not only does Lawyers Cooperative use Folio to publish CD-Roms of caselaw, but so does HyperLaw. The "Chinese Wall" presumably reflected a concern for many, including HyperLaw, because a competitor's (Lexis) parent (Reed) controlled the CD-Rom publishing software. When HyperLaw chose to use Folio, Folio did not disclose that a key investor was Mead, and HyperLaw did not discover this for years.
The Thomson Corporation
Metro Center at One Station Place
Stamford, Connecticut 06902
August 30, 1996
Louis J. Andreozzi
Vice President and General Counsel
P.O. Box 933
Dayton, OH 45401
Let me address the issues in your letter of August 23.
* Paragraph 1. As you well know, paragraph 2 of our March 22 agreement provides that Thomson and Reed "agree[d] to negotiate" for an extension of certain agreements. The business terms of any possible extension were never discussed or agreed, and one of the reasons it took some time for me to respond to you was to confirm that fact with Andy Mills. As a result, *and contrary to your assertion*, neither Brian nor I were ever in a position to agree to a wholesale extension on current terms, and we never did so. However, if Andy's discussions with Nigel Stapleton ever reach the level of discussing specifics, we may eventually reach an agreement. However, as of now, there is no agreement to extend.
* Paragraphs 4 and 5. Contrary to your assertion that these paragraphs "merely change the definitions in the existing agreement to reflect the technology changes from 1988 to 1996," the definitions proposed for the first time in your letter would amount to *major* substantive changes in provisions 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 or computer terminals" and the "central processing unit or units." This is *huge* change that would allow *multiple* and *local* uses far beyond what is permissible under the present agreement. Another example is your proposed deletion of the
August 30, 1996
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 as VERALEX, something not permitted under the present agreement.
* Paragraph 7. This was never discussed or agreed upon by Andy and Nigel.
* Folio. There are a number of issues of concern which are either not addressed, or not adequately addressed, in the draft Folio agreement which are of concern: the real effectiveness of the "Chinese Wall" in light of the fact that the Lexis-Nexis lawyers are working on a matter we assume the Reed lawyers should be working on; the "equal priority" clause doesn't protect Thomson against Folio giving Reed more favorable treatment (because of the use of the term "other customers of Folio producing revenues for Folio comparable to those amounts paid by Publisher to Folio"); it is unclear that the license is extended through 1999; there remains an issue as to whether Thomson discounts should be increased based upon increases in prospective use of Folio products; and, whether purchasers of divested products will be assured of Folio access on the same terms as the current Thomson agreement.
Finally, your comments on paragraphs 2, 3 and 6 reflect your attempt to take advantage of selected favorable portions of the standard license agreement (which has been agreed with DOJ), while maintaining portions of the license agreement which are more favorable to Reed - in particular, the pricing provision.
We remain prepared for any party, including Reed, to accept the standard form agreement contained in the Consent Decree, in total, including its pricing terms. In the alternative, we are prepared to consider changes in the current agreement, or in the standard form agreement, if they make good commercial sense and if the business people knowingly agree to them. We are not amenable to Reed cherry picking those provisions of both agreements which it finds most beneficial and claiming the right to adopt them unilaterally.
As Andy has previously said to Nigel Stapleton, and as I have previously said to you - it makes sense for the business people (not the lawyers) to discuss and agree on commercial terms. Once that is done, we lawyers can put those terms into a form
August 30, 1996
of agreement. There is no benefit for the lawyers to continue a dialog without the benefit of an agreement by our business colleagues.
Very Truly Yours,
Michael S. Harris
cc: A.G. Mills
J. Schatz, Esq.
E.A. Friedland, Esq.
D. Collins, Esq.