Loading…

Flash Player 9 (or above) is needed to view presentations.
We have detected that you do not have it on your computer. To install it, go here.

Like this presentation? Why not share!

Like this? Share it with your network

Share

The Long Arm of the Law: Of Books and Competition by William Hannay, Schiff Hardin LLP

  • 1,444 views
Uploaded on

Charleston Conference ...

Charleston Conference
Saturday Morning Plenary
November 6, 2010, 10:00 AM

More in: Technology , Business
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Be the first to comment
No Downloads

Views

Total Views
1,444
On Slideshare
1,444
From Embeds
0
Number of Embeds
0

Actions

Shares
Downloads
21
Comments
0
Likes
1

Embeds 0

No embeds

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
    No notes for slide
  • The library itself is known to have had an acquisitions department (possibly built near the stacks, or for utility closer to the harbor), and a cataloguing department.
  • The library itself is known to have had an acquisitions department (possibly built near the stacks, or for utility closer to the harbor), and a cataloguing department.
  • Under the Amended Settlement Agreement, Google can sell access to books that it has scanned in five ways: To Libraries via online subscription to the complete corpus (ASA § 4.1) To Consumers, one online book at a time (ASA § 4.2) To Consumers, as individual “print on demand” volumes (ASA § 4.7(a)) To Consumers, as ebooks they can download and read offline (ASA § 4.7(b)) To Consumers via online subscription to the complete database of digitized works (ASA § 4.7(c))
  • Letter from The American Library Association, the Association of College and Research Libraries, and the Association of Research Libraries to William F. Cavanaugh, Dep Asst Atty Gen, dated 12/15/09.
  • Executive Director for Research, Committee on Capital Markets Regulation. J.D., The University of Chicago Law School. M.B.A., The University of Chicago Booth School of Business.
  • Millennium provides libraries with an array of ILS services to maintain a library. Encore gives a library and its patrons a public interface to search and integrate much more web-based information than just the library's local holdings. INN-Reach is a consortial borrowing system that directly links multiple library systems in a defined geographic area into a single real-time "union" catalog (i.e., a combined library catalog describing the collections of the libraries in the consortium) that provides resource sharing among libraries.
  • There are three separate product or service markets at issue in the claims asserted in this case by SkyRiver. The first is the market for bibliographic data comprised of digital electronic metadata (i. e., records) of the holdings of college, university and research libraries (collectively "libraries" or "academic libraries"). The second is the market for cataloging the bibliographic records of the holdings and new acquisitions of academic libraries. The third is the market for interlibrary lending between and among academic libraries to share each other's resources.
  • An ILS can provide fully integrated back-office functionality, an integrated public view catalog for finding the books and other materials that libraries hold, and interlibrary lending on a regional basis for consortia of libraries located in defined geographic areas.
  • Moon River, wider than a mile, I'm crossing you in style some day. Oh, dream maker, you heart breaker, wherever you're going I'm going your way. Two drifters off to see the world. There's such a lot of world to see. We're after the same rainbow's end-- waiting 'round the bend, my huckleberry friend, Moon River and me.

Transcript

  • 1. Of Books and Competition Charleston Conference 2010 Bill Hannay Schiff Hardin LLP, Chicago [email_address]
  • 2. Two Hot Cases
    • Author’s Guild v. Google
      • The case of the century?
      • Raises lots of questions about the nature of competition in the book world
    • SkyRiver v. OCLC
      • Whose catalog is it, anyway?
    • But first, a bit of history ...
  • 3. Alexandria Herald Ptolemy II Announces Plan for Universal Library Open Scrolls Alliance Decries Monopoly ALEXANDRIA, Feb. 8, 286 B.C.E. (via Rome) – Pharaoh Ptolemy II today announced the founding of a universal library in Alexandra “to make available every scroll in the world.” Critics outside Egypt immediately condemned the proposal as a ploy to build up Alexandria’s tourist industry by forcing scholars to come to the city. Excerpt from
  • 4. Tewkesbury Times Manuscript Mania! Gutenberg Inks Deal with Cloister Consortium TEWKSBURY, Feb. 8, 1438 – Bible Baron Johannes Gutenberg today announced an agreement with a consortium of major cloisters to “print” their entire collection of illuminated manuscripts, using his radical new invention Movable Type. Prices for gold leaf and parchment plunged in late trading as speculators dumped their stocks. Excerpt from
  • 5. So, is there anything new under ye olde helios ? Flash forward to 2004 ...
  • 6. The Book Project/The Lawsuit
    • 2004 – Google Print Project initiated
    • 2005 – Lawsuit by Author’s Guild et al.
    • 10/28/08 – Settlement announced
    • 09/18/09 – DOJ files 1 st statement
    • 11/13/09 – Amended Settlement Agreement (“ASA”) filed
    • 11/19/09 – Court preliminarily approves
    • 02/04/10 – DOJ files 2 nd statement
    • 02/18/10 – Fairness Hearing held
  • 7. The Issues in Dispute
    • The principal battle in the suit was about the nature and scope of copyright laws including ownership and fair use issues.
    • But the 2008 settlement led to a firestorm over the scope of federal class action law.
    • The Department of Justice entered the fray at that point and launched an antitrust investigation into the settlement’s impact on “competition.” (It continues.)
  • 8. Cites to the DOJ’s 2 Statements Statement of Interest of the United States of America Regarding Proposed Class Settlement, Doc. Item 720, filed 9/18/09, available at http://www.justice.gov/atr/cases/f250100/250180.htm Statement of Interest of the United States of America Regarding Proposed Class Settlement, Doc. Item 922, filed 2/4/10, available at http://www.justice.gov/atr/cases/f255000/255012.htm
  • 9. DOJ Views: On the one hand ...
    • “ Breathing life into millions of works that are now effectively dormant, allowing users to search the text of millions of books at no cost, creating a rights registry, and enhancing the accessibility of such works for the disabled and others are all worthy objectives.”
  • 10. DOJ View: On the other ...
    • “ The rights granted to Google under the ASA confer significant and possibly anti-competitive advantages on a single entity...”
    • “ ... Google would remain the only competitor in the digital marketplace with the rights to ... exploit a vast array of works in multiple formats. Google also would have the exclusive ability to exploit unclaimed works (including so-called “orphan works”) without risk of liability. The ASA’s pricing mechanisms ... also continue to raise antitrust concerns.”
  • 11. What’s the antitrust problem?
    • Publishers & other search engines may not be able to compete in the future due to Google’s enormous lead, its market share, and the very copyright barriers to entry that led to the litigation.
    • Private parties are jointly restructuring the publishing industry, with settlement terms replacing copyright laws and without any legislative authorization.
  • 12. What’s the DOJ’s bottom line
    • The DOJ “has reluctantly concluded that use of the class action mechanism in the manner proposed by the ASA is a bridge too far.”
    • “ ... the ASA’s collectively agreed-upon constraints on the rightsholders’ relationships with Google continue to raise concerns. In addition, Google’s de facto exclusive access to orphan and rights-uncertain works remains unaddressed....”
  • 13. What does the DOJ suggest?
    • “... the public interest would best be served by direction from the Court encouraging the continuation of settlement discussions between the parties.”
  • 14. What do others say?
  • 15. Library Associations Expressed Concerns Similar to DOJ’s
    • The cost of creating ... a repository and Google’s significant lead time advantage suggest that no other entity will create a competing digital repository for the foreseeable future. In the absence of competition ..., the settlement could compromise fundamental library values....
    • [T]he absence of competition for the institutional subscription service ... makes libraries particularly vulnerable to profit maximizing pricing.
  • 16. Eric M. Fraser writing in the Stan. Tech. L. Rev. says:
    • “ The settlement effectively gives Google simultaneous agreements with virtually all the rightsholders to in-copyright American books. ... The simultaneity concentrates pricing power, leading to cartel pricing (a problem under § 1 of the Sherman Act) and monopolization (a § 2 problem).”
  • 17. Others Find No Antitrust Harm
    • Mark A. Lemley, an attorney representing Google in the litigation, has written “An Antitrust Assessment of the Google Book Search Settlement” and finds criticisms by the DOJ and others to be “unpersuasive.”
    • Einer Elhauge, a Harvard Law Professor who received research support from Google, has written “Why the Google Books Settlement is Procompetitive.”
  • 18. What is the current status?
    • Still no word, and it’s been 8 months.
    • All are eagerly waiting to hear how Judge Chin will rule on the “fairness” issue.
      • He can accept it as is or reject it.
      • He might rewrite the settlement and say he’ll approve it if parties make changes.
    • He has been promoted to the US Ct of Appeals in NYC but is still on the case (?).
  • 19. What do I think?
    • I think that one way or the other we will be dancing to that well-known 1940s swing melody:
    It’s the Boogie-Woogie Google Boy of Company G!
  • 20. SkyRiver v. OCLC Complaint filed July 29, 2010 Now let’s turn to ...
  • 21. Dramatis Personae
    • Plaintiffs
      • SkyRiver Technology Solutions
      • Innovative Interfaces, Inc.
    • Defendant
      • OCLC Online Computer Library Center, Inc.
  • 22.
    • SkyRiver Technology Solutions – founded in October 2009 – CEO Leslie Straus
    • SkyRiver’s website describes it as “a new bibliographic utility that offers a low cost alternative for cooperative cataloging.”
    • SkyRiver claims “savings of up to 40%” over OCLC
    • It boasts contracts with MCLS, LYRASIS, and (last week) Oberlin Group members
  • 23.
    • Innovative Interfaces, Inc. – founded in 1978 – “born in the spare bedroom of CEO Jerry Kline's El Cerrito home”
    • It provides integrated library systems (“ILS”) through 3 principal products: Millennium, Encore and INN-Reach.
    • Innovative boasts 1200 Millennium systems installed.
  • 24.
    • OCLC – founded in 1967 by a group of Ohio libraries – CEO Jay Jordan
    • Merged with RLG in 2006. OCLC is now “a worldwide organization in which almost 27,000 libraries, archives and museums in 171 countries are members.”
    • Membership is “open to libraries and other memory organizations of all types and sizes.”
  • 25. The lawsuit against OCLC is actually two lawsuits combined into one complaint: one by SkyRiver and one by Innovative
  • 26. SkyRiver’s Suit
    • SkyRiver alleges OCLC has monopolized three distinct service markets:
      • The market for bibliographic data about the holdings of college, university and research libraries
      • The cataloging of bibliographic records of the holdings of academic libraries
      • The market for interlibrary lending between and among academic libraries.
  • 27. Innovative’s Suit
    • Innovative claims that OCLC is attempting to monopolize the market for integrated library systems (ILS).
    • OCLC is alleged to be using its monopoly power over its WorldCat database, cataloging service, and ILL service in an attempt to monopolize the market for integrated library systems.
  • 28. How does the law work?
    • The Sherman Act prohibits “monopolizing” or “attempting to monopolize” a market.
    • SkyRiver must prove that OCLC has a monopoly and maintains or got it through unfair, predatory or exclusionary means.
    • Innovative must prove that OCLC has a dangerous probability of achieving monopoly by using improper means with the specific intent to monopolize.
  • 29. What is SkyRiver’s claim?
    • The complaint alleges OCLC used tax-exempt status to gobble up competitors or would-be competitors. “Since 1982 OCLC has used its tax-free profits to acquire 14 for-profit companies.”
    • It is alleged that, when libraries tried switching to SkyRiver, OCLC retaliated by imposing price increases of >1100% to upload holdings to the WorldCat database.
  • 30. What is Innovative’s claim?
    • Innovative alleges that OCLC uses its membership requirements to obtain the agreement, assistance and services of libraries in developing OCLC products such as WorldCat Local, which they are also obligated to purchase, while competitors, such as Innovative, are excluded from what should be competitive procurement opportunities.
  • 31. What’s the status?
    • SkyRiver filed suit in San Francisco CA, and OCLC moved to transfer it to southern Ohio under 28 USC 1404 (“for the convenience of parties and witnesses [and] in the interest of justice”).
    • Last week, the Calif. court granted the motion because inter alia “all but two of the libraries that have switched from OCLC to SkyRiver are closer to ... Ohio than ... to California” and are material witnesses.
  • 32. What’s Next?
    • The average period between filing a complaint and trial is > 29 months.
    • But a defendant can move to dismiss a complaint for failure to state a claim now.
    • If OCLC so moves, will it prevail?
    • It is hard to say. The 39-page complaint seems thoughtfully written with lots of detail, but the Sherman Act is a tricky law.
  • 33. What do I think?
    • I think that you should join me in crooning that great old Henry Mancini song from “Breakfast at Tiffany’s”:
    SkyRiver, cheaper by a mile You’ll help me to refile ... someday.