A Brief History
Historically, West operated as a quasi-governmental entity with little competition in the legal publishing sector However, in the last two decades, numerous competitors have emerged, intensifying market rivalry The three dominant players—West (now part of Thomson), Reed Elsevier, and Wolters Kluwer—have engaged in fierce competition for market share while also facing challenges from lower-cost and independent publishers Recently, significant acquisitions have led to the consolidation of many major print titles and services under the umbrella of these "big three" companies As of 2001, only one independent legal publisher from 1978 remained in business, highlighting the competitive landscape's shift.
11 Sharon Schmickle and Tom Hamburger, West Has a Long Publishing History, M INNEAPOLIS –S T P AUL
S TAR T RIBUNE , March 5, 1995, at 1, available at http://www.startribune.com/westpub/profiles/west_his.htm.
In 1922, there were approximately 65 publishers of case reports, offering around 190 sources of case law By the end of 1994, this number had surged to over 170 providers, delivering more than 700 sources As of early 1995, the competition has expanded further, with more than 190 entities producing over 750 case law sources, reflecting a remarkable increase of about 300 percent in both categories over the past two years.
S TAR T RIBUNE , March 5, 1995, at 1, available at http://www.startribune.com/westpub/perspectives/response.htm.
13 Sharon Schmickle and Tom Hamburger, West Fights to Maintain Its Lead in a Changing Industry,
M INNEAPOLIS –S T P AUL S TAR T RIBUNE , March 5, 1995, at 1, available at http://www.startribune.com/westpub/competit.htm.
14 Deborah Tussey, Owning the Law: Intellectual Property Rights in Primary Law, 9 F ORDHAM I NTELL
P ROP M EDIA & E NT L.J 173, at 177–8 (1998) Between 1979 and 2002, Thomson acquired 23 publishers, including West Group Kendall F Svengalis, Rhode Island Law Press, The Current State of the Legal
The publishing industry has seen significant consolidation, with Reed Elsevier acquiring ten publishers, including Lexis-Nexis, and Wolters Kluwer purchasing five others between 1994 and 2002 Additionally, the Thomson Corporation owns the West Group, which holds 213 trademarks, including notable titles such as ALR, Federal Reporter, Am Jur, Factiva, FindLaw, LawOffice.com, Nutshell Series, and Westlaw This trend of consolidation has important implications for law libraries, impacting their access to legal resources and information.
15 Svengalis presentation, supra note Error: Reference source not found.
The First Big Challenge: Mead Data Central v West Publishing Co
The legal publishing industry has seen ongoing internal litigation alongside consolidation, primarily due to West's efforts to maintain its pseudo-monopoly on legal information by safeguarding the pagination of its case reporters This trend of modern legal publishing litigation dates back to 1986, initiated by the landmark case West Publishing Co v.
Mead Data Central, Inc sued LexisNexis for unlawfully using West's universally accepted star pagination system, essential for accurate legal citations This citation system was vital for attorneys using LexisNexis, as judges expected consistent page references across different legal reporting services Although West and Mead reached a private settlement, the Eighth Circuit ultimately ruled that Mead infringed on West's copyright regarding pagination This case marked a significant challenge to West's century-long dominance in legal publishing, enabling LexisNexis to establish a presence in the market By 1989, LexisNexis had amassed one million users, peaking at 100,000 searches in a single day the following year.
The Tide Turns: Feist and Industry Consolidation
Five years following the Mead case, the Supreme Court delivered an indirect setback to West in the Feist decision, emphasizing that mere effort or "sweat of the brow" does not qualify for copyright protection The Court clarified that for a work to be eligible for copyright, it must exhibit originality and contain a distinct "creative spark."
16 See Atlas, supra note Error: Reference source not found, at 495; see Wheaton v Peters, 33 U.S at 598 (holding no reporter can have copyright in judicial opinions).
18 James H Wyman, Freeing the Law: Case Reporter Copyright and the Universal Citation System, 24
F LA S T U L R EV 217, 219 (1996) (noting that almost all federal courts and a large number of state courts require citations that contain the page numbers of West Publishing Company’s case reporters).
Despite efforts to establish an independent universal citation system, the initiative ultimately failed Christine Hurt's work, "Network Effects and Legal Citation," explores how antitrust theory can inform the development of a more effective citation framework.
In the article "Bluebook Mousetrap in the Age of Electronic Mice," published in the Iowa Law Review, the author argues that West's significant influence and its pursuit of market dominance contributed to the decline of the universal citation movement.
20 Gary Wolf, Who Owns the Law, W IRED , May 1994, available at http://www.wired.com/ (speculating that the terms of the settlement in West v Mead Data involved West licensing its page numbering system to Mead Data but that Mead Data could not use these page numbers in CD-ROM’s and other electronic formats)
22 West was founded in 1872 by John B West and his brother Horatio Thomson West Company Overview, at http://west.thomson.com/about/history/ (last visited April 30, 2004).
23 The LexisNexis timeline: Celebrating Innovation and 30 years of online legal research, available at http://www.lexisnexis.com/anniversary/30th_timeline_fulltxt.pdf (hereinafter “Lexis timeline”).
25 Id at 345 See also Susan Hansen, Fending off the Future, T HE A MERICAN L AWYER (Sept 1994), available at http://people.umass.edu/aex1000/am-lawr.html (last visited May 19, 2004) (discussing the shift in Feist toward less liberal copyright protection) so far as to give carte blanche to legal publishers to freely co-opt West’s star pagination, but it raised doubt in the Mead decision and rejuvenated litigation against West 26
In the legal publishing industry, two significant takeovers occurred before the next round of litigation began In 1994, Mead sold the Mead Data Corporation, which owns LexisNexis, to Reed Elsevier for $1.5 billion Just eleven months later, Wolters Kluwer, the largest publisher of tax and legal journals in Europe and owner of Aspen Publishing, acquired Commerce Clearing House (CCH) for $1.9 billion.
Until recently, the publishing industry experienced limited consolidation and remained relatively stagnant Wolters Kluwer had not engaged in significant legal publishing ventures since acquiring Aspen Publishers, Inc in 1978, with its next major move being the acquisition of CCH in 1994 Similarly, Lexis and its future parent company, Reed Elsevier, had been inactive in the market, with their only notable acquisition occurring in 1987 when Lexis purchased the Michie Company, known for publishing state codes and statutes.
The acquisitions were driven by the growth potential of online legal information outlets during the dot-com boom, allowing Wolters Kluwer and Reed Elsevier to effectively deliver legal materials electronically This shift diminished West's previously dominant position in the market, as it now faced competition from large multinational corporations rather than just a few smaller firms In response to this changing landscape, West engaged two investment banks to gather bids and officially put itself up for sale.
Thomson Buys Legal Publishers, Prompts Antitrust Investigation
Thomson was charging into the publishing business through a steady stream of acquisitions Starting in 1978, the Canadian conglomerate had purchased 13 other
On August 31, 1996, Morgan Chu, Alex Wiles, and Elliot Brown from Irell & Manella LLP submitted a letter to the DOJ regarding Thomson/West The letter highlights that the West v Mead decision remains intact and emphasizes that West continues to leverage litigation to hinder competitors from utilizing star pagination.
27 Raju Narasetti and Greg Steinmetz, Reed Elsevier Wins Bidding for Lexis/Nexis, W ALL S T J., October 5,
28 James P Miller, Publisher CCH Agrees to Buyout by Dutch Firm, W ALL S T J., November 28, 1995, at A3.
29 American Association of Law Libraries, Committee on Relations with Information Vendors, A Legal
Publishers List: Corporate Affiliations of Legal Publishers, 2d ed.: Part III Wolters Kluwer, available at http://www.aallnet.org/committee/criv/resources/tools/list/wolterskluwer.html (last visited May
30 American Association of Law Libraries, Committee on Relations with Information Vendors, A Legal
Publishers List: Corporate Affiliations of Legal Publishers, 2d ed.: Part II Reed Elsevier, available at http://www.aallnet.org/committee/criv/resources/tools/list/reedelsevier.html (last visited May 6,
31 West Publishing’s Auction Attracts a Slew of Suitors, W ALL S T J., February 26, 1996, at B8.
Prominent publishers in the industry include Wadsworth, Litton, Delmar, Gale, AutEx, and Lawyers Cooperative Publishing, which encompasses Callaghan and Clark Boardman Other notable names are MICROMEDEX, the Institute for Scientific Research, Banks-Baldwin, Information Access Company, The Medstat Group, The Rutter Group, and Peterson’s.
On February 27, 1996, the Wall Street Journal announced that Thomson Corp successfully acquired legal publisher West Publishing Co for a substantial $3.43 billion in cash, despite the looming threat of the internet to West's primary markets.
The Journal evaluated Thomson's acquisition primarily based on its potential to utilize West's extensive legal resources for competing in the growing online market However, before completing the purchase, Thomson needed to meet the antitrust requirements established by the Hart-Scott-Rodino Act.
In June, the United States and seven states filed an antitrust suit against the acquisition of Thomson/West, highlighting concerns over the potential creation of a duopolistic legal publishing market The court's examination underscored the implications of this merger, signaling a shift in the legal publishing landscape Support from amici curiae LexisNexis and Hyperlaw, along with public comments from Matthew Bender & Co., further emphasized the significance of the case.
The court's examination of the post-acquisition legal publishing market revealed potential anticompetitive issues, particularly in two key areas: Thomson's potential monopoly in markets where it and West were the sole publishers of specific materials, and the risk of Thomson either discontinuing its licensed content or raising its purchase costs The settlement addressed these concerns.
Thomson has divested 52 legal publications and, more significantly, has agreed to implement a compulsory licensing system for its prominent pagination system This new licensing rate is notably lower than what LexisNexis was paying under the settlement from the 1986 Mead case.
33 American Association of Law Libraries, Committee on Relations with Information Vendors, A Legal
Publishers List: Corporate Affiliations of Legal Publishers, 2d ed.: Part I Thomson Corporation, available at http://www.aallnet.org/committee/criv/resources/tools/list/thomson.html (last visited May 6,
2004) (hereinafter “Thomson List”); West: Historic Highlights, at http://west.thomson.com/about/history (last visited May 18, 2004).
34 Raju Narisetti and Solange De Santis, Thomson to Buy West Publishing for $3.43 Billion, W ALL S T J., February 26, 1996, at A3.
Thomson's chief financial officer emphasized the unique value of their extensive case database, stating that its historical depth and the capability to efficiently search through it are features that are challenging to replicate.
The Hart-Scott-Rodino Act, established in 1976, aims to prevent harmful "midnight mergers" that could negatively affect antitrust laws For more details, visit the official FTC website at [ftc.gov](http://www.ftc.gov/bc/hsr/hsr.htm).
37 Albert R Karr, Thomson’s Pact to Acquire Rival Receives Government Approval, W ALL S T J., June 20,
38 United States v Thomson Corp., 949 F Supp 907, 910 (D.D.C 1996).
39 Id at 909–12 See generally DOJ Antitrust Review of Thomson/West Merger Page, at http://www.hyperlaw.com/dojvthm.htm.
40 Id at 915 n.8 Reed Elsevier bought all the titles Thomson was required to divest Reed List, supra note 30.
41 Id at 925–31 The settlement was summarized: “In United States, State of California, State of
The merger between Thomson Corporation, based in Toronto, Canada, and West Publishing, valued at $3.4 billion, is being challenged by Connecticut, Illinois, Massachusetts, New York, Washington, and Wisconsin The Division argues that this acquisition could reduce competition in the legal publishing industry.
Perhaps in deference to other pending litigation discussed below, the U.S
Department of Justice (“DOJ”) was careful to limit the precedential value of West’s agreement to freely license the star pagination system In announcing the settlement, the DOJ stated:
The recent settlement, which includes an open licensing requirement, does not imply that the Department mandates a license for the use of pagination The Department maintains its right to express its opinions regarding the scope, validity, or importance of any intellectual property rights asserted by the companies West and Thomson.
Department also said that the parties agree that the settlement shall have no impact whatsoever on any adjudication concerning such matters 42
Industry Litigation Spreads: The Bender, Hyperlaw and Oasis Cases
Litigation continued to thrive prior to Thomson's acquisition of West, as Thomson acquired smaller publishers while Lexis and West advanced their online legal services Entrepreneurs utilized emerging internet technology and CD-ROMs to provide affordable legal information to smaller law firms and the public, bypassing the high costs of printed volumes In February 1994, Bender, represented by David Nimmer, sought a declaratory judgment to incorporate West’s pagination in its CD-ROM compilations As an established legal publisher since 1887, Bender explored new content delivery methods amid growing competition in primary and secondary law markets A consent decree was proposed to settle the lawsuit, mandating Thomson to divest over 50 products, ensure database access, and license pagination rights to other publishers This marked the largest federal and state antitrust action in two years, with modifications made before the decree was finalized on March 7, 1997, leading to the required divestitures.
42 U.S Dept of Justice, Press Release No 96–287, at 3–4, 1996 WL 337211 (DOJ) *2 (June 19, 1996).
43 “[A]nyone with a little cash, know-how, and entrepreneurial spark can call themselves a legal publisher and begin hawking case law on CD–ROM.” Hansen, supra note 25.
Matthew Bender & Co., currently owned by LexisNexis, publishes the authoritative treatise "Nimmer on Copyright." This essential resource can be accessed through the LexisNexis bookstore at http://bookstore.lexis.com/bookstore/catalog?action=product&prod_id=441&cat_id=T&pcat_id=&pub_id=1.
45 Matthew Bender & Co v West Pub Co., 1995 WL 702389 (S.D.N.Y 1995) See also Matthew Bender
& Co v West Publishing Co., 95 Civ 4496 (JSM) (S.D.N.Y.).
46 LexisNexis Company History, at http://www.lexisnexis.com/presscenter/mediakit/history.asp (last visitedMay 18, 2004).
Alan Sugarman, founder of Hyperlaw, emerged as a key player in the CD-ROM industry after facing challenges accessing legal cases for his publication due to West’s proprietary system Founded in 1991, Hyperlaw quickly offered discounted CD-ROM compilations of Supreme Court and U.S Court of Appeals opinions using its own citation system However, these compilations proved largely ineffective, as users needed to reference specific pages from West’s official reporters In 1996, the court allowed Hyperlaw to intervene in the Bender case, uniting two significant challenges against West’s dominance in legal publishing.
While a case was still pending, Oasis Publishing Co filed a similar motion for declaratory judgment, challenging West’s copyright claim over its star pagination system The United States District Court in Minnesota granted summary judgment in favor of West, reinforcing the Mead court's ruling that West's case arrangement warranted protection for its page numbering system The case was subsequently argued to the Eighth Circuit in early 1997 and resolved.
West made extensive efforts to prevent the Bender case from being heard on its merits, including filing motions that were ultimately denied by the court Despite these attempts, which delayed the case by at least two years and incurred significant litigation costs, the District Court ruled on November 22, 1996, granting summary judgment on the star pagination issue The court concluded that West held no copyrightable interest in its star pagination system, asserting that the arrangement of text on specific pages does not reflect any original expression.
47 Kevin Worth, Business and the Internet: The Future of Online Legal Publishing: The Business Case for
Hyperlaw, Inc., at http://cyber.law.harvard.edu/courses/tech97/temp/team4/business.html (last visited May
18, 2004), citing an interview with Alan Sugarman, founder of Hyperlaw, Inc.
In the case of Matthew Bender & Co v West Publishing Co., 94-CIV-589 (JSM) (S.D.N.Y 1996), the court determined that HyperLaw had a legitimate concern of potential litigation from West regarding its use of specific West features at the time the complaint was filed.
53 E-mail from Bruce H Little, attorney for Oasis Publishing Co., to Jason Gelman, student, Duke
University School of Law (May 13, 2004) (on file with author) (ellipsis in original).
A letter to the DOJ from legal professionals Morgan Chu, Alex Wiles, Elliot Brown, and James Imbriaco highlights a troubling trend in litigation practices It notes a consistent pattern where large Fortune 500 companies are able to settle disputes due to their financial resources, while smaller publishers are often overwhelmed and unable to compete in lengthy legal battles This disparity raises concerns about fairness and access to justice in the publishing industry.
West’s Information Empire, M ULTINATIONAL M ONITOR , available at http://multinationalmonitor.org/hyper/mm1294.html (last visited May 19, 2004) (quoting James Love, director of the Taxpayer Assets Project).
In the case of Matthew Bender & Co v West Publishing Co., the court denied summary judgment regarding the legality of Hyperlaw's direct copying from West's reporters, indicating that the creation in question lacked protection However, the court signaled a potential favorable outcome for Hyperlaw following a bench trial, while West subsequently appealed both rulings.
While the appeal was pending in the Second Circuit, Times Mirror Co., the parent company of Matthew Bender, sold the publisher to Reed Elsevier, the parent company of LexisNexis This billion-dollar transaction further consolidated the legal publishing industry Reed Elsevier's co-chairman, Nigel Stapleton, stated that the acquisition aimed to enhance their competitiveness against Thomson, which had previously held a dominant market position.
On November 3, 1998, the Second Circuit affirmed the District Court's rulings, concluding that star pagination is not eligible for copyright protection and that Hyperlaw is permitted to directly copy from West's reporters The court referenced the Feist decision as a clear contradiction to the opposing claims.
Mead and commented that West was relying on the “now defunct ‘sweat of the brow’ doctrine.” 61 Now West could not leverage its proprietary system to prevent competition
The recent ruling permits publishers to directly scan judicial opinions from West reporters into their databases, signaling a significant change in West's strategy for safeguarding its intellectual property After exhausting legal avenues, West is now pursuing a dual approach: acquiring competitors and lobbying Congress for legislation that would provide copyright-like protection for its databases.
The Industry after Bender: Legal Publishers Consolidate
Following the Bender ruling, the legal publishing industry experienced rapid consolidation, with Wolters Kluwer acquiring ten publishers from 1997 to 2004, including Wiley Law, Summers Press, Accounting Research Manager, and Browne.
Publishing, Casenotes Publishing Company, Charles D Spencer & Associates and
Reed Elsevier expanded its legal publishing portfolio by acquiring Matthew Bender, completing its purchase of Shepard’s, and obtaining 52 titles from Thomson during its acquisition of West Additionally, between 1998 and 2002, Reed Elsevier acquired nine other publishers, including Quicklaw, CD Law, and Courtlink.
57 Matthew Bender & Co v West Publishing Co., 1996 WL 266972 (S.D.N.Y.).
58 Lisa Bannon and Kimberley A Strassel, Reed Elsevier to Buy Two Units of Times Mirror, W ALL S T J., April 28, 1998, at A3.
60 Matthew Bender & Co v West Publishing Co., 158 F.3d 674 (2d Cir 1998), cert denied, 526 U.S 1154
(1999) (hereinafter “Bender”) and Matthew Bender & Co v West Publishing Co., 158 F.3d 693 (2d Cir
62 Michael Higgins, Go West, Young Publishers, 85 A.B.A.J 24 (1999) (quoting Carl Hartmann, lawyer for Hyperlaw, Inc reacting to the District Court ruling in favor of Matthew Bender and Hyperlaw).
63 Atlas, supra note Error: Reference source not found, at 499–500.
Between 1998 and 2004, Thomson surpassed its major competitors by acquiring 20 publishers, both in print and online, with a notable $37 million acquisition of FindLaw, a leading provider of free legal information In response, Lexis launched LexisOne, a service tailored for small law offices and solo practitioners.
Since the Bender decision, there has been a lack of sustainable independent legal sources providing free access to U.S case law LawSource offers American Law Source On-line (ALSO), which lists free legal information sources Over the past decade, the U.S government has increasingly made its information available online, often at no cost However, private companies have not kept pace, with most links on ALSO directing users to government websites, LexisOne, or FindLaw The Cornell Legal Information Institute (LII) stands out as a significant free resource, allowing users to search circuit court decisions from 1992 onward, along with New York Court of Appeals decisions, U.S and state constitutions, the U.S Code, and more Much of this information is also accessible through free government websites and platforms like FindLaw and LexisOne.
Unfortunately, the availability of free legal resources online is limited Among the over 100 links to free legal information provided by ALSO, only nine link to non-government sites that are not affiliated with major publishers like Thomson or Reed Elsevier, aside from those linked to the Legal Information Institute (LII).
Thomson and Reed Elsevier face minimal competition in the “free” legal information market, as they prefer to dominate these sources rather than compete directly By carefully regulating the flow of free legal information, they manage to appease the general public with limited access while retaining control over comprehensive research resources.
Much like free sources of law, there are only a handful of independent sources for online legal information One such source is TheLaw.net 71 TheLaw.net competes directly
In April/May 2001, Emily S Nash reported in Law Office Computing that West Group acquired FindLaw, which provides access to the U.S Code, Supreme Court cases dating from 1893 to the present, and a concise directory of attorneys.
LexisOne provides access to a vast database of state and federal court rulings from the last five years, as well as U.S Supreme Court decisions dating back to 1790 Users can search the LexisNexis Total Research System for free, although payment is required only for the documents retrieved Additionally, some legal forms can be downloaded at no cost, and there is a comprehensive listing of legal websites Various paid options are also available for those seeking more extensive legal information For more details, visit [LexisOne](http://www.lexisone.com/aboutlexisone/index.html).
66 American Law Source On-line, at http://www.lawsource.com/lawsource.htm (last visited May 20, 2004).
68 Cornell’s Legal Information Institute, at http://www.law.cornell.edu (last visited May 20, 2004).
70 American Law Source On-line, supra note 66.
TheLaw.net offers affordable legal research on a national scale, providing a cost-effective alternative to established platforms like LexisNexis and Westlaw Contrary to expectations, the competition has not driven down prices for these dominant services; instead, they have maintained their market position by emphasizing their comprehensive offerings, accuracy, and additional value-added services Through innovation and reliability, major legal publishers have successfully distinguished themselves from smaller paid services while safeguarding their market share by restricting access to free legal information and acquiring potential rivals.
The Business of Legal Publishing in 2004
The legal publishing market has rapidly embraced new technology, particularly with the advent of computers and the internet, which has significantly enhanced public access to vast amounts of information This transformation has been particularly evident in the United States, where the government has made a concerted effort to digitize legal and national information, ensuring that all citizens can access essential legal resources online.
The vast quantity of data is distributed across a complex global network of computers, accessible through billions of websites Advanced computers are utilized to efficiently query this extensive information, providing valuable results for users, while legal publishers excel at presenting these findings effectively.
In 1953, the first information retrieval system on a general-purpose computer was introduced, marking a significant advancement in technology By 1964, the legal field began utilizing these systems for storing case citations, statutes, and administrative decisions By 1975, there were 300 public access databases available Fast forward forty years, and the market is primarily dominated by three major players: West Group, LexisNexis, and CCH In 1998, the estimated market for legal information retrieval reached $5.2 billion, highlighting the industry's growth and evolution.
72 About Westlaw, at http://west.thomson.com/store/product.asp?product%5Fid=Westlaw&catalog
%5Fname=wgstore (last visited August 28, 2004).
Government information is a valuable public asset, and the government is dedicated to ensuring timely and equitable access to this information through various public and private sources, including state and local governments and libraries Utilizing advanced computer networking technology, the government aims to enhance the availability of this information to taxpayers Consistent federal information policies are essential to make government data accessible at fair prices while fostering the growth of the information industry The National Technical Information Service (NTIS), part of the U.S Department of Commerce, serves as a key distributor of government information, operating the FedWorld portal to facilitate access.
74 Press Release, Google Achieves Search Milestone with Immediate Access to More Than 6 Billion Items, at http://www.google.com/press/pressrel/6billion.html (last visited May 3, 2004).
75 Lexis timeline, supra note Error: Reference source not found.
76 Id The Lexis service was launched in 1973, followed by the Westlaw service in 1975.
77 Id research materials, these three companies controlled over $4 billion in annual sales 79 In
2004 the “big three” posted $5.9 billion in sales 80 Online sales represent nearly 46% of this $6 billion-plus market 81
The "big three" legal publishers achieve significantly higher profit margins compared to traditional publishers, with nearly half of their revenue stemming from online sales This makes direct comparisons with traditional print publishers misleading; instead, it is more appropriate to evaluate their margins alongside other "information dealers." Legal publishing divisions report average profit margins of 25.265%, which is comparable to the 24.845% average in the software and programming industry However, since less than half of their revenue is derived from online sources, this comparison is less robust A more accurate representation of legal publishers' revenue streams can be derived by averaging the margins of the software and programming industry with the traditional publishing industry's mere 5% margin, resulting in an estimated profit margin of 14.925%, significantly lower than that of legal publishers.
78 The “big three” control 80% of the legal publishing market Svengalis presentation, supra note Error: Reference source not found.
79 Svengalis presentation, supra note Error: Reference source not found.
In 2003, Thomson Corporation reported annual sales of $3.142 billion, as detailed in their annual report available at http://ar.thomson.com Meanwhile, Reed Elsevier achieved sales of €1.428 billion, equivalent to $1.616 billion, according to their annual report found at http://www.reedelsevier.com/media/pdf/n/p/annualRep03.pdf.
2003 Annual Report”); Wolters Kluwer has 2003 sales of 1.025€ billion, or $1.152 billion Wolters Kluwer
The 2003 Annual Report by Wolters Kluwer, available at http://www.wolterskluwer.com/NR/rdonlyres/eiu6ftzt5kc2cs7t4ccioi6nidf4hwbm65huoyhv5wptish2s6zhqn jiamder7thgbrgodpd25ccei/WK03ENGTOTAL1.pdf, provides a comprehensive overview of the company's performance and strategic initiatives For further details, please refer to the document accessed on May 3, 2004.
81 Svengalis presentation, supra note Error: Reference source not found.
In the first quarter of 2004, Thomson's Legal & Regulatory division achieved a remarkable profit margin of 26.9%, reflecting an increase of over 4% compared to the same period in 2003, and outperforming all other divisions In contrast, the company's overall profit margin for 2003 stood at 15.7%.
Reed Elsevier reported a profit margin of 22.8% for LexisNexis in 2003, reflecting a 10% increase from the previous year, while the company's overall profit margin was 13.4% In comparison, Wolters Kluwer achieved a 26% profit margin in North American legal publishing, with a company-wide margin of 18%.
Profit margins in the publishing industry vary significantly, with educational books yielding a profit margin of 13–16%, while adult paperbacks only achieve a margin of 1–4% According to William H Donald's report from Standard & Poor’s Industry Surveys, the median profit margin for the overall periodical publishing industry is around 5.0%, as highlighted by Brendan J Wyly's analysis of publisher profits.
84 Reuters.com, Software & Programming Industry Overview, at http://www.investor.reuters.com/IndustryCenter.aspx?industrypscode=SOFTWR&target=industrycenter (last visited May 6, 2004).
Legal publishing divisions boast profit margins exceeding 25%, placing them among the top quartile of S&P 500 companies, which is notably high compared to overall corporate standards With such substantial margins, it is difficult for legal publishers to claim they are at risk In fact, the sales of the major three legal publishers have surged by 40% since 1998.
Proposed Legislative Protection
Despite their dominant market position and excessive profit margins, the big three companies envy the database owners in Europe On March 11, 1996, the European Union Parliament and Council enacted the Directive on the Legal Protection of Databases.
The EU Database Directive empowers database owners in Europe to prohibit unauthorized extraction and reuse of their database contents for a duration of 15 years from the date of creation.
EU has threatened the United States with trade retaliation if it fails to enact similar legislation 92
Legal publishers are urging Congress to enact legislation akin to the EU Database Directive, with several proposals having been considered Notably, on May 19, 1998, the House approved H.R 2652, the Collections of Information Antipiracy Act, which ultimately stalled in the Senate Critics labeled this bill as an "unfortunate residue" of an overly protective property rights stance During the 106th Congress, two bills, H.R 345 and H.R 1858, were introduced, with H.R 345 favoring the publishing industry and H.R 1858 crafted as a compromise with public interest input Although both bills advanced through their committees, they failed to merge into a Senate-considerable version, leading to the demise of database protection once again.
The ongoing legislative conflict in the 108th Congress saw Representative Howard Coble and nine cosponsors introduce H.R 3261, the Database and Collections of Information Misappropriation Act, on October 8, 2003, which favored legal publishers In response to this initiative, Representative Cliff Stearns presented H.R 3872 on March 3, 2004, highlighting the contentious nature of information rights and publishing in the legislative arena.
87 The five-year average profit margin of S&P 500 companies is 11.63% http://www.reuters.com.
88 Higgins, supra note 62 (asserting that the cost of providing online content is 4 cents per minute but that current market rates are several dollars per minute).
90 Directive 96/9/EC of the European Parliament and of the Council on the legal protection of databases, available at http://europa.eu.int/ISPO/infosoc/legreg/docs/969ec.html (last visited May 4, 2004).
91 David Mirchin, White Papers: The European Database Directive, 39(1) NFAIS N EWSLETTER 7 (January
1997), available at http://www.nfais.org/publications/white_papers_2.htm (last visited May 4, 2004).
92 Stephen Mairer and Suzanne Scotchmer, Database Protection: Is It Broken and Should We Fix It?, 284
93 For a comprehensive guide to recent database legislation, refer to the Association of Research Librarian’s Database Proposals and Legislation page at http://www.arl.org/info/frn/copy/database.html.
94 For detailed information on H.R 2652, go to http://thomas.loc.gov/bss/d105query.html and search for
95 Pam Samuelson, Letter to Representative Howard Cole, Re: Tyson/Sherry Report, October 23, 1997.
96 H.R 3261 Bill Summary and Status for the 108th Congress, at http://thomas.loc.gov/cgi-bin/bdquery/z?d108:HR03261:@@@P (last visited August 29, 2004).
The Consumer Access to Information Act of 2004 saw both bills successfully pass through their committees Currently, these competing bills are on the House's Union Calendar, awaiting consolidation before a final vote on the House floor.
Reed Elsevier and Thomson are actively pursuing stronger copyright protections, investing significantly in lobbying efforts In 2003, Reed Elsevier allocated $1.2 million to employ full-time lobbyists and paid over $640,000 to seven lobbying firms in Washington D.C to advocate for enhanced intellectual property rights, particularly for database protection By mid-2004, their federal lobbying expenditures had reached an additional $163,875 Alongside these efforts, Reed Elsevier also contributes to political candidates through its Political Action Committee, making modest donations during the 2000 election cycle.
$12,500; in the 2002 cycle it donated $50,045; and in 2004 it has donated $53,522 as of the August 2 filing deadline 101 Reed’s “hard-money” contributions are matched by its
$115,175 in soft-money contributions over the 2000 and 2002 election cycles 102
Reed Elsevier's political contributions totaling $250,000 do not rank it among the top federal donors In contrast, Vance Opperman, a prominent Washington insider and former head of West Group (now owned by Thomson), has a history of substantial political donations Opperman has faced ongoing scrutiny for his significant contributions, particularly highlighted during the 2000 election cycle when he, through Key Investments, made notable donations.
$488,000 in soft money to federal Democrats 105 Opperman also gave over $170,000 in
Since 2002, Democrats in Minnesota, particularly in the West division of Thomson, have invested millions in efforts to influence Congress However, these expenditures have yet to yield a favorable law.
97 H.R 3872 Bill Summary and Status for the 108th Congress, at http://thomas.loc.gov/cgi-bin/bdquery/z? d108:HR03872: (last visited August 29, 2004).
The Union Calendar in the House of Representatives serves as a schedule for reviewing bills and resolutions that either generate revenue or authorize the allocation of funds and resources, whether directly or indirectly For more information, visit the official definition at the Library of Congress.
99 United States Senate Office of Public Records Lobby Filing Disclosure Program, available at http://sopr.senate.gov.
According to Opensecrets.org, the funding for Reed's Political Action Committee (PAC) primarily comes from three key individuals: Norman Willox, Chief Officer for Privacy, Industry and Regulatory Affairs at LexisNexis, who contributed $17,500; Henry Horbaczewski, Senior Vice President and General Counsel at Reed Elsevier, who donated $8,000; and Steven Manzo, Vice President for Government Affairs at Reed Elsevier, who provided $5,200.
103 Viveca Novak and Michael Weisskopf, The Cheerful Giver: A Businessman with a Corner on
Publishing Court Documents Was Also a Master of Political Donations, T IME , April 21, 1997, available at http://www.cnn.com/ALLPOLITICS/1997/04/14/time/novak.html.
106 Follow the Money: The Institute of Money in State Politics, at http://www.followthemoney.org/database/StateGlance/contributor.phtml?si 0223&d%15509 (last visited August 29, 2004).
Existing Legal Protections
The big three legal publishers—Thomson, Reed Elsevier, and Wolters Kluwer—effectively utilize existing intellectual property protections, including copyright, patent, and trademark, to safeguard their data and market share Thomson stands out for its aggressive use of these laws, having registered over 48,000 trademarks, compared to just over 5,300 for Reed Elsevier and Wolters Kluwer combined Both Thomson and Reed Elsevier hold patents to protect their innovative methods for helping lawyers access relevant information quickly from their extensive databases Additionally, trademark protection is heavily employed by all three publishers to secure their brands This dominance is evident in the extensive trademark listings, illustrating how these companies control nearly all the essential information that legal professionals require during law school and in practice.
In addition to using traditional intellectual property rights, the big three employ
Thomson Reuters employs "click wrap" contracts to safeguard its data on westlaw.com, requiring users to agree not to reverse engineer or access the site's source code This restriction appears unnecessary if Thomson has patented its site's valuable features, which would prevent competitors from replicating its services until the patents expire Additionally, the User Agreement limits users from permanently storing downloaded information, allowing only temporary storage of insubstantial amounts This clause effectively prevents users from compiling a comprehensive database of case law, despite the fact that the text of each decision is not copyrightable Thomson's extensive portfolio of 48,000 registered copyrights should cover all copyrightable content on the site The User Agreement aims to secure all data Thomson has gathered, whether through creative means or effort, highlighting the significant power publishers have in imposing limitations on user rights beyond legislative intent.
Reed Elsevier’s LexisNexis and Thomson’s Westlaw.com implement loyalty programs similar to frequent flyer miles, awarding points to users to enhance customer retention and market share These initiatives specifically target law students, aiming to cultivate long-term loyalty among future legal professionals.
111 Westlaw User Agreement for Law School Students, at http://lawschool.westlaw.com/pdf/law school student user agree.pdf (last visited September 5, 2004).
Law students earn points by logging into various legal services and completing training programs that highlight the unique features of each service These points can be redeemed for rewards, allowing students to access LexisNexis and Westlaw at no cost However, many students are unaware of the actual costs associated with these services and often overlook more affordable or free alternatives As a result, they become reliant on these convenient tools, making them more likely to continue using and paying for them as future legal practitioners.
The big three have successfully leveraged existing laws and strategic marketing to generate demand for their services while minimizing competition Their current protections have proven sufficient for achieving substantial profits, and given their success in safeguarding data and profitability, there appears to be no need for additional legislative or regulatory barriers in a market already controlled by these three dominant players.
The market demonstrates that raw information does not require legal protection if the retrieval interface is significantly more convenient than free alternatives, and the information is both reliable and comprehensive This enhanced usability and assured accuracy surrounding the facts compel attorneys to invest heavily in legal resources, despite the availability of cheaper options.
Despite unfavorable court rulings like Bender and Hyperlaw that allowed free riders into the market, major players such as Thomson, Reed Elsevier, and Wolters Kluwer have maintained their dominance and continued to grow The Bender decision was initially met with optimism from librarians, who anticipated a decrease in legal information costs However, prices have not dropped, likely due to the lack of competition from independent publishers This situation highlights the challenges in accessing affordable legal resources and the reliance on private, free sources of law.
Thomson, Reed Elsevier, and Wolters Kluwer dominate the legal publishing market, ensuring their success despite the Bender and Hyperlaw decisions Their business practices and the nature of the legal industry make them resilient against competition from free riders By securing legal protection for their comprehensive databases, these companies safeguard their products, which, unlike those in travel and electronics, are less susceptible to market fluctuations.
A total of 114 law students benefit from unlimited-use subscriptions to LexisNexis and Westlaw, funded by their law schools and likely incorporated into tuition fees These subscriptions are exclusively for academic purposes and are accessible only while the students are enrolled in classes or engaged in school-related activities.
115 For an analysis of how to engineer an effective loyalty program see generally Brian Wansink and Scott Seed, Making Brand Loyalty Programs Succeed, 8:3 J OURNAL OF B RAND M ANAGEMENT 211 (February 2001).
116 Our legal information market is based on an elaborate fiction—significant numbers of decisions are
"Unpublished" opinions refer to decisions made by editors, such as those at West, indicating that certain cases are deemed unworthy of publication While these decisions hold validity as case law, many courts do not permit citations to unpublished opinions Consequently, a comprehensive database of case law includes only published decisions, excluding those that remain unpublished.
The legal publishing industry is dominated by three major players who have consistently acquired significant competitors to maintain their market control This competitive landscape fosters innovation as these publishers vie for market share However, no lower-cost providers have emerged to offer a comparable range of services, preventing any pressure on the big three to reduce their prices Given this context, it would be unreasonable to impose further restrictions on external competition in an industry that has long been a highly profitable cartel for its leading firms.
Trademarks Owned by Thomson, Reed Elsevier and Wolters Kluwer and their subsidiaries:
Trademarks Issued to Thomson’s West Unit:
California Insurance Law and Regulation Reporter
Great Ideas in the Law
McKinney's Consolidated Laws of New York Annotated
MLRS Memory Learning and Retention System
Preparing for Settlement and Trial
The Key to Good Law
United States Merit Systems Protection Board Reporter
United States Supreme Court Digest
Selected Trademarks Issued to Reed Elsevier & Its Subsidiaries:
Ballantine & Sterling California Corporation Law
Martindale-Hubbell Dispute Resolution Directory
Partner with the Brightest Minds in Law
Selected Trademarks Issued to Wolters Kluwer & Its Subsidiaries:
Cyber Strategies at the Frontier of Law and Business
The Journal of Ambulatory Care Management
Topics in Health Care Financing
Selected Patents Assigned to Thomson Publishing, Reed Elsevier and their subsidiaries (note: no patents were found assigned to Wolters Kluwer or its subsidiaries):
Selected Patents Assigned to Thomson & West Publishing
5,157,783: Data base system which maintains project query list, desktop list and status of multiple ongoing research projects
5,265,065: Method and apparatus for information retrieval from a database by replacing domain specific stemmed phases in a natural language to create a search query
5,418,948: Concept matching of natural language queries with a database of document concepts
5,434,932: Line alignment apparatus and process
5,488,725: System of document representation retrieval by successive iterated probability sampling
5,644,720: Interprocess communications interface for managing transaction requests 5,715,445: Document retrieval system employing a preloading procedure
5,870,770: Document research system and method for displaying citing documents
6,263,351: Document research system and method for efficiently displaying and researching information about the interrelationships between documents
6,292,813: System and method for communicating information relating to a network resource
6,301,576: Document retrieval system for retrieval of a first search document and a last search document from database
6,336,131: System and method for communicating information relating to a network resource
6,341,305: System and method for communicating information relating to a network resource
6,529,911: Data processing system and method for organizing, analyzing, recording, storing and reporting research results
6,604,103: System and method for information retrieval employing a preloading procedure
6,668,255: Data processing system and method for organizing, analyzing, recording, storing and reporting research results
Selected Patents Assigned to Reed Elsevier & Its Subsidiaries
5,481,742: Printer control apparatus for remotely modifying local printer by configuration signals from remote host to produce customized printing control codes 5,692,176: Associative text search and retrieval system
5,761,497: Associative text search and retrieval system that calculates ranking scores and window scores
5,771,378: Associative text search and retrieval system having a table indicating word position in phrases
5,771,381: Method and system for adding configuration files for a user
5,819,260: Phrase recognition method and apparatus
5,826,260: Information retrieval system and method for displaying and ordering information based on query element contribution
5,855,015: System and method for retrieval of hyperlinked information resources
6,115,712: Mechanism for combining data analysis algorithms with databases on the internet
6,282,660: Extending dial up networking paradigm to cover network connections
6,529,911: Data processing system and method for organizing, analyzing, recording, storing and reporting research results
6,668,255: Data processing system and method for organizing, analyzing, recording, storing and reporting research results
Of the three largest legal publishers, Thomson & West Publishing have most aggressively registered their copyrights 119
West Publishing Corportation is the author of 29,762 registered works:
WEST PUBLISHING COMPANY, INC (2 items)
WEST PUBLISH9ING CORPORATION (1 item)
The information in Appendix C is sourced from the United States Copyright Office's online database of registered copyrights and serial works, accurate as of August 26, 2004 It should be noted that the data does not fully represent Thomson, Reed Elsevier, and Wolters Kluwer, as these companies may have registered copyrights under various divisions For more details, the searchable index of the United States Copyright Office is available at http://www.copyright.gov/records.
All information is based on a August 26,
2004 search of the United States Copyright Office’s database of registered copyrights and registered serials.
WEST PUBLISHING COMPANY, INC (25 items)
Reed Elsevier holds significantly fewer copyright registrations with 1,458 registered works:
REED ELSERVIER, INC LEXIS LAW PUBLISHING (1 item)
REED ELSEVEIR, INC MICHIE (1 item)
REED ELSEVIER GROUP BUTTERWORTH-HEINEMANN (4 items)
REED ELSEVIER PROPERTIES, INC (5 items)
REED ELSEVIER PROPERTIES, INC LEXIS LAW PU (4 items)
REED ELSEVIER PROPERTIES, INC LEXIX LAW PU (1 item)
REED ELSEVIER PROPERTIES, INC MICHIE COMPA (1 item)
REED ELSEVIER LEXIS LAW PUBLISHING (376 items)
REED ELSEVIER, INC LEXIS LAW PLBUISHING (1 item)
REED ELSEVIER, INC LEXIS LAW PUBLISHING (219 items)
LEXIS LAW PUBLIS;HING (1 item)
LEXIS LAW PUBLISHING OF PUERTO RICO (1 item)
LEXIS LAW PUBLISHING OF PUERTO RICO, INC (6 items)
LEXIS LAW PUBLISING OF PUERTO RICO, INC (1 item)
LEXIS NEXIS DE PUERTO RICO (5 items)
LEXIS NEXIS DE PUERTO RICO, INC (1 item)
LEXIS PUBLISHING CD LAW, INC (4 items)
LEXIS-NEXIS DE PUERTO RICO, INC (9 items)
LEXIS-NEXIS OF PUERTO RICO (2 items)
LEXIS-NEXIS OF PUERTO RICO, INC (16 items)
LEXISNEXIS GROUP ANDERSON PUBLISHING COMPA (12 items)
LEXISNEXIS GROUP ANDERSON PUBLISHING GROUP (1 item)
LEXISNEXIS GROUP ANERSON PUBLISHING COMPAN (1 item)
LEXISNEXIS OF PUERTO RICO, INC (1 item)
REED ELSEVIER BUSINESS INFORMATION (2 items)
REED ELSEVIER GROUP, INC BUTTERWORTH-HEINE (1 item)
REED ELSEVIER INC MICHIE (2 items)
REED ELSEVIER MEDICAL PUBLICATIONS USA (1 item)
REED ELSEVIER MEDICAL PUBLISHERS (1 item)
REED ELSEVIER MEDICAL PUBLISHERS, USA (3 items)
REED ELSEVIER PROPERTIES, INC (1 item)
REED ELSEVIER CAHNER PUBLISHING COMPANY (3 items)
REED ELSEVIER CAHNERS BUSINESS INFORMATION (4 items)
REED ELSEVIER CAHNERS PUBLISHING COMPANY (17 items)
REED ELSEVIER CAHNERS TRAVEL GROUP (22 items)
REED ELSEVIER LEXIS LAW PUBLISHING (565 items)
LEXIS DOCUMENT SERVICES, INC (2 items)
LEXIS LAW PUBLISHING (FORMERLY MICHIE) (1 item)
LEXIS LAW PUBLISHING OF PUERTO RICO, INC (2 items)
LEXIS LAW PUBLISHING, INC (1 item)
LEXIS NEXIS MEALEY PUBLICATIONS & CONFERENC (1 item)
LEXIS NEXIS PUBLISHING OF PUERTO RICO, INC (1 item)
LEXIS PUBLISHING CD LAW, INC (2 items)
LEXIS-NEXIS DE PUERTO RICO, INC (4 items)
LEXIS-NEXIS OF PUERTO RICO (4 items)
LEXIS-NEXIS OF PUERTO RICO, INC (15 items)
LEXISNEXIS GROUP ANDERSON PUBLISHING COMPA (1 item)
LEXISNEXIS MEALEY PUBLICATION & CONFERENCES (1 item)
LEXISNEXIS MEALEY PUBLICATIONS & CONFERENCE (156 items)
LEXISNEXIS MEASLEY PUBLICATIONS & CONFERENC (2 items)
LEXISNEXIS OF PUERTO RICO, INC (1 item)
Wolters Kluwer has registered even fewer copyrights, with 714 registered works:
WOLTERS KLUWER HEALTH LIPPINCOTT WILLIAMS (3 items)
WOLTERS KLUWER HEALTH, INC (15 items)
ASPEN LAW & BUSINESS PUB (3 items)
ASPEN LAW & BUSINESS PUBLISHERS (9 items)
ASPEN LAW & BUSINESS PUBLISHERS, INC (2 items)
ASPEN LAW & BUSINESS PUBLISHING (3 items)
ASPEN LAW AND BUSINESS (108 items)
ASPEN LAW AND BUSINESS PUB (37 items)
ASPEN LAW AND BUSINESS PUBLICATION (1 item)
ASPEN LAW AND BUSINESS PUBLICATIONS (1 item)
ASPEN LAW AND BUSINESS PUBLIHSERS, INC (1 item)
ASPEN LAW AND BUSINESS PUBLISHER (2 items)
ASPEN LAW AND BUSINESS PUBLISHERS (40 items)
ASPEN LAW AND BUSINESS PUBLISHERS, INC (7 items)
ASPEN LAW AND BUSINESS PUBLISHING (23 items)
ASPEN LAW AND BUSINESS PANEL PUBLISHERS (1 item)
ASPEN PUBLISHERS ASPEN HEALTH LAW CENTER (1 item)
ASPEN PUBLISHERS ASPEN LAW & BUSINESS (1 item)
ASPEN PUBLISHERS, INC ASPEN CENTER FOR PAT (9 items)
ASPEN PUBLISHERS, INC ASPEN COMMUNICATIONS (7 items)
ASPEN PUBLISHERS, INC ASPEN EDUCATION DEVE (2 items)
ASPEN PUBLISHERS, INC ASPEN HEALTH AND ADM (1 item)
ASPEN PUBLISHERS, INC ASPEN HEALTH LAW AND (12 items)
ASPEN PUBLISHERS, INC ASPEN HEALTH LAW CEN (11 items)
ASPEN PUBLISHERS, INC ASPEN LAW & BUSINESS (7 items)
ASPEN PUBLISHERS, INC ASPEN LAW AND BUSINE (4 items)
ASPEN PUBLISHERS, INC ASPEN NONPROFIT FUND (1 item)
ASPEN PUBLISHERS, INC ASPEN REFERENCE GROU (61 items)
ASPEN PUBLISHERS, INC ASPEN REVERENCE GROU (1 item)
ASPEN PUBLISHERS, INC HEALTH & ADMINISTRAT (1 item)
ASPEN PUBLISHERS, INC HEALTH AND LAW COMPL (1 item)
ASPEN PUBLISHERS, INC PANEL PUBLISHERS (1 item)
ASPEN PUBLISHERS, INC ASPEN LAW & BUSINES (1 item)
ASPEN REFERENCE GROUP ASPEN PUBLISHERS, IN (1 item)
WOLTERS KLUWER HEALTH, INC (12 items)
WOLTERS KLUWER U.S CORPORATION LIPPINCOTT (2 items)
ASPEN LAW & BUSINESS PANEL PUBLISHERS (1 item)
ASPEN LAW & BUSINESS PUB (26 items)
ASPEN LAW & BUSINESS PUBLISHERS (8 items)
ASPEN LAW & BUSINESS PUBLISHING (5 items)
ASPEN LAW AND BUSINESS (102 items)
ASPEN LAW AND BUSINESS PUB (129 items)
ASPEN LAW AND BUSINESS PUBLICATION (1 item)
ASPEN LAW AND BUSINESS PUBLISHER (1 item)
ASPEN LAW AND BUSINESS PUBLISHERS (39 items)
ASPEN LAW AND BUSINESS PUBLISHERS, INC (1 item)
ASPEN LAW AND BUSINESS PUBLISHING (38 items)
ASPEN LAW AND BUSINESS PANEL PUBLISHERS (2 items)
ASPEN LAW OF BUSINESS PUBLISHERS (1 item)