Small steps

Court cases rarely result in sweeping victories for anyone.  The Kirtsaeng case decided earlier this year by the Supreme Court was an anomaly in this regard; the court held that the doctrine of first sale applied in the United States to any lawfully-made copy of copyrighted material, regardless of where it was manufactured.  Although no library was a party to the lawsuit, that was a complete victory for libraries, as well as for Mr. Kirtsaeng.  But as I say, that is unusual.  Most of the time, court decisions do not completely satisfy either side, nor do they represent complete vindication for any one set of interests.  And if this is true about final decisions, it is even more the case when the ruling is about only one aspect of an ongoing case.

All of this is by way of saying that we should not read too much into some recent decisions, even though both contain small nuggets of encouragement for libraries.

I already wrote about the decision to reverse class certification in the Google Books lawsuit brought by the Authors Guild.  There is another perspective on that decision here.  But that case is a good example of what I mean.  It is encouraging that the class certification was reversed, provisionally, since so many academic authors are not represented by the position taken by the Authors Guild, and it is great to have the trial court instructed to consider fair use prior to deciding about the class action status of the case.  But there is still a long way to go in that case; Judge Chin has just scheduled the briefings and oral arguments for the next stage.  We cannot yet say for sure that Google Books is or is not a fair use, and even after a final ruling there will probably continue to be disagreement and room for dispute.

It is in this context that we should look at the ruling from the Southern District of New York in the Justice Department’s lawsuit against Apple over e-book pricing.

This was not merely a procedural ruling, to be sure.  It is the final decision of the trial court, which held that Apple and the major e-book publishers conspired to set prices above the standard that had been set by Amazon’s dominance of $9.99 per title.  The judge expressed no doubt that there had been a “combination in restraint of trade” that violated the anti-trust laws of the United States.

It is important to note that this finding involves both Apple and the five major e-book publishers.  Even though all of the publishers settled out of the lawsuit, their behavior is very much at issue.  Consider this quote, in which “plaintiffs refers to the U.D. Department of Justice, the State of Texas and others (the full opinion is here):

The Plaintiffs have shown that the Publisher Defendants conspired with each other to eliminate retail price competition in order to raise e-book prices, and that Apple played a central role in facilitating and executing that conspiracy. Without Apple’s orchestration of this conspiracy, it would not have succeeded as it did in the Spring of 2010.

In a similar vein, the Judge is very clear that neither the Apple executive nor the publisher CEOs who testified were credible to the court.

Obviously this lawsuit, which will certainly be appealed by Apple, has some implications for libraries in their ongoing quest for reasonable and workable terms for e-book acquisitions.  Perhaps the Judge’s orders in the case can help level that playing field a little bit.  But the case is not really about libraries, and we should not draw sweeping conclusions or direct analogies from it.  I want to suggest three general lessons for the rest of us to take from this case.

First, the digital environment is still new and frightening to many in the publishing industry.  They are trying to find ways to control the Internet and to make all the money they think it promises to them, but they are falling behind the curve.  Libraries, especially, need to take what they are told by publishers with several grains of salt and keep open all of our options for the digital life of scholarship.  The publishing industry worked very well for libraries and scholarship in the print era, but now as that industry alternates between wooing and threatening us, we need to acknowledge that, in these changed conditions, they may simply no longer be reliable or trustworthy partners.

Second, for anti-trust laws to be violated, some kind of collusion or conspiracy has to exist.  Simply charging an outlandish price is not an anti-trust violation.  Nor is simply refusing to pay an outlandish price.  Where there are problems is where there are organized boycotts by consumers to try to force prices down and where there are agreements amongst competitors to try and force them up.  An individual library is free to walk away from some of the most one-sided deals it is offered, and even to tell others that it did so and why. And even groups are free to boycott when the issues on which they want to put pressure are not price related, as in the Cost of Knowledge boycott of Elsevier, which focused on the fair treatment of authors.

For anti-trust liability to attach, there must be collusion focused on preventing free market competition between those who can marshal power in that market.  The conspiracy can be covert and secretive — there does not have to be a “smoking gun” — but it must exist.  In this e-books case the judge had no troubling documenting such a conspiracy.  But the basic parameters required for that element of an anti-trust violation can help us in libraries determine the things we can do to bring pressure on publishers that would not rise to the level of such “combination in restraint of trade.”

Third, anti-trust laws cut both ways.  In libraries we are often concerned that we need to avoid liability for collusion that might restrain free trade.  But this must also be a concern for publishers, as the Apple case shows.  Many issues that libraries face, including bundling of journals and e-b0oks, could create anti-trust liability for the vendors as well.  It all depends on whether or not there is a conspiracy or the exercise of excessive market power.  So libraries should be vigilant, both about their own actions and about the way they are treated as consumers; we should avoid collaborations designed to reduce prices, but also be willing to challenge price-fixing.