Copyright Antitrust Claims Against Textbook Publishers Dismissed in Longstanding Gray Market Copyright Case

by Foley Hoag LLP - Trademark, Copyright & Unfair Competition
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Copyright AntritrustIt is no secret that college textbooks are expensive, and the average student has little recourse when a professor assigns specific books and editions.  Stuck between a rock and a hard place, over the years students have concocted several creative ways to avoid these high prices.  Examples include checking out textbooks from libraries for a semester at a time; purchasing books at retail price, photocopying every page, and returning the books for a full refund; and of course swapping textbooks with other students.  Some of these methods are legal, and others not.

When Ganghua Liu was a student during the late 1990s, she created another option. Liu purchased in bulk foreign editions of textbooks, which are often priced lower than their U.S. counterparts. She then sold them online in the U.S.

In 2008, two textbook publishers, Pearson Education, Inc. and John Wiley & Sons, Inc., filed suit against Liu and others in the Southern District of New York, alleging copyright infringement.  Meanwhile, a similar case  — Kirtsaeng v. John Wiley & Sons, Inc. — was making its way to the Supreme Court. In March 2013, the Supreme Court held that the resale of foreign edition textbooks in the U.S. is protected by the first-sale doctrine.  After the Kirtsaeng decision, the copyright infringement claim against Liu was dismissed.

War on Textbook Resale

However, remaining before the District Court were Liu’s antitrust counterclaims against the plaintiffs, alleging that they had engaged in a variety of anticompetitive conduct designed to suppress competition by textbook resellers.  Liu alleged that Pearson and Wiley:

  • Brought multiple lawsuits against textbook resellers such as Liu for copyright infringement;
  • Caused online marketplaces such as Amazon.com and Half.com to block Liu from selling her books;
  • Reached agreements with retailers outside of the U.S. to limit the number of copies of foreign editions that can be delivered to a single U.S. address;
  • Placed statements on textbooks to discourage U.S. consumers from purchasing foreign editions; and
  • Unnecessarily published new editions of textbooks and bundled textbooks with new materials to disrupt resellers’ businesses.

But Is It an Antitrust Violation?

On May 22, 2014, the District Court issued an opinion dismissing Liu’s counterclaims, thus ending the case for all parties.  The District Court held that, even taking Liu’s allegations as true, they did not state a claim under the Sherman Act.  First, Liu did not have standing to bring many of her claims.  Specifically, she was not harmed by the publishers’ suits against other resellers.  Moreover, the creation of unnecessary new editions and bundles does not reducecompetition, but brings new and improved products into the market.

Second, the Court ruled, the publishers’ suits against resellers were protected from antitrust liability under the Noerr-Pennington doctrine, which states that litigation must be a “sham” for it to give rise to antitrust liability.

Third, the publishers’ unilateral agreements with retailers to exclude the sale of old and foreign editions is lawful, and Liu did not allege sufficient facts to suggest an agreement among the publishers to execute a coordinated strategy.

While the Court’s ruling does not foreclose future antitrust claims against textbook publishers, it does provide valuable insight about the types of allegations needed to overcome a motion to dismiss in the antitrust context. A copy of the full opinion can be found here.

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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