[Federal Register Volume 61, Number 199 (Friday, October 11, 1996)]
[Notices]
[Pages 53386-53456]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-25030]


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DEPARTMENT OF JUSTICE

Antitrust Division


Public Comments and Plaintiff's Response; United States of 
America v. The Thomson Corporation and West Publishing Company

    Notice is hereby given pursuant to the Antitrust Procedures and 
Penalties Act, 15 U.S.C. 16(b)-(h), that Public Comments and 
Plaintiff's Response have been filed with the United States District 
Court for the District of Columbia in United States v. The Thomson 
Corporation and West Publishing Company, Civ. Action No. 96-1415.
    On June 19, 1996, the United States filed a Compliant seeking to 
enjoin a transaction in which The Thomson Corporation (``Thomson'') 
agreed to acquire West Publishing Company (``West''). Thomson and West 
are two of the country's largest publishers of law books and legal 
research materials. Thomson and West publish numerous competing legal 
publications, including the only two annotated United States Codes and 
the only two enhanced U.S. Supreme Court reporters. The Complaint 
alleged that the proposed acquisition would substantially lessen 
competition in the market for legal publications in violation of 
Section 7 of the Clayton Act, 15 U.S.C. 18, and Section 1 of the 
Sherman Antitrust Act, 15 U.S.C. 1.
    Public comment was invited within the statutory 60-day comment 
period. Such comments, and the responses thereto, are hereby published 
in the Federal Register and filed with the Court. Charts appended to 
the Public Comments have not been reprinted here, however they may be 
inspected with copies of the Complaint, Stipulation, proposed Final 
Judgment, Competitive Impact Statement, Public Comments and Plaintiff's 
Response in Room 3233 of the Antitrust Division, Department of Justice, 
Tenth Street and Pennsylvania Avenue, N.W., Washington. D.C. 20530 
(telephone: 202-633-2481) and at the office of the Clerk of the United 
States District Court for the District of Columbia, Third Street and 
Constitution Avenue, N.W., Washington, D.C. 20001.
    Copies of any of these materials may be obtained upon request and 
payment of a copying fee.
Constance K. Robinson,
Director of Operations, Antitrust Division.

In the United States District Court for the District of Columbia

    United States of America, 1401 H Street, NW, Suite 4000, 
Washington, DC 20530 (202) 307-5779, State of California, State of 
Connecticut, State of Illinois, Commonwealth of Massachusetts, State 
of New York, State of Washington, and State of Wisconsin Plaintiffs, 
v. The Thomson Corporation, and West Publishing Company Defendants. 
Civil No. 96-1415 (PLF)

PLAINTIFFS' RESPONSE TO PUBLIC COMMENTS

I. Background
II. Response to public comments
    A. Divestiture of the Publications Enumerated in the Decree 
Adequately Protects Competition
    1. Divestiture of competing products, not companies and 
supporting infrastructure
    2. Availability of legal editors
    3. Divestiture products independent of a cross-referencing 
``system''
    4. California
    5. Brand names
    B. The Option to Official Reporter Contract States Provision is 
Appropriate and Adequate Relief for the Violation Alleged in the 
Complaint
    1. California
    2. Washington
    3. Wisconsin
    4. Other states
    C. Divestiture of Auto-Cite and Lexis/Reed Elsevier's Option to 
extend Critical Thomson Content Licenses Adequately Protects 
Competition in the Comprehensive Online Legal Research Services 
Market
    1. TCSL
    2. Product differentiation
    3. Auto-Cite divestiture
    4. Overall competition in the comprehensive online legal 
research services market
    D. The Star Pagination License Eases a Significant Barrier to 
Entry and is Procompetitive
    1. Validity of West's star pagination copyright claim
    2. Abandonment of star pagination copyright claim
    3. Text copyright
    4. Other antitrust violations
    5. Citation to first page of an opinion
    6. Level of license royalty fees
    7. Large publishers
    8. Other markets
    9. The need for a text license in unrelated to this merger 
transaction
    10. Selection of cases
    11. Description of product or service
    12. License fee per format
    13. Challenges of West's copyright
    14. The confidentiality provision is intended to protect the 
licensee and could encourage procompetitive discounting
    15. Arbitration
    16. The Internet
    17. License fee for books
    18. Other comments regarding the star pagination license
    E. Plaintiffs Used Appropriate Merger Analysis in Examining this 
Merger
    F. Plaintiffs Should Not Require Divestiture of the Juris 
Database
    1. There is no conflict of interest within the Department on 
this matter
    2. Familiarity with legal publishing industry
    G. Miscellaneous Comments--unrelated to merger or unsupported by 
the investigation
III. The Legal Standard Governing the Court's Public Interest 
Determination
IV. Conclusion

    Pursuant to the requirements of the Antitrust Procedures and 
Penalties Act, 15 U.S.C. 16(b)-(h) (``Tunney Act''), the United States 
and the attorneys general of the states of California, Illinois, 
Massachusetts, New York, Washington, and Wisconsin hereby respond to 
the public comments received regarding the proposed Final Judgment in 
this case.\1\
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    \1\ The State of Connecticut does not join in this Response to 
Comments. Therefore, subsequent references to ``the governments'' or 
``the plaintiffs'' refer only to the plaintiffs who have signed the 
response.
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I

Background

    On June 19, 1996, the United States Department of Justice (``the 
Department'') and the seven plaintiff state attorneys general's offices 
filed the Complaint in this matter. The Complaint alleges that 
defendants Thomson Corporation (``Thomson'') and West Publishing 
Company (``West''), in violation of Section 7 of the Sherman Act, 15 
U.S.C. 18, proposed a merger that was likely substantially to lessen 
competition.

[[Page 53387]]

    Simultaneously with the filing of the Complaint, the plaintiffs 
filed the proposed Final Judgment and a Stipulation signed by all the 
parties that allows for entry of the Final Judgment following 
compliance with the Tunney Act. A Competitive Impact Statement 
(``CIS'') was filed and published in the Federal Register on July 5, 
1996. The CIS explains in detail the provisions of the proposed Final 
Judgment, the nature and purposes of these proceedings, and the 
practices giving rise to the alleged violation.
    As the Complaint and CIS explain, the merger as originally proposed 
was likely to reduce or eliminate competition between Thomson and West 
in several specific markets in three categories: enhanced primary law, 
secondary law, and comprehensive online legal research services. 
Complaint Secs. 24 and 25. The proposed Final Judgment is intended to 
prevent the expected lessening of competition caused by the merger in 
those specific markets.
    As a remedy to particular competitive concerns in enhanced primary 
and secondary law product markets, the Department, seven states, 
Thomson, and West agreed to certain product divestitures, the mandatory 
licensing of the internal pagination from West's National Reporter 
System (``star pagination''), and, in the case of official reporter 
contract states, an option to those states to obtain a new official 
publisher and to require divestiture of Thomson's official reporter 
assets.
    These divestitures of enhanced primary and secondary law products 
are also intended to protect consumers by ensuring continued vigorous 
competition between Lexis-Nexis and WESTLAW in the ``comprehensive 
online legal research services'' market after the merger, but the 
plaintiffs agreed also to the extension of certain licenses to Lexis-
Nexis, a division of Reed Elsevier, Inc., and the divestiture of Auto-
Cite to address this concern.
    The 60-day period for public comments expired on September 3, 1996. 
As of September 23, 1996, plaintiffs had received comments from 26 
persons.\2\
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    \2\ The comments received as of September 23, 1996, are 
attached, preceded by a list of the 26 commenters. The United States 
plans promptly to publish the comments and this response in the 
Federal Register.
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    The comments come from a variety of sources. The most extensive 
comments are submitted by Lexis/Reed Elsevier; Alan Sugarman, President 
of HyperLaw, Inc. (``HyperLaw''); and Matthew Bender & Company, Inc. 
(``Matthew Bender''). Lexis/Reed Elsevier is the owner of the only 
existing competitor to West in the comprehensive online legal research 
services product market. Alan Sugarman and Matthew Bender are currently 
engaged in copyright litigation with West in the District Court for the 
Southern District of New York. Other comments are from private 
attorneys, librarians, individuals, non-profit organizations, 
government organizations, and one anonymous commenter.

II

Response to Public Comments

    In the legal publishing industry, there are a number of contentious 
legal, business, and public policy issues being debated. Many of these 
issues involve the merging parties or the Department of Justice. This 
fact has generated a large number of comments that do not relate to the 
specific law violations charged in the Complaint or even to the merger 
in any way.
    The Court's responsibility under the Tunney Act is to determine 
whether entry of the proposed Final Judgment is ``within the reaches of 
the public interest.'' United States v. Western Elec. Co., 993 F.2d 
1572, 1576 (D.C. Cir.), cert. denied, 114 S. Ct. 487 (1993) (emphasis 
added, internal quotation and citation omitted). The Court may not look 
beyond the Complaint ``to evaluate claims that the government did not 
make and to inquire as to why they were not made.'' United States v. 
Microsoft, 56 F.3d 1448, 1459 (D.C. Cir. 1995) (emphasis in original). 
Thus, comments that relate to conduct plaintiffs did not pursue are 
beyond the scope of Tunney Act review for the reasons set forth fully 
in section III, below.
    Many of the comments raise issues not relevant to this merger or in 
this Tunney Act proceeding. Rather, they are statements about:

--Other public policy issues in the legal publishing industry;
--Issues in litigation in other non-merger cases;
--Conditions in the legal publishing industry--unrelated  to the 
merger--that make it less competitive than the commenter believes it 
could be;
--Arguments that plaintiffs should have brought a different case; and
--Individual complaints about behavior of one of the merging parties, 
unrelated to the merger.

    In general, this Response mentions these comments and explains why 
they are not the proper subject of this proceeding. Where appropriate, 
the comments are placed in context.
    Each of the comments that is relevant to this Tunney Act proceeding 
is addressed below. In general, they fall in three categories:

--Some comments raised relevant issues that the decree has already 
resolved. Plaintiffs explain the proper interpretation of the decree 
and demonstrate why this is the case.
--In three instances, comments raise issues of ambiguity in the decree. 
To resolve the matter, plaintiffs have agreed with defendants on new, 
clarifying language for the decree.
--Other comments make criticisms that simply are not warranted. For 
example, they are premature, or go to matters that will happen after 
the Final Judgment is entered, or are otherwise unfounded.

    Because a number of the commenters adopted or replicated the 
comments of other commenters, plaintiffs have organized this Response 
by subject to avoid redundancy. An appendix list the comments submitted 
and cross-references to the places where they are discussed in this 
Response. Many of the arguments made by Lexis/Reed Elsevier in its 
Motion to Intervene and accompanying papers were essentially comments 
on the decree, or they repeated or elaborated their previous comments; 
accordingly, such Lexis/Reed Elsevier arguments are addressed in this 
Response.

A. Divestiture of the Publications Enumerated in the Decree Adequately 
Protects Competition

    Several commenters expressed concern that the divested publications 
will not be viable without divestiture of additional products and 
rights.\3\ Viability of divestiture assets is an important concern in 
virtually every merger case, and plaintiffs in this case carefully 
reviewed these issues and took steps in the proposed Final Judgment to 
ensure viability of the divested publications. We believe that when the 
terms of the proposed Final Judgment are carefully examined, it will be 
clear that these concerns have been adequately addressed.
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    \3\ Professor Robert Oakley, American Association of Law 
Libraries; Cyndi A. Trembley, Association of Law Libraries of 
Upstate New York; Alois V. Gross, Esq.; Gary L. Reback, Esq., Lexis/
Reed Elsevier; Kendall F. Svengalis, Rhode Island State Law Library; 
James P. Love, Consumer Project on Technology.
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1. Divestiture of Competing Products, not Companies, and Supporting 
Infrastructure
    Professor Robert Oakley of the Georgetown Law Center comments as 
Washington Affairs Representative of the American Association of Law 
Libraries (``AALL''). The AALL stated, at

[[Page 53388]]

the beginning of the governments' investigation, that it was neutral on 
the Thomson/West merger, and in its comment it reiterates that it 
remains neutral. At the same time, the AALL questions certain aspects 
of the proposed Final Judgment.
    AALL states that some of its members are concerned that individual 
titles are required to be divested rather than subsidiary companies.\4\ 
They think this may mean some individual titles will not continue to be 
viable entities in the market after divestiture. They are concerned 
that the divestiture products share a ``supporting infrastructure'' 
with other, non-divested products, and that at least some of the 
divestiture publications are an essential component of a ``larger 
system of legal research.'' Divestiture of such non-divested products 
would mean ordering defendants to divest products where there were no 
product overlaps.
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    \4\ Similar comments were submitted by E. Scott Wetzel, CD Law, 
Inc.
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    Plaintiffs agree that the future viability of divestiture products 
is a legitimate concern and assert that this concern is fully addressed 
in the decree. The government's investigation examined the supporting 
infrastructure of the parties very carefully. Except in the case of the 
California Reports and Deering's California Code,\5\ production costs 
are not formally allocated between or among Thomson products to an 
extent sufficient to question the viability of individual products, and 
plaintiffs discovered relatively little evidence of joint production of 
Thomson products. This means such products can be viable on a stand 
alone basis, provided the acquirer has the necessary editorial staff 
and production infrastructure. For this reason, plaintiffs have ensured 
that acquirers of divestiture products will have access to these 
resources. The proposed Final Judgment provides that acquirers receive 
all production assets of the divestiture products, including 
intellectual property, work in progress, plates, films, master tapes, 
machine-readable codes for CD-ROM production, existing inventory, 
pertinent correspondence and files, a copy of the current subscriber 
list, all related subscriber information, advertising materials, 
contracts with authors, software, and, at the acquirer's option, 
computers and other physical assets. Proposed Final Judgment at para. 
II.B. Also at the acquirer's option, Thomson must agree to provide 
transition production of the product on behalf of the acquirer 
(essentially as a contract publisher) for a reasonable period of time 
and a reasonable price.\6\ In order to facilitate divestiture, 
provisions in the Proposed Final Judgment specifically say prospective 
purchasers can have access to personnel, physical facilities, and 
financial documents. Id. at para. II.E. And, the proposed Final 
Judgment states that Thomson/West shall not interfere with any 
negotiations by acquirers to make offers of employment to Thomson/West 
employees whose primary responsibility is the production, sale or 
marketing of divestiture products. Id. at para. II.F. Thomson/West must 
preserve the divestiture products until divestiture is made, must not 
reassign employees to avoid their being hired by acquirers, except for 
transfer bids initiated by employees which must be reported to 
plaintiffs. Id. at para. VIII.A-C. Finally, all divestitures are 
subject to the approval of the United States with the consultation of 
the state plaintiffs, and divestitures of state-specific products are 
subject to the approval of the United States and the appropriate state 
plaintiff. Approval of the divestitures will only be made if, to the 
sole satisfaction of the appropriate plaintiffs, the divestiture 
product(s) can and will be operated by the acquirer as viable, ongoing 
product lines. Thus, the decree has properly addressed the issue of 
viability of divested assets and contains adequate provisions to 
protect viability.
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    \5\ As explained below, both these products are to be divested 
pursuant to the proposed Final Judgment.
    \6\ Proposed Final Judgment at para. II.C. The acquirer will 
control all pricing, promotion, sales, and order fulfillment. Id.
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2. Availability of Legal Editors
    Gary L. Reback at the law firm of Wilson Sonsini Goodrich & Rosati 
submitted comments on behalf of Lexis/Reed Elsevier. Reed Elsevier, the 
Anglo-Dutch corporation that owns Lexis-Nexis, had 1995 revenues of 
$5.8 billion. Lexis-Nexis is the sole competitor to West's WESTLAW 
service. The comments of Lexis/Reed Elsevier express concern that there 
is an inadequate supply of qualified legal editors to maintain the 
divestiture products. In its Motion to Intervene and accompanying 
papers, Lexis/Reed Elsevier claims that Thomson/West has a ``monopoly 
in editorial staff.'' Memorandum in Support of Motion to Intervene at 
22.
    Plaintiffs agree that a capable editorial staff is needed to 
continue these divested products. But a qualified purchaser of the 
divestiture products can hire editorial staff pursuant to the 
divestiture terms or secure them elsewhere in the market.
    On the basis of our investigation, plaintiffs believe that the 
divestiture products will attract a strong, capable buyer, which has 
the capability to ensure their viability. Plaintiffs understand, from 
the reports submitted pursuant to the proposed Final Judgment, that 
several significant publishing firms, including Lexis/Reed Elsevier 
itself, indicated interest in purchasing the divestiture assets. These 
potential buyers already possess editorial staffs and publishing 
infrastructure. Other possible buyers include firms that could hire 
staff and create infrastructure to accompany the divestiture product.
    Furthermore, the decree provides, as noted above, that the acquirer 
of the divestiture products will have access to relevant Thomson 
employees for purposes of making offers of employment. Of course, such 
employees are free to decide whether or not to accept such an offer of 
employment. But they may be expected to carefully consider whether 
future prospects are better at the acquiring firm, if the product on 
which they have worked is being divested.
    In addition, there is market evidence of the ability of prospective 
acquirers to obtain qualified legal editors. A number of legal 
publishers and some states employ trained editorial staffs who 
editorially enhance their respective law products. For example, Michie, 
which is also owned by Reed Elsevier, employs an editorial staff which 
enhances over 20 state code products. Another commenter, CD Law (a 
company which has been very successful with its own Washington state 
product) prepares headnotes for the official Washington state reports. 
Another such example is the editorial staff at the Bureau of National 
Affairs (``BNA''), which editorially enhances United States Law Week. 
Similarly, the States of New York, Illinois, and Massachusetts write 
their own headnotes for their official case reporters. Thomson uses 
contract employees for some of its editing. The preceding is not 
intended to be an exhaustive list, but is included only to provide 
representative examples of the fact that qualified editorial staffs are 
now widely employed, and there is no ``monopoly'' of legal editors, as 
Lexis/Elsevier claims. A suitable publisher which uses the provisions 
of the decree and other sources could assemble a capable editorial 
staff.\7\
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    \7\ The preceding discussion also addresses the argument of 
Garth Saloner in his Declaration in Support of Lexis-Nexis' 
Opposition to the Entry of the Proposed Final Judgment that 
defendants will have a unique incentive to pay editors who work with 
divestiture products more than the potential acquirer would in order 
to interfere with an offer by the divestiture buyer. (Paras.  13-
16). Furthermore, the decree forbids the defendants to interfere 
with the acquirer's attempt to hire personnel whose primary 
responsibility encompasses a divested product.

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[[Page 53389]]

3. Divestiture Products Independent of a Cross-Referencing ``System''
    Other comments suggested that the divestiture products are 
integrated in a ``research system.'' Lexis/Reed Elsevier's Motion to 
Intervene also raises this issue. See Declaration of Kendall F. 
Svengalis in Support of Lexis-Nexis' Opposition to the Entry of the 
Proposed Final Judgment Paras. 7-9.
    Some of these comments relate to the viability of the divested 
products, an appropriate Tunney Act comment. This was an issue the 
plaintiffs considered carefully and concluded that divestiture of 
independent products was sufficient. Other comments, however, 
essentially suggest that the plaintiffs should have brought a different 
case--one based on loss of competition between research systems. For 
reasons stated in Section III, the latter sort of comment is not 
appropriate in a Tunney Act proceeding.
    The proposed Final Judgment is the culmination of an extensive 
investigation by Plaintiffs. In the course of the investigation, 
plaintiffs subpoenaed documents from defendants, deposed employees and 
officers of defendants, and interviewed numerous law librarians, legal 
publishers that compete against defendants, and other legal publishing 
industry participants. Plaintiffs carefully examined whether 
significant numbers of users of legal research tools consider Thomson's 
``Total Client Service Library'' or ``TCSL'' \8\ to be a substitute for 
West's ``Key Number'' system. See section II.C.1 below.
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    \8\ The Total Client Service Library includes cross-references 
that Thomson includes in many of its legal publications.
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    In fact, most law schools do not teach that the TCSL and West Key 
Number system are substitutes. This is true, for example at the 
Georgetown University Law Center, at which Professor Oakley, who 
commented on behalf of AALL, teaches.
    Nor did our investigation reveal that competition between the 
parties' individual products is based on competition between TCSL and 
Key Numbers. Rather, the competition between individual products is 
based primarily on substantive content in the publications. For 
example, in new York, both firms have annotated statutes. They are 
substitutes primarily because they both offer statutory text and 
annotations to relevant case law. For case law reporters, both firms 
offer case law publications that are substitutes primarily on the basis 
of containing case law and editorial enhancements such as headnotes and 
summaries. The parties' divestiture publications do compete in part 
because they are enhanced with cross-references.
    At the conclusion of the investigation of these issues the 
Department carefully considered, under the prevailing legal standard, 
the evidence supporting the theory that the merger harmed competition 
between competing research systems, and determined that no further 
action was warranted on the evidence before it.
    After careful investigation, the governments decided that it would 
not be necessary to divest all the publications to which divestiture 
products are cross-referenced in order to keep the divestiture products 
competitive. Lexis/Reed Elsevier complains that ``the Consent Decree 
exacerbates the proposed acquisition's anticompetitive effects in its 
failure to require Thomson to provide continued access to, and use of, 
the portions of the Thomson system that the Department is not proposing 
for divestiture.''
    Divestiture products that contain cross-references to Thomson 
products will still be able to include those cross-references. Thomson 
has never objected to, and has in fact encouraged, cross-references (of 
the kind contained in the TCSL) to their products by other publishers. 
The governments' investigation revealed many instances of other 
publishers cross-referencing to Thomson, West, and other firms' 
publications. For example, Matthew Bender includes American Law Reports 
(``ALR'') references in several of its publications. Thomson has 
confirmed to the Department that it will continue this practice of open 
citation to Total Client Service Library products.\9\ See attachment A. 
Plaintiffs expect that the acquirer(s) of the divestiture products will 
continue to be able to cross-reference Thomson publications, which will 
help the divestiture products remain competitive.
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    \9\ Professor Saloner maintains that ``new entrants'' are 
unlikely to come into the markets for enhanced primary law products 
even if postmerger prices increase, because the cost of developing 
and introducing a cross-reference methodology for a small set of 
products would be prohibitive. Declaration of Garth Saloner in 
Support of Lexis-Nexis' Opposition to the Entry of the Proposed 
Final Judgment Paras. 17 and 18. However, as explained above, a 
``new entrant'' would be able to cite to the TCSL products and would 
therefore not have to develop its own cross-reference methodology.
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    Lexis/Reed Elsevier's comments express concern that Thomson will 
charge monopoly prices for cross-referencing to ALR and other Thomson 
publications that are part of the TCSL. This concern is unfounded as 
Thomson has never claimed a proprietary interest in such cross-
references and has never charged a royalty for them. Lexis/Reed 
Elsevier is also concerned that Thomson may ``save itself the cost of 
maintaining ALR.'' The implication is that Thomson would stop 
publishing this popular publication because ALR is a substitute for a 
West product or products. This fear is not supported by substantial 
evidence. See II.C.1.
    Similarly, Lexis/Reed Elsevier comments that the acquirer of United 
States Reports, Lawyers Edition will not have access to the annotations 
at the back of each reporter. Plaintiffs disagree. The proposed Final 
Judgment provides that defendants will divest to the acquirer the 
annotations in existing volumes. Proposed Final Judgment at para. II.B. 
The acquirer will be responsible for continuing to provide such 
annotations in future volumes.
4. California
    Mr. L. David Cole, an attorney in Beverly Hills, California, a 
subscriber to Thomson's CD-ROM titles in California, is concerned that 
the divestiture of Deering's California Code Annotated will separate it 
from other titles such as California Reports, the Witkin Library, and 
Miller & Starr, and that such separation will result in ``unintegrated 
sets, thereby frustrating the reason for my choice of products * * *.'' 
He states, ``my * * * investment in Deering's and California Reports 
will be rendered substantially less valuable when the related treaties 
are no longer under common ownership and integrated.''
    The precise issue identified by Mr. Cole's comment was considered 
seriously during the investigation of potential competitive effects 
caused by the Thomson/West merger--that is, whether any of the parties' 
competing products involve such integration with other, non-competing 
products that they could not after divestiture, compete in the 
marketplace. Specifically, the issue of integration of Thomson's 
California products was investigated and reviewed. It was determined by 
the plaintiffs that Deering's Code and the California Reporter are 
integrated sufficiently to indicate that they should both be 
divested.\10\ On the other hand,

[[Page 53390]]

there was insufficient evidence that one or both of those two products 
are sufficiently integrated, in the minds of consumers, with Witkin or 
any other Thomson product, to warrant a challenge involving more 
titles.
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    \10\ The proposed Final Judgment requires immediate divestiture 
of Deering's Code. The proposed Final Judgment also contemplates the 
divestiture of California Reports; however, the concurrence of the 
State Reporter of Decisions is an additional requirement before its 
divestiture can occur.
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5. Brand Names
    Mr. Alois V. Gross, an attorney in Minneapolis, Minnesota, comments 
that trade names must be divested, including Lawyer's Cooperative, 
Bancroft-Whitney, LawDesk, TCSL, and American Jurisprudence. He 
believes these names carry valuable goodwill and brand recognition and 
are essential to the divestiture products' viability. Where brand names 
appeared important to the divestiture product, their divestiture has 
been included. For example, Deering's Annotated California Code, Corbin 
on Contracts, and United States Reports, Lawyers Edition, all will be 
divested. The brand names Mr. Gross mentions cover a broad range of 
products and are not those primarily associated with the specific 
divestiture products.

B. The Option to Official Reporter Contracts States Provision is 
Appropriate and Adequate Relief for the Violation Alleged in the 
Complaint

    Several commenters expressed concerns about the scope and terms of 
the decree provision which requires Thomson to grant the Official 
Reporter Contract States the option to terminate their Thomson 
contracts for publishing official reporters.\11\
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    \11\ L. David Cole, Esq.; Edward D. Jessen, California Advisory 
Committee on Publication of Official Reports; Kathleen Jo Gibson, 
New Mexico Compilation Commission; Karen Ehmer, Esq., Darby Printing 
Company; E. Scott Wetzel, CD Law, Inc.; John H. Lederer, Esq.
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1. California
    On August 7, 1996, Mr. Edward Jessen submitted comments as Official 
Reporter of Decisions and Secretary of the Advisory Committee for 
Publication of the Official Reports of the State of California. He 
questioned whether the proposed Final Judgment adequately addressed the 
fact that California Reports and Deering's California Codes share costs 
and text and should be together to stay competitive. Lexis/Reed 
Elsevier' Motion to Intervene and accompanying papers also expressed 
this concern.
    Deering's and its assets are required to be divested. California 
Reports, and all its related assets, also must be divested if the 
governing entity in California awards the official publisher contract 
to another firm. Mr. Jessen is the head of that governing body. This 
provision was inserted into the Final Judgment (Washington and 
Wisconsin are treated similarly) for the sole purpose of allowing the 
state governing bodies to concur in the need for divestiture of 
official reported assets and to decide who should buy the official 
reporter assets.
    Plaintiffs believed this would be a superior approach to attempting 
directly to require the abrogation and assignment of the contracts with 
the state judicial branch entities.\12\ Therefore, the affected states 
were effectively given the option to obtain full divestiture. Mr. 
Jessen and his committee are given control over whether to require 
divestiture of California's official reporter assets or continue with 
Thomson. The committee can re-open bidding for the state contract, and 
give significant weight to ownership of Deering's Code. This places 
California in a similar position to its pre-merger position. This 
action should satisfy Mr. Jessen's concerns completely.
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    \12\ Darby believes that the official reporter assets of 
official reporter contract states should also be immediately 
divested. The part of proposed Final Judgment relating to the re-
opening of bidding of official state reporter contracts involves a 
true option to the state governing bodies. These bodies are not 
required to re-open bidding. The plaintiffs have no information on 
the requirements that will be placed on bidders by the state 
governing bodies. There is nothing in the proposed Final Judgment 
insuring that Thomson will participate in bidding, or requiring 
states to allow Thomson to participate. Even if Thomson were to 
participate in a re-opened bidding process, there are no 
restrictions in the proposed Final Judgment on the state governing 
bodies' criteria or decision on what firm to pick as a new official 
reporter or a state's decision to choose Thomson if the state 
wishes.
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    Mr. Jessen has now indicated he no longer has the concerns he 
initially addressed. On September 17, 1996, Mr. Jessen sent a letter to 
Thomas Greene, Senior Assistant Attorney General at the State of 
California Department of Justice, in which he stated that, ``I now 
fully support the proposed consent decree for the Thomson/West 
transaction as sufficient to protect California's interests as far as 
my office is concerned.'' (The entire correspondence is contained in 
attachment B). This letter appended Mr. Jessen's September 16, 1996 
letter to Brian Hall, President of the West Information Publishing 
Group.
    In his letter to Mr. Hall, Mr. Jessen stated,

    I now understand that this issue was thoroughly investigated by 
the California Attorney General's Office and by the United States 
Department of Justice. I also understand that any sale of Deering's 
and the other California products to be divested must be approved 
under the consent decree by the California Attorney General's Office 
and the United States Department of Justice, and that Thomson is not 
free to select any purchaser of its choosing regardless of its 
qualifications. I am confident that the California Attorney 
General's Office and the United States Department of Justice will 
exercise their powers of approval as provided in the proposed 
consent decree to ensure that the purchaser of any divested product 
will have the managerial, operational and financial capability to 
compete effectively in the publication and sale of that product.

    The plaintiffs agree that there is a nexus between California 
Reports and Deering's California Code.
2. Washington
    E. Scott Wetzel comments on behalf of CD Law, Inc. of Seattle, 
Washington. CD Law publishes case law, administrative law, and other 
Washington state legal materials on CD-ROM and the Internet. CD Law 
comments that ``Thomson and West competed vigorously for the contract 
to publish the official Washington state reports.'' Plaintiffs agree. 
However, as CD Law concedes, Thomson and West were not the only 
competitors for the contract--Darby, Michie, and CD Law also submitted 
bids.
    CD Law comments that ``there are virtually no publishers capable of 
competing with West/Thomson'' and summarily dismisses companies such as 
Darby and Michie. Darby currently holds the official reporter contracts 
for Georgia and the Virginia Supreme Court, and recently was named the 
successful bidder in Michigan, beating out Thomson among others. Darby 
has in the past had the official reporter contract for Massachusetts 
and Arkansas. Michie publishes numerous print and CD-ROM codes and case 
reporters. Further, Michie is owned by Reed Elsevier, the second 
largest legal publisher in the United States. In addition to these two 
serious bidders, the governments' investigation revealed that there are 
a number of other companies which have bid on and/or published official 
reporters in other states and which possibly could bid in Washington.
    CD Law is also concerned that defendants will not renew its 
contract to write the headnotes for the official state reports. This 
concern does not necessarily flow from the merger, as Thomson could 
have decided not to renew the contract and instead to write its own 
headnotes in the absence of the merger. In addition, CD Law is not 
precluded from contracting with the successful bidder for a contract to 
write headnotes in the event that the state of

[[Page 53391]]

Washington decides to exercise its option to terminate its contract 
with Thomson and awards the contract to another bidder.
    CD Law complains that it will not be able to compete with 
defendants because its product will lack headnotes and case summaries; 
however, even if Thomson does not contract with CD Law to perform these 
editorial enhancements, CD Law has not explained why it cannot continue 
to create the enhancements for its own CD-ROM products. The 
governments' investigation revealed that CD Law has been a vigorous 
competitor in Washington for a number of years, and CD Law has not 
advanced any reasons why that should not continue to be the case.
3. Wisconsin
    John H. Lederer, Esq., a retired attorney in Oregon, Wisconsin, 
expresses concern that defendants will be the only bidders for the 
Wisconsin official reporter contract. As noted above, the governments' 
investigation revealed that a number of companies bid for various 
official reporter contracts in a number of states. Any of these 
companies potentially could bid for the Wisconsin contract.
4. Other States
    Ms. Karen Ehmer comments on behalf of Darby Printing Company, a 
printer of court opinions in a number of states. Darby asks that 
Illinois, Massachusetts, and New York (where Thomson publishes other 
official reporters) also be given the opportunity to re-open bidding 
for official reporter contracts.
    With respect to the official reporters for Illinois, Massachusetts, 
and New York, competition for these was considered carefully by the 
plaintiffs in the course of the investigation. This comment relates to 
markets not included in the Complaint, and thus it is not an 
appropriate Tunney Act comment. Plaintiffs note, however, that as Darby 
knows (it was the official printer of Massachusetts opinions until 1995 
when it lost the contract to Thomson), in these three states the states 
themselves write the headnotes and summaries and make other editorial 
judgments about content. Thomson acts as a printer, rather than an 
editorial writer in these states. In these states, then, existing 
editorial competition is only between the state and West. More 
important, however, is that a court-ordered divestiture of assets is 
not required for the state to choose a new printer that is capable and 
adequate to replace Thomson. Printers do not also need to be law 
publishers in order to compete. There are many printers that can do the 
job, including Darby (e.g., in Massachusetts, or in Michigan where 
Darby won the printing contract in 1995). Finally, plaintiffs note that 
the state attorneys general's offices from Illinois, Massachusetts and 
New York joined the Complaint and settlement.
    Ms. Kathleen Jo Gibson comments on behalf of the New Mexico 
Compilation Commission. The Commission wants the proposed Final 
Judgment to include language giving New Mexico, and other states that 
have official reporters, an option to re-open bidding similar to that 
now in the proposed Final Judgment for California, Washington, and 
Wisconsin. The Commission would also like a permanent, royalty-free 
license to New Mexico court opinions reported by West.
    The merger does not affect competition for the sale of official 
reporters in New Mexico. Thus, it would be inappropriate to require the 
relief requested by the New Mexico Compilation Commission. West has 
been the official reporter of New Mexico opinions since 1933. Thomson 
simply does not compete in New Mexico with an official reporter. In 
fact, Thomson has not represented even potential competition with West; 
according to the Commission, ``For a number of reasons, it is not 
economical for small states such as New Mexico to contract with any 
other publisher * * *'' New Mexico's dispute with West over the 
copyrightability of West-reported New Mexico opinions likewise is not 
related to any actual or potential competition likely to be lost as a 
result of the Thomson/West merger.

C. Divestiture of Auto-Cite and Lexis/Reed Elsevier's Option To Extend 
Critical Thomson Content Licenses Adequately Protects Competition in 
the Comprehensive Online Legal Research Services Market

    The complaint alleged that the merger could harm consumers by 
adversely affecting competition in the comprehensive online legal 
research services market. Specifically, there was a risk that Thomson, 
a supplier of content to Lexis-Nexis, could use this position to harm 
Lexis-Nexis and benefit WESTLAW (which Thomson would now own) in a way 
that would harm consumers.\13\ In reviewing the situation created by 
this merger, thus, the question is whether the Lexis-Nexis service 
could be so degraded by Thomson's postmerger actions that consumers 
(not Lexis/Reed Elsevier) would be hurt.
---------------------------------------------------------------------------

    \13\ This ``vertical foreclosure'' risk is likely to lead to 
anticompetitive effects on consumers, however, only to the extent 
that Lexis/Reed Elsevier cannot take market actions to maintain 
content adequate to allow it to be a vigorous competitor. If the 
downstream firm (here, Lexis/Reed Elsevier) in a possible vertical 
foreclosure situation can readily obtain its inputs (here, content) 
from other sources, or develop the inputs itself, then there is no 
antitrust violation (even though the downstream firm might prefer 
simply to continue its existing source of inputs).
---------------------------------------------------------------------------

    In reviewing how competition in this market functions, plaintiffs 
observed that Lexis/Nexis and WESTLAW compete not only by offering 
virtually identical data bases of court decisions, but also by offering 
various, different secondary legal materials and a wide variety of non-
legal materials; their products are differentiated. Competition in the 
market to date has resulted in two services that are partly similar, 
partly differentiated and constantly changing. The merger does not 
affect the similar part of the services--the text of court decisions. 
Thus plaintiffs considered the effect on the differentiated portion of 
the services. Plaintiffs noted that Lexis/Reed Elsevier itself, of 
course, is a large multinational publishing corporation. Plaintiffs are 
also aware that shortly after the Thomson/West merger announcement, 
Lexis/Reed Elsevier entered a new arrangement with Matthew Bender 
(another significant legal publisher) in which Matthew Bender's content 
will be included in the Lexis/Nexis service. Plaintiffs also noted that 
this market is evolving extremely rapidly--indeed, it virtually did not 
exist before the Lexis-Nexis service was created in the 1970s.
    In this context, plaintiffs evaluated a possible case and potential 
relief. Prior to the governments' review of this merger, Thomson and 
Lexis negotiated extensions of the most important licenses for Thomson 
content, both legal and non-legal.\14\ Virtually all of the licenses 
were extended for five additional years and generally at the existing 
price, i.e., prices that had been negotiated when Thomson did not own 
WESTLAW and thus could have no anticompetitive incentives with regard 
to Lexis/Nexis. With the extensions, the average length of the licenses 
was about seven years.
---------------------------------------------------------------------------

    \14\ These licenses included the following materials: (1) Legal 
publications (including Auto-Cite, ALR U.S.C.S., and AmJur2d); (2) 
non-legal databases (including ASAP, Predicasts, and Investext); and 
tax materials from Research Institute of America.
---------------------------------------------------------------------------

    The plaintiffs thus evaluated whether additional relief was 
necessary to ensure vigorous competition in this market. Two additional 
protections were determined to be necessary. First, for certain key 
non-legal data bases,

[[Page 53392]]

Thomson was required to offer to extend Lexis/Reed Elsevier's licenses 
for an additional five years. These data bases (ASAP, Predicasts and 
Investext) had been identified by Lexis/Reed Elsevier as particularly 
significant. Second, Auto-Cite was required to be divested, so that 
Lexis/Reed Elsevier could obtain it from a source independent of 
Thomson (or buy it itself). These two provisions, together with the 
previously negotiated license extensions, and the normal market 
incentives and capabilities of Lexis/Reed Elsevier (such as those that 
led it to a new partnership with Matthew Bender), should be sufficient 
to maintain vigorous competition that would protect consumers in the 
comprehensive online legal research services market.
    Lexis/Reed Elsevier comments that these actions are not enough. 
These arguments are not new. Plaintiffs heard them from Lexis/Reed 
Elsevier during the investigation and investigated them extensively and 
intensively.
    Specifically, Lexis/Reed Elsevier makes two complaints. First, they 
seek divestiture of TCSL. Second, they criticize the divestiture of 
Auto-Cite. These points are essentially reiterated in their Motion to 
Intervene.
1. TCSL
    Lexis/Reed Elsevier complains that plaintiffs should have obtained 
an additional divestiture--the TCSL--in order to enable Lexis/Reed 
Elsevier to use the components of the TCSL to compete with WESTLAW's 
Key Numbers and headnotes. Plaintiffs disagree. Plaintiffs carefully 
considered this argument and all the evidence relevant to it--and found 
it wanting. The information filed by Lexis/Reed Elsevier with its 
Motion to Intervene itself demonstrates why this argument is without 
merit.
    Lexis/Reed Elsevier asserts that there are four ``portions of the 
TCSL'' that are ``the most important * * * enhancements'' and that 
Lexis/Nexis must license ``(i)n order to compete with Westlaw'': ``the 
annotations found in ALR and Lawyer's Edition, the AmJur encyclopedia, 
and Auto-Cite.'' Emrick Declaration para.7. In fact, the enhancements 
that are important to Lexis/Reed Elsevier will continue to be 
available. First, Lawyer's Edition is, of course, a divestiture 
product. The new buyer, if other than Lexis/Reed Elsevier, certainly 
will have every incentive that Thomson had to earn revenue by licensing 
Lawyer's Edition to Lexis/Nexis. Second, Auto-Cite, too, is a 
divestiture product. If Lexis is not the buyer of this product, it will 
have access to Auto-Cite, as explained more fully in the next section. 
Third, the claim that AmJur is essential to Lexis/Nexis is undercut by 
Lexis/Nexis' own behavior. AmJur was only added to the Lexis/Nexis 
service in February 1996 after Lexis/Nexis fitfully negotiated for it 
over a course of several years.
    Fourth, ALR is touted by Lexis/Reed Elsevier as a substitute for 
West's Key Number system in finding cases. Emrick Declaration para.8. 
But a document attached to the Emrick Declaration directly undercuts 
this claim. This Thomson document reports on research with focus groups 
of lawyers and librarians, addressing the issue of whether ALR is a 
substitute for West Key Numbers. The results were that ``ALR was not 
well received as being a place to start research'' even among groups 
``where familiarity with ALR was skewed in ALR's favor.'' Emrick 
Declaration Exhibit B at 11, 12.\15\ In focus groups of Lexis/Nexis 
sales people, ``No one understood the analogy of ALR as a competitive 
alternative to headnotes.'' Id. at 9.\16\
---------------------------------------------------------------------------

    \15\ Among other points, it was also noted that ``[b]oth 
attorneys and librarians view ALR as one of many available secondary 
sources, often cited in the same category as law reviews and 
treatises.'' Id. at 11. ``ALRs were not highly regarded as 
definitive legal research.'' Id. at 12. Lexis sales people said that 
``Attorneys mostly use ALR as a last resort * * *.'' Id. at 10.
    \16\ Because the evidence does not support the proposition that 
ALR is a substitute for West Key Numbers, there is no basis for the 
claim in the Saloner Declaration (para. 11) that the price of ALR 
will rise. Saloner assumed such substitutability.
---------------------------------------------------------------------------

    There is simply insufficient evidence that ALR must be divested to 
preserve competition with the West key number system. Under the Tunney 
Act the Department has the duty to review the evidence and determine 
the litigative prospects. Lexis/Reed Elsevier asks the court to adopt 
this prosecutorial function.
2. Product Differentiation
    Similarly, Lexis/Reed Elsevier argues that divestiture of TCSL is 
necessary to allow Lexis/Reed Elsevier to offer a product that is 
differentiated from that offered by defendants. Plaintiffs disagree. 
The governments' investigation revealed that the Lexis-Nexis and 
Westlaw services are today quite different and that Lexis-Nexis 
continues to add new, non-Thomson publications and databases to its 
service. In addition, we note that Lexis/Reed Elsevier, on its own, was 
able to negotiate and extend its licenses for these components into the 
next decade. For example, Lexis/Reed Elsevier negotiated a license for 
ALR through 2002 and a license for AmJur2d through 2006. This may 
provide an additional cushion for further differentiation of Lexis-
Nexis and addition of additional secondary sources. Furthermore, Lexis/
Reed Elsevier's joint venture with Matthew Bender, a leading legal 
publisher with numerous primary and secondary law products, will 
bolster its ability to continue to offer a good quality, differentiated 
product. Finally, the proposed Final Judgment requires Thomson to grant 
Lexis/Reed Elsevier the option to extend its License Agreements for 
three non-legal databases--Investext, ASAP, and Predicasts \17\--which 
are offered on Nexis, for an additional five years. Thus Lexis/Reed 
Elsevier may, at its option, extend these contracts until 2010. 
Proposed Final Judgment at para. X. (As with the legal publications 
above, Lexis/Reed Elsevier and Thomson have already negotiated extended 
contracts for these databases into the next decade.) In the judgment of 
plaintiffs, this is sufficient time for Lexis/Reed Elsevier to seek 
other sources, differentiate its product in other ways, or create 
competing databases.
---------------------------------------------------------------------------

    \17\ Investext is a collection of approximately 200 brokerage 
house reports regarding individual equities and industries. ASAP is 
an indexed consolidation of approximately 450 specialized industry 
publications. Predicasts includes the following three databases: (1) 
PROMT, an indexed database of over 1,100 trade and business 
publications; (2) MARS, an indexed database that includes 
information relating to advertising and marketing of consumer 
products and services; and (3) Newsletter, an indexed international 
database including 650 different newsletters from 165 publishers.
---------------------------------------------------------------------------

3. Auto-Cite Divestiture
    Lexis/Reed Elsevier also comments that the proposed Final Judgment 
``impairs Lexis-Nexis' contract rights to Auto-Cite, thus affirmatively 
damaging its ability to compete.'' The plaintiffs disagree. As 
explained above, Thomson has never discouraged citations to its 
publications and the acquirer of Auto-Cite will be able to continue to 
cite to defendants' publications, including ALR. In addition, the 
acquirer of Auto-Cite will be bound by the terms of the existing 
license between Thomson and Lexis/Reed Elsevier. Further, the 
acquirer--if it is a firm other than Lexis/Reed Elsevier--has every 
incentive to continue to offer Lexis/Reed Elsevier a competitive 
citator rather than risk losing that revenue stream.
    Lexis/Reed Elsevier further comments that defendants should have 
been required to divest ``all rights and interests'' in Auto-Cite and 
complains that

    Thomson is thus not divesting itself of Auto-Cite at all: it is 
retaining the database itself, the staff trained in its use; the

[[Page 53393]]

(apparently exclusive) right to use important elements of the 
system, i.e., the cross-references and integration with the ALRs and 
other Thomson products; and other important incidents of ownership, 
such as the ability to sublicense.\18\
---------------------------------------------------------------------------

    \18\ James P. Love of the Consumer Project on Technology 
submitted a similar comment.

    The governments' investigation revealed that Lexis/Reed Elsevier 
needed to be able to license Auto-Cite and provide it on its system in 
order to effectively compete in the comprehensive online legal research 
service market. The proposed Final Judgment addresses this concern and 
ensures that the acquirer of Auto-Cite will be able to continue to 
provide Auto-Cite to Lexis/Reed Elsevier.
    The proposed Final Judgment provides that the divestiture of Auto-
Cite:

    Shall include the sale of all Auto-Cite trademarks and service 
markets, the assignment of the Auto-Cite License Agreement, and 
delivery of a transferrable royalty-free perpetual license of the 
Auto-Cite case database as of the time of the divestiture and all 
software, trade secrets, and know-how used in producing and updating 
the Auto-Cite case database.

    para.II.B. Thus, Thomson must divest to the acquirer everything it 
needs to be able to continue to offer Auto-Cite to Lexis/Reed Elsevier, 
other than new cases, which the acquirer can get from a number of 
sources, including Lexis/Reed Elsevier.
    Furthermore, the plaintiffs will ensure that Auto-Cite will be 
acquired by a qualified bidder. The proposed Final Judgment provides 
that the United States after consultation with the state plaintiffs 
must be satisfied that: (1) The acquirer can and will operate Auto-Cite 
as a viable, ongoing product; (2) the purchase is for the purpose of 
competing effectively in the sale of Auto-Cite; and (3) the acquirer 
has the managerial, operational, and financial capability to compete 
effectively in the sale of Auto-Cite.\19\
---------------------------------------------------------------------------

    \19\ Before Thomson offered Auto-Cite as a commercial product on 
the Lexis online service, it used it internally for editorial 
purposes. (The same is true of West's Insta-Cite service). The 
governments' investigation revealed that entirely foreclosing 
Thomson editors from internally using Auto-Cite for essential, 
editorial purposes would harm its retained products, which would 
clearly harm competition. Thus Thomson retains a copy of Auto-Cite 
and can use that copy (though not, for example, the Auto-Cite 
trademark).
---------------------------------------------------------------------------

    Professor Saloner's concern that (1) ``the acquirer will merely be 
given a license to the product, without the personnel that currently 
produce Auto-Cite,'' and that (2) ``Lexis-Nexis has lost effective 
access to Auto-Cite because of the failure to include critical 
components of the service (e.g., prospective access to ALR) in the 
divestiture'' are addressed above and also in Sections II.A.2 and 
II.A.3 Declaration of Saloner Paras. 19-23.
    Lexis/Reed Elsevier also complains that Thomson has not provided it 
with basic information about Auto-Cite, including cost information, so 
that it could ``evaluate and make a meaningful bid.'' Plaintiffs 
investigated this complaint and requested additional information from 
Thomson about the bidding process. The governments' inquiry revealed 
that the bidding process is at an early stage. At this point, only non-
binding expressions of interest, not actual bids, have been requested 
by defendants. A number of interested companies, including Lexis/Reed 
Elsevier, have expressed interest in bidding.
    During the next stage of the bidding process, prospective bidders 
will receive a presentation by Thomson personnel and access to a due 
diligence room containing proprietary documents. Ironically, because of 
its confidential license agreements with Thomson, Lexis has access to 
key data that no other bidder can obtain and therefore has more 
information than any other bidder. Thus, prospective bidders will have 
adequate information before formulating their bids.\20\
---------------------------------------------------------------------------

    \20\ Lexis/Reed Elsevier's real concern appears to be that 
Thomson could use its copy of the Auto-Cite database to improve 
WESTLAW, West's comprehensive online legal research service. 
WESTLAW's counterpart to Lexis-Nexis' Auto-Cite is called Insta-
Cite. Insta-Cite only offers a portion of what Auto-Cite offers--it 
does not offer negative, indirect history before 1972 nor does it 
offer cross-references to ALR. If Thomson does ``upgrade'' Insta-
Cite, it would be a procompetitive result. The governments' 
investigation did not reveal--and even Lexis/Reed Elsevier has not 
argued--that Auto-Cite has to be ``better than'' Insta-Cite for the 
Lexis-Nexis service to compete with WESTLAW. Continued access to 
Auto-Cite is sufficient. Further, West could have, absent the 
merger, to fill in the Insta-Cite database.
---------------------------------------------------------------------------

4. Overall Competition in the Comprehensive Online Legal Research 
Service market
    Matthew Lee, Executive Director of Inner City Press/Community on 
the Move (``ICP'') also expressed concerns about competition in the 
comprehensive online legal research services product market. ICP 
comments that the comprehensive online legal research service product 
market was already an ``over-concentrated and anticompetitive'' duopoly 
and faults plaintiffs for taking no action to change this situation. 
ICP's complaint is unrelated to the merger. ICP's complaint essentially 
seeks a Sherman Act section 2 monopolization case in the comprehensive 
online legal research services market. Whatever the merits of such an 
action, it is far beyond the scope of this Tunney Act proceeding on a 
Clayton Act section 7 matter.
    O.R. Armstrong submitted comments on behalf of Geronimo Development 
Corporation, St. Cloud, Minnesota. Geronimo Development publishes a CD-
ROM format, Virginia case law, statutes and administrative materials, 
along with U.S. Fourth Circuit and Supreme Court case law. Geronimo 
claims that because Lexis will be weakened by the merger, West's 
enhanced lower federal court case law monopoly therefore will be 
strengthened. Plaintiffs disagree. Our response to Lexis' comments 
relating to the merger's effect on it are above in II.C. However, even 
if Geronimo's claim about weakening Lexis were true, the merger cannot 
accurately be described as strengthening West's position in any 
enhanced federal case reporters, because there is insufficient evidence 
to support a successful allegation that Lexis is an actual or potential 
competitor in that market.

D. The Star Pagination License Eases a Significant Barrier to Entry and 
is Procompetitive

    A number of commenters raised concerns about the decree provision 
which requires defendants to grant licenses to star paginate to West's 
National Reporter System publications.\21\ This license provision was 
included in the proposed final judgment because West's prior refusal to 
grant such licenses was a barrier to entry into some markets affected 
by the merger, particularly emerging electronic forms (particularly CD-
ROM) of enhanced primary law and secondary law.
---------------------------------------------------------------------------

    \21\ Lynn Warmath, Hirschler, Fliescher, Weinberg, Cox & Allen; 
Alan D. Sugarman, HyperLaw, Inc.; Professor Robert L. Oakley, 
American Association of Law Libraries; Alois V. Gross, Esq.; Gary L. 
Reback, Esq., Lexis/Reed Elsevier; O.R. Armstrong, Geronimo 
Development; Morgan Chu, Esq., Matthew Bender & Company; E. Scott 
Wetzel, CD Law; Jose is. Rojas, Esq., Oasis Publishing Company, 
Inc.; Eleanor J. Lewis, American Association of Legal Publishers; 
Professor J.C. Smith, Artificial Intelligence Research Project; John 
H. Lederer, Esq.; Kendall F. Svengalis, Rhode Island State Library; 
James P. Love, Consumer Project on Technology; Norman S. Wolfe, 
International Compu Research, Inc.
---------------------------------------------------------------------------

    West's claim of copyright infringement by ``star pagination'' is 
controversial. It has been the subject of litigation. In current 
litigation the United States has stated its position that use of star 
pagination does not constitute copyright infringement.\22\ If

[[Page 53394]]

that position prevails, then licenses pursuant to the decree will be 
unnecessary. If that position does not prevail, then the license 
provisions will reduce existing entry barriers and thus make these 
markets more competitive.
---------------------------------------------------------------------------

    \22\ The United States recently filed briefs to this effect in 
Matthew Bender & Co., Inc. v. West Publishing Co., 94 Civ. 0589 
(JSM) (S.D.N.Y.) and Oasis Publishing Co. v. West Publishing Co., 
No. 96-2887 (8th Cir.).
---------------------------------------------------------------------------

    Because the issue of West's alleged pagination copyright has been 
so controversial, this provision of the decree attracted a substantial 
number of comments. Most of them are comments about this general public 
policy issue and do not relate to harm caused by the merger and to the 
violation alleged in the complaint. Each is discussed below.
1. Validity of West's Star Pagination Copyright Claim
    Many of the commenters questioned the propriety of including the 
Star Pagination License provision in the proposed Final Judgment.\23\ 
Specifically, these commenters believe that the license provision 
somehow endorses West's claim that star pagination infringes its 
copyright. This argument ignores the plain language of the decree.
---------------------------------------------------------------------------

    \23\ Alan D. Sugarman, HyperLaw, Inc.; Alois V. Gross, Esq.; 
Morgan Chu, Esq., Matthew Bender & Company; Jose is. Rojas, Esq., 
Oasis Publishing Company, Inc.; Eleanor J. Lewis, American 
Association for Legal Publishers; Professor J.C. Smith, Artificial 
Intelligence Research Project; Kendall F. Svengalis, Rhode Island 
State Library; James P. Love, Consumer Project on Technology.
---------------------------------------------------------------------------

    Language in the Stipulation, proposed Final Judgment, and 
Competitive Impact Statement clearly states that the license provisions 
created in settling this case shall not have any bearing, in any forum, 
on any West intellectual property claim. This provision was added 
specifically in anticipation that some persons might incorrectly infer 
that the proposed star pagination license endorses West's star 
pagination claim. If defendants ever attempt to use the Final Judgment, 
or any pleading in this case, to support any intellectual property 
claim in any other forum, any opposing party can simply cite the 
relevant disclaimer language to rebut Thomson/West.
    In addition, the proposed final judgment has been revised with the 
addition of the following language to the disclaimer:

    Defendants have agreed that they will not use the model license 
contained in this Final Judgment, or the fact that any such license 
was included in the Final Judgment, in any litigation or 
negotiations with third parties to support the validity of their 
position on star pagination.
2. Abandonment of Star Pagination Copyright Claim
    Several of the commenters who made the foregoing point also argued 
that plaintiffs should have insisted on total abandonment of the claim 
that star pagination infringes West's copyright. For example, Morgan 
Chu at the law firm of Irell & Manella submitted comments on behalf of 
Matthew Bender. Matthew Bender cites two cases for the proposition that 
this decree should require abandonment of star pagination claims; 
however, these cases presented entirely different factual situations. 
United States v. Borland International, Inc., 1992-1 Trade Cas. (CCH) 
para. 69,774 (N.D. Cal. 1992), involved a merger of firms that 
controlled competing database programs and related intellectual 
property. Had Borland not been barred from pursuing Ashton-Tate's 
copyright infringement claims against ``clones,'' the resulting 
increase in concentration from the acquisition would have been 
anticompetitive. Thus, the abandonment of infringement claims directly 
addressed competitive harm posed by the transaction. In this case, the 
deal does not combine two competing sets of intellectual property 
rights; no one is seeking the right to star-paginate to Thomson 
products. Therefore, Borland does not apply.
    The relief in Hoechst AG, 60 Fed. Red. 49609 (F.T.C. 1995), was 
even more narrowly drawn. Hoechst's acquisition of Marion Merrell Dow, 
Inc. (``MMD''), put it in control of Cardizem CD, the dominant product 
in the market for once-a-day Dilitiazem, which is used to treat, among 
other things, high blood pressure and angina. Before the acquisition, 
Hoechst and another firm had been developing a drug to compete with 
Cardizem CD, and MMD had sued them for patent infringement. In ensuring 
that the third company would be able to continue to develop the 
competitive drug as effectively as it would have absent the merger, the 
decree required dismissal of the infringement suit. Since Hoechst had 
left the new drug in the other firm's hands and the infringement suit 
was dismissed, there was no need for the sweeping relief obtained in 
Borland.
    Matthew Bender further comments that defendants should have been 
forced to abandon West's star pagination claims because they will give 
Thomson and West an unfair advantage in creating new products which 
integrate Thomson's secondary law with West's primary law. Matthew 
Bender argues that other publishers will not be able to compete with 
these new, integrated products because of the star pagination claim. 
However, Matthew Bender does not explain how the star pagination 
license leaves it worse off. If it prevails in its litigation with 
West, of course, Matthew Bender will not need a license at all to star 
paginate. If however, it loses, the license ensures that Matthew Bender 
will be able to obtain a star pagination license at a reasonable rate. 
The creation of new, integrated products is a procompetitive 
development, which the antitrust laws encourage. To the extent this 
acquisition makes that creation possible, the proposed Final Judgment 
should not prevent it.
3. Text Copyright
    Mr. Sugarman claims the proposed Final Judgment unfairly benefits 
Thomson/West in HyperLaw's private suit with defendants, for 
infringement of a West (claimed) copyright in the text of cases 
reported in West reporters. He apparently believes the proposed star 
pagination license will be falsely characterized by West to sway and 
mislead courts and the United States Congress, to persuade them to 
adopt West's view of its copyright claim in the text of West-reported 
cases. Plaintiffs disagree. The proposed Final Judgment does not 
support or even address West's claim to a text copyright. The decree's 
disclaimer language applies equally to any West text copyright claim.
4. Other Antitrust Violations
    Mr. Sugarman states that, ``the Antitrust Division has punched a 
free antitrust waiver ticket to West-Thomson. It will be able to throw 
its weight around in the legal market without any concern as to 
enforcement from the Antitrust Division.'' There is no support for this 
statement. Thomson/West remains subject to full antitrust investigation 
and enforcement on any conduct other than this specific merger.
    Mr. Sugarman states, ``there is nothing in Hart-Scott-Rodino [the 
premerger notification filing statute, codified at 15 U.S.C. 18a] that 
prohibits the United States from initiating antitrust enforcement 
action when it develops evidence of violation of the antitrust laws in 
the course of a Hart-Scott-Rodino investigation.'' Plaintiffs agree. If 
an antitrust violation unrelated to this merger were to be uncovered 
during the course of the investigation, or in any other investigation, 
the appropriate remedies would necessarily be sought in other fora, for 
example, by challenging the conduct in a civil complaint, a grand jury 
proceeding and/or indictment in a potentially criminal matter, by 
amicus brief in a private suit, or by competition advocacy in 
legislative or regulatory forums.

[[Page 53395]]

    Mr. Sugarman worries that the Department, West and others 
mischaracterize the star pagination license as ``resolv[ing] any 
possible antitrust concern regarding the availability of star-
pagination licenses.'' We agree that such a statement, by itself, would 
be a mischaracterization of the intended effect of the proposed 
license. The plaintiffs believe only that the proposed license, along 
with the other relief obtained in this settlement, resolves any 
possible antitrust concerns arising from this merger. The plaintiffs 
have no control over the mischaracterization of any part of the 
proposed Final Judgment by any other person. However, the terms and 
circumstances of the star pagination license are sufficiently clear to 
make successful mischaracterizations of the kind that concerns Mr. 
Sugarman highly unlikely.
5. Citation to First Page of an Opinion
    Matthew Bender comments that it believes that West claims to have 
``a copyright interest in the initial parallel citations (i.e., the 
cite to the first page of a case) in the National Reporter System that 
may be infringed when a competitor uses such citations.'' The 
governments' investigation revealed that West claims it has a copyright 
interest in such ``initial parallel citations,'' but concedes that 
third party use of such citations is a fair use and as such is a 
defense to infringement and that such citations are ``effectively in 
the public domain.'' Further, West has never enforced such a copyright 
interest, and defendants have stated that they have no intention of 
enforcing such a copyright interest in the future. See Attachment A.
6. Level of License Royalty Fees
    There were many comments on the level of the pagination license 
fees. After carefully reviewing these comments and after obtaining more 
information about license fees, the parties negotiated a revision to 
the schedule of pagination license fees contained in the proposed Final 
Judgment. With this revision, the fees per thousand characters would be 
as follows:

                                                  1st year of a license
                   .............................................4 cents
                                                   2d year of a license
                  ..............................................4 cents
                                                   3d year of a license
                  ..............................................6 cents
                                                  4th year of a license
                   .............................................6 cents
                                                  5th year of a license
                   .............................................8 cents
                                                  6th year of a license
                   .............................................8 cents
                                                  7th year of a license
                   .............................................9 cents
                                                       Subsequent years
              ..................................................9 cents

    This new schedule, compared to that in the initial proposal, 
reflects the comments on the need for lower fees to more effectively 
encourage new entrants. The new schedule has overall lower fees for 
such entrants. Furthermore, the new schedule both begins at a lower 
rate and allows a longer period in which a new entrant benefits from 
low rates.
7. Large Publishers
    A number of commenters express concerns that the star pagination 
graduated royalty rate (license fee) structure will benefit only large 
publishers.\24\ The revised fee structure is likely to result in entry 
by some legal publishers, which should result in competition being 
preserved and perhaps enhanced by new competition. The ``graduated'' 
structure is specifically aimed at encouraging entry of publishers who 
are new or small, by providing a lower license price in the early 
years. This should assist start-up firms with less capital in the early 
years. Then, after the entrant has had a few years to establish its new 
publication the rate levels off.
---------------------------------------------------------------------------

    \24\ Lyn Warmath, Hirschler, Fliescher, Weinberg, Cox & Allen; 
Alan D. Sugarman, HyperLaw, Inc.; Professor Robert L. Oakley, 
American Association of Law Libraries; Gary L. Reback, Esq., Lexis/
Reed Elsevier; Morgan Chu, Esq., Matthew Bender; Jose is. Rojas, 
Esq., Oasis Publishing Company; Eleanor J. Lewis, American 
Association of Legal Publishers; John H. Lederer, Esq.; Kendall F. 
Svengalis, Rhode Island State Law Library; James P. Love, Consumer 
Project on Technology; Norman S. Wolfe, International Compu 
Research, Inc.
---------------------------------------------------------------------------

    It also should be remembered that the license fee is a function of 
the number of cases for which star pagination is licensed. Thus, the 
size of the total fee payment should be compared to the number of cases 
and expected sales, not the size of the publisher. Finally, the license 
provides that the fee is not to exceed the stated rates; therefore, the 
license specifically allows for negotiation and payment of a lower fee.
8. Other Markets
    Ms. Lyn Warmath, Library Director at Hirschler, Fliescher, 
Weinberg, Cox & Allen in Richmond, Virginia expresses concern about the 
level of the fee anticipated for the star pagination license. Ms. 
Warmath calculates the license fees for various publications, for 
example, she calculated the license to duplicate West's Federal 
Supplement to be $632,000 in the first year. This product, however, is 
not affected by the merger, so the relevance of this point is dubious.
    Essentially, the plaintiffs' approach to this case is to encourage 
competition in the enhanced primary and secondary law product markets 
alleged in the Complaint where a star pagination license might be 
useful. Simply, competition for federal reported case law (other than 
the enhanced Supreme Court reporters for which divestiture is required) 
is not affected by the merger of Thomson and West, because Thomson does 
not publish products that compete with West's Federal Supplement or 
Federal Reporter series. The proposed Final Judgment therefore 
addresses the relief deemed necessary to preserve competition.
    The Department has said publicly that it hopes the mandatory star 
pagination license encourages entrants in other markets. These 
generally pro-competitive results, if they occur, would be ancillary to 
the remedy sought in the proposed Final Judgment.
9. The Need for a Text License Is Unrelated to This Merger Transaction
    Mr. Sugarman insists that the proposed star pagination license 
should also include a mandatory test license and a waiver of any 
Thomson/West copyright claims on intermediate copying as long as any 
published case does not include West head notes and summaries. 
Similarly, Eleanor J. Lewis of the American Association of Legal 
Publishers (``AALP''), comments on the unavailability of an archive of 
federal judicial decisions. Norman Wolfe of International Compu 
Research, Inc. (``ICRI'') comments that ``[t]here is no provision in 
either the settlement document or the licensing agreement for obtaining 
the full text of judicial opinions.'' Plaintiffs disagree with the 
proposition that a text license should have been included in the 
decree.
    The relevant question is not what license would be the best 
possible license to address all possible issues involving the legal 
publishing industry in a vacuum. The proposed license is an attempt, in 
connection with the other relief, to remedy the effect of this 
particular merger. The straightforward purpose of the star-pagination 
license is to open access to the de facto star pagination standard in 
the markets alleged in the Complaint. A text license or intermediate 
copying waiver is not necessary to address any competitive harms 
flowing from this merger. In fact, in the enhanced primary case law 
markets alleged in the Complaint for which the proposed star pagination 
license is intended to encourage entry, court opinions are available to 
potential entrants from the courts, so a text license and an 
intermediate copying waiver are not necessary.
    Mr. Sugarman insists that the Final Judgment include relief on the 
issue of West's claimed text copyright merely because the text of 
judicial opinions is difficult to obtain. HyperLaw alleges

[[Page 53396]]

that West has made it difficult to obtain opinions in some 
jurisdictions and that this places firms like HyperLaw at a competitive 
disadvantage. Plaintiffs agree that judicial opinions may be difficult 
to obtain in some jurisdictions, and that this is an entry barrier to 
some enhanced primary law markets. Complaint para.30. However, there is 
no evidence that the merger of Thomson and West, or the proposed Final 
Judgment, will affect in any way HyperLaw's ability to obtain the text 
of judicial opinions. Mr. Sugarman states, ``Thomson was not only a 
potential competitor in the creation of archives of opinions, but was 
well on the way to doing so.'' Plaintiffs are unaware of any basis for 
this assertion. The most likely broad-scope source of opinions 
competing with West, in those instances where the difficulty in 
obtaining opinions may be a barrier to competition, is Lexis/Reed 
Elsevier. Moreover, in the enhanced primary law markets alleged in the 
Compliant, the text of opinions is not difficult to obtain.
10. Selection of Cases
    Mr. Sugarman complains that Section 1.03 of the proposed star 
pagination license defines ``Licensee Case Reports'' as reports of 
decisions ``selected for reporting by Licensees,'' and it therefore 
will allow Thomson/West to refuse to license if it determines that the 
potential licensee did not select the decisions, but instead copied the 
selection of West, a state, or some other party. Ms. Lewis of the AALP 
expresses concern that ``only licensing original compilations and 
West's right to determine what is an original compilation'' will 
undermine the purpose of the license. Matthew Bender comments, ``West 
apparently can still challenge a licensee's use of star pagination if 
West contends that the licensee has not made its own selection, 
coordination, and arrangement of cases.'' Plaintiffs disagree.
    The plaintiffs interpret the proposed license to mean that a 
license must be issued for star pagination any set of cases selected by 
the licensee, even if West or any other person had previously selected 
a similar set of cases. Defendants have stated to plaintiffs that they 
would not consider a CD-ROM product which included exactly the same 
cases included in a West print reporter to be an infringement. Indeed, 
Matthew Bender has introduced such a product and we are informed 
defendants have not challenged it as a ``selection infringement. 
Defendants would object to a print product which simply replicated a 
West print reporter; however, there is no reason to expect entry into 
print products and, in any event, CD-ROM products compete with print 
products and thus provide competitive constraint.
11. Description of Product or Service
    A number of commenters think the proposed star pagination license 
should not unnecessarily require licensees to disclose competitive 
product information to defendants in order to obtain a star pagination 
license.\25\ For example, Eleanor Lewis of AALP comments, ``A licensee 
should be required to disclose to West only the most general ideas 
about the proposed use of the licensed materials.''
---------------------------------------------------------------------------

    \25\ Alan D. Sugarman, HyperLaw; Morgan Chu, Esq., Matthew 
Bender; Eleanor J. Lewis, AALP; Norman Wolfe, ICRI.
---------------------------------------------------------------------------

    Plaintiffs agree. There is no requirement in the proposed license 
that detailed information be disclosed. Section 1.03 merely requires 
licensees to provide a short, general description of the licensee's 
product or service to defendants, i.e., a title. This limited 
disclosure is necessary so that it is clear what product is covered by 
the license. Ultimately, the licensee must disclose what cases are 
included in their product so that the license fee can be calculated. 
This simple information is not the type that should or could be 
considered sensitive competitive information, as the cases selected by 
the licensee for publication will subsequently be public information.
12. License fee per Format
    A number of comments maintain that the provision in the proposed 
star pagination license that requires the payment of a separate license 
fee for each format--books, CD-ROM, on-line or the Internet--erects too 
high a barrier to potential entrants.\26\ However, the governments' 
investigation indicated that many, perhaps most, prospective entrants 
would only consider one medium--CD-ROM. One of the main objectives of 
the licensing provision was to facilitate entry specifically into the 
new technology/new product of CD-ROMs incorporating analytical material 
and hypertext links to relevant primary law. Because enhanced primary 
case law on CD-ROM competes with enhanced primary law in print, CD-ROM 
entry should be sufficient (with the other relief in the decree) to 
deter anticompetitive behavior by Thomson/West in either print or CD-
ROM.\27\
---------------------------------------------------------------------------

    \26\ Alan D. Sugarman, HyperLaw; Morgan Chu, Esq., Matthew 
Bender; Eleanor J. Lewis, AALP; James P. Love, Consumer Project on 
Technology.
    \27\ As reflected in the Complaint, Thomson and West do not 
compete in the provision of enhanced primary case law in the online 
medium. Although the plaintiffs are fully aware that several firms 
desire to enter the provision of case law online and on the 
Internet, entry into these mediums is not a remedy intended to be 
addressed by the proposed star pagination license.
---------------------------------------------------------------------------

    Addtionally, the governments' investigation revealed that for those 
existing publishers who publish in more than one format, for example 
CD-ROM and on-line, the latter medium is used primarily to provide 
updates (new cases) and therefore does not duplicate the cases on the 
CD-ROM and would not require multiple payment of the license fee.
13. Challenges to West's Copyright
    Mr. Sugarman and Matthew Bender, who are currently engaged in 
copyright litigation with West, contend that the prohibition in the 
proposed star pagination license that bars licensees from challenging 
the validity of West star pagination copyright claims ignores Lear v. 
Adkins, 395 U.S. 653 (1969), and assures that no West copyright claim 
will be challenged. Ms. Lewis states that the license ``requires 
competing publishers to renounce their First Amendment right to express 
their opinions about the Licensor's alleged copyright during the term 
of the license.'' Mr. Wolfe of ICRI also comments regarding ``this 
obvious abandonment of our First Amendment rights.'' Plaintiffs 
disagree.
    First, the prohibition in Exhibit B is limited to challenges only 
to the star pagination claim, not to any other West copyright claim, 
and is limited in time--only during the duration of the license. 
Second, it is questionable as to whether the progeny or policy of Lear, 
a patent case, applies to copyright licenses. See, e.g., Saturday 
Evening Post Co. v. Rumbleseat Press, Inc., 816 F. 2d 1191 (7th Cir. 
1987); Nimmer on Copyright Sec. 10.15[B] at 10-134-137 (questioning 
Rumbleseat). In addition, this prohibition is much more narrowly 
tailored than the broad no-challenge clauses courts have struck down in 
patent-license contexts.
    Third, this provision will not prevent challenges to the validity 
of West's star pagination infringement claims; publishers may still 
choose the option they have today--publish without a license and 
litigate the star pagination copyright claim's validity. The proposed 
Final Judgment simply provides prospective publishers with an entry 
option they would not otherwise have.
    Fourth, a licensee may exercise his First Amendment rights and 
speak out publicly and lobby for changes relating to this issue.

[[Page 53397]]

14. The Confidentiality Provision Is Intended to Protect the Licensee 
and Could Encourage Procompetitive Discounting
    Mr. Sugarman, Ms. Lewis, and Mr. Wolfe comment that the 
confidentiality provision in the proposed star pagination license will 
permit Thomson/West to engage in preferential licensing and to continue 
to engage in abusive licensing practices in secret. Plaintiffs 
disagree. The confidentiality provision in the star pagination license 
is intended to protect the product development and marketing plans of 
the licensee, not any secrets of Thomson/West. Thomson/West's minimum 
license terms are already public in Exhibit B. The company is required 
to grant a license--in at least this favorable a form--to anyone who 
wants one. Failure to fulfill this requirement and any licensing 
obligation would be a violation of the Final Judgment and grounds for 
contempt.
    Concerns about secret, preferential licensing and abusive licensing 
practices may in fact be concerns that Thomson/West might enter some 
licenses that are more favorable to the licensee than Exhibit B. But 
entering into licenses with more favorable terms will generally be 
desirable and pro-competitive. Moreover, a ``most-favored-nation'' 
clause (one that states Thomson/West will not grant to any licensee a 
more favorable license) would discourage pro-competitive discounting 
that Thomson/West may undertake on its own in response to market 
forces.
15. Arbitration
    Mr. Sugarman states that provisions in the proposed star pagination 
license requiring arbitration in West's home state will lead to bias in 
favor of West on any arbitrated matter. Ms. Lewis agrees and comments 
that arbitration should occur in Washington, D.C. or the home state of 
the licensee. Mr. Wolfe comments, ``[i]t is not appropriate for the 
jurisdiction for any dispute to be any place other than Washington, 
DC.''
    Plaintiffs disagree. Such provisions are standard in licenses which 
are negotiated at arms length in the context of private business 
transactions, and are usually included only for the convenience of 
traveling. There is no reason to call into question the honesty, 
integrity, or ability of any impartially appointed arbitrator based 
solely on his or her location or citizenship in the State of Minnesota. 
In addition, the decision of the panel of arbitrators is appealable to 
the appropriate state or federal court.
16. The Internet
    James P. Love of CPT comments that the ``license agreement is 
written in such a way that the subscribers must agree to the terms of 
the license, and Thomson must approve the license, making it extremely 
unlikely that the citations will ever be available for browsing on the 
Internet.'' We interpret Mr. Love's concern to be that the license 
provisions to which a licensee's subscribers must agree may be used to 
restrict some form of Internet publication of licensed material on the 
Internet.
    The possibility that Mr. Love suggests appears unrelated to the 
acquisition. Provisions of this kind are conventional in intellectual 
property licenses. Nothing would have prevented West, prior to the 
acquisition, from insisting on such provisions in licenses. The 
acquisition should not aggravate Mr. Love's concern, and therefore, 
there is no need for the remedy to alleviate it. In short, this comment 
addresses a public policy concern not related to the merger.
17. License Fee for Books
    Mr. Sugarman claims that the proposed star pagination license is 
ambiguous as to the license fee charged for books. Plaintiffs intended 
that the fee would be paid by the licensee in the year the book is 
printed. In other words, books first printed, then stored, and sold in 
later years would not require additional fee payments for the later 
years. In order to avoid any confusion, the language of the proposed 
License Agreement will be modified. Defendants have agreed to the 
following modification, which plaintiffs will include when we later 
move the Court to enter the decree:

    2.01. Star Pagination License. During the term of this 
Agreement, subject to the terms and conditions hereof, including, 
without limitation, the timely payment by Licensee to Licensor of 
the licensee fees provided for in Section 2.03 hereof, Licensor 
hereby grants to Licensee, and Licensee hereby accepts from 
Licensor, a non-exclusive, non-transferable (except as specifically 
provided in Section 6.05 hereof), limited License (i) * * * (iii) to 
license and/or distribute such [Licensee Product(s)/Services(s)] to 
Licensee Subscribers subject to Licensee Subscriber Limitations; * * 
*
    2.03 License Fees. In consideration of the license granted under 
Section 2.01 hereof, Licensee shall pay Licensor the license fees 
provided for in this Section 2.03; provided, however, that the 
licensee fee for [print Licensee Product(s)] needed only be paid for 
the year in which the [print Licensee Product(s)] are printed.
18. Other Comments Regarding the Star Pagination License
    Mr. Sugarman believes that third party information providers should 
be able to sell or license case law data which includes licensed star 
pagination and text as long as the purchasers or licensees have entered 
into or are subject to a pagination license agreement with Thomson/
West.\28\
---------------------------------------------------------------------------

    \28\ Mr. Wolfe of ICRI offered a similar comment on behalf of 
ICRI, which describes itself as ``a wholesale customer of legal 
publishers with the rights to resell, as part of our product and for 
the use of our product, case law data.''
---------------------------------------------------------------------------

    Plaintiffs agree. Section 2.02 of the license addresses this point 
specifically: ``nothing in this Agreement shall prohibit Licensee from 
selling, leasing, licensing or otherwise transferring Licensee Case 
Reports that contain Licensed NRS Pagination to third party information 
providers, but such transfers shall not include or grant any right to 
reproduce, publish, broadcast, distribute, loan, rent, lease, sell or 
otherwise transfer, make available or use the Licensed NRS Pagination 
contained in such Licensee Case Reports.'' Any third party information 
provider that obtained a star pagination license could, of course, use 
the transferred star pagination under its own license with Thomson/
West. There is nothing in the proposed license to the contrary. 
Nevertheless, to clarify that the license fee need only be paid by the 
publisher, and not also by the third party information provider, 
plaintiffs proposed and defendants reviewed and agreed to the following 
language:
    2.01. Star Pagination License * * *. (iv) to have a third party 
obtain, on behalf of Licensee, NRS Pagination from West Case Reports 
contained in NRS Reporter publications and include such NRS 
Pagination (which shall become Licensed NRS Pagination when so 
included) in corresponding Licensee Case Reports contained in 
[Licensee Product(s)/Service(s)].

    Mr. Sugarman comments that Thomson/West should be required to agree 
not to assert future database protection legislation and anti-RAM 
copying claims against licensees, for use of star pagination. This 
issue is specifically addressed in the proposed license in Exhibit B. 
The proposed license ensures that Thomson/West will not contend that a 
licensee's use of star pagination infringes any intellectual property 
right. Section 2.01 also provides that ``Licensor [Thomson] shall not 
challenge, under any present or future legislation, any use by the 
Licensee of Licensed NRS Pagination if Licensee's use of same conforms 
to the terms of this Agreement.'' (emphasis added).

[[Page 53398]]

    Mr. Sugarman comments that the proposed Final Judgment should 
require West-Thomson to negotiate star pagination licenses in good 
faith. Plaintiffs disagree because the proposed Final Judgment requires 
Thomson/West to grant the license contained in Exhibit B to the 
Judgment to anyone who wants one; therefore, good faith is not 
relevant. Any refusal to license would be punishable as contempt.
    Mr. Sugarman states that the proposed star pagination license is 
not an ``open license,'' ``* * * when it will be negotiated in private 
and arbitrated in private pursuant to confidentiality provisions agreed 
to by the Antitrust Division.'' Plaintiffs disagree. The proposed 
license is in fact ``open'' within the common meaning of that word. The 
terms are public and mandatory, and are attached the proposed Final 
Judgment as Exhibit B. While it is true that negotiations with 
potential licensees seeking more favorable terms than the proposed 
license may be non-public, licenses arranged for under more favorable 
terms will not cause an anticompetitive effect and in fact should be 
pro-competitive.
    Mr. Sugarman feels that the requirement in the proposed star 
pagination license that licensees prominently display West internal 
pagination should be deleted. In fact, Section 2.05 of the license 
merely requires licensees to present NRS Pagination ``no less 
prominently than any other unofficial pagination or pinpoint 
locators.'' (emphasis added). Plaintiffs cannot determine what possible 
anticompetitive effects, if any, could arise from this provision. Mr. 
Sugarman does not state any.
    Mr. Sugarman is concerned that the proposed star pagination license 
does not include a mandatory license agreement for statutes. Star 
pagination to West's statutes has not become an issue. We are aware of 
no jurisdiction where it is conventional to cite to statutes by West 
pages. A license agreement on the text of statutes themselves is not 
called for in the context of the competitive issues raised in this 
merger investigation. Statute text is available in every jurisdiction, 
for every potential entrant, and in every product market involving 
statutes affected by the merger.

E. Plaintiffs Used Appropriate Merger Analysis in Examining this Merger

    Ms. Trembley comments that ``[i]n the past, Thomson practices have 
made acquired products both more labor intensive and costly to 
maintain.'' She is concerned that Thomson-owned products in the past 
have had their price raised at a higher rate than West products. 
Similarly, Mr. Marc Ames, an attorney in New York City, comments that 
he has been involved in a lengthy billing dispute with Lawyers 
Cooperative Publishing, a part of Thomson. He brings this to our 
attention to ``point out and underscore a shift in attitude when 
business becomes too large as the result of mergers and acquisitions.''
    Past price increases by Thomson are beyond the scope of this merger 
challenge. To the extent they indicate that price rises have resulted 
when Thomson takes over specific competing products, evidence of past 
price increases is useful as evidence that similar product pairings 
should be prohibited.
    Plaintiffs believe such pairings have been identified and 
prohibited in this case by the required divestitures. Plaintiffs note 
that it does not necessarily follow that a large firm always will 
engage in harmful pricing or service practices to its customers. 
Competition leads to lower prices and increased service, quality and 
innovation. However, there is no way to prove a likely decrease in 
competition due to a merger without first carefully examining the 
factual details in specific product markets.
    Mr. David C. Harrison, an attorney in Philadelphia, Pennsylvania, 
asks how the Justice Department can approve the merger of ``the second 
largest legal publisher with the largest legal publisher, giving the 
new company a virtual monopoly.'' Even if it was true, a merger of the 
second largest and largest legal publisher would not necessarily lead 
to an irreplaceable reduction in competition in legal publishing.\29\ 
As stated above, increases in industry concentration is an important 
indicator of possible anticompetitive effects of any merger, however, 
courts require more before a merger challenge will be successful. 
Generally, courts require provable relevant product markets and a lack 
of likely substitutes or entry. The plaintiffs believe every plausible, 
legally recognizable, anticompetitive effect of the Thomson/West merger 
has been addressed in the Complaint and proposed Final Judgment.\30\
---------------------------------------------------------------------------

    \29\ According to SIMBA/Cowles Professional Publishing 
Information Report (1996) and Lexis' own figures, measured by sales 
Thomson has been the number three legal publisher, behind Reed 
Elsevier, owner of Lexis. Thomson owns many non-legal assets 
unrelated to this merger. West is the largest legal publisher.
    \30\ Lexis states that consumers are already feeling the loss of 
competition because Thomson has stopped publication of the Illinois 
Administrative Code, and that Thomson may be on the verge of 
canceling its New Jersey Administrative Code. Mem. at 6. However, 
Thomson's codes in Illinois and New Jersey do not compete in any 
market alleged in the Complaint, nor do they compete with any West 
product, as they are unenhanced. Moreover, the regulatory materials 
contained in these products are freely available from the states and 
entry into the publication of unenhanced state administrative codes 
is unlikely to be difficult.
---------------------------------------------------------------------------

F. Plaintiffs Should not Require Divestiture of the JURIS Database

1. There is no Conflict of Interest Within the Department on This 
Matter
    Tax Analysts (``TA'') comments that the United States Justice 
Department (``the Department'') should be forced to disclose the 
contents of its former JURIS database in order to remove an alleged 
barrier to entry described in paragraph 30 of the Complaint--that in 
many jurisdictions case law is difficult to obtain. TA also believes 
that because the Department's Civil Division, joined by West, is 
defending a Freedom of Information Act (``FOIA'') (5 U.S.C. 552 et 
seq.) request by TA for the JURIS database in another action, the 
Department has an irreconcilable conflict of interest that causes the 
Department to act against the public interest. TA filed a motion to 
intervene in this Tunney Act proceeding on July 25, 1996, which was 
denied by an order of Judge Richey of this Court.
    TA is a non-profit vendor of publications relating to legal tax 
issues, that logically wishes to obtain historic reports of legal 
opinions and statutes cheaply, or for free, in order to offer these to 
its customers. It applied for but was denied a FOIA request to obtain 
the JURIS database.\31\ TA filed a FOIA action against the Department 
in the District of Columbia in January, 1994, seeking an order 
requiring disclosure of the database. West intervened. It sought to 
protect its interest as the original provider of the case reports to 
the Department; West continues to sell similar reports to its other 
customers. The Department has been defended at all times in that matter 
by attorneys of the Federal Programs Branch of the Civil Division. In 
January 1996, Judge Kessler granted the partial motion of the 
Department to dismiss the suit as it related to the status of the West-
supplied case reports as an ``agency record'' under FOIA. The order was

[[Page 53399]]

certified as final on April 1, 1996. Tax Analysts v. Department of 
Justice and West Publishing Company, 913 F. Supp. 599 (D.D.C. 1996).
---------------------------------------------------------------------------

    \31\ JURIS was established and used by the Department for 
internal use by its many components for legal research. It licensed 
case reports and statutes from West and made them available along 
with other legal information and documents online across the 
Department and other United States Government agencies. In an effort 
to reduce costs, JURIS was discontinued in 1993, and replaced at the 
Department with contracts for direct provision of case reports and 
statutes from Lexis/Reed Elsevier and West.
---------------------------------------------------------------------------

    TA was denied the database it sought because Judge Kessler held 
that the Department did not control the West-supplied case reports, 
which were provided under a contract with West. The contract restricts 
the Department's right to use, dispose of, or transfer the database; 
and it therefore does not qualify as an ``agency record'' for purposes 
of disclosure under FOIA. Tax Analysts, at 604. At no time has the 
Department asserted any proprietary or copyright interest in the 
database, nor has it made any assertion on behalf of West's copyright 
claim. The Department's defense in the FOIA matter is not related to 
any conduct of Thomson or West relating to the merger. TA has appealed 
Judge Kessler's ruling.
    The Antitrust Division's unrelated investigation of the proposed 
merger of Thomson and West began on March 12, 1996, pursuant to the 
Clayton Antitrust Act, 15 U.S.C. 12 et seq. At all times, the 
Department's investigation, challenge and settlement negotiations of 
the Thomson/West matter have been conducted by attorneys of the Merger 
Task Force of the Antitrust Division or their direct supervisors within 
the Antitrust Division, and in direct coordination with several state 
attorneys general's offices. At no time during the investigation or 
subsequent challenge has the Department or any plaintiff made any 
assertion relating to the JURIS database.
    In the Tax Analysts defense, the Department seeks to protect 
against unwarranted disclosures under FOIA and to protect against 
violating its contract with a private entity. The Thomson/West merger 
challenge and settlement, on the other hand, involves the public 
interest reflected in the federal antitrust statutes for the 
preservation of competition in markets affected by mergers. There is 
simply no conflict or inconsistency between the public interests sought 
to be protected by the two cases.
    TA argues that the Department has an irreconcilable conflict of 
interest resulting from its litigating relationship with West in the 
Tax Analysts case. At all times the Department has conducted an 
independent FOIA defense in the Tax Analysts case. West intervened on 
its own initiative and has made its own pleadings and assertions. To 
the extent West's views in that matter coincide with the Department's, 
joint pleadings were appropriate for judicial economy.
    West is not the Department's client in either this or the Tax 
Analysts matter. TA avers that the Department has adopted the interests 
of West in the Tax Analysts case, and substituted them for the public 
interest. The Department has a clearly articulated and valuable role in 
protecting the public interest against unwarranted FOIA disclosure and 
breach of government contracts with private persons. Department 
attorneys are strictly prohibited from representing other persons in 
matters involving the United States. 18 U.S.C. 203. Moreover, West's 
interest in the Tax Analysts case is commercial, while the Department 
has no commercial interest whatsoever in the JURIS database.
    There have been no Department attorneys involved at any time in 
both matters. The first time any attorney from the Antitrust Division's 
Merger Task Force (handing the Thomson/West matter) had any contact or 
even knew the identity of any attorney from the Civil Division handling 
the Tax Analysts matter was after Tax Analysts filed a motion to 
intervene in this matter.
    TA does not seek to protect rights that would be impaired by the 
entry of the proposed Final Judgment. TA seeks relief directed at the 
conduct of the Department and which would place requirements on it 
alone. Essentially, TA seeks to prohibit a merger between two parties 
unless and until another party not involved in the proposed merger 
takes some affirmative action to increase competition (they believe) in 
the legal publishing industry. The paragraphs in the Complaint towards 
which TA points as examples of the harm not remedied by the proposed 
settlement are pre-existing industry facts that will not be changed by 
the merger. (See e.g., paragraph 30 of the Complaint, which states, 
``[p]ast and/or current opinions simply are not available from many 
courts, and in many others, obtaining access is costly and time-
consuming.''). In short, this is a public policy issue unrelated to the 
merger.
2. Familiarity With Legal Publishing Industry
    Another allegation made by TA is that the Department is unfamiliar 
with the workings of the legal publishing industry, particularly with 
the role of online legal publishing. The Department regularly 
investigates, challenges, and reaches settlement with participants in 
many industries in which it is not a participant. In order to develop 
expertise in an industry for purposes of merger enforcement, the 
Department uses past experience, examines documents, conducts 
interviews and depositions, employs industry experts, and reviews 
publicly available materials. These activities were all done in the 
investigation of the Thomson/West merger.
    In addition, during this merger investigation, an unprecedented 
level of cooperation was established between the Department and several 
states, and the expertise of seven state attorneys general's offices 
was combined. The state attorneys general have joined in the Complaint 
and proposed Final Judgment after participating in fact-gathering and 
legal analysis. Two of the states, New York and California, devoted 
full-time employees to the investigation throughout its duration. All 
of the state governments provided valuable assistance due to their 
intimate knowledge of state-related publications.
    TA states the Department has mischaracterized existing competition 
between Lexis and WESTLAW in the ``comprehensive online legal research 
services'' market and argues that other small legal publishers exist. 
However, the existence of small, online legal publisher has no impact 
on the anticompetitive effects alleged to result from the Thomson/West 
merger in the comprehensive online legal research services market in 
which there are only two participants at this time.

G. Miscellaneous Comments--Unrelated to Merger or Unsupported by the 
Investigation

    A number of comments were received when raised concerns which are 
either unrelated to the merger or asserted conclusions which were not 
supported by the governments' investigation.
    Ms. Cyndi A. Trembley, President of the Association of Law 
Libraries of Upstate New York, comments, ``Thomson will have control of 
a significant portion of the secondary sources that aid in interpreting 
the law.'' Kendall F. Svengalis of the Rhode Island State Law Library 
comments that defendants will control a large percentage of legal 
publications, and that they therefore should have been required to 
divest Lawyers Cooperative Publishing (``LCP'').
    It is true that Thomson has owned and now owns, as a result of its 
merger with West, a significant number of secondary law titles. 
However, that fact alone is not grounds on which to base a merger 
challenge under the antitrust laws. Elements of a legally recognizable 
merger challenge include proving that the merging firms actually 
compete with each other in one or more product markets and that the 
effects of that competition will be lost and not replaced after the 
merger. The burden is also on the enforcing agency or agencies

[[Page 53400]]

to show that there are insufficient substitutes for the products of the 
merging firms, and that entry into the product market is difficult. 
Thus, plaintiffs focused on competing legal publications. A torts 
handbook does not compete with a contracts treatise, for example. In 
the proposed Final Judgment, the plaintiffs require divestiture of one 
of the parties' products in as many product markets as could plausibly 
be alleged, or that the plaintiffs believed were likely to be 
allegeable, in a litigated merger challenge.
    Mr. Svengalis complains that some of the titles that defendants 
must divest are relatively small and that only three states must be 
given the option to rebid their respective official reporter contracts. 
The fact that some parts of the divestiture list are small does not 
mean that the entire settlement is inadequate.
    Mr. Gross states that the bids (for divestiture products) should 
not be limited to the entire list of divestiture products. The proposed 
Final Judgment permits Thomson/West to package, initially, the 
divestiture products in any manner it desires. The only requirements on 
bidding for divestiture products are contained in the proposed Final 
Judgment and relate to the need that the divestiture products are sold 
to some person who will keep them viable and competitive. There is no 
reason to believe (in fact it may be to the contrary) that the 
divestiture products will be more viable and competitive in the hands 
of two or more acquirers. In any event, the divestitures remain subject 
to approval by the appropriate plaintiffs, who must agree that the 
products will be kept viable.
    There is no reason to believe that ``having more legal publishers 
in the market will result in competitive pricing and higher quality of 
law products for the consumer,'' as suggested by Mr. Gross. The relief 
in this merger challenge addresses the expected loss of competition due 
to Thomson and West no longer competing with each other. If all the 
Thomson products go to one able firm, as long as there is no reduction 
in competition resulting from the divestiture, then any competition 
lost by the Thomson/West merger will be replaced and preserved.
    Mr. Gross comments that Thomson should have to pay a license fee 
for ALR cites on Auto-Cite, after Auto-Cite is divested. Plaintiffs 
disagree. It is true that Auto-Cite includes ALR cites. However, there 
is no requirement that the acquirer of Auto-Cite continue to include 
ALR references. If the acquirer wants to, however, it is free to 
continue them. Thomson may receive some incidental benefit to continued 
ALR references at the option of the acquirer, but if Thomson cares 
about the cites remaining on Auto-Cite, Thomson can negotiate on its 
own a contract/license to place them there. The investigation of this 
merger did not reveal sufficient evidence that the competitive value of 
Auto-Cite derives from ALR references. Rather, Auto-Cite's value comes 
from an accurate, up-to-the-date display of case citations, and an 
accurate display of whether or not a case opinion is still good law by 
showing the case's direct history.
    Mr. Gross claims that the competition between West's Corpus Juris 
Secundum (``CJS'') and Thomson's American Jurisprudence 2d 
(``AmJur2d'') will be eliminated by the merger and therefore one of 
them should be divested.\32\ Plaintiffs disagree. This comment does not 
relate to any claim made in the Complaint and thus is not relevant. In 
fact, while they are both referred to as ``encyclopedias,'' there was 
insufficient evidence that CJS is a strong competitor for AmJur2d in 
the minds or actual use of consumers.
---------------------------------------------------------------------------

    \32\ A similar comment was submitted by Bartlett F. Cole, Esq.
---------------------------------------------------------------------------

    Geronimo comments that the Complaint fails to address West's 
monopoly in reporting enhanced lower federal (U.S.) court opinions. 
Geronimo suggests four remedies designed to open up the market for 
enhanced lower federal case law. This comment also relates to a market 
not included in the Complaint and thus is not relevant. West reports 
decisions of lower federal courts in its Federal Supplement and Federal 
Reporter series. The Complaint does not include a count involving 
enhanced lower federal case law because Thomson is not even a 
participant in that market. There also is insufficient evidence to 
allege that Thomson is an actual potential or perceived potential 
competitor to West's alleged monopoly in enhanced lower federal case 
law. That Thomson is a large company with financial resources and 
editorial expertise does not make it a potential competitor.
    Lexis/Reed Elsevier comments that plaintiffs in their press release 
incorrectly calculated the sales of the divestiture products, in which 
Lexis/Reed Elsevier claims is only $48 million. Plaintiffs disagree. 
The $72 million figure was based upon information obtained from Thomson 
about the sales of the divestiture products, including Auto-Cite, and 
products related to the Official Reporter Contracts. Lexis/Reed-
Elseiver's reference to the lower figure apparently does not include 
the retail revenues of Auto-Cite or the sales of Official Reporters and 
related products.
    Scott Wetzel of CD Law comments that ``the Washington States legal 
publishing market is pervaded with anti-competitive practices that 
include predatory pricing, exclusive contracts for certain legal 
materials, and tying agreements. The Department consent decree does 
little or nothing to prevent or ameliorate these practices.'' These 
comments go beyond the allegations in the Complaint. Hence, they are 
not relevant to the Tunney Act proceeding.
    Matthew Lee for ICP complains that West does not offer ``any 
program or provision for granting access to Westlaw and other West 
resources to non-profits, particularly grassroots civil rights and 
consumers' groups at reduced or waived fees.'' Whether defendants offer 
such programs falls outside of the process of merger review and 
analysis.
    ICP also questions ``DOJ's long standing inter-relation with West, 
particularly the selection of West as the DOJ's legal-materials 
supplier after, largely due to West's anticompetitive behavior, the DOJ 
abandoned its `Juris' project.'' Since discontinuing Juris, DOJ 
attorneys have used both Lexis-Nexis and Westlaw. Further, if merely 
using a product or service were grounds for concern, government 
attorneys would be unable to investigate and analyze many of the 
mergers that come before them.
    ICP further maintains that ``DOJ should attempt to better inform 
the affected public, especially the `retail' and low and moderate 
income segment thereof, of pending DOJ merger reviews, such that the 
DOJ can receive, and consider, comments from those who stand to be most 
affected.'' First, the plaintiffs, during the investigation, sought to 
receive very wide input from affected users, and in fact received 
information from an unusually wide number of sources. Second, as 
required by the APPA, plaintiffs have filed the requisite documents 
with this Court and published them in the Federal Register and the 
Washington Post. Furthermore, it would be impossible for plaintiffs to 
identify all members of ``the affected public'' and then notify each of 
these individual and entities of the proposed Final Judgment. In this 
case, plaintiffs also personally notified many of the individuals and 
companies who had been involved in the investigation of the proposed 
Final Judgment.
    Some commenters were concerned that politics played a role in 
governments' investigation and

[[Page 53401]]

settlement of this matter.\3\ There is no political context to this 
merger challenge or the proposed Final Judgment, and any comments 
making such accusations are wrong. Recommendations of the settlement 
reached were made by the Department's career professional staff. We 
note that the Department of Justice is joined by seven state attorneys 
general's offices in this matter, all of which are dedicated to 
impartial law enforcement regardless of politics.
---------------------------------------------------------------------------

    \33\ David C. Harrison, Esq.; John H. Lederer, Esq.
---------------------------------------------------------------------------

    An anonymous commenter alleges that West is in collusion with the 
United States Congress in the production of United States Code 
Annotated (``U.S.C.A.''). The commenter says whatever company possesses 
this privileged, insider relationship, whether it be West or Thomson, 
enjoys an enormous and unwarranted market advantage. Plaintiffs 
received no other information to support this anonymous allegation. 
However, any condition of advantage enjoyed by West through its 
relationships with the Congress or any judicial entity is not affected 
by the merger of Thomson and West. Thomson may replace West in the 
position of advantage, but existing competition between Thomson and 
West is not changed. In any event, Thomson's annotated United States 
Code product, United States Code Service, is a divestiture product 
under the proposed Final Judgment.

III

The Legal Standard Governing the Court's Public Interest Determination

    Once the United States moves for entry of the proposed Final 
Judgment, the Tunney Act directs the Court to determine whether entry 
of the proposed Final Judgment ``is in the public interest.'' 15 U.S.C. 
16(e). In making that determination, ``the court's function is not to 
determine whether the resulting array of rights and liabilities is one 
that will best serve society, but only to confirm that the resulting 
settlement is within the reaches of the public interest.'' United 
States v. Western Elec. Co., 993 F.2d 1572, 1576 (D.C. Cir.), cert. 
denied, 114 S. Ct. 487 (1993) (emphasis added, internal quotation and 
citation omitted).\34\ The Court should evaluate the relief set forth 
in the proposed Final Judgment and should enter the Judgment if it 
falls within the government's ``rather broad discretion to settle with 
the defendant within the reaches of the public interest.'' Microsoft, 
56 F.3d at 1461. Accord, Associated Milk Producers, 534 F.2d at 117-18.
---------------------------------------------------------------------------

    \34\ The Western Electric decision concerned a consensual 
modification of an existing antitrust decree. The Court of Appeals 
assumed that the Tunney Act was applicable.
---------------------------------------------------------------------------

    The Court is not ``to make de novo determination of facts and 
issues.'' Western Elec., 993 F.2d at 1577. Rather, ``[t]he balancing of 
competing social and political interests affected by a proposed 
antitrust decree must be left, in the first instance, to the discretion 
of the Attorney General.'' Id. (internal quotation and citation omitted 
throughout). In particular, the Court must defer to the Department's 
assessment of likely competitive consequences, which it may reject 
``only if it has exceptional confidence that adverse antitrust 
consequences will result--perhaps akin to the confidence that would 
justify a court in overturning the predictive judgments of an 
administrative agency.'' Id.\35\
---------------------------------------------------------------------------

    \35\ The Tunney Act does not give a court authority to impose 
different terms on the parties. See, e.g., United States v. American 
Tel. & Tel. Co., 552 F. Supp. 131, 153 n.95 (D. D.C. 1982), aff'd 
sub nom. Maryland v. United States, 460 U.S. 1001 (1983) (Mem.); 
accord H.R. Rep. No. 1463, 93d Cong., 2d Sess. 8 (1974). A court, of 
course, can condition entry of a decree on the parties' agreement to 
a different bargain, see, e.g., AT&T, 552 F. Supp. at 225, but if 
the parties do not agree to such terms, the court's only choices are 
to enter the decree the parties proposed or to leave the parties to 
litigate.
---------------------------------------------------------------------------

    The Court may not reject a decree simply ``because a third party 
claims it could be better treated.'' Microsoft, 56 F.3d at 1461 n.9. 
The Tunney Act does not empower the Court to reject the remedies in the 
proposed Final Judgment based on the belief that ``other remedies were 
preferable.'' Id. at 1460. As Judge Greene has observed:

    If courts acting under the Tunney Act disapproved proposed 
consent decrees merely because they did not contain the exact relief 
which the court would have imposed after a finding of liability, 
defendants would have no incentive to consent to judgment and this 
element of compromise would be destroyed. The consent decree would 
thus as a practical matter be eliminated as an antitrust enforcement 
tool, despite Congress' directive that it be preserved.

United States v. American Tel. & Tel. Co., 552 F. Supp. 131, 151 (D. 
D.C. 1982), aff'd sub nom. Maryland v. United States, 460 U.S. 1001 
(1983) (Mem.).
    Moreover, the entry of a governmental antitrust decree forecloses 
no private party from seeking and obtaining appropriate antitrust 
remedies. Thus, Defendants will remain liable for any illegal acts, and 
any private party may challenge such conduct if and when appropriate. 
If any of the commenting parties has a basis for suing Defendants, they 
may do so. The legal precedent discussed above holds that the scope of 
a Tunney Act proceeding is limited to whether entry of this particular 
proposed Final Judgment, agreed to by the parties as settlement of this 
case, is in the public interest.
    Finally, the Tunney Act does not contemplate judicial reevaluation 
of the wisdom of the government's determination of which violations to 
allege in the Complaint. The government's decision not to bring a 
particular case on the facts and law before it at a particular time, 
like any other decision not to prosecute, ``involves a complicated 
balancing of a number of factors which are peculiarly within [the 
government's] expertise.'' Heckler v. Chaney, 470 U.S. 821, 831 (1985). 
Thus, the Court may not look beyond the Complaint ``to evaluate claims 
that the government did not make and to inquire as to why they were not 
made.'' Microsoft, 56 F.3d at 1459 (emphasis in original); See also, 
United States v. Associated Milk Producers, Inc., 534 F.2d 113, 117-18 
(8th Cir. 1976), cert. denied, 429 U.S. 940 (1976).
    Similarly, the government has wide discretion within the reaches of 
the public interest to resolve potential litigation. E.g., United 
States v. Western Elec. Co., 993 F.2d 1572 (D.C. Cir.), cert. denied, 
114 S. Ct. 487 (1993); United States v. American Tel. & Tel. Co., 552 
F. Supp. 131, 151 (D. D.C. 1982), aff'd sub nom. Maryland v. United 
States,  460 U.S. 1001 (1983) (Mem.). The Supreme Court has recognized 
that a government antitrust consent decree is a contract between the 
parties to settle their disputes and differences, United States v. ITT 
Continental Baking Co., 420 U.S. 223, 235-38, (1975), United States v. 
Armour & Co., 402 U.S. 673, 681-82 (1971), and ``normally embodies a 
compromise; in exchange for the saving of cost and elimination of risk, 
the parties each give up something they might have won had they 
proceeded with the litigation.'' Armour, 402 U.S. at 681. This Judgment 
has the virtue of bringing the public certain benefits and protection 
without the uncertainty and expense of protracted litigation. Armour, 
402 U.S. at 681; Microsoft, 56 F.3d at 1459.

IV

Conclusion

    After careful consideration of these comments, the plaintiffs 
conclude that entry of the proposed Final Judgment will provide an 
effective and appropriate remedy for the antitrust violation alleged in 
the Complaint and is in the public interest. The Plaintiffs

[[Page 53402]]

have moved the Court to enter the proposed Final Judgment after the 
public comments and this Response have been published in the Federal 
Register, as 15 U.S.C. 16(d) requires.

    Dated: September 23, 1996.

        Respectfully submitted,

James K. Foster,

Minaksi Bhatt (DC Bar #434448),
Attorneys, U.S. Department of Justice, Antitrust Division, 1401 H 
Street, N.W., Suite 4000, Washington, D.C. 20530, Tel: 202/514-8362.

    For Plaintiff State of California:

----------------------------------------------------------------------
Kathleen E. Foote,
Deputy Attorney General, 50 Fremont Street, Suite 300, San 
Francisco, CA 94105, (415) 356-6320.

    For Plaintiff State of Illinois:

----------------------------------------------------------------------
Christine H. Rosso

    For Plaintiff Commonwealth of Massachusetts:

----------------------------------------------------------------------
George K. Weber

    For Plaintiff State of New York:

----------------------------------------------------------------------
Stephen P. Houck

    For Plaintiff State of Washington:

----------------------------------------------------------------------
Tina E. Kondo

    For Plaintiff State of Wisconsin:

----------------------------------------------------------------------
Kevin J. O'Connor

             Appendix--Index of Public Comments and Response            
------------------------------------------------------------------------
             Comment                              Response              
------------------------------------------------------------------------
Lyn Warmath, Library Director,     II.D.6., II.D.7, II.D.8.             
 Hirschler, Fleischer, Weinberg,                                        
 Cox & Allen, Pp. 1-3 (pagination                                       
 license).                                                              
L. David Cole, Esq., Pp. 1-2       II.B.1.                              
 (unintegrated products).                                               
Alan D. Sugarman:                                                       
June 26 letter:                                                         
    P. 1 (good faith negotiation)  II.D.18.                             
    P. 2 (text license)..........  II.D.3., II.D.9.                     
    Pp. 2-3 (level of license      II.D.6., II.D.7.                     
     fees).                                                             
    P. 3 (copyright challenges)..  II.D.13.                             
    Pp. 3-4 (confidentiality of    II.D.14.                             
     license).                                                          
    P. 4 (arbitration)...........  II.D.15                              
    P. 4 (selection of cases)....  II.D.10.                             
    Pp. 4-5 (text license).......  II.D.3., II.D.9.                     
    P. 5 (license fee per format)  II.D.12.                             
    P. 5 (West pagination          II.D.18.                             
     display).                                                          
    P. 5 (description of product)  II.D.11.                             
    P. 5 (book license fees).....  II.D.17.                             
    P. 6 (third party providers).  II.D.18.                             
June 28 letter:                                                         
    Pp. 1-2 (selection of cases).  II.D.10.                             
    P. 2 (license for statutes)..  II.D.18.                             
September 3 letter:                                                     
    P. 2 (other antitrust          II.D.4.                              
     violations).                                                       
    P. 2 (products divested).....  II.A.1.                              
    P. 3 (good faith negotiation)  II.D.18.                             
    P. 4 (open licenses).........  II.D.18.                             
    Pp. 5, 9 (confidentiality of   II.D.14., II.D.18.                   
     license).                                                          
    P. 5 (level of license fees).  II.D.6.                              
    P. 5-8 (text license)........  II.D.9.                              
    P. 8 (selection of cases)....  II.D.10.                             
    P. 8 (copyright challenges)..  II.D.13.                             
    Pp. 8-9 (license fee per       II.D.12.                             
     format).                                                           
    P. 9 (third party providers).  II.D.18.                             
    P. 9 (arbitration)...........  II.D.15.                             
Edward D. Jessen, Reporter of      II.B.1.                              
 Decisions, Supreme Court of                                            
 California, Pp. 2-3                                                    
 (divestitures of products).                                            
Professor Robert L. Oakley,                                             
 American Association of Law                                            
 Libraries:                                                             
    P. 2 (divestiture of           II.A.1.                              
     products).                                                         
    P.2 (editorial staffs).......  II.A.2.                              
    P. 3 (``systems'')...........  II.A.3.                              
    Pp. 3-4 (level of license      II.D.6., II.D.8.                     
     fees).                                                             
    Pp. 4-5 (copyright             II.D.13.                             
     challenges).                                                       
    P. 5 (online competition)....  II.C.4.                              
Cyndi A. Trembley, President,      II.A.1., II.E., II.G.                
 Association of Law Libraries of                                        
 Upstate New York, P. 1 (merger                                         
 and pricing).                                                          
Kathleen Jo Gibson, New Mexico                                          
 Compilation Commission:                                                
    P. 1 (state reporters).......  II.B.4.                              
    Pp. 1, 2 (text copyright)....  II.D.3., II.D.9.                     
    P. 2 (star pagination          II.D.2.                              
     copyright).                                                        
Karen Ehmer, Esq., Darby Printing                                       
 Company:                                                               
    P. 1 (state reporters).......  II.B.4.                              
    Pp. 1-2 (state reporters)....  II.B.1.-3.                           
David C. Harrison, Esq.                                                 
    P. 1 (merger)................  II.E.                                
    P. 1 (political                II.G.                                
     considerations).                                                   
Alois V. Gross, Esq.:                                                   
August 12 letter:                                                       
    Pp. 1-4 (brand names)........  II.A.5.                              
    Pp. 4-5 (star pagination       II.D.1., II.D.2.                     
     copyright).                                                        
    Pp. 5-6 (state reporters)....  II.B.1.-3.                           

[[Page 53403]]

                                                                        
    Pp. 6-7 (packaging             II.G.                                
     divestitures).                                                     
    P. 7 (legal encyclopedias)...  II.G.                                
August 20 letter:                                                       
    Pp. 1-5 (brand names)........  II.A.5.                              
    Pp. 2-3 (``systems'')........  II.A.3.                              
    P. 4 (encyclopedias).........  II.G.                                
    P. 5 (Auto-Cite).............  II.C.2., II.G.                       
Thomas F. Field, Publisher Tax                                          
 Analysts:                                                              
August 29 letter:                                                       
    Pp. 1-8 (access to case law/   II.F.                                
     Juris).                                                            
    P. 8 (online competition)....  II.C.                                
September 3 letter:                                                     
    Pp. 1-2 (barriers to entry)..  II.D.                                
Gary L. Reback, Esq., Wilson,                                           
 Sonsini, Goodrich & Rosati (for                                        
 Lexis-Nexis Division of Reed-                                          
 Elsevier):                                                             
    Pp. 1-2, 7 (divestiture of     II.A.1.                              
     products).                                                         
    Pp. 2-6 (``systems'')........  II.A.3.                              
    Pp. 2, 8-9 (Auto-Cite).......  II.C.2.                              
    Pp. 5-6 (editorial staffs)...  II.A.2.                              
    Pp. 7-8 (``systems'')........  II.C.1.                              
    Pp. 10-11 (level of license    II.D.6., II.D.8.                     
     fees).                                                             
    P. 12 (value of divestitures)  II.G.                                
Anonymous, Pp. 2-3 (U.S.C.A.)....  II.G.                                
Marc L. Ames, Esq., Pp. 1-3        II.E.                                
 (merger).                                                              
O.R. Armstrong, President,                                              
 Geronimo Development                                                   
 Corporation:                                                           
    Pp. 2, 4-5 (pagination         II.D.1., II.D.2.                     
     copyright).                                                        
    P. 2 (online competition)....  II.C.1.-3.                           
    Pp. 2-3 (monopoly in federal   II.G.                                
     case law).                                                         
    Pp. 3-4 (text copyright).....  II.D.3.                              
    P. 5 (Tax Analysts)..........  II.F.                                
Morgan Chu, Irell & Manella LLP,                                        
 (for Matthew Bender & Company,                                         
 Inc.):                                                                 
    P. 9, 11 (initial parallel     II.D.5.                              
     citations).                                                        
    P. 12 (star pagination         II.D.1., II.D.2.                     
     copyright).                                                        
    P. 13 (integration of          II.D.2.                              
     products).                                                         
    P. 13 (level of license fees)  II.D.6., II.D.8.                     
    P. 13 (license fee per         II.D.12.                             
     format).                                                           
    P. 14 (selection of cases)...  II.D.10.                             
    P. 14 (description of          II.D.11.                             
     product).                                                          
    Pp. 14-15 (copyright           II.D.13.                             
     challenges).                                                       
E. Scott Wetzel, CD Law:                                                
    Pp. 3-4 (Washington case law)  II.B.2.                              
    Pp. 4-5 (other antitrust       II.G.                                
     violations).                                                       
    P. 6 (level of license fees).  II.D.6., II.D.8.                     
    P. 6 (copyright challenges)..  II.D.13.                             
    P. 6 (arbitration)...........  II.D.15.                             
    P. 6 (divestiture of           II.A.1.                              
     products).                                                         
Jose I. Rojas, Esq., Broad and                                          
 Cassel (for Oasis Publishing                                           
 Company):                                                              
August 27 letter:                                                       
    P. 1 (star pagination          II.D.1.                              
     copyright).                                                        
    P. 1 (copyright challenges)..  II.D.13.                             
    P. 2 (level of license fees).  II.D.6., II.D.8.                     
August 30 letter:                                                       
    P. 1 (level of license fees).  II.D.6., II.D.8.                     
Eleanor J. Lewis, American                                              
 Association of Legal Publishers:                                       
    Pp. 1-4 (text license).......  II.D.3., II.D.9.                     
    P. 4 (selection of cases)....  II.D.10.                             
    P. 4 (description of product)  II.D.11.                             
    Pp. 4-5 (level of license      II.D.6., II.D.8.                     
     fees).                                                             
    P. 5 (license fee per format)  II.D.12.                             
    P. 5 (copyright challenges)..  II.D.13                              
    P. 5 (confidentiality of       II.D.14.                             
     license).                                                          
    P. 5 (arbitration)...........  II.D.15.                             
Professor J.C. Smith, Director,    II.D.1., II.D.6.                     
 Artificial Intelligence Research                                       
 Project, P. 2-3 (license                                               
 agreement).                                                            
John H. Lederer, Esq.:                                                  
    P. 1 (``systems'')...........  II.A.3.                              
    P. 2 (level of license fees).  II.D.6., II.D.8.                     
    P. 2 (copyright challenges)..  II.D.13.                             
    P. 2 (state reporters).......  II.B.3.                              
    Pp. 2-3 (political             II.G.                                
     considerations).                                                   
Professor Kendall Svengalis,                                            
 Rhode Island State Law Library:                                        
    Pp. 1-2, 5 (divestiture of     II.A.1.                              
     products).                                                         
    Pp. 2, 5 (``systems'').......  II.A.3.                              
    Pp. 3-4 (secondary law)......  II.G.                                

[[Page 53404]]

                                                                        
    P. 4 (state reporters).......  II.B.1.-3.                           
    P. 5 (level of license fees).  II.D.6., II.D.8.                     
Matthew Lee, Executive Director,                                        
 Inner City Press/Community on                                          
 the Move:                                                              
    Pp. 2-6 (online competition).  II.C.2.                              
    P. 8 (non-profit               II.G.                                
     organizations).                                                    
James Love, Director, Consumer                                          
 Project on Technology:                                                 
    P. 1 (divestiture of           II.A.1, II.A.3.                      
     products).                                                         
    P. 2 (``systems'')...........  II.A.3.                              
    P. 2 (editorial staffs)......  II.A.2.                              
    P. 2 (license fee per format)  II.D.12.                             
    P. 2 (level of license fees).  II.D.6., II.D.8.                     
    P. 3 (Internet)..............  II.D.16.                             
    P. 3 (validity of copyright).  II.D.1.                              
Norman Wolfe, International Compu                                       
 Research, Inc.:                                                        
    P. 2 (level of license fees).  II.D.6., II.D.8.                     
    P. 2 (third party providers).  II.D.18.                             
    P. 2 (text license)..........  II.D.9.                              
    P. 2 (copyright challenges)..  II.D.13.                             
    P. 2 (description of product)  II.D.11.                             
    P. 3 (confidentiality          II.D.14.                             
     license).                                                          
    P. 3 (arbitration)...........  II.D.15.                             
Bartlett F. Cole, P. 1             II.G.                                
 (encyclopedias).                                                       
Lexis-Nexis Opposition to the      II.A.2.                              
 Entry of the Proposed Final                                            
 Judgment, P. 22 (editorial                                             
 staffs).                                                               
Mary Brandt-Jensen Declaration:                                         
    Paras.  4, 7 (``systems'')...  II.A.3.                              
    para. 6 (text copyright).....  II.D.3.                              
    para. 6 (level of license      II.D.8.                              
     fees).                                                             
    para. 9 (online competition).  II.C.1.-2.                           
Nicholas R. Emrick Declaration:                                         
    Paras.  7-12 (``systems'')...  II.C.1.-2.                           
    para. 13 (editorial staffs)..  II.A.2.                              
Michael A. Jacobs Declaration:                                          
    Paras.  3-5, 9-12 (Auto-Cite   II.C.3.                              
     divestiture).                                                      
    para. 13 (value of             II.G.                                
     divestiture).                                                      
Garth Saloner Declaration:                                              
    para. 7 (divestiture of        II.A.1.                              
     products).                                                         
    Paras.  10-11 (ALR)..........  II.C.1.                              
    para. 12 (ALR)...............  II.A.3                               
    Paras.  13-16 (editorial       II.A.2.                              
     staffs).                                                           
    Paras.  17-18 (``systems'')..  II.A.3.                              
    Paras.  19-23 (Auto-Cite)....  II.C.2.                              
Kendall F. Svengalis Declaration:                                       
    Paras.  7-9 (``systems'')....  II.A.3.                              
    para. 11 (Auto-Cite).........  II.C.2.                              
    para. 12 (divestiture of       II.A.1.                              
     products).                                                         
------------------------------------------------------------------------

The Thomson Corporation

September 18, 1996.

Via Facsimile 202 307 5802

Ms. Minaksi Bhatt,
U.S. Department of Justice, City Center Building, 1401 H Street, 
NW., Washington, DC 20530.

    Dear Ms. Bhatt:
    I'm writing in response to your letter to Dale Collins and me of 
September 13 asking for clarification of Thomson's position 
regarding the use by competitors of first page citations to West 
case reports.
    As we discussed last Thursday, Thomson's position and belief is 
that the use of first page citations by competitors or others is a 
fair use under 17 U.S.C. Sec. 107--i.e., an otherwise infringing use 
that, when analyzed under the four fair use factors set forth in 
Sec. 107, is deemed ``fair.'' This is the same position consistently 
taken by West. See West Publishing Company v. Mead Data Central, 
Inc., 616 F.Supp. 1571, 1580-81 (D.Minn. 1985), affirmed, 799 F.2d 
1219, 1228 n.3 (8th Cir. 1986), cert. denied, 479 U.S. 1070 (1987); 
Oasis Publishing Company v. West Publishing Company, 924 F.Supp. 
918, 926 (D.Minn. 1996).
    The reason Thomson and West believe that the use of first page 
citations is ``fair'' (while star paging is not) is that, as found 
by the Court in Oasis, ``[a]lthough with either the parallel cites 
or an internal cite form each case a user could sort West's cases 
and determine West's arrangement, the former does not utterly 
supplant the need for West's product while the latter does.'' 924 
F.Supp. at 926. As a result of their belief regarding fair use, 
neither Thomson nor West objects to the use of first page citation 
by others, including competitors. Therefore, Thomson does not plan 
to seek to prevent, by legal action, citation to the first page of 
West case reports.
    Additionally, I wish to confirm that Thomson has not in the 
past, nor will it in the future, take any action to prohibit third 
parties from cross-referencing any of its publications (including, 
for example, ALR, Am Jur, or any of its treatises). Additionally, 
our proposed divestiture agreement will, likewise, recognize the 
right of the buyer to cross-reference Thomson publications.
    I trust this responds to your questions. If not, please feel 
free to call me.

    Sincerely,
Michael S. Harris
MSH/kpf
cc: L Fullerton, Esq., C. Robinson, Esq., C. Conrath, Esq., J. 
Foster, Esq., B. Hall, D. Collins, Esq., J. Schatz, Esq.

State of California, Department of Justice

September 12, 1996.
Edward W. Jessen,
Reporter of Decisions, Supreme Court of California, 303 Second 
Street, South Tower, Eighth Floor, San Francisco, CA 94107.


[[Page 53405]]


Re: Thomson/West Merger, Proposed Settlement

    Dear Mr. Jessen: Your letter of September 5, 1996 to Tom Greene 
of this office expresses concern that the proposed judgment in 
settlement of the Thomson/West merger might leave the Court without 
effective competitors for the job of publishing the California 
Official Reports. In particular, you noted that the integration of 
the Official Reports with other editorially enhanced titles, 
especially Deering's California Codes, renders a more competitive 
product from the standpoint of both consumer appeal and the 
efficiencies of joint editing. You are concerned that these assets 
might be lost as a result of awards to separate publishers in the 
divestiture process.
    Historically, Thomson and West have bid competitively for the 
right to publish the Official Reports. Safeguarding the ability of 
the Court to rebid the Official Reports contract in a comparable 
climate of competition following the merger was a primary aim of 
this office in reaching the proposed settlement. Recognizing the 
volume and complexity of the materials and the Court's special need 
for accuracy and speed in publication, we required measures to 
facilitate the transfer of Bancroft-Whitney's editorial expertise, 
in addition to other provisions designed to promote the competitive 
strength of any prospective new publisher.
    From a practical financial standpoint, this office believes the 
successor publishers of Deering's Codes and the other divested 
California titles will likely be, and should be, strong, active 
bidders for the right to publish the Official Reports, in the event 
the court elects to rebid that contract. We expect to apply this 
perspective in reviewing the competitive suitability of the 
Acquirer(s) of the California titles under paragraph IV.C. of the 
proposed judgment. In light of your concerns and consistent with our 
own past practice, we will examine in some detail what concrete 
plans, if any, the Acquirer has for taking on the Official Reports 
publication.
    We believe that this approach should produce a bidding climate 
comparable to that enjoyed by the Court in past years. Moreover, it 
should do so without disturbing the proposed settlement or 
jeopardizing the prospective competitive benefits that it contains.

      Sincerely,
Daniel E. Lungren,
Attorney General.
Kathleen E. Foote,
Deputy Attorney General.
cc: Craig W. Conrath (U.S. Dept. of Justice), Wayne D. Collins 
(Shearman & Sterling)

Supreme Court of California, Office of the Reporter of Decisions

September 13, 1996.
Kathleen E. Foote,
Deputy Attorney General, Department of Justice, 50 Fremont St., 
Suite 300, San Francisco, CA 94105-2239

    Dear Ms. Foote: Recently expressed concerns on the proposed 
settlement for the Thomson/West merger have been substantially 
mitigated by your September 12 letter, and by a verbal understanding 
reached this week in a conversation with Wayne D. Collins and a 
subsequent conference call with Brian Hall and two other Thomson 
executives responsible for the California Official Reports. On that 
basis, please consider the suggestions in my September 5 letter to 
your office as moot.
    This assumes, of course, that the verbal understanding reached 
with Thomson will be reduced to writing over the next few business 
days, consistent with the discussions.
    The verbal understanding with Thomson provides that: (i) The 
license for use of summaries and headnotes will be expressly 
prospective in application, both as to material in existence on the 
finality date for the consent decree and material yet-to-be-written 
under the present publication contract; (ii) a license similar to 
the one stated for summaries and headnotes will be provided for use 
of the digest classification scheme for the California Official 
Reports, notwithstanding possible divestiture of the digest; and, 
(iii) a waiver of Thomson's right to withhold consent should 
California exercise the option for a second one-year extension of 
the present contract, and an express statement that exercising that 
option waives no rights under the consent decree. (The above is 
intended to be descriptive and is not necessarily reflective of the 
precise language that will be employed.)
    In combination with your September 12 letter, this understanding 
satisfactorily addresses concerns relating to the California 
Official Reports set forth in the advisory committee's August 7 
public comment letter to Craig Conrath, and in my September 5 letter 
to your office. On behalf of the Official Reports advisory 
committee, thank you for your assistance.

      Cordially,
Edward Jessen,
Reporter of Decisions.
cc: Justice Marvin Baxter, chair of advisory committee, Wayne D. 
Collins, Shearman & Sterling, Brian Hall, Jim Fegen, Tom Trenkner, 
members of the advisory committee.

Supreme Court of California, Office of the Reporter of Decisions

September 16, 1996.
Brian Hall,
President, West Information Publishing Group, 610 Opperman Drive, 
P.O. Box 64526, St. Paul, MN 55164-0526.

    Dear Brian: Thank you very much for your attention to my 
concerns about the proposed consent decree relating to the Thomson/
West legal publishing transaction. Since Thomson is presently the 
publisher of the Official Reports, it is my duty as the Reporter of 
Decisions to ensure that the interests of the Supreme Court and the 
people of California are protected by any agreement settling the 
investigation.
    My greatest concern was whether California's ability to select a 
``substitute publisher'' would effectively be dictated by Thomson's 
selection of a buyer for Deering's Codes. In particular, I was 
concerned that the production synergies between Deering's and the 
Official Reports are so great that the only substitute publisher 
that could support the Official Reports was the publisher of 
Deering's.
    I now understand that this issue was thoroughly investigated by 
the California Attorney General's Office and by the United States 
Department of Justice. I also understand that any sale of Deering's 
and the other California products to be divested must be approved 
under the consent decree by the California Attorney General's Office 
and the United States Department of Justice, and that Thomson is not 
free to select any purchaser of its choosing regardless of its 
qualifications. I am confident that the California Attorney 
General's Office and the United States Department of Justice will 
exercise their powers of approval as provided in the proposed 
consent decree to ensure that the purchaser of any divested product 
will have the managerial, operational and financial capability to 
complete effectively in the publication and sale of that product.
    Moreover, I was very glad to learn that the proposed decree 
requires Thomson to reveal to any new purchaser of the divested 
products information about the personnel whose primary 
responsibilities are the editorial production of these products. I 
also understand that the proposed decree prohibits Thomson from 
interfering with any negotiations between the new purchaser and 
Thomson employees whose primary responsibility is the production, 
sale or marketing of the divested products. These requirements 
should help ensure that a new buyer will be able to continue with 
the products without any loss of continuity.
    Finally, I was not aware that any buyer of Deering's or 
substitute publisher of the Official Reports would be free to 
provide the cross-references to ALR, AM Jur, Cal Jur and the other 
Thomson publications that make up the other half of Thomson's 
research system of cross-references. You have told me, however, that 
Thomson has never asserted a copyright interest in these cross-
references and does not intend to do so in the future, so that a new 
publisher of Deering's or the Official Reports would be free to 
include these cross-references as they saw fit. I understand that 
you have similar representations to the California Attorney 
General's Office and the United States Department of Justice.
    In light of this, my level of comfort with the transaction has 
greatly increased. As we discussed, however, I have several more 
concerns that I do not believe are addressed by the proposed decree 
and that need to be resolved before I can fully support the proposed 
settlement. First, I am concerned that there will be a ``gap'' in 
the Thomson license to the State and the State's potential 
introduction of any substitute publisher. Second, although Thomson 
is required by the proposed decree to divest the California digest 
in the event California finds a substitute publisher, I am concerned 
that this does not give the State an adequate interest in the 
Digest's classification scheme. Third, I am concerned that Thomson 
may not consent to continue, at California option, as the publisher 
of the Official Reports for a second one-year extension of the 
existing

[[Page 53406]]

contract to begin November 1, 1997, as contemplated by our contract 
extension agreement of April of this year.
    Therefore, to fully satisfy my concerns, I ask that Thomson, 
subject to whatever approvals are required from the California's 
Attorney General's Office and the United States Department of 
Justice, agree to the following:
    Condition 1. Extend the license to California provided by 
Section XI(C) of the proposed consent decree to include the use of 
any intellectual property rights which Thomson holds pertaining to 
the headnotes, case notes, and/or case summaries in the Official 
Reports created through the end of the existing contract, including 
any extensions pursuant to the April, 1996, agreement.
    Condition 2. Include in the license to California provided by 
Section XI(C) the use of the classification scheme of Thomson's 
California Digest.
    Condition 3. Agree to consent to the additional one-year 
extension from November 1, 1997, to October 31, 1998, of the 
existing publication contract of the California Official Reports as 
provided in the publication contract extension agreement of April, 
1996, if California elects to exercise its option to extend under 
the extension agreement, and acknowledge that during any such 
extension California retains all rights under Section XI of the 
proposed consent decree to terminate the publication contract 
without cause upon ninety days notice to Thomson.
    If you agree to these three conditions, I will withdraw my 
letter to Assistant Attorney Greene by sending him a copy of this 
letter and your response, and fully support the proposed consent 
decree as sufficient to protect California's interests as far as my 
office is concerned.

          Cordially,

Edward Jessen,
Reporter of Decisions.

WEST

September 16, 1996.
Edward W. Jessen,
Reporter, Supreme Court of California, Office of the Reporter of 
Decisions, 303 Second Street, South Tower, Eighth Floor, San 
Francisco, CA 94107.

    Dear Ed: Thank you very much for your letter of September 16, 
1996. As you know, we take your concerns very seriously. Your 
satisfaction as a Reporter of Decisions with our performance on the 
Official Reports and with the adequacy of the proposed consent 
decree to protect the interests of your office is very important to 
us. I am glad that we have had the opportunity to discuss your 
concerns and resolve them to your satisfaction.
    To that end, I am happy to agree on behalf of Thomson to the 
three conditions set forth in your letter. In particular, subject to 
whatever approvals are required from the California Attorney 
General's Office and the United States Department of Justice, 
Thomson (operating through the West Information Publishing Group) 
agrees to do the following:
    1. Extend the license to California provided by Section XI(C) of 
the proposed consent decree to include the use of any intellectual 
property rights which Thomson holds pertaining to the headnotes, 
case notes and/or case summaries in the Official Reports created 
through the end of the existing contract, including any extensions 
pursuant to the April, 1996, agreement.
    2. Include in the license to California provided by Section 
XI(C) the use of the classification scheme of Thomson's California 
Digest.
    3. Agree in consent to the additional one-year extension from 
November 1, 1997, to October 31, 1998, of the existing publication 
contract of the California Official Reports as provided in the 
publication contract extension agreement of April, 1996, if 
California elects to exercise its option to extend under the 
extension agreement, and acknowledge that during any such extension 
California retains all rights under Section XI of the proposed 
consent decree to terminate the publication contract without cause 
upon ninety days notice to Thomson.
    With these commitments in hand, I am delighted that you will now 
be able to inform Assistant Attorney General Greene of your support 
for the proposed consent decree.
    We very much look forward to working with you in the future.

      Respectfully,
Brian H. Hall.

Supreme Court of California

September 17, 1996.
Thomas Greene,
Senior Assistant Attorney General, Department of Justice, P.O. Box 
944255, Sacramento, CA 94244-2550.

    Dear Mr. Greene: Please regard my September 5 letter to you as 
withdrawn. I now fully support the proposed consent decree for the 
Thomson/West transaction as sufficient to protect California's 
interests as far as my office is concerned.
    This change in view results from discussions initiated by Brian 
Hall, President of the West Information Publishing Group, to address 
the concerns expressed in the September 5 letter, and also the 
August 7 public comment letter to Craig Conrath, United States 
Department of Justice. These discussions culminated in the attached 
exchange of correspondence, which set forth provisions that will 
significantly improve the commercial viability of the Official 
Reports in the coming years.
    Also contributing to my change in view is Kathleen Foote's 
September 12 letter, which sets forth the perspective the Attorney 
General will likely apply in reviewing the competitive suitability 
of the acquirer of California divestiture titles.
    In sum, my concerns have been satisfactorily addressed by the 
discussions and correspondence that followed the September 6 letter.

      Cordially,
Edward Jessen,
Reporter of Decisions.
cc: Brian Hall, Kathleen Foote

Certificate of Service

    On September 23, 1996, I caused a copy of Plaintiffs' Response 
to Public Comments to be served by first-class mail upon all parties 
to this action, and a courtesy copy to be mailed to each commenter.
----------------------------------------------------------------------
Minaksi Bhatt

Public Comments

1. Lyn Warmath, Library Director, Hirschler, Fliescher, Weinberg, 
Cox & Allen, P.O. Box 500, Richmond, VA 23218-0500
2. L. David Cole, Esq., 433 North Camden Drive, Beverly Hills, CA 
90210
3. Alan D. Sugarman, President, HyperLaw, Inc, P.O. Box 1176, 
Ansonia Station, New York, NY 10023-1176
4. Edward D. Jessen, Reporter of Decisions and Secretary to 
California Advisory Committee on Publication of Official Reports, 
Office of the Reporter of Decisions, 303 Second Street, South Tower, 
San Francisco, CA 94107
5. Professor Robert L. Oakley (For American Association of Law 
Libraries), Georgetown University Law Center, Edward Bennett 
Williams Law Library, 111 G Street, NW, Washington, DC 20001
6. Cyndi A. Trembley, President, Association of Law Libraries of 
Upstate New York, 557 Cutler Road, Homer, NY 13077
7. Kathleen Jo Gibson, Secretary and Clerk, New Mexico Compilation 
Commission, P.O. Box 15549, Santa Fe, NM 87506
8. Karen Ehmer, Esq., Darby Printing Company, 6215 Purdue Drive, 
Atlanta, GA 30336
9. David C. Harrison, Esq., 2100 Arch Street, Fifth Floor, 
Philadelphia, PA 19103-1399
10. Alois V. Gross, Esq., 2219 Pillsbury Avenue, Minneapolis, MN 
55404-3266
11. Thomas F. Field, Publisher, Tax Analysts, 6830 North Fairfax 
Drive, Arlington, VA 22213
12. Gary L. Reback, Esq. (For Lexis-Nexis Division of Reed-
Elsevier), Wilson Sonsini Goodrich & Rosati, 650 Page Mill Road, 
Palo Alto, CA 94304-1050
13. Anonymous
14. Marc L. Ames, Esq., 225 Broadway, New York, NY 10007
15. O.R. Armstrong, President, Geronimo Development Corporation, 606 
25th Avenue South, Suite 206, St. Cloud, MN 56301
16. Morgan Chu, Esq., (For Matthew-Bender & Company, Inc.), Irell & 
Manella, 1800 Avenue of the Stars, Suite 900, Los Angeles, CA 90067-
4276
17. E. Scott Wetzel, CD Law, Inc., 1000 Second Avenue, Suite 1610, 
Seattle, WA 98104
18. Jose I. Rojas, Esq. (For Oasis Publishing Company), Broad and 
Cassel, 201 South Biscayne Boulevard, Miami, FL 33131
19. Eleanor J. Lewis, American Association of Legal Publishers, 282 
North Washington Street, Falls Church, VA 22046
20. Professor J.C. Smith, Faculty of Law Artificial Intelligence 
Research Project, The University of British Columbia, 1822 East 
Mall, Annex 1, Vancouver, BC, Canada V6T 1Z1

[[Page 53407]]

21. John H. Lederer, Esq., 5678 Vineyard Road, Oregon, Wisconsin 
53575
22. Kendall F. Svengalis, State Law Librarian, Rhode Island State 
Law Library, 250 Benefit Street, Providence, RI 02903
23. Matthew Lee, Executive Director, Inner City Press/Community on 
the Move, 1919 Washington Avenue, Bronx, NY 10457
24. James P. Love, Consumer Project on Technology, P.O. Box 19367, 
Washington, DC 20036
25. Norman S. Wolfe, Vice President/General Manager, International 
Compu Research, Inc., 1401 Dove Street, Suite 580, Newport Beach, CA 
92660
26. Bartlett F. Cole, Esq., 1201 S.W. 12th Ave. Rm. 305, Portland, 
OR 97205-1705

Hirschler, Fleischer, Weinberg, Cox & Allen

August 2, 1996.
By telecopier and first class mail

Mr. Craig Conrath,
Chief--Merger Task Force, Antitrust Division, United States 
Department of Justice, 1401 H Street, Suite 4000, Washington, DC 
20530.

Re: United States of America v. The Thomson Corporation and West 
Publishing Company, No. 96 1415

    Dear Mr. Conrath: I am writing to express my opposition to the 
settlement in the acquisition of West Publishing Company by the 
Thomson Corporation. I was initially pleased by the general terms of 
the settlement until I read details of licensing fees for internal 
pagination to West's National Reporter System. I was further alarmed 
when a colleague did some arithmetic based on the fee schedule 
described in the settlement agreement.\1\
---------------------------------------------------------------------------

    \1\ Calculations are based on 1,000 characters of text equalling 
38 characters across each of two columns and 50 lines on a page in a 
random volume of Federal Supplement that contains 1583 pages. That 
totals approximately 6,015,400 characters in the sample volume, 
although some amount should be subtracted for West's proprietary 
headnotes.
---------------------------------------------------------------------------

    Using a random volume of the Federal Supplement reporter, 
licensing the star pagination from a single volume of this one 
reporter appears to be a bit less than $541. Multiplied by the 918 
bound volumes in the set as of mid-July, star pagination for this 
single set of reporters would start off in the general vicinity of 
$496,000 annually. This does not even take into consideration the 
addition of approximately 36 new volumes per year as well as the 
increases built into the settlement agreement for the second and 
third years. The settlement agreement provides $0.02 per year annual 
increases per 1,000 characters and at first glance we seem to be 
discussing mere pennies. The reality, however, is that we are 
discussing astronomical amounts of money. Licensing this one title 
for the second year will add approximately $632,000 to a small 
business's production costs while licensing this one title for the 
third year will add a further $774,000 to production costs. These 
increases are nearly 22% and 37% over the first year's estimated 
costs.
    The first year's license fees alone are a staggering amount for 
a small business to contemplate and few businesses can sustain 
production increases like those described above. These licensing 
fees will have a direct and critical impact on prices of potential 
competing products.
    I believe these facts merit repeating: So far, I have described 
costs for one title. The license agreement, however, covers 19 
titles:

------------------------------------------------------------------------
                                                                  Number
                             Titles                                 of  
                                                                 volumes
------------------------------------------------------------------------
Supreme Court Reporter.........................................      112
Federal Reporter 2d............................................      999
Federal Reporter 3d............................................       79
Federal Supplement.............................................      918
Federal Rules Decisions........................................      164
Atlantic Reporter..............................................      674
North Eastern Reporter.........................................      660
North Western Reporter.........................................      546
Pacific Reporter...............................................      913
South Eastern Reporter.........................................      467
Southern Reporter..............................................      671
South Western Reporter.........................................      919
California Reporter 2d.........................................      286
California Reporter 3d.........................................       47
Illinois Decisions.............................................      355
New York Supplement............................................      628
Bankruptcy Reporter............................................      193
Military Justice Reporter......................................       42
United States Claims Court Reporter............................       26
Federal Claims Reporter........................................        8
Veterans Appeals Reporter......................................        8
                                                                --------
      Total....................................................    8,715
------------------------------------------------------------------------

    West Publishing clearly stands alone as the single authoritative 
source to provide precise licensing costs that take into account 
characters of text in its national reporter system minus characters 
of its secondary, proprietary headnotes. Over the last several weeks 
I have repeatedly called West Publishing to inquire about exact 
costs for one, two and three year license fees or even ballpark 
figures for the same three-year period. Over the course of several 
phone conversations, West Publishing's agent has replied that she 
``has no idea,'' still ``does not know,'' or ``has not found that 
information yet.'' Perhaps the figures are so unthinkable for a 
small business to contemplate that public disclosure is not in 
West's best interests.
    While licensing fees in the range of $.09, $0.11 and $0.13 per 
1000 characters initially might look like mere pennies, ``doing the 
math'' actually presents an entirely different and untenable picture 
to small, medium and even some large publishers.
    I predict these licensing fees will lock out competitors and 
virtually guarantee a monopoly for Thomson/West. Some of the 
settlement clauses are reasonable. The licensing agreement, however, 
is disastrous for legal information consumers, who in the end are 
our country's everyday citizens and neighbors.

      Yours truly,
Lyn Warmath,
Library Director.

L. David Cole

July 12, 1996.
Bancroft Whitney,
P.O. Box 7006, San Francisco, California 94126-7004.

Attention: Brian H. Hall, President West Information Publishing 
Group

    Dear Mr. Hall: As a user of Bancroft Whitney CD-ROMs (California 
Reports, Deerings, Miller & Starr and California Transactions Forms) 
for some time, as well as a less frequent user of West Publishing 
CD-ROMS (U.S. Code Annotated), I was interested to learn of the 
planned divestiture to which Thomson Publishing has apparently 
agreed with the Antitrust Division of the United States Department 
of Justice, as a result of its review of the acquisition of West 
Publishing by Thomson. When I read the detail which accompanied your 
letter of June 28, 1996, my interest turned to concern.
    I subscribed to Deerings and the California Reports services on 
CD-ROM from Bancroft Whitney, rather than two comparable sets from 
West Publishing, primarily because of their integration to Miller & 
Starr, which I use regularly in my practice. An additional incentive 
was the potential further integration if I elected to subscribe to 
Witkin. (Absent that integration, I would probably have chosen 
West's services, based on its ``key number'' organization.) I 
observe that neither Miller & Starr nor Witkin is to be included in 
the divested products. The apparently piecemeal divestiture will 
over time likely result in unintegrated sets, thereby frustrating 
the reason for my choice of products, an important component of the 
value to me of the California Reports and Deerings sets. I foresee, 
unhappily, that my substantial (to me) investment in Deering and 
California Reports will be rendered substantially less valuable when 
the related treatises are no longer under common ownership and 
integrated. Please consider this letter my protest of the piecemeal 
divestiture which has apparently been agreed.
    As the divestiture is apparently mandated by agreement with the 
Antitrust Division, I am forwarding a copy of this letter to the 
Antitrust Division as well, for its consideration, (the likelihood 
of which, I acknowledge, is slight). However, as the divestiture 
agreement is, at least from my perspective as a user of the divested 
product, ill advised and potentially damaging, my protest is made to 
the U.S. Department of Justice in the hope that it may be considered 
if public or other comment with respect to the divestitures 
contemplated.
    I hope, without optimism, that my misgivings prove unfounded.

      Very truly yours,
L. David Cole
LDC:jb
cc: U.S. Department of Justice


[[Page 53408]]



HyperLaw

June 26, 1996.
Craig W. Conrath,
Chief, Merger Task Force, Antitrust Division, U.S. Department of 
Justice, Suite 4000, 1401 E Street, N.W., Washington, D.C. 20530.

    Dear Mr. Conrath: Although we have a number of concerns relating 
to the approval by the Department of Justice of the merger of West 
Publishing Company and The Thomson Corporation, this letter 
addresses only the proposed compulsory license agreement for 
internal pagination.
    We conclude that the License Agreement form attached as Exhibit 
B provides illusory benefits, is not drafted to protect the 
interests of licensees, is an invitation for the Licensor to engage 
in further abusive conduct, and is not in the public interest.
    We believe that the Final Judgment needs to include an 
obligation by West-Thomson to negotiate in good faith, an agreement 
to not enter into discriminatory licensing agreements, and 
affirmative statements as to what constitutes ``fair use'' in the 
copying of West case reports when the only purpose of copying the 
opinion is to remove identifiable West copyrighted material.
    The proposed License Agreement is unacceptable. It seems to 
assume that the Licensor will act in good faith. Based upon past 
activities of the Licensor, this belief is completely unwarranted. 
The License Agreement is riddled with one-sided provisions and 
invitations for the Licensor to continue its anti-competitive 
practices.
    We urge the Department of Justice, as well as the plaintiff 
Attorney Generals, withdraw consent to the Stipulation and Order 
until the License Agreement is modified to remedy these substantial 
problems.
    It would appear that the Department of Justice in requiring 
compulsory licensing was addressing the 1988 pagination licensing 
agreement entered into between West and Mead at the conclusion of a 
two week trial. Presumably, West is being required to offer to all 
what was available only to Mead and now Reed-Elsevier/Lexis. 
However, in 1988, West and Mead entered into two licenses in 
connection with the settlement of the three pending actions: one 
license covered internal pagination and the other license covered 
the use of text copied by Mead from West books. In addition, the 
1988 agreements were not an arms length negotiation, and moreover, 
involved the only two companies in the industry.
    Some have even suggested that the 1988 agreements were 
themselves violative of the antitrust laws, and were nothing other 
than agreements by the only two companies in the industry to work to 
keep everyone else out.
    Unfortunately, the compulsory licensing agreement crafted by the 
Antitrust Division addresses only one of these two components, the 
pagination issue, and even that in an completely impractical manner.
    For opinions published in the last 75 years of West reporters, 
West has asserted proprietary claims as to the opinion text. These 
claims cover West's non-creative editorial enhancements, such as 
judge authored changes to an opinion. These text claims are inherent 
in the compilation copyright claims which have been constructed by 
West and which West ominously waves when convenient for West to ward 
off competition. West also claims that the temporary copying of 
their case reports for the purpose of removing identifiable 
copyrighted information is not fair use, and is a violation of their 
copyright.
    In order to buttress these claims, West is formulating and 
pushing legislation. The two main components of the West legislative 
program are the database protection bill now in Congress and the 
anti-RAM copying provisions contained in another bill before 
Congress. The database protection bill is supported by West 
surrogates such as an ABA subcommittee chaired by a West employee 
who promoted the original lawsuit by West against Mead and by the 
West dominated Information Industries Association. The anti-RAM 
copying provision can similarly be tracked to West initiatives in 
executive department public/private committees and the IIA. The net 
effect of these two provisions would be to make it a violation of 
law to scan a West opinion from a book into a computer, delete the 
West digests and summaries, and then publish the remaining text. We 
note that for older opinions found only in West reporters, this is 
the only practical way, and in many situations the only way, to 
locate final older opinions.
    Thus, at the very least, West must be required as a condition of 
the merger, to agree not to attempt to assert copyright or any 
future database protection act claim against those who (1) copy West 
opinions for the purposes of removing copyrighted materials or (2) 
copy West corrections and other non-creative material found in the 
resulting text. Moreover, the pagination license should carry with 
it a ``license'' for use of the text itself.
    The problems presented by the License Agreement include:
    1. An escalating royalty rate structure that will benefit only 
the largest of legal publishers.
     The royalty structure as presented will only be 
meaningful in the market for smaller collection of cases where there 
is one time publication, and only if the pagination license carries 
with it a text license. At this time we will not comment further on 
the rate structure because we expect that you will receive comments 
from others. However, for most smaller CD-ROM publishers, a license 
would not be cost effective and is prohibitive. For example, a 
number of small CD-ROM publishers have databases of cases of 
approximately 1 Gigabyte, and all do, or plan Internet availability. 
The license fee to West would start off at $180,000 per year and 
grow year after year as a result of escalations and the natural 
increase in database size. None of these companies can sustain these 
royalty payments.
     The licensing fee should be a one-time fee.
     The licensing fee should be on a per opinion bases and 
should be no more than $.05 per opinion (in our view, free) and 
should be less for older opinions, and no fee for de minimis numbers 
of opinions, for example, under 1000 opinions on a single CD-ROM.
     The licensing fee should cover all media in which the 
opinion is disseminated.
     Licensees with products containing under 5000 opinions 
should not be required to enter into a formal agreement, and royalty 
payments will be deemed payable on publication, with or without an 
agreement.
    2. Prohibitions in the Agreement against licensees contesting 
any West compilation copyright claims while licensing internal 
pagination. This ignores Lear v. Adkins, 395 U.S. 653 (1969), and 
assures that the West dubious copyrights will not be challenged.
    ``3.01  Copyrights. During the term of this Agreement, Licensees 
(I) shall respect and not contest the validity of the copyrights 
claimed by Licensor's arrangement of case reports in NRS Reporters 
as expressed by NRS Pagination.* * *''
     Licensees should be free to contest the validity of 
West copyrights.
    3. Confidentiality provisions which will permit West to engage 
in preferential licensing and to continue to engage in abusive 
licensing practices in secret.

See Section 4.01

     Licensees should have the privilege to waive 
confidentiality.
     West should report all license agreements to DOJ.
     There should be most-favored-nation clauses.
    4. Provisions requiring arbitration in West's home state, and, 
presumably in privacy.

See Section 6.07

     Arbitration should not be private, unless elected by 
the Licensee.
     Arbitrations should be able to be held in Washington, 
DC, at the Licensees option.
     The decision of the Arbitrator should be appealable to 
the US District Court for the District of Columbia.
    5. Enabling West to limit licenses to what it considers in its 
own discretion to be an original compilation. This limits the 
meangingfulness of the license. In other words, a company such as 
Oasis could not take a license to publish Florida Cases, 
notwithstanding that the selection of these opinions contained 
therein are made by the Florida courts, because West claims this is 
an original compilation belonging to West. If the license as drafted 
is approved, West will remain the monopoly publisher of opinions in 
a substantial number of states and at the federal level.
    ``1.03  `Licensee Case Reports' shall mean Licensee's reports of 
judicial decisions that are selected for reporting by Licensees in 
[Licensee Product(s)/Service(s) and coordinated and arranged by 
Licensee within [Licensee Product(s)/Services].''
     The limitation needs to be removed. The West reporters 
in most situations include only opinions that the authoring courts 
indicate in one way or another as being suitable for publication.
     In addition, the list of reporters in Section 1.02 
should include all of the West state case reporters, and, where West 
does not claim proprietary rights in a state reporter, that should 
be clearly identified and West should publicly release rights 
therein.

[[Page 53409]]

    6. The pagination license does not extend to the text of the 
opinions, thereby permitting West to continue its expansive 
definition of arrangement and coordination and originality to 
include factual corrections and changes made to individual opinions 
by West and/or the courts.
     The pagination license should also include a text 
license, and a waiver of any West claims of intermediate copying, as 
long as any published case does not include West headnotes and 
summaries.
    7. Provisions that will require the triple payment of license 
fees--one fee for CD-ROM, one for the Internet or on-line, and 
another for books.
     The license should cover dissemination of the 
information in all formats.
    8. Requirements that the Licensee prominently display West 
internal pagination in a way as to further the questionable market 
position of the internal pagination.
    2.05. Display of Licensed NRS Pagination. During the term of 
this Agreement, if Licensee includes NRS Pagination as a part of any 
Licensee Case Report, such Licensed NRS Pagination shall be 
presented no less prominently (in terms of size, high-lighting, 
underlining, etc.) than any other unofficial pagination or pinpoint 
locators for the Licensee Case Report in question.
    Section 2.05 should be deleted.
    9. Requirements that the licensee disclose competitive product 
information to West prior to consummation of the license agreement. 
Detailed disclosure of product information would provide West with 
advance plans of competitors.
    ``1.03. `Licensee Product(s)/Services]' shall mean [description 
of Licensee Product(s)/Services]''
     The licensees should only be required to disclose the 
product in the most general terms. Why should the biggest competitor 
receive prior information about all new products.
    10. Ambiguous provisions as to the License charges for books. It 
is not clear whether the payment applies only on first publication 
of a book, or continues as long as the book is being marketed.
     For book and CD-ROM products, the license with West 
need only be in effect on the date of publication and would be paid 
only as of the date of first publication.
    In addition, it is very important that the following provision 
be added to create a wide number of sources of paginated opinions to 
supply smaller independent publishers:
     Third party information providers may sell or license 
case law data which included West pagination and text on a wholesale 
basis as long as the purchasers or licensees of the data have 
entered into or are subject to a pagination License Agreement with 
West.
    There is absoltely nothing in the factual circumstances to 
indicate that West will negotiate fairly with licensees. To the 
contrary, all evidence and history would suggest that West will 
engage in obfuscatory and dilatory tactics, matched with continued 
expansive intellectual property claims.
    As noted above, the License Agreement must be viewed in the 
context of the legisaltive programs actively pushed by West and its 
surrogate organizations and association (such as the IIA and the ABA 
Intellectual Property subcommittee) as found in the proposed 
Database Protection Act and the Anti-RAM copying bill.
    The License Agreement as presently drafted is not in the public 
interest, and the DOJ should withdraw its consent until a fair, 
arms-length agreement that reflects the past conduct of the parties 
and the realities of publishing is negotiated.
    We are continuing to ananlyze this provision and will provide 
additional recommendations before the expiration of the 60-day 
period.
      Sincerely,
Alan D. Sugarman,
President, HyperLaw, Inc.

HyperLaw

June 28, 1996.
Craig W. Conrath,
Chief, Merger Task Force, Antitrust Division, U.S. Department of 
Justice, Suite 4000 1401 E Street, N.W., Washington, D.C. 20530.

    Dear Mr. Conrath: In my letter to you two days ago concerning 
the many problems with West's License Agreement form, I referred to 
the following section in the agreement which permits West to vitiate 
the agreement.
    ``1.03  `Licensee Case Reports' shall mean Licensee's reports of 
judicial decisions that are selected for reporting by Licensees in 
[Licensee Products(s)/Services(s) and coordinated and arranged by 
Licensee within [Licensee Product(s)/Services].''
    I understand that West representatives are now saying that this 
provision does not mean what it says. It is clear to me: if the 
Licensee does not itself select for reporting the decisions and then 
also coordinate and arrange them, as defined by West in its own 
confidential arbitrary discretion subject only to review by 
confidential non-appealable arbitration in Minnesota, then West will 
not grant a license.
    To understand what this means, I quote to you the following from 
a letter from West that is attached to the complaint in Oasis v. 
West, about to be appealed to the Eighth Circuit.
    ``[W]est does not object to the use by a competitor of a 
parallel citation to the first page of West case reports of judicial 
decision independently selected by the competitor for inclusion in 
its own reporter volume.''
    ``With respect to your question of whether West would enter into 
a star pagination license agreement, the answer is yes. West has 
entered into star pagination licenses with other publishers and 
would be happy to discuss such a license with your client. However, 
the terms of such licenses are individually negotiated and depend in 
part upon the scope of the use contemplated by the licensees. 
Therefore, I am unable to quote any type of price or even discuss 
basic license terms without knowing more about your client's 
intended product.''
    Letter dated January 4, 1995 from Joseph M. Musilek, outside 
litigation general counsel for West, responding to request ``Our 
client would like to use not only the initial page numbers of each 
case but also `star pagination' reflecting the pagination of the 
Florida Cases as published by West under contract with the State of 
Florida.''
    It would seem that under the proposed License Agreement, West 
would be able to continue to assert that Florida Cases is a West 
selection of decisions, and deny a license to companies like Oasis 
under Section 1.03, since the Licensee would, according to West, be 
copying the West section. And, Oasis would not even be able to tell 
anyone because it would be muzzled pursuant to the confidentiality 
provisions accorded to West. Good public policy? I think not.
    In response to our letter, others have noted to us that the 
Department of Justice and the plaintiff Attorney Generals have 
reserved the right to contest the copyright claims of West. I wish 
to bring to your attention State of Texas v. West Publishing Co., 
882 F.2d 171 (5th Cir. 1989) which was a declaratory judgment action 
brought by the Attorney General of Texas re West's claims to 
ownership of chapter and section numbers of Texas statutes.
    The Texas Attorney General's challenge was dismissed because 
there was no case or controversy--the State of Texas was not deemed 
to have met the justiciabilty standard that the state itself had the 
immediate intent ability to itself publish the statutes. So, I am 
having a hard time understanding how these attorneys general or even 
the Department of Justice is going to challenge the West claims. 
And, the United States has never intervened in the still pending 
West v. Mead 1988 case, despite the obvious anti-competitive impact 
of the settlement, nor has the United States ever taken the obvious 
step of asking the court to make the agreements public, so that the 
public can see just how much the public is being abused.
    One would conclude that these reservation of rights by the 
United States and the Attorneys General to contest West copyrights 
is simple window dressing.
    We also note that there is no statute license agreement 
(something else covered in 1988 between West and Mead in their 
secret settlement which it seems the Department of Justice and the 
Attorney Generals felt was only important to Lexis and would not be 
important to other publishers).
      Sincerely,
Alan D. Sugarman,
President, HyperLaw, Inc.

HyperLaw, Inc.

Via Fax--202-307-5802
Copy by Federal Express and Hand Delivery

September 3, 1996.
Craig W. Conrath,
Chief, Merger Task Force, Antitrust Division, U.S. Department of 
Justice, Suite 4000, 1401 E Street, N.W., Washington, D.C. 20530.

    Dear Mr. Conrath: This letter completes HyperLaw's comments to 
the Department of Justice concerning the Consent Decree relating to 
the merger of Thomson and West Publishing Company. This letter 
should be read in conjunction with our letters of June 26, 1996 and 
June 28, 1996.

[[Page 53410]]

    The Consent Decree is not in the public interest and the 
Department of Justice must withdraw its consent.
    HyperLaw, Inc. publishes the opinions of federal appellate 
courts on CD-ROM, and is thus a competitor of West. It also is a 
supplier of tagged federal appellate opinions to Thomson. In 
addition, HyperLaw has been threatened by West, which threats have 
prevented HyperLaw from including West's star pagination in its 
product and from copying public domain material from West reporters. 
As United States District Judge John S. Martin found in Matthew 
Bender & Company, Inc. and HyperLaw, Inc. v. West Publishing 
Company, 94 Civ. 0589 (JSM), 1996 U.S. Dist. LEXIS 11091 (SDNY 
August 5, 1996) (attached):
    ``[t]he Court finds that HyperLaw had a reasonable apprehension 
of being sued by West over use of the West features at issue here at 
the time that it filed the complaint.''
    Among the factors the court considered was that ``Schatz [West 
General Counsel] told Sugarman that his firm wins all his lawsuits 
for West.'' The Court ``accept[ed] Sugarman's testimony that Schatz 
made the comment in the context of a discussion about HyperLaw's use 
of West features'' after noting that ``Schatz gave varying versions 
of the time and place of the conversation in his deposition and 
hearing testimony, and finally testified at the hearing that he was 
not certain where the conversation took place.'' The Court also 
found it relevant that ``Stephen Haynes, a senior executive and 
attorney for West approached Sugarman at a convention and stated 
that Sugarman was aiding and abetting infringement of West 
copyrights * * *'' [This is the same Stephen Haynes that is the 
chair of an ABA Database Protection subcommittee which authored a 
1996 report in favor of database protection legislation.]
    By filing a comprehensive complaint against West-Thomson, and 
then proposing an ineffectual consent decree, the Antitrust Division 
has provided the following benefits to West-Thomson:
    Insulated West-Thomson from further antitrust enforcement by the 
Department of Justice for the foreseeable future.
    Sanctioned a license agreement which will be falsely 
characterized by West-Thomson so as to enable West-Thomson to sway 
and mislead Congress, the courts, and public opinion, as shown 
below. Without a doubt, West-Thomson will use this license agreement 
before Congress as a reason why a database protection action would 
not be anticompetitive.
    In a sense, the Antitrust Division has punched a free antitrust 
waiver ticket for West-Thomson. It will be able to throw its weight 
around in the legal market without any concern as to enforcement 
from the Antitrust Division.
    Indeed, the half-hearted inconsequential relief is so limited in 
effect that we urge DOJ to withdraw its complaint and have no 
consent decree, rather than perpetuate a meaningless remedy on the 
public.
    Lawyers Cooperative must be divested as an ongoing operating 
entity, and, the License Agreement must be revised to provide in an 
unambiguous way a meaningful and adequate remedy to the harms 
described in the complaint, many of which pre-existed the merger.
    We reject as ludicrous the position of the Antitrust Division 
that in the Division must ignore preexisting violations of the 
antitrust laws that are discovered during a merger approval 
investigation.
    The consent decree does not provide an adequate remedy to the 
allegations in the complaint, is ambiguous (the ambiguity of the 
license agreement has been documented in HyperLaw's previous 
letters), and lacks any effective enforcement methodology.
    If the Antitrust Division persists in its efforts to protect its 
public relations posture and its political deal with West and 
Thomson, we believe that even under the stringent standards of U.S. 
v. Microsoft, the District Court should reject the consent decree. 
The following excerpts are from U.S. v. Microsoft and describe what 
the District Court judge may do. Of course, the Antitrust Division, 
after consideration of the new information brought to its attention, 
is in no way restricted by the limited discretion permitted to the 
District Court.
    ``whether the remedy provided in the decree was adequate to the 
allegations in the complaint''
    ``A district judge pondering a proposed consent decree 
understandably would and should pay special attention to the 
decree's clarity.''
    ``Similarly, we would expect a district court to pay close 
attention to the compliance mechanisms in a consent decree.''
    ``When the government and a putative defendant present a 
proposed consent decree to a district court for review under the 
Tunney Act, the court can and should inquire, in the manner we have 
described, into the purpose, meaning, and efficacy of the decree. If 
the decree is ambiguous, or the district judge can foresee 
difficulties in implementation, we would expect the court to insist 
that these matters be attended to. And, certainly, if third parties 
contend that they would be positively injured by the decree, a 
district judge might well hesitate before assuming that the decree 
is appropriate.''
    U.S. v. Microsoft, 56 F.3d 1148 (D.C. Cir. 1995) [Because West 
claims a copyright in its internal page numbers, and because 
HyperLaw has not paid a citation tax to West so that it could insert 
the page numbers in its database . . . assuming that West would 
license the internal pagination for use in HyperLaw's CD-ROM 
database of almost all of the opinions in recent Federal Reporters 
and assuming that HyperLaw would sign the onerous agreement and 
could afford the exorbitant up-front payments without any assurance 
that it could increase prices and sales to cover such payments . . . 
HyperLaw does not have the internal page numbers of this opinion in 
its database, and is unable to cite to the internal page numbers 
without locating an open public law library during the Labor Day 
weekend.]
    We conclude as follows:
    The Consent Decree is defective ab initio and has little 
remedial effect on a grossly anticompetitive merger.
    To the extent the Consent Decree might provide a scintilla of 
meaningful relief, it relies for enforcement on the good faith of 
parties that in the past has never been shown. Between the signing 
of the settlement and the present time, the Wilson Sonsini letter 
shows that West-Thomson is not acting, and has no intent to act, in 
good faith.
    The Department of Justice has not the means or the will to 
enforce even that scintilla of relief.
    The Department of Justice in its description of the Consent 
Decree has intentionally misrepresented the scope and effect of the 
Consent Decree and the License Agreement.
    The Antitrust Division has argued as a reason for its tepid 
actions that in a merger approval under Hart-Scott Rodino, it is 
circumscribed in addressing past antitrust wrongs. However, there is 
nothing in Hart-Scott Rodino that prohibits the United States from 
initiating antitrust enforcement action when it develops evidence of 
violation of the antitrust laws in the course of a Hart-Scott-Rodino 
investigation. Thus, there is no justification for the Division's 
argument that a weak meaningless license agreement should be 
gratefully accepted by the public merely because it remedies 
problems that pre-existed (but are worsened by) the merger.
    THE LICENSE AGREEMENT IS NOT AN ``OPEN LICENSE AGREEMENT AND IS 
BEING MISREPRESENTED BY THE ANTITRUST DIVISION AND WEST TO FURTHER 
THEIR MUTUAL SELF-INTEREST AND TO DECEIVE THE PUBLIC INTO BELIEVING 
THAT THE CONSENT DECREE IS A ``VICTORY FOR ALL OF US'' AND 
``RESOLVE[S] ANY POSSIBLE ANTITRUST CONCERN REGARDING THE 
AVAILABILITY OF STAR PAGINATION LICENSES.''
    DOJ's initial press release misdescribed the scope and 
applicability of the Consent Decree and in particular called the 
license agreement an ``open agreement.'' Nothing could be further 
from the truth. Subsequent to our June letters, during a two hour 
telephone conversation (described below in more detail) with you, 
Larry Fullerton and others in the Antitrust Division, we reiterated 
our displeasure with this mischaracterization, and the Division was 
unable to provide a credible defense for its positions concerning 
the license agreement.
    Shortly thereafter, as part of its public relations campaign, 
the Antitrust Division once again engaged in gross misrepresentation 
of the license agreement in a letter and brief filed by the 
Antitrust Division on August 5, 1996 before the United States 
District Court for the Southern District of New York in Matthew 
Bender & Co., Inc. and HyperLaw, Inc. v. West Publishing Company.
    ``Part of that settlement requires Thomson to license to other 
law publishers the right to star paginate to West's National 
Reporter System. . . . In announcing the settlement, the U.S. 
Department of Justice stated: `Today's settlement, with its open 
licensing requirement does not suggest . . . that the Department 
believes a license is required for use of such pagination.' ''
    Memorandum of United States Of American As Amicus Curiae In 
Support Of The Proposition That Bender's Star

[[Page 53411]]

Pagination To West's National Reporter System Does Not Infringe Any 
Copyright Interest West May Have In The Arrangement Of The National 
Reporter System Volumes, p. 2, August 5, 1996, Matthew Bender & Co. 
Inc. and HyperLaw, Inc. v. West Publishing Company, 94 Civ. 0589 
(JSM), United States District Court, Southern District of New York 
(DOJ New York Brief).
    Among other things, it is inappropriate to describe the License 
Agreement as an ``open'' agreement when it will be negotiated in 
private and arbitrated in private pursuant to confidentiality 
provisions agreed to by the Antitrust Division.
    We also note that this continued misrepresentation in the August 
5 brief occurred after our June letters and the two hour conference 
in late July with you and other senior Antitrust Division counsel.
    DOJ tossed out this self-serving public relations slow ball. 
Then, West on August 24, 1996, exaggerated further this 
mischaracterization in its response to the DOJ New York Brief:
    ``West had agreed, as part of its Proposed Final Judgment in 
United States v. The Thomson Corp., No. 96-1415 (D.D.C. filed June 
19, 1996), to license all other law publishers the right to star 
paginate to West's National Reporter System publications--at 
standardized royalty rates which the Antitrust Division approved as 
commercially reasonable. While, as the Antitrust Division points 
out, the inclusion of a star-pagination license in the Proposed 
Filed Judgment does not mean that the Antitrust Division agrees with 
West's position on star-pagination--it doesn't--the negotiation of 
the Proposed Final Judgment does not mean that the Antitrust 
Division agrees with West's position on star-pagination--it 
doesn't--the negotiation of the Proposed Final Judgment does resolve 
any possible antitrust concern regarding the availability of star 
pagination licenses to West competitors.''
    West Publishing Company's Memorandum Of Law In Opposition To The 
Memorandum Of The Antitrust Division Of The Department Of Justice As 
Amicus Curiae, August 24, 1996, Matthew Bender & Company, Inc. and 
HyperLaw, Inc. v. West Publishing Company.
    We were not aware that the Division was of the opinion that the 
Proposed Final Judgment ``resolved any possible antitrust concern 
regarding the availability of star-pagination licenses'' nor are we 
aware of any basis that the rates are commercially reasonable. We 
note that there has been no record created as to how the Division 
arrived at the royalty rates, and how it may be commercially 
reasonable in certain limited situations, and unreasonable in 
others.
    We believe that West-Thomson should be held to its posturing, 
and the Licensee Agreement be renegotiated to resolve ``any possible 
antitrust concern'' by making the agreement an open, practical, 
reasonably priced agreement both in form and in substance.
    WEST'S COPYRIGHT CLAIMS TO TEXT OF COURT OPINIONS, OPINION 
ARCHIVES AND THE DATABASE PROTECTION ACT.
    The DOJ Complaint fully recognized the importance of archives of 
the text of legal opinions. Unfortunately, not only does the Consent 
Decree not propose any relief with respect to this problem, but the 
merger only increases the concentration in this area, by placing 
into the combined entity the archives of West and the Thomson 
Companies, and removing the Thomson Companies from its continuing 
efforts to create and obtain its own archives of opinions. Quite 
clearly, Thomson was not only a potential competitor in the creation 
of archives of opinions, but was well on the way to so doing.
    The License agreement provides for West to license the internal 
pagination at an expensive license fee, but is singularly silent as 
to whether a licensee as part of the license may obtain the text by 
copying the opinion text from a West reporter. Moreover, no other 
relief provided in the consent decree will have any measurable 
impact on the dominance of West and Thomson in enhanced and 
unenhanced case law.
    What does the complaint state:
    ``Entry would be difficult for three reasons. First, successful 
entry would require access to past and current court opinions and 
statutes. Past and/or current opinions simply are not available from 
many courts, and in many others, obtaining access is costly and 
time-consuming.''
    DOJ is correct in this regard. This paragraph of the complaint 
although devoted to the West Thomson dominance in enhanced case law, 
applies equally to unenhanced case law, particularly in those 
jurisdictions, such as the federal courts (recipients of West's 
largesse) at West's urging have acquiesced to West's being the 
provider of the authoritative archive of federal court opinions. The 
reasons set forth in Paragraph 19 are some of the factors relating 
to the domination of on-line case law research described later in 
the Complaint. [Paragraph 19 of the Complaint's lists those markets 
where West and Thomson's compete in case law. This list is 
substantially understated, since it only refers to enhanced case 
law. For example, HyperLaw licenses to Thomson tagged case opinions 
for the federal appellate courts which Thomson includes on CD-ROMs 
of state case law in Texas, Louisiana, Mississippi, and Kansas.)
    We understand that the American Association of Legal Publishers 
is providing today to DOJ an analysis of its efforts to obtain 
original copies of federal court opinions directly from the courts 
for opinions from the 1960's and 1970's. This study shows that 
opinions are simply missing from files, that court files are not 
able to be found, that opinions are misfiled in the case files, that 
the court archive centers limit the number of case files to as few 
as three that may be viewed, and that the process if fraught with 
delays, confusion and expense. It is sometimes difficult to obtain 
even current court opinions and some federal courts of appeals do 
not even make all of their published opinions available 
electronically.
    One reason that archives are such a competitive advantage is 
that the incremental cost of publishing a CD-ROM treatise or 
enhanced product with the full text of cited opinions is zero for a 
company with an archive. In other words, the West incremental cost 
is zero. It does not have to locate and copy the original opinions 
and does not have to convert them to electronic form. Nor of course 
does West have to pay a license fee to use the star-pagination.
    What is the current position of West-Thomson on the issue of 
copying court opinion text from West case reports? West's Response 
to Matthew Bender's Rule 3(g) Statement (wherein Matthew Bender 
recited undisputed facts in support of its motion for summary 
judgment) filed August 19, 1996 in Matthew Bender & HyperLaw v. West 
states as follows:
    MATTHEW BENDER STATEMENT OF UNDISPUTED FACT: 40. West contends 
that rival publishes, including Matthew Bender, are free to obtain 
slip opinions directly from their issuing courts, but will incur 
copyright liability by copying those opinions from a West reporter.
    WEST'S RESPONSE: West cannot admit or deny this statement, which 
is actually a hypothetical situation, rather than a ``fact,'' 
without having specific facts about how much copying has been done 
from a West Reporter. This statement also incorrectly refers to 
opinions rather than case reports.
    To make matters worse, the DOJ New York Brief suggests that the 
Antitrust Division is playing a double game here. First, the 
Antitrust Division has at no time indicated its desire to file a 
brief in support of HyperLaw's motion that will permit rival 
publishers to copy the text of court opinions from West reporters. 
Second, as anticipated in HyperLaw's June letters which referred to 
West efforts to end-run the copyright laws by lobbying for database 
protection legislation, DOJ states as follows in its brief:
    ``Copyright is not the only conceivable legal regime for 
protecting the fruits of industrious collection. The Delegation of 
the United States of America recently proposed to the World 
Intellectual Property Organization an international treaty that 
would provide to the ``maker'' of certain databases the exclusive 
right to extract all or a substantial part of the contents, without 
regard to copyrightability. World Intellectual Property 
Organization, Preparatory Committee of the Proposed Diplomatic 
Conference (December 1966) on Certain Sui Generis Protection of 
Databases, CRNR/PM/7 (May 20, 1996). Legislation providing for such 
protection has been introduced in Congress. See H.R. 3531, 104th 
Cong., 2d Sess. (1996).

DOJ New York Brief, Page 6, Note 4.
    Fortunately, because of widespread opposition, the Congressional 
legislation has not gone anywhere. So, what has the Administration 
done in this political season: on behalf of information industry 
lobbyists and campaign contributors including West, with the seeming 
support of the Antitrust Division, the Administration has put in 
place an end-run around the United States Congress and the United 
States Constitution by having international bodies composed of 
member nations with constricted views of the public's right of 
access to government information agree to a treaty that will then be 
forced down Congress's throat.
    If the Antitrust Division was merely being inartful in its 
disregard of the West monopoly on text, and if it agrees that West 
has and is

[[Page 53412]]

engaging in copyright misuse and anti-trust violations by asserting 
claims in the text of court opinions drawn from West case reports in 
West reporters, then we invite the Antitrust Division to: (1) 
require the amendment of the License Agreement to specifically 
include the right of the pagination licensee to copy the text of 
court opinion from West case reports and (2) file an amicus brief in 
support of HyperLaw's motion for declaratory relief permitting 
competing publishers to copy the court opinion portion from West 
case reports.

LICENSE AGREEMENT ISSUES DISCUSSED IN JULY MEETING

    We also wish to follow up on the discussion we held in late July 
concerning our two letters:
    1. We specifically objected to the characterization of the 
license agreement as an ``open'' license agreement. Thereafter, DOJ 
repeated this mischaracterization twice in its filings in Matthew 
Bender & HyperLaw v. West.
    2. We discussed the effect of Section 1.03, which states:
    ``1.03  `Licensee Case Reports' shall mean Licensee's reports of 
judicial decisions that are selected for reporting by Licensees in 
[Licensee Product(s)/Service(s) and coordinated and arranged by 
Licensee within [Licensee Products(s)/Services].''
    Not one of the five senior Antitrust Division attorneys present 
at the meeting disputed our interpretation that West would not be 
required to license page numbers to publishers publishing all of the 
opinions in a single West Reporter Series. I used as examples the 
proposed Oasis CD-ROM of opinions found in West Florida Cases, and 
HyperLaw's CD-ROM which includes almost all opinions appearing in 
West's Federal Reporter.
    3. The Antitrust Division argued that Lear v. Adkins, in 
prohibiting no-contest provisions in license agreements, had been 
narrowly construed in later opinions. However, there was no response 
to our point that the public policy issues raised in Lear v. Adkins 
remain valid and were even more relevant where the Antitrust 
Division had negotiated a compulsory license to remedy destructive 
anti-competitive behavior.
    4. The Division argued that the no-contest provision was 
narrowly drafted and would only relate to ``contest[ing] the 
validity of the copyrights claimed by Licensor in Licensor's 
arrangement of case reports in NRS Reporters as expressed by NRS 
pagination'' and would not prohibit other objections to West 
copyright claims. However, we pointed out that West linked all of 
its claims to its compilation claims, and, that, all West had to do 
was pull the license and take the licensee to a confidential 
arbitration in Minnesota, so, that the effect of 3.01 was to 
prohibit a broader range of contest.
    5. The Division argued that the multiple license fee was not a 
problem since it had determined that most publishers were not 
intending to publish in multiple media. We pointed out that this was 
a flatly incorrect statement and that most CD-ROM publishers are or 
were planning to offer Internet versions. One example I provided was 
CD-LAW in Washington. In addition, Law Office Information Systems 
has announced that it would make its CD-ROM information available on 
the Internet. The Department's position evidences a complete lack of 
understanding of the information industry wherein the medium of 
dissemination is irrelevant. In addition, the Division's response is 
just plain illogical. If no publishers will publish in multiple 
media, then West-Thomson would lose no revenues by permitting a 
single license to cover publication in different media. The Division 
cannot have it both ways.
    6. The Division argued that the confidentiality provision were 
for the protection of the licensee. That may be if the licensee 
desires confidentiality, and, the Division was unable to explain why 
the licensee would be forced to maintain confidentiality over its 
objections. It is clear to us that the primary beneficiary of 
confidentiality would be West-Thomson. Once again, the Division's 
defense to accepting this provision is completely illogical.
    7. We objected to the fact that providers of HyperLaw would be 
unable to market star-paginated cases to third parties who would 
then obtain a license from West, unless HyperLaw also obtained a 
license from West. Thus, West would obtain two license fees for only 
one public distribution. The Division staff argued that third-party 
sales was permitted under Section 2.02. But, we think the staff has 
misunderstood our objection. Only a third party provider who already 
had a license would be able to engage in the wholesale sale of star-
paginated cases. This is like paying a double sales tax. Moreover, 
HyperLaw, in order to sell star-paginated cases would have to both 
sign the license agreement and thereby agree to dismissal of its 
litigation against West. We think that the Division has completely 
misconstrued the clear language of Section 2.02.
    8. We addressed another issue not covered in our earlier 
letters: Section 2.01 requires the Licensee to provide star-
paginated cases to customers, but only if the customer has signed a 
Licensee Subscriber Limitations contractual agreement as described 
in section 1.08. In other words, star-paginated cases will only be 
available to customers who sign contracts similar to contracts 
signed by Westlaw subscribers. West as part of the licensing will be 
able to ask for copies of proposed license agreement and even 
monitor that process and otherwise harass the publisher. Most 
important, we noted that any star-paginated case law on the Internet 
would be limited only to services with restricted access and who 
obtained written agreements with each user. We noted the belief by 
Emory Law School that it could obtain a star-paginated license for 
its Federal Court of Appeals WEB pages was completely misplaced, 
although, understandable in view of the DOJ's misleading press 
releases. Here, the Division completely misunderstood the practical 
impact of this provision.
    In our prior letters, and during that conversation, we referred 
several times to the fact that any and all ambiguity or arguable 
ambiguity would be interpreted by West-Thomson in its own interests, 
absent any concept of implied good faith. In all due deference to 
the views of the Division staff, we do not believe that commercial 
arbitrators from Minnesota will share the Division's view of the 
License Agreement.
    We have reviewed the letter submitted by Wilson Sonsini Goodrich 
and Rosati on behalf of Lexis-Nexis, a Division of Reed Elsevier. 
This letter describes conduct that to us would indicate a complete 
variance by West-Thomson from the divestiture procedures outlined in 
the Consent Decree. West-Thomson for example has ignored the 
requirement to divest Auto-Cite and ignored requirements to permit 
publishers acquiring divested products to hire West-Thomson 
employees. We also understand from other sources that publishers are 
not being permitted to purchase single products, but most also agree 
to purchase the dog products which riddle the list of divested 
products. Thus, even during this period where the Consent Decree is 
under review and its actions are not subject to confidentiality, 
West-Thomson is acting as expected, to narrowly and in bad faith 
interpret each and every provision of the Consent Decree. No doubt, 
it will do the same with the License Agreement.
    Our comments focused on the license agreement. However, the 
approval of the merger, without also requiring the divestiture of 
Lawyers Cooperative is not in the public interest.
    The divestiture of products with a revenue of only 48 million 
dollars will have no significant competitive impact on legal 
publishing in the future. We believe that most of these products 
would have been consolidated with other West-Thomson products, left 
without marketing or development resources to die on the vine, or 
killed outright. Certainly, West-Thomson has no reason to fear 
competition from any company that is foolish enough to purchase a 
crippled divested product.
    Absent significant modifications to the Consent Decree, we 
believe that the public interest would be best served were the 
Antitrust Division to seek dismissal of the Complaint without 
prejudice.
    We believe that the bad faith shown by West-Thomson as described 
in the Wildson Sonsini letter and the mischaracterization of the 
settlement as indicated in the West filing in the New York 
litigation is sufficient reason standing alone for the Antitrust 
Division to pull its consent.

    Sincerely,
Alan D. Sugarman,
President, HyperLaw, Inc.

    This letter could not be reprinted in the Federal Register, 
however, they may be inspected in Suite 215, U.S. Department of 
Justice, Legal Procedures Unit, 325 7th St. N.W., Washington, D.C. 
at (202) 514-2481 and at the Office of the Clerk of the United 
States District Court for the District of Columbia.

Supreme Court of California

August 7, 1996.
Craig W. Conrath,
Chief, Merger Task Force, Antitrust Division, U.S. Department of 
Justice, 1401 H Street, N.W., Suite 4000, Washington, D.C., 20530


[[Page 53413]]


    Dear Mr. Conrath:

Standing of Advisory Committee

    This comment on the proposed consent decree for merger of the 
Thomson Corporation and West Publishing Company is submitted on 
behalf of the California Advisory Committee on Publication of the 
Official Reports.
    The California Advisory Committee for Publication of the 
Official Reports was appointed by the Chief Justice of California in 
October 1995 to study the California Official Reports, solicit 
publication proposals pursuant to the California Government Code, 
and make recommendations concerning publication of the Official 
Reports, including a recommendation as to the publisher. The 
committee's recommendations are made to the California Supreme Court 
and the contracting parties to the Official Reports publication 
contract for the State of California (i.e., the Chief Justice of 
California, the Attorney General, the Secretary of State, the 
President of the State Bar, and the Reporter of Decisions).
    The advisory committee consists of Supreme Court Associate 
Justice Marvin R. Baxter, chair; Court of Appeal Associate Justice 
J. Gary Hastings; Supervising Deputy Attorney General Linda Cabatic; 
Chief Assistant Secretary of State Robert Jennings, Kenneth Drexler 
for the President of the State Bar; Nanna Frye, Librarian for the 
Fourth District Court of Appeal; and, Edward Jessen, Reporter of 
Decisions.

Advisory Committee's Analysis of Proposed Consent Decree

    The advisory committee met on July 15, 1996, to review how the 
proposed consent decree would affect publication of the California 
Official Reports. The committee concluded that the proposed consent 
decree does not adequately preserve competition in California for 
enhanced primary law products. (Primarily, present competition is 
between Thomson's California Official Reports and West's unofficial 
California Reporter, and between Deering's Annotated California 
Codes and West's Annotated California Codes).
    The economic reality of publishing enhanced primary law products 
in California compels a continuing nexus between Deering's Codes and 
the Official Reports following completion of the Thomas/West merger. 
The advisory committee notes that there is no language in the 
proposed consent decree to require continuation of the existing 
nexus between Deering's Codes and the official Reports. (Relevant 
language on page 19 of the proposed consent decree is as follows: 
``Thomson shall transfer to the Official Reporter Contract State a 
license, which shall be perpetual in term, sublicensable, 
assignable,and royalty-free, to the use of any intellectual property 
rights which Thomson holds pertaining to the headnotes, case notes, 
and/or case summaries in the products at issue.'' This language does 
not relate to the future; there is some doubt it will suffice to 
maintain a nexus between Deering's Codes and the Official Reports 
after completion of the merger and divestitures.
    In California, Thomson and West presently have competing 
enhanced primary law products. Each publisher pairs an enhanced 
opinion products and an enhanced code product, and each also 
publishes secondary law materials that combine with the enhanced 
primary law products to form two competing systems of integrated 
legal information. With the possible exception of New York, the 
committee is unaware of any state that has competing systems of 
legal information.
    The economic importance to a publisher of such an integrated 
system of legal information is that a portion of the editorial cost 
of producing headnotes for the enhanced opinion product (i.e., the 
California Official Reports and West's unofficial California 
Reporter) can be allocated to the enhanced code product (i.e., 
Deering's Annotated California Codes and West's Annotated California 
Codes), as well as to secondary law materials. The significant 
nexus, however, is between the opinion and code products.
    The proposed consent decree preserves West's economic advantage 
of having enhanced primary law products within an integrated system 
of legal information. It fails, however, to include provisions to 
preserve the existing unity of Thomson's enhanced primary law 
products within an integrated system of legal information. 
Preservation of the existing unity of opinion and code products is 
left to chance. The advisory committee believes that this situation 
is not in California's public interest.
    If Deering's Annotated California Codes cannot use the headnotes 
from the California Reports as annotations in an enhanced code 
product, the resulting increased editorial costs will lead to 
uncompetitive pricing. Likewise, pricing for the California Official 
Reports may increase unless a portion of editorial costs for 
headnoting opinions can be allocated to other products.
    If two competing lines of enhanced primary law products within 
integrated systems of legal information are reduced to a single 
Thomson/West integrated system, the economic reality is that no 
publisher would be able to effectively compete with Thomson/West in 
California. Rather than fostering competition, the consent decree 
would lead to a market with a single dominant vendor.

Conclusion

    The foregoing analysis reflects the consensus of the California 
Advisory Committee on Publications of the Official Reports pursuant 
to the committee's study of Official Reports publication. The 
committee requests that the proposed consent decree be modified to 
require that divestiture of Deering's Annotated California Codes be 
linked in some manner to the California Official Reports.
    For the advisory committee,
Edward W. Jessen,
Reporter of Decisions and Secretary to California Advisory Committee on 
Publication of Official Reports.

American Association of Law Libraries

July 29, 1996.
Mr. Craig Conrath,
Chief, Merger Task Force, Antitrust Division, U.S. Department of 
Justice, Suite 4000, 1401 H Street, N.W., Washington, D.C. 20530

Subject: Proposed Merger of West Publishing with Thomson Corporation
    Dear Mr. Conrath: I am writing today to comment on the proposed 
consent order in the sale of West Publishing Company to the Thomson 
Corporation. The American Association of Law Libraries presented its 
views on the merger at an earlier stage of the proceeding in a 
letter to Ms. Anne Bingaman dated March 26, 1996. We appreciate the 
attention the Department has given to this issue, and we very much 
appreciate the effort the Department has made to respond to our 
concerns. Nonetheless, in light of the proposed settlement, we do 
wish to submit some additional comments for your consideration.
    The American Association of Law Libraries is a nonprofit 
educational organization headquartered in Chicago with nearly 5,000 
members nationwide. Our members build legal and law-related 
collections in over 1,900 libraries, and they respond to the legal 
and governmental information needs of attorneys and law students, 
judges and legislators, and the general public. We are almost 
certainly the largest single identifiable consumer group for the 
products of the companies involved. As our immediate past-President, 
Patrick E. Kehoe, said when the merger was first announced: ``the 
merger of Thomson and West will change legal publishing forever.''
    The American Association of Law Libraries remains neutral on the 
issue of the merger itself. In filing these comments A.A.L.L. does 
not wish to be understood as opposing the sale of West to Thomson, 
and nothing we say here should be construed in that manner. Rather, 
the American Association of Law Libraries remains committed to the 
larger goal of ensuring the continuation of high quality legal 
information products at reasonable prices in a healthy competitive 
environment. With that general goal in mind, A.A.L.L. would like to 
comment on three aspects of the settlement including: the proposal 
to sell selected individual titles from the publishers' inventory, 
rather than selling off companies, the amount of the proposed 
license fee for the use of star pagination from West's National 
Reporter System, and the requirement in the license agreement that a 
licensee relinquish their legal right to challenge West's claim of 
copyright. We also want to reiterate our concern for the impact of 
the sale on competition in the online environment.
    The viability of individual titles. The proposed settlement 
relies heavily on spinning off some 52 titles to maintain 
competition in the legal publishing industry. With those sales as 
the basis of the future competitive environment, it will be 
essential that those titles are able to survive in the marketplace.
    From the beginning of this process, the members of the American 
Association of Law Libraries have been concerned about the impact of 
the merger on their ability to choose among competing print products 
and their ability to obtain the benefits of

[[Page 53414]]

competition in matters of product pricing and product quality (see 
letter to Anne Bingaman, March 26, 1996, pp. 2-5). The settlement is 
plainly responsive to those concerns since it proposes to maintain 
the competitive environment by requiring the companies to sell off 
those individual products where the impact of the merger on 
competition would be the greatest.
    Some members of our Association are concerned, however, about 
the decision to require the sale of individual titles rather than 
subsidiary companies. To them, it is not clear that individual 
titles will continue to be viable entities in the market when 
separated from the larger organizations of which they have been a 
part.
    First, the production of a complex legal title requires the 
existence of a substantial supporting infrastructure. Most 
obviously, it requires a trained and knowledgeable staff, skilled in 
the identification and analysis of legal developments, whether 
statutory or judicial, and skilled in the presentation of those 
developments in a format that is useful to attorneys. Although the 
settlement allows the purchaser to attempt to hire the staff that 
has been involved in the creation of the titles in question, it is 
by no means clear that staff would choose to leave a larger parent 
organization to follow an individual stand-alone title.
    The supporting infrastructure also includes production, 
including design and layout, marketing and sales, computer support, 
and printing. Each of these operations is substantial and is 
frequently shared across product lines within a single company. 
Again, it is not clear that it is economically viable to establish 
this kind of production and printing support for a single title, or 
even for a small group of titles that have been split off from a 
larger company.
    Second, at least some of the publications in question have long 
been an essential component of a larger system of legal research. 
The Total Client Service Library provides a system by which the many 
products of Lawyer's Coop have been integrated into a research 
system. Cross references among the products provide a helpful and 
seamless way for the lawyer to move from one Lawyer's Coop product 
to another, including the American Law Reports, American 
Jurisprudence, 2d, and other practice materials that are not being 
sold as part of the divestiture.
    A booklet published by Lawyer's Coop in 1990 described Am Jr 2d, 
ALR and USCS as being ``part of a comprehensive legal research 
system.'' (See A Student's Guide to Am Jur 2d, ALR and USCS, Lawyers 
Coop, 1990.) The booklet states: ``The comprehensive legal research 
system published by Lawyers Cooperative Publishing covers everything 
from on-point cases in both state and federal jurisdictions, to 
principles of law, statutes, procedure, model forms, trial 
techniques * * * in short, everything you need to handle almost any 
legal matter. And since it is fully cross-referenced, you can go 
quickly from one aspect of your matter to another with assurance 
that no aspect will be overlooked.''
    They then list as part of the ``system'' some fourteen separate 
titles ranging from encyclopedias and form books to ALR, the USCS, 
and Lawyers Edition, to several services and texts on specialized 
legal topics. With extensive cross-referencing among these products, 
it is again not clear that one or two can be pulled out, scrubbed 
clean of the value-added cross-referencing, and then be expected to 
stand alone in the market place. Pulled out of the system, they will 
be different products, and the market may no longer find them to be 
so desirable or so valuable.
    The American Association of Law Libraries would very much like 
to see further analysis on the issue of the viability of individual 
titles and they would like to receive some assurance that those 
titles will be able to continue to compete in the marketplace 
following the merger.
    Pricing of the license for use of the West pagination. The 
association is concerned about the pricing of the proposed license 
for the use of the pagination in the West Reporter system.
    The Association has long believed that the system of citation to 
legal publications should be in the public domain. In testimony on 
behalf of the American Association of Law Libraries in favor of H.R. 
4426 in the 102d Congress, Professor Laura Gasaway stated: 
``Copyright protection should not extend to volume and page numbers 
of these materials for two reasons: because page numbers lack 
sufficient originality to merit protection, and [because] allowing 
one publisher to control the means of citation to important public 
domain materials gives that publisher the power to exclude others 
from the market. Such protection would become a mechanism by which 
one publisher could turn public domain materials into protected 
materials that they can control.''
    At the same hearing, the representative of Thomson Legal 
Publishing was even more forceful. Accompanied by a representative 
of Lawyers Cooperative, she argued that the copyright of legal 
citation information had led to the monopolization of the 
``publication of lower federal court opinions, statutory law in 
Illinois and Texas and elsewhere, and the appellate case law of many 
states.''
    The proposed license illustrates the problem. The American 
Association of Law Libraries welcomes the development of an open 
structure for the pricing of West's citation information. But the 
level of the pricing involved seems designed to accomplish precisely 
what the proponents of H.R. 4426 feared: exclusion of others from 
the marketplace. Nine cents does not sound like a great deal of 
money until one does the math. But when the numbers are multiplied 
out for some of the very large sets in the National Reporter System, 
the price seems to us to be significant. Such pricing could be a 
major barrier to using the data and entering the legal publishing 
market to anyone except a very large existing enterprise.
    The Association does note that this issue could become moot or 
largely irrelevant if the courts and organs of legal scholarship 
would accept a medium neutral/vendor neutral system of citation, 
such as the one previously endorsed by this Association.
    The Association takes no position on what the appropriate level 
of pricing ought to to be. Nonetheless, in view of the Association's 
interest in promoting a healthy competitive environment for access 
to legal information, we believe that the level ought to be set such 
that a prospective entrepreneur can enter the market, and with a 
reasonable increment on its other costs add the system of pagination 
to its new product. The current strikes us as excessive to meet that 
goal.
    The requirement that a licensee give up some of their legal 
rights. The Association believes that the license approved by the 
United States Department of Justice and the United States District 
Courts for the District of Columbia should not contain a provision 
that requires the licensee to give up its legal right to contest 
West's claim of copyright in the system of pagination.
    The proposed license agreement states in relevant part:
    3.01. Copyrights. During the term of this Agreement, Licensee 
(I) shall respect and not contest the validity of the copyrights 
claimed by Licensor in Licensor's arrangements of case reports in 
NRS Reporters as expressed by NRS Pagination. * * *

We understand why West-Thomson would want such a provision as part 
of the agreement. However, in this case, the provision will have the 
approval of the U.S. Department of Justice and approval is now being 
sought from the United States District Court for the District of 
Columbia as well. We see no reason why those organs of justice 
should approve a provision requiring a licensee to give up a legal 
right when they sign the agreement.
    We respectfully request that this provision be stricken from the 
proposed license.
    Online competition. The Association remains concerned about the 
impact of the merger on the market for online legal information.
    In its earlier letter to the Department, the American 
Association of Law Libraries expressed concern about the impact the 
merger could have in the competition for online legal services, 
citing the need that LEXIS has to acquire source data from existing 
publications that will now be under the sole control of its chief 
competitor. Insofar as the record shows, nothing has changed in this 
regard.
    The Order does direct the sale of one legal database--Auto-
Cite--and grants an option to extend the License Agreements for 
Investext, ASAP, and Predicasts, three non-legal databases. But 
nothing is said about access to other legal databases to which LEXIS 
might want access such as state statutory materials, American Law 
Reports Annotated, and other ancillary material such as the RIA Tax 
Coordinator. We worry that if one company is the sole source for 
certain important information, it could use that control to make its 
competitor's product less desirable and thereby squeeze it out of 
the market. In view of the fact that there are only two major 
competitors in the market for online legal information, we believe 
it is critical to address the issue of licensing, or equitable 
access to such sole source information, in the final order.
    The American Association of Law Libraries appreciates the 
opportunity to comment again on the proposed merger of the two

[[Page 53415]]

largest legal publishers. This change in the legal publishing 
landscape is almost certainly the most important development in the 
field that any of us will see during our careers. It is critical to 
do it in a way that maintains a competitive market for high quality 
legal information products at reasonable prices.
    If we may be of further assistance or answer any questions about 
any of these matters, I hope you will not hesitate to call upon me 
at (202) 622-9161.

    Sincerely,
Robert L. Oakley.
Craig W. Conrath,
Chief, Merger Task Force, Antitrust Division, U.S. Department of 
Justice, Suite 4800, 1401 H Street, N.W., Washington, DC 20530

    Dear Mr. Conrath: Even after taking the list of divested titles 
into consideration, members of the Association of Law Libraries of 
Upstate New York continue to feel concern over the potential 
ramifications of the acquisition of West Publishing by Thomson. With 
this purchase, Thomson will have control of a significant portion of 
the secondary sources that aid in interpreting the law. In the past, 
Thomson practices have made acquired products both more labor 
intensive and costly to maintain. Updates to looseleaf sets from 
Callaghan and Clark Boardman are updated routinely more than once a 
year as Clark Boardman Callaghan titles. With the advent of online 
services, the need for an increase in chapter and supplement 
shipments has come into question. In addition, many former pocket 
titles from Lawyers Cooperative have been converted to binder 
formats which are more labor intensive to update.
    It is the area of pricing that is truly cause for concern. Ten 
years ago, it was rare for maintenance of a Lawyers Cooperative 
title to increase more than 9% a year excluding price spikes created 
by revisions or new editions. Since Thomson acquired Lawyers 
Cooperative, individual title maintenance often runs well over 25% a 
year. This has not been true for West products. For example:

------------------------------------------------------------------------
                                                       Percent   Percent
                                                      increase  increase
                                                        1985      1995  
------------------------------------------------------------------------
CBC: Bailey, Crimes of Violence: Rape...............       4.3      57.4
LCP:                                                                    
  Carmody-Wait......................................       8.5      63.0
  Foster, Law and the Family........................       7.5      20.4
WEST: Devitt, Federal Jury Practice.................       1.4      10.2
------------------------------------------------------------------------

    Your consideration of these factors in your continued review of 
West's acquisition by Thomson will be appreciated.
Sincerely,
Cyndi A. Trembley,
President.
    This letter could not be reprinted in the Federal Register, 
however, they may be inspected in Suite 215, U.S. Department of 
Justice, Legal Procedures Unit, 325 7th St., N.W., Washington, D.C. 
at (202) 514-2481 and at the Office of the Clerk of the United 
States District Court for the District of Columbia.

Darby Printing Company

August 9, 1996.
Mr. Craig W. Conrath,
Chief, Merger Task Force, Antitrust Division, U.S. Department of 
Justice, Suite 4000, 1401 H Street, N.W., Washington, D.C. 20530.

    Dear Mr. Conrath: On behalf of Darby Printing Company I wish to 
comment on the proposed consent degree entered in the merger of 
Thomson Corporation and West Publishing Company.
    After reviewing the documents filed in this anti-trust action, 
we have two questions regarding the proposed settlement. First, why 
were the states of Washington, Wisconsin, and California given the 
option to rebid their contracts and not the states of Illinois, 
Massachusetts and New York? These states also have enhanced case law 
reporters which fit the two principle criteria as defined in 
paragraph 21, beginning on page 8 of the Complaint, in that these 
publications contain the entire body of case law for their 
respective jurisdictions and they contain comprehensive written 
descriptions of points of law within the opinions. As with the 
states covered in the complaint, West and Thomson publish the 
dominant enhanced case law reporters in the states of Illinois, 
Massachusetts and New York.
    Second, after having contacted those responsible for overseeing 
the publication of the case law reporters in California, Washington, 
and Wisconsin, there appears to be some confusion as to the 
definition of ``option''. Is the option given to these states a true 
option, in that these states may opt not to rebid the contracts, or 
is it a mandate that these states rebid? The opinions of those 
involved in making the decision in these states are split as to what 
they are required to do under this proposed consent. Furthermore, if 
the option is exercised will Thomson-West be allowed to participate 
in the bid process?
    Darby Printing Company believes that based on the Herfindahl-
Hirschman Index those states given the option to rebid their 
respective case law contracts should be mandated to rebid those 
contracts without the participation of the Thomson Corporation. The 
HHI numbers, 4762 for California enhanced case law, an increase of 
3866, 4521 for Washington enhanced case law, an increase of 996, and 
5535 for Wisconsin enhanced case law, increased by 2424, as provided 
in Appendix B of the complaint, prove that the post merger markets 
in these states are very concentrated. It is our opinion that the 
only way to create competition in these markets is to compel the 
Thomson Corporation in effect to divest these products.
    Thank you for your attention in this matter. We look forward to 
hearing your response to our questions.
    Sincerely,
Karen Ehmer, Esq.

Law Offices, David C. Harrison, Daniel M. Belov

July 2, 1996.
Janet Reno,
Attorney General, Department of Justice, Washington, DC 20530.

RE: Merger: The Thompson Corporation/West Publishing

    Dear General Reno: I have just learned that Anti-Trust Division 
has approved the merger of The Thompson Corporation (which is better 
known as Lawyers Cooperative Publishing) with West Publishing. How 
can the Justice Department approve the merger of the second largest 
legal publisher with the largest legal publisher, giving the new 
company a virtual monopoly?
    It is this kind of nonsense that enrages Democrats who would 
like to support President Clinton but are finding it increasingly 
difficult to do so. He is becoming a Republican clone, as is his 
administration. How can this merger be justified?
      Very truly yours,
David C. Harrison
DCH: slh

ALOIS V. GROSS

August 12, 1996.
Mr. Craig W. Conrath,
Chief, Merger Task Force, Antitrust Division, U.S. Department of 
Justice, 1401 H Street N.W., Suite 4000, Washington, D.C. 20530.

Re: Public Comment, U.S. v The Thompson Corporation and West 
Publishing Co., U.S. District Court for the District of Columbia, 
Civil Action No. 96-1415

    Dear Mr. Conrath: I have enclosed my Public Comment on the above 
matter. I understand the enclosed comments and your reponses will be 
published in the Federal Register and filed with the Court.
    Please feel free to call me if you would like clarification of 
anything in my Public Comment.
    I am part of a group who is a prospective acquirier of 
Divestiture Products. Although my private comments in this respect 
have been directed in a separate letter to Mr. James Foster at the 
U.S. Department of Justice, I have enclosed a copy of that letter 
for your review as well.
      Very truly yours,
Alois V. Gross
Enclosures/2

Public Comment on Proposed Final Judgment and Competitive Impact 
Statement, U.S. v. The Thomson Corporation and West Publishing Co., 
U.S. District Court for the District of Columbia, Civil Action No. 96-
1415

I. Premise

    The Proposed Final Judgment fails to attain its goal, as 
required by the federal antitrust laws of eliminating the 
anticompetitive effect that a merger of the two Defendants creates

[[Page 53416]]

in the legal publishing market. It should therefore be rejected by 
the Court.

II. Argument

A. Tradenames Must Be Divested

    Thomson/West is not required by the Proposed Final Judgment to 
divest the ``Bancroft-Whitney'', ``LawDesk'', and ``Lawyers' 
Cooperative Publishing'' tradenames currently owned by The Thomson 
Corporation. These tradenames should be included in the list of 
Divestiture Products in the Proposed Final Judgment (Exhibit A), but 
they are not.
    These tradenames carry valuable goodwill and brand market 
recognition developed over many decades of legal publishing. They 
will be essential in maintaining the confidence of customers and the 
market share for the Divestiture Products identified with these 
tradenames. Without these tradenames, the acquirer of such 
Divestiture Products will have the same barriers to entry as a 
start-up publication. With its vast financial, marketing, and 
distribution resources. Thomson/West could easily overwhelm and 
overpower the acquirer within months of divestiture.
    To ensure the Divestiture Products remain viable, the goodwill 
and market recognition associated with the ``Bancroft-Whitney'', 
``LawDesk'', and ``Lawyers' Cooperative Publishing'' tradenames must 
transfer with the Divestiture Products, and therefore these 
tradenames must be divested by Thomson/West.
    ``Bancroft-Whitney'' is the tradename associated with the oldest 
law publishing company in the country, established in California 
nearly 150 years ago. ``Bancroft-Whitney'' is identified currently 
with the products Thomson sells to the California legal market, and 
will be vitally important to the successful acquirer of the 
California-specific Divestiture Products.
    Substantial current revenue brought to Thomson from its 
``Bancroft-Whitney'' office is derived from the sale of products 
listed as Divestiture Products, including Deering's California Codes 
Annotated; California Appellate Reports (official); California 
Reports (official); California Reports Advance Sheets (official); 
and California Digest. Consequently, without the Bancroft-Whitney 
tradename, the acquirer of these products is severely disadvantaged.
    ``LawDesk'' is also a tradename--for CD-ROM products--owned by 
Thomson that is not included on the list of Divestiture Products in 
the Proposed Final Judgment. It will be vitally important to the 
successful acquirer of Divestiture Products sold in CD-ROM format 
under the ``LawDesk'' tradename to maintain the market recognition 
and goodwill associated with the ``LawDesk'' tradename.
    CD-ROM based legal information is a growth market. Both Thomson 
and West have CD-ROM product lines with tradenames associated with 
these products. West uses the ``West'' tradename for its CD-ROM 
products, and Thomson uses the ``LawDesk'' tradename for its CD-ROM 
products.
    Each of these tradenames (``LawDesk'' and ``West'') has a 
substantial reputation in the CD-ROM legal information market. 
``LawDesk'' CD-ROM products are the only major competitor to the 
``West'' CD-ROM products in many markets.
    Furthermore, Thomson's indication that it will be operating 
under the familiar and powerful ``West'' tradename in the United 
States following the merger (Thomson/West's merged organizational 
name will be West Information Publishing Group), highlights the 
probability that there will be little or no measurable loss to 
Thomson from the divestiture of the tradename ``LawDesk''.
    ``Lawyers' Cooperative Publishing'', a tradename owned by 
Thomson, is also excluded from the list of Divestiture Products in 
the Proposed Final Judgment. ``Lawyers' Cooperative Publishing'' is 
the tradename associated with the oldest continuously published 
edition of the United States Supreme Court Reports--Lawyers Edition 
(L Ed 2d)--which is listed as a Divestiture Product. ``Lawyers' 
Cooperative Publishing'' is the tradename identified with this and 
many other Divestiture Products that Thomson currently sells to the 
national, federal, and many state legal markets. Transfer of this 
tradename along with the Divestiture Products will be essential for 
their success.

B. The Star Pagination System Needs No License

    ``Star-pagination'' is not universally considered to be a 
definitive proprietary feature of the West National Reporter 
System.* No licensing arrangement should be established or 
sanctioned by the Court for ``star-pagination'' of the West National 
Reporter System.
---------------------------------------------------------------------------

    * See West Publishing Company v Mead Data Central, Inc. (1985, 
DC Minn) 616 F Supp 1571, 227, USPQ 631, affd (1986, CA8 Minn) 799 
F2d 1219, 230 USPQ 801, cert den (1987) 479 US 1070, 93 L Ed 2d 
1010, 107 S Ct 962; Oasis Publishing Company v West Publishing 
Company (D Minn 1996) ______ F Supp ______, 1996 WL 264773 (pending 
litigation); Matthew Bender and Company, Inc. v West Publishing 
Company (S.D.N.Y.) Docket No. 94-CIV-0589 (pending litigation).
---------------------------------------------------------------------------

    Until such time as there is a definitive ruling, a licensing 
scheme that is national in scope, such as the License Agreement 
contained in the Proposed Final Judgment (Exhibit B), should not be 
established or sanctioned by the Court.
    By sanctioning the licensing of ``star-pagination'' by a merged 
Thomson/West organization, the Court is establishing de facto 
monopolistic proprietary rights, which by its very nature is 
anticompetitive. The issue of the copyrightability of ``star-
pagination'' has no definitive ruling from the United States Supreme 
Court or clear legislative coverage in the Copyright Act.
    Moreover, by sanctioning such a licensing scheme for ``star-
pagination,'' the Court will be fostering a monopoly for a merged 
Thomson/West organization and fostering anticompetitiveness in the 
legal publishing market by giving judicial approval to the West 
National Reporter System as the de facto official reporter system 
throughout the United States.

C. Official Reports and Digests Must Be Divested

    Without clearly stating it, the Proposed Final Judgment allows a 
merged Thomson/West organization to retain and not divest the 
Divestiture Products listed in Exhibit A.3 (official reports, 
appellate reports, and advance sheets for California, Washington, 
and Wisconsin) and Exhibit A.4 (digest of official reports for 
California and Wisconsin).
    The Proposed Final Judgment requires Thomson to offer 
information on such publications only after the respective States 
exercise their option to cancel their current contract to publish 
the official reports (which the States are not required to do). 
Thus, unless and until the respective States to which those 
publications apply choose to cancel their respective contracts with 
the merged Thomson/West organization, Thomson and West arguably are 
not required to offer information regarding such products to 
prospective bonafide acquirers.
    Furthermore, if a merged Thomson/West organization is allowed to 
maintain these contracts, this will have an anticompetitive effect, 
since the Defendants also publish the major competing publications 
in the pertinent markets. Therefor, the final judgment should 
require Thomson to disclose to bonafide prospective acquirers all 
pertinent information on these Divestiture Products, without regard 
to whether the States cancel their current publishing contracts for 
these products. The final judgment should also require Thomson to 
divest these products: California Appellate Reports (official), 
California Reports (official), California Reports Advance Sheets 
(official), California Digest (of official reports and appellate 
reports), Washington Appellate Court Reports (official), Washington 
Supreme Court Reports (official), Wisconsin Official Reports, 
Wisconsin Official Reports Advance Sheets, and Wisconsin Digest (of 
official reports).

D. Bids Must Not Be Limited to Entire List of Divestiture Products 
Only

    The Proposed Final Judgment ambiguously allows Thomson to 
require all prospective bonafide acquirers of Divestiture Products 
to bid only on the entire list of Divestiture Products, rather than 
on one or a group of the products. This has the anticompetitive 
effect of allowing Thomson to refuse to offer important information 
on individual Divestiture Products to prospective bonafide 
acquirers. Secondly, this allows Thomson to refuse to consider an 
offer on a single or group of Divestiture Products by a prospective 
bonafide acquirer.
    Competitiveness in the legal publishing market will be fostered 
if Thomson is required to consider and in fact favor bids for 
individual or groups of Divestiture Products over bids for all the 
Divestiture Products. Having more legal publishers in the market 
will more likely result in competitive pricing and higher quality of 
law products for the consumer. Having a few very large legal 
publishers in the market could result in anticompetitive pricing and 
lower quality of law products for the consumer. Thomson should be 
required to consider and favor bids for individual or groups of 
Divestiture

[[Page 53417]]

Products over bids for all Divestiture Products.

E. Jurisprudence Publication Must Be Divested

    The Proposed Final Judgment fails to eliminate the 
anticompetitive effect of the merger of Thomson and West with regard 
to jurisprudence publications, otherwise known as legal 
encyclopedias. West publishes Corpus Juris Secundum (CJS); and 
Thomson publishes American Jurisprudence 2d (Am Jur 2d).
    These two publications are the only major national legal 
encyclopedias in the United States legal market. Without divestiture 
of one of these publications, the merged Thomson/West organization 
will have a monopoly on the national legal encyclopedia market. 
Since the West tradename is already associated with CJS, divestiture 
of Am Jur 2d would more effectively satisfy the goal of ensuring 
competition in the market place. Thomson should be required to 
divest one of these two national legal encyclopedias to ensure a 
competitive market.

    Dated: August 12, 1996.

      Respectfully submitted,
Alois V. Gross,
Minnesota Attorney No. 13322X, 2219 Pillsbury Avenue, Minneapolis, MN 
55404-3266, Phone: (612) 871-4680.

Alois V. Gross

August 12, 1996.
Mr. James Foster,
Merger Task Forth, Antitrust Division, U.S. Department of Justice, 
1401 H Street N.W., Suite 4000, Washington, D.C. 20530.

Re: Private Comments by Prospective Acquirer of Divestiture 
Products, U.S. v The Thomson Corporation and West Publishing Co., 
U.S. District Court for the District of Columbia, Civil Action No. 
96-1415

    Dear Mr. Foster: I am part of a group who is a bonafide 
prospective acquirer of Divestiture Products in the above matter. I 
was recently informed by your office that private inquiries and 
comments should be addressed to you. I wish this letter and your 
response to it not be published in the Federal Register, nor filed 
with the Court in the above matter. I have under separate cover sent 
``Public Comments'' to Mr. Craig Conrath, as well as a copy of this 
letter. I have also sent copies of this letter to the other 
Plaintiffs in the above matter.
    Thomson has in a very short time decimated the competition in 
the legal publishing industry in the U.S., by following a course of 
takeover of companies and aggressive downsizing. Following Thomson's 
acquisition/takeover of Lawyers' Cooperative Publishing Company 
(along with its then subsidiary companies--Bancroft-Whitney and 
Research Institute of America) in 1989, Thomson ``downsized'' these 
U.S. organizations, eliminating two-thirds of the Bancroft-Whitney 
staff, as well as making severe reductions in the staff at the other 
acquired U.S. companies. Thomson then similarly acquired and 
substantially downsized other U.S. law publishers, such as Clark-
Boardman and Callaghan.
    In the process of this U.S. industry takeover by a foreign 
corporation, Thomson has been in a constant state of restructuring 
and reorganization of its U.S. legal publishing dynasty. This 
history of takeover by Thomson in the U.S. legal publishing industry 
is important to view in the proper perspective Thomson's present 
acquisition/takeover/``merger'' of West Publishing Company (West).
    If the current Proposed Final Judgment is approved by the Court, 
one result will be that the U.S. legal publishing industry will have 
no real competition. Furthermore, Thomson's products for the U.S. 
legal market will likely suffer in quality from decreased editorial 
input. Its legal information products will likely have substantial 
price increases due to a lack of any real price competition in the 
market.
    The Proposed Final Judgment does not require divestiture of 
certain valuable tradenames currently identified with the 
Divestiture Products. ``Bancroft Whitney'', ``LawDesk'', and 
``Lawyers' Cooperative Publishing'' command tremendous goodwill and 
brand market recognition in the legal publishing market. Brand 
market recognition is essential for the viability of the Divestiture 
Products in the legal publishing market. If a prospective purchaser 
acquires Divestiture Products such as the California Appellate 
Reports (official), California Reports (official), California 
Reports Advance Sheets (official), California Digest and Deering's 
California Codes Annotated without the accompanying tradenames long 
associated with such product--``Bancroft Whitney'' and ``LawDesk'', 
then they are at a severe competitive disadvantage against the 
``West'' brand. Thus, if Thomson is successful in maintaining 
ownership of the ``Bancroft Whitney'' and other tradenames, it will 
obtain a de facto monopoly in any legal publishing market where 
those tradenames hold clout.
    Thomson has already indicated it will be using the familiar and 
powerful ``West'' tradename in marketing its products in the U.S. 
legal market, by announcing that its U.S. legal publishing operation 
will change its name from Thomson Legal Publishing to West 
Information Publishing Group. The ``West'' tradename has tremendous 
goodwill and brand market recognition attached to it in the legal 
publishing market. When familiar tradenames associated with legal 
publishing in the U.S. are no longer available to competitors, 
Thomson (with the ``West'' tradename) will achieve a de facto 
monopoly. In California, for example, the ``West'' California 
Reporter will continue to have the brand market recognition and 
goodwill it always has had. Without the Official Reports' 
accompanying ``Bancroft-Whitney'' goodwill and brand market 
recognition, the perceived quality and resulting market share for 
the Official Reports will likely decline.
    The same argument applies to the statutory law publications in 
California: without the accompanying ``Bancroft-Whitney'' goodwill 
and brand market recognition, the perceived quality and resulting 
market share of Deering's California Codes Annotated will surely 
decline. As is, the Proposed Final Judgment will create a de facto 
monopoly for Thomson/West in one legal publishing market after 
another.
    This reasoning applies equally to the legal CD-ROM product 
market in the U.S. There are two major competing legal CD-ROM 
product lines in the U.S.--the ``West'' CD-ROM products and the 
``LawDesk'' CD-ROM products. In the interest of maintaining 
competition and preventing a de facto Thomson monopoly, Thomson must 
be required to divest one of these two major competing legal CD-ROM 
trademarks.
    ``West'' is the tradename The Thomson Corporation has already 
indicated that it will be relying on to advance its merged legal 
publishing business throughout the United States. Therefor, 
``LawDesk'' is the likely candidate for divestiture.
    It is even more likely Thomson will replace its ``LawDesk'' CD-
ROM product line with the ``West'' CD-ROM product line, since 
Thomson now owns the operating system software on which the ``West'' 
CD-ROM product line is based--Premise.* Thomson should be required 
to divest the ``LawDesk'' tradename.
---------------------------------------------------------------------------

    *The operating system software for the ``LawDesk'' CD-ROM 
products (the base for the legal information that is stored there) 
is Folio--owned by Folio Corporation. The operating system software 
for the ``West'' CD-ROM products is Premise--owned by West * * * and 
now Thomson.
---------------------------------------------------------------------------

    Initially, after we wrote to request information from Thomson 
and West on certain Divestiture Products, I was told in a telephone 
conversation by Thomson that, unless we intended to make one bid on 
all the Divestiture Product, Thomson was not obligated to--and would 
not--make available any information at all on individual Divestiture 
Products. This all or nothing approach is extremely anti-
competitive. Thomson should be required to disseminate information 
and consider bids on any individual Divestiture Product.
    In the ``Offering Memorandum-Selected Legal Products'' from 
Thomson, there is absolutely no information--financial or 
otherwise--concerning certain Divestiture Products such as the 
various official reports and digests for the three jurisdictions 
involved. When I then specifically requested by telephone this 
information from Thomson, I was informed that it was not required to 
give any information concerning the official reports or digests, or 
any information other than what it included in the above-mentioned 
Offering Memorandum. We intended to bid on some or all of the 
official reports and digests. However, without financial and other 
information, it is impossible to make an educated analysis of and 
proposal for these Divestiture Products. Thomson should be required 
to make information available on the official reports and digests, 
and all Divestiture Products, to bona fide prospective bidders.
    Furthermore, the financial and other information included in the 
above-mentioned Offering Memorandum is misleading. It contains no 
meaningful and historical presentation of the facts and figures. The 
Divestiture Products have all seen changes in

[[Page 53418]]

their production since Thomson first acquired many of them in 1989, 
in its acquition/takeover of Lawyers' Cooperative Publishing and 
Bancroft Whitney. To obtain an understanding of the value of the 
Divestiture Products, it is necessary to compare financial and other 
information on the products both prior to Thomson's initial 
acquisition of such products in 1989 and in the 7 years since its 
ownership of such products. This is important because of the changes 
in production that Thomson has implemented on these products since 
its ownership of them.
    The present value of the Divestiture Products is directly 
related to how they have been produced both prior to Thomson's 
acquisition of them and since that time--a time that has been filled 
with substantial personnel reductions and shifting of resources 
throughout the Thomson organization, all of which affects the value 
of any Divestiture Products. Thomson should be required to disclose 
to all bonafide prospective acquirers, financial and other 
information on the Divestiture Products in a meaningful and 
historical presentation from the time immediately prior to its 
acquisition of such products in 1989 to the present time, with 
proper supporting documentation.
    Thomson initially established a deadline of August 8th for 
submission of proposals for acquisition of the Divestiture Products. 
On August 2nd, Thomson sent a letter indicating the deadline was 
changed to August 15th. In light of the concerns and inquiries I 
have expressed here, Thomson should be required to extend its 
deadline on August 15th, until these concerns can be satisfactorily 
resolved. As part of a group who is a bonafide prospective acquirer 
of Divestiture Products, I ask that you apply to the Court for an 
appropriate and necessary order to resolve the issues raised in this 
letter.
    I would like to speak with you at your earliest convenience 
since Thomson's August 15th deadline for proposals is almost here. 
Thank you.

      Very truly yours,
Alois V. Gross
CC: Mr. Craig W. Conrath, Mr. James E. Doyle, Jr., Ms. Christine O. 
Gregoire, Mr. Dennis C. Vacco, Mr. Scott Harshbarger, Mr. Jim Ryan, 
Mr. Richard Blumenthal, Mr. Daniel E. Lungren

ALOIS V. GROSS

August 20, 1996.
Mr. Craig W. Conrath,
Chief, Merger Task Force, Antitrust Division, U.S. Department of 
Justice, 1401 H Street N.W., Suite 4000, Washington, D.C. 20530.

Re: Public Comment, U.S. v The Thomson Corporation and West 
Publishing Co., U.S. District Court for the District of Columbia, 
Civil Action No. 96-1415

    Dear Mr. Conrath: The enclosed Public Comment on the above 
matter is an addendum to my Public Comment sent to you on August 
12th. I understand the enclosed comments and your responses will be 
published in the Federal Register and filed with the Court.
    Please feel free to call me if you would like clarification of 
anything in my earlier Public Comment or this Public Comment 
Addendum.

      Very truly yours,
Alois V. Gross
Enclosure

Public Comment on Proposed Final Judgment and Competitive Impact 
Statement, U.S. v The Thomson Corporation and West Publishing Co., U.S. 
District Court for the District of Columbia, Civil Action No. 96-1415 
(Addendum to Public Comment filed August 12, 1996)

I. Premise

    The Proposed Final Judgment fails to attain its goal, as 
required by the federal antitrust laws, of eliminating the 
anticompetitive effect that a merger of the two Defendants creates 
in the U.S. legal publishing market. It should therefor be rejected 
by the Court.

II. Argument

A. Tradenames Must Be Divested

    Thomson/West is not required by the Proposed Final Judgment to 
divest the ``Total Client-Service Library'' (``TCSL''), ``A Practice 
Systems Library Manual'', and ``American Jurisprudence'' (``Am 
Jur'') tradenames currently owned by the Thomson Corporation. These 
tradenames should be included in the list of Divestiture Products in 
the Proposed Final Judgment (Exhibit A), but they are not.
    These tradenames carry valuable goodwill and brand market 
recognition developed over many decades of legal publishing. They 
will be essential for maintaining the confidence of customers and 
the market share for the Divestiture Products identified with these 
tradenames. Without these tradenames, the acquirer of such 
Divestiture Products will have the same barriers to market entry as 
with a start-up publication. With its vast financial, marketing, and 
distribution resources, Thomas/West could easily overwhelm and 
overpower the acquirer within months of divestiture.
    To ensure the Divestiture Products remain viable, the goodwill 
and market recognition associated with the ``Total Client-Service 
Library'' (``TCSL''), ``A Practice Systems Library Manual'', and 
``American Jurisprudence'' (``Am Jur'') tradenames should transfer 
with the Divestiture Products, and therefor these tradenames should 
be divested by Thomas/West.
    ``Total Client-Service Library'' (``TCSL'') is a tradename 
feature appearing in many Divestiture Products and other 
publications currently produced by the Lawyers' Cooperative 
Publishing (LCP) and Bancroft Whitney (BW) offices of Thomson. It is 
a very useful reference tool for locating related primary and 
secondary legal publications, by way of cross-reference citations. 
(Currently, ``TCSL'' is used to cross-refer readers to other 
publications produced by the LCP and BW offices of Thomas--a very 
useful internal marketing feature.) The Divestiture Products obtain 
value from the inclusion of the ``TCSL'' tradename feature. Without 
continued inclusion of the ``TCSL'' feature in the Divestiture 
Products, the acquirer of such products will be severely 
disadvantaged in the market from the inability to cross-refer, and 
``internally market'' other related legal products published by the 
acquirer--in a manner that is both familiar to and valued by current 
users of the Divestiture Products. Any change in these publications 
following divestiture, whereby the ``TCSL'' feature is no longer 
included, will likely be a severe disadvantage to the 
competitiveness of such publications.
    If Thomson/West desires to continue using the ``TCSL'' feature 
in non-divestiture products, it should be required to license the 
use of this tradename from the acquirer. The burden to license the 
use of the ``TCSL'' tradename should be placed on Thomson/West 
rather than on the acquirer, since the continued viability of 
Divestiture Products is already questionable due to the inevitable 
changes in their production following divestiture.
    Any unnecessary burden, such as requiring the acquirer to 
license the use of existing tradenames in Divestiture Products will 
negatively affect the ability of the acquirer to maintain cost-
effective production of the Divestiture Products. Should such a 
burden become too great for the acquirer, the ``TCSL'' tradename 
feature could be eliminated from the Divestiture Products, with a 
resulting negative impact on the competitiveness of such products. 
In order to maintain the competitive survival of the Divestiture 
Products, the ``TCSL'' tradename should transfer with such products 
upon divestiture, with a license-back to Thomson/West for its 
continued use of ``TCSL'' in non-divestiture products.
    Similarly, ``A Practice Systems Library Manual'' is a tradename 
associated with many Divestiture Products, and other non-divestiture 
publications produced by the LCP and BW offices of Thomson/West. 
This tradename appears in the titles of such publications. This 
tradename is not included on the list of Divestiture Products, but 
it should be.
    The goodwill and brand market recognition associated with the 
``A Practice Systems Library Manual'' tradename was developed over 
many decades of legal publishing. The Divestiture Products currently 
associated with this tradename obtain value from this tradename. 
Without continued inclusion of this tradename in the Divestiture 
Products currently associated with it, such products will be 
competitively disadvantaged in the market. The same argument 
regarding licensure of this tradename feature discussed above for 
``TCSL'' applies equally here. If Thomson/West desires to continue 
using this tradename in producing non-divestiture publications, it 
should be required to license-back such tradename use from the 
acquirer.
    ``American Jurisprudence'' (``Am Jur'') is the tradename 
currently associated with one of the two national legal 
encyclopedias in the U.S. that under the current divestiture plan 
will both be owned by a merged Thomson/West. Both the tradename and 
the encyclopedia (American Jurisprudence 2d) should be included on 
the list of Divestiture Products in the Proposed Final Judgment, but 
they are not. The encyclopedia was recommended for required 
divestiture in a Public Comment filed August 12, 1996.

[[Page 53419]]

    If American Jurisprudence 2d is divested as recommended, the 
``Am Jur'' tradename will still be associated with certain non-
divestiture products owned by Thomson/West, including: Am Jur Legal 
Forms, Am Jur Pleading and Practice Forms, Am Jur Proof of Facts, 
and Am Jur Trials. Such related products should also be divested to 
keep the Am Jur product line in tact and competitive. Alternatively, 
Thomson/West should at the very least be required to license back 
the tradename ``Am Jur'' from the acquirer of American Jurisprudence 
2d, for continued use in Thomson/West's related ``Am Jur'' products.

B. Thomson/West Must Pay License Fee for ALR cites on Auto-Cite

    Auto-Cite is a Divestiture Product that contains substantial 
references to Thomson/West-owned legal publications, for which the 
acquirer of Auto-Cite should be compensated on a license basis from 
Thomson/West. The Proposed Final Judgment does not provide for a 
license fee to be paid by Thomson/West to the acquirer of Auto-Cite, 
but it should.
    In particular, Auto-Cite contains the many thousands of 
citations to case reports and annotations contained in Thomson/
West's American Law Reports (ALR) publications: ALR, ALR 2d, ALR 
3rd, ALR 4th, ALR 5th, and ALR Federal. Developed over many years of 
legal publishing, Auto-Cite derives competitive value from the 
inclusion of citations to ALR case reports and annotations, since 
such citations in their entirety currently appear in no other 
electronic legal research product/service on the market.
    Following divestiture of Auto-Cite, its competitive value 
attributable to ALR citations will probably diminish in some degree 
over time, since Thomson/West will in time likely add all ALR 
citations and text to its Westlaw electronic legal research product/
service. Nevertheless, Thomson/West should be required to pay a 
license fee to the acquirer of Auto-Cite, for inclusion of all 
references to Thomson/West's ALR citations, since Thomson/West will 
also obtain value from the continued inclusion of ALR citations in 
Auto-Cite.

III. Conclusion

    An overriding concern with the Proposed Final Judgment is that 
it does not effectively maintain real competition in the U.S. legal 
publishing industry, following this latest advance in Thomson's 
calculated takeover of the industry and fracturing of product lines. 
Valuable goodwill, brand market recognition, and product-line 
customer loyalty currently associated with Divestiture Products will 
likely suffer under the current divestiture plan. The current plan 
makes no attempt to maintain the competitiveness of Divestiture 
Products by requiring divestiture of and along entire product lines. 
Moreover, the current plan also makes no attempt to maintain the 
competitiveness of Divestiture Products by requiring divestiture of 
and along company tradename lines, such as all ``BW'' products or 
all ``LCP'' products.
    Goodwill, brand market recognition, and customer loyalty 
associated with entire product lines and interrelated publications 
and services currently produced by the BW and LCP offices of Thomson 
will be fractured following divestiture under the current plan. Some 
of these BW and LCP products and services will be published by 
Thomson/West, and some (Divestiture Products) will be published by 
the acquirer(s), under the current plan.
    Incongruously, the current plan leaves most products and entire 
product lines presently produced by West under the familiar ``West'' 
tradename in tact and largely unscathed, with regard to goodwill, 
brand market recognition, and customer loyalty. These are the 
products and product lines that Thomson/West will continue to own 
following divestiture under the current plan. While on the contrary, 
the current plan fractures many product lines of which Divestiture 
Products are presently a part. It also fractures the many tradenames 
presently associated with Divestiture Products. The current plan 
therefor places Divestiture Products and their acquirer at a severe 
competitive disadvantage in the legal publishing market following 
divestiture.
    Under the Proposed Final Judgment, this fractured U.S. legal 
publishing industry will continue with only one clear market 
leader--Thomson/West--and a de facto monopoly in that organization. 
Real competition in the U.S. legal publishing industry will likely 
be gone forever under the current plan.
    The Thomson/West merger-divestiture should be reevaluated with 
an eye toward requiring Thomson/West to divest entire product lines 
that share common tradenames. At the very least, all tradenames 
currently associated with Divestiture Products should be divested 
and transferred with those products.

    Dated: August 20, 1996.

    Respectfully submitted,
Alois V. Gross,
Minnesota Attorney No. 13322X, 2219 Pillsbury Avenue, Minneapolis, MN 
55404-3266, Phone: (612) 871-4680.

Tax Analysts

September 3, 1996.
By Hand Delivery

Craig W. Conrath, Esq.
Chief, Merger Task Force, Antitrust Division, U.S. Department of 
Justice, 1401 H Street, N.W., Suite 4000, Washington, D.C. 20530.

Re: United States v. The Thomson Corporation and West Publishing 
Company, Case No. 1:96CVO1415 (U.S. District Court for the District 
of Columbia)

    Dear Mr. Conrath, I have read the comments of Lexis-Nexis 
relating to the proposed final judgment in this case.
    I agree with Lexis-Nexis' conclusion that the Department of 
Justice has failed to provide the safeguards that are needed to 
preserve competition in the market for enhanced case law. I also 
agree with Lexis-Nexis' conclusion that the proposed final judgment 
will result in substantially lessened competition in the markets 
identified in the complaint.
    I particularly agree with Lexis-Nexis' criticism of the failure 
of the Department of Justice to take steps that would ``lower the 
high barriers to entry that have caused such extreme market 
concentrations'' in legal publishing. See comments, page 2. As a 
small legal publisher, Tax Analysts is well aware of the existence 
of these barriers to entry. For further information on this subject, 
please see the comments that we submitted to you on August 29, 1996.
    Tax Analysts opposes entry of the Proposed Final Judgment, 
unless and until it is modified to eliminate the problems identified 
in the Lexis-Nexis comments and in our own comments of August 29, 
1996.

      Best regards,
Thomas F. Field,
Publisher.
cc: Constance Spheeris, Esq., General Counsel, Tax Analysts

PUBLIC COMMENTS SUBMITTED BY TAX ANALYSTS: CIVIL ACTION NO. 96-1415

The United States, et al. v. the Thomson Corporation and West 
Publishing Company

Mr. Craig W. Conrath,
Chief, Merger Task Force, Antitrust Division, U.S. Department of 
Justice, 1401 H. Street, N.W., Suite 4000, Washington, D.C. 20530.

    Dear Mr. Conrath: Tax Analysts respectfully submits the 
following comments regarding the Department of Justice's current 
review of, and proposed settlement terms for, the acquisition of 
West Publishing Co. (``West'') by the Thomson Corporation 
(``Thomson''). As you know, Tax Analysts moved to intervene on July 
25 in this matter and was denied. We reference by incorporation our 
court filings in that proceeding, particularly for the legal basis 
of our contentions.
    One of the most serious barriers to competition in the legal 
publishing industry is the unavailability to most publishers, 
particularly newer and/or smaller publishers, of past or archival 
case law. The seriousness of this barrier is evidenced by its 
inclusion in the Department of Justice's (``the Department'' or 
``Justice'') prima facie case in this action alleging 
anticompetitive behavior against defendants Thomson and West. See 
paragraph 30 of the Complaint. Despite this, the Department's 
proposed Final Judgment does not provide a remedy for this 
competitive barrier, which is serious enough to warrant inclusion in 
its prima facie case. Tax Analysts submits that this omission makes 
the proposed settlement incomplete and unworthy of judicial or 
departmental approval, as the underlying monopolistic behavior of 
West, not Thomson, remains unchecked.
    The reason there is no remedy, we suggest, is because the 
Department has locked itself into a collusive posture with West in 
separate litigation over this very issue--public access to past case 
law. In that litigation, Tax Analysts v. Department of Justice and 
West Publishing Co., 913 F.Supp 599 (D.D.C. 1996), stayed pending 
decision on appeal under F.R.Civ.Pro.54(b) in the U.S. Court of 
Appeals, Case No. 96-5109, Justice is co-asserting West's 
proprietary rights over the words of judges in United States federal 
case

[[Page 53420]]

law. Thus, the Department has an irreconcilable conflict of interest 
with respect to the availability of past case law, paragraph 30 of 
the Complaint, because of its defensive position with West in co-
asserting a West proprietary interest in the past case law contained 
in the JURIS database. This conflict clearly disables the Department 
from fulfilling its statutory mandate under the Tunney Act because 
it is unwilling or unable to provide a remedy to the anticompetitive 
allegations contained in paragraph 30 of the Complaint.
    As a result, the proposed Final Judgment is inadequate and 
unacceptable and should be amended to provide a remedy, which is 
readily available, to this very real and continuing barrier to 
competition. Without access to past case law, there will be little 
or no increase in competition in the legal publishing industry. It 
is within Justice's authority to require the release of the past 
case law contained in JURIS as part of the terms of approval of 
Thomson's acquisition of West.
    Tax Analysts urges the Department and the District Court to 
order the public domain release of nonproprietary federal case law 
and statutes contained in the JURIS database as a condition of 
settlement in its antitrust review of Thomson's acquisition of West.

1. The Public Is Not Represented by Justice's Collusive Position 
With West With Respect to Past Case Law

    Because of Tax Analysts unique circumstances in litigating 
against the Department of Justice to secure release into the public 
domain of the only publicly developed database of archival case law, 
JURIS, we are acutely aware of your department's inability to 
represent the public interest because of its collusion with West in 
co-asserting West proprietary rights to entirely public domain 
information in case law contained in JURIS. This is also apparent in 
the divergent and conflicting positions adopted by the antitrust and 
civil divisions of the Department with respect to this issue. See 
Appendix A, Memorandum of the United States of America as Amicus 
Curiae in Support of the Proposition That Bender's Star Pagination 
to West's National Reporter System Does Not Infringe Any Copyright 
Interest West May Have in the Arrangement of the National Reporter 
System Volumes, (``the Department's Memorandum''), at 5-15, 17.
    Tax Analysts is the plaintiff in a Freedom of Information Act 
suit which seeks to preserve and make freely available to the public 
the nonproprietary portions of the Department's electronic database 
known as JURIS. See Tax Analysts, supra. The nonproprietary portions 
of JURIS contain the words in judicial opinions written by U.S. 
judges and the statutes enacted by State and Federal legislatures.
    The nonproprietary portions of the JURIS database do not contain 
value-added information that could arguably be subject to 
proprietary claims. For example, the nonproprietary portions of 
JURIS do not contain page numbers, synopses or headnotes, nor do 
these portions contain any West electronic formatting, search 
software, or electronic searching capability. West's so-called 
``stream format'' was eliminated by use of government-owned software 
as the first step in creating JURIS. See Appendix A.
    The JURIS database was electronically formatted by means of 
government-owned software, written at public expense by government 
employees, and applied at public expense by a third-party computer-
services contractor, West, to the nonproprietary portions of the 
JURIS database. On the basis of its role as the computer-services 
contractor to the Department, West claims proprietary rights in the 
nonproprietary portions of the JURIS database; that is, the 
unenhanced text of the judges' own words and the legislatures' 
statutes. These claims, advanced in concert by West and the 
Department, have thus far been successful in blocking release of the 
JURIS database to the public.\1\
---------------------------------------------------------------------------

    \1\ On January 16, 1996, U.S. District Court Judge Gladys 
Kessler granted the motions of the Department and West to dismiss 
those portions of Tax Analysts' Complaint that relate to the 
nonproprietary portions of the JURIS database. On April 1, 1996, the 
Judge's ruling was certified as final, pursuant to Fed. Rule Civ. 
Pro. 54(b). Tax Analysts has appealed. The appeal will determine 
whether Judges Kessler and Richey erred in denying Tax Analysts' 
repeated requests for discovery needed to oppose West's claims that 
its computer services contract with Justice created proprietary 
rights in the federal statutes and case law contained in the 
nonproprietary portions of the JURIS system. Oral argument is set 
for January 13, 1997. The remainder of the JURIS case has been 
stayed, pending resolution of the appeal. Meanwhile, similar actions 
are in preparation in other venues.
---------------------------------------------------------------------------

    As a consequence, U.S. federal statutes and retrospective case 
law in electronic form are unavailable as a practical matter to 
smaller publishers seeking to enter the legal publishing market. 
And, as paragraph 30 of the Complaint in this action make clear, 
``successful entry [into the legal publishing market for enhanced 
primary law] would require access to past and current court opinions 
and statutes. Past and/or current opinions simply are not available 
from many courts and in many others, obtaining access is costly and 
time-consuming.''
    The nonproprietary portions of the JURIS database--the words of 
judges and legislatures--constitute a very valuable public asset. 
JURIS is the only publicly owned database containing Federal and 
State statutes and Federal case law. Until the nonproprietary 
portions of the JURIS database are made available to the public, 
including smaller publishers, there is ``unlikely to be entry by any 
company offering enhanced primary law in any of the relevant product 
markets identified. * * *'' See Complaint, paragraph 30.
    It is clear from the proposed Final Judgment that the 
Department's collusion with West in Tax Analysts, supra, renders it 
unable to craft a fair settlement of third-party publishers in the 
current monopolistic conditions in the legal publishing industry. 
These conditions are almost entirely the result of West's 
monopolistic control and assertions of proprietary rights over the 
original, unenhanced words of judges in past case law. For small, 
innovative publishers, the lack of access to past case law is 
rightly alleged in paragraph 30 of the Complaint. The Department's 
failure to require the release of nonproprietary federal case law 
and statutes contained in JURIS, as a response to this prima facie 
monopoly practice or claim, is untenable. The Department's JURIS 
database is a readily available and appropriate remedy to this 
competitive barrier. Tax Analysts believes that allowing this 
situation to continue will do more harm to competition in the 
industry than any existing remedy contained in the Final Judgment 
will do to alleviate it.
    But for the Department's decision to propound and support West's 
assertions of proprietary rights over public domain case law in the 
JURIS database, the nonproprietary portions of that database rightly 
would be released into the public domain. Rather than encourage 
competition in the legal publishing industry by requiring release of 
this database by West and the Department, the Department continues 
to collude with West by choosing to omit the release of JURIS from 
the Final Judgment in this action.\2\
---------------------------------------------------------------------------

    \2\ Although Tax Analysts and others maintain that the mere 
words of judges and legislators contained in case law and statutes, 
stripped of West value-added enhancements, is entirely 
nonproprietary, whether West holds any proprietary rights in the raw 
data that it provided to Justice under contract for JURIS is 
irrelevant here. Along with the other materials West and Thomson are 
required to divest for purposes of approval, the Department is fully 
empowered to require release into the public domain of the federal 
case law and statutes contained in JURIS, regardless of what 
portions are claimed as proprietary by the parties.
---------------------------------------------------------------------------

2. The Department Is Disabled From Representing the Public With 
Respect to Access to Past Case Law

    If the Department were truly acting in the public interest with 
respect to access to past case law, it would require the release of 
JURIS into the public domain as a condition of approval of Thomson's 
acquisition of West. Collusion, including virtual co-pleading, in a 
prior litigation with a current opposing party, to the detriment of 
a current client--in this case, the American People, whom Justice 
purports to represent in this Tunney Act antitrust review--violates 
the very foundation of professional responsibility.\3\ By these 
actions, Justice proves that it cannot represent the public interest 
in gaining access to past case law. The archival case law contained 
in JURIS, stripped of West enhancements, was and still

[[Page 53421]]

is available to Justice as a remedy here if it truly wishes to end 
the monopolistic hold of West on past case law, and, therefore, on 
the legal publishing industry as a whole. Justice's failure to 
include this remedy in its Final Judgment speaks of its continued 
collusion with West.
---------------------------------------------------------------------------

    \3\ See, e.g. pleadings in Tax Analysts, supra:
    (1) Defendants' Motions to Dismiss using almost identical 
language and submitted to the court on the same day: (Justice, 
February 14, 1994) ``* * * dismiss * * * to the extent Plaintiff 
seeks disclosure of West licensed data.''; (West, February 14, 1994) 
``* * * dismiss * * * insofar as it [Plaintiff] seeks to obtain West 
licensed data.'' At no time was West-licensed data ever sought by 
Tax Analysts in its FOIA request or in the subsequent litigation.
    (2) West and Justice Joint Opposition to Plaintiff's Motion to 
Establish Procedure for Resolution & Discovery on Agency Record 
Issue, submitted to the Court on June 9, 1994.
    (3) West and Justice joint statement as to undisputed facts and 
disputed issues of fact and law, Appendix B to Joint Pleading 
Pursuant to Order Dated May 6, 1994, dated May 27, 1994.
---------------------------------------------------------------------------

    Release of JURIS is the simplest and quickest remedy to the 
competitive harm caused by the lack of access to past case law. 
Given the many millions of taxpayer dollars already spent on 
computer services contractors such as West to provide the raw data 
for JURIS, we urge the Department to include its release as a 
condition of approval of Thomson's acquisition of West.

3. Only the Public Can Claim Rights in the Words of Federal Judges

    Even though it is irrelevant whether West has proprietary rights 
over the words of federal judges contained in the case law of JURIS 
for the purpose of an antitrust settlement, as a matter of record, 
it is important to examine who owns what in an electronic database. 
While proprietary claims in the electronic or digital world are in a 
state of change, some aspects of this emerging legal framework are 
clear. First, it is settled that mere gathering or collecting is not 
a copyrightable act, no matter how much ``sweat of the brow'' is 
involved. See Feist Publications, Inc. v. Rural Telephone Service 
Co., 499 U.S. 340 (1990). Conversely, Tax Analysts agrees that West 
has a proprietary claim in its original, value-added enhancements to 
case law, such as synopses and headnotes.
    Second, it is also settled that despite the originality of any 
compilation or arrangement, no one owns the actual information in 
the database, particularly when the information originates from a 
public entity, such as courts and legislatures. See Feist, supra, at 
349, and Appendix A, the Department's Memorandum, at 5, 6, 11, 12, 
14, 16, 17.
    Third, in the digital world, value-added material--summaries, 
search engines, other formatting designs, etc.--that is digitally 
coded onto the raw data is easily removed. In the case of JURIS, 
West's value-added materials had to be removed and Department JURIS 
software procs inserted for the database to run the raw data, e.g. 
case law and statutes, provided by West under contract. See Appendix 
B. While West's enhancements may constitute value, they were never 
an object of Tax Analysts' original FOIA request for the public 
domain release of JURIS or of the subsequent litigation, nor are 
they contemplated in these comments for release as a remedy to the 
anticompetitive allegations in paragraph 30.
    Simply put, the mere original words of judges and legislators in 
the JURIS database, devoid of West material, is what is 
appropriately available for release by Justice into the public 
domain. No one `owns' these words except the public. The fact that 
West provided to Justice for departmental input in JURIS the words 
of judges in case opinions confers no proprietary right on West in 
the cases themselves. ``Feist's thin copyright leaves facts 
unprotected while protecting only creative selection and 
arrangement. West's principle, in contrast, effectively protects 
facts.'' Appendix A, the Department's Memorandum, at 15.
    The following passage illustrates this point well:
    An electronic database is any collection of information 
maintained in a computer * * * How much of an online database can be 
owned under copyright law? The answer is that a person who compiles 
a database will have a copyright in the original `selection, 
coordination, or arrangement' of that database. However, no one can 
own the `facts' contained in the database, no matter how much work 
he or she may have put into gathering those facts. This is because 
facts are not originated by the database developer, but are an 
independent part of the world apart from the developer, free to all 
who want to use them. In other words, a database developer does not 
create facts, he or she discovers them, and no one can copyright a 
discovery. * * * This legal rule may not seem fair * * * 
Nonetheless, it reflects a major limitation on copyright law, which 
protects expressions of facts only, and not the facts themselves. 
(emphasis added, except for ``discovers'')

Netlaw: Your Rights in the Online World, by Lance Rose (1995), p. 
109-110.

    The Department, in its Memorandum in the Matthew Bender case, 
explains the policy rationale behind this legal development:
    This case [Matthew Bender & Co., Inc., v. West Publishing Co.] 
like Mead before it, arose primarily because new technologies, new 
means of managing information, became available, a frequent event in 
the information age. We have seen, in on-line computer searchable 
databases and in CD-ROM products, new ways of working with the raw 
materials of legal research--case reports, statutes, and other 
materials that once appeared only in print form. Neither we nor this 
Court can predict what new technological developments will next year 
or in the next decade further revolutionize the practice of law and 
make the substance of law more readily available to all. By making 
clear the limited scope of copyright protection for factual 
compilations, Feist cleared the way for these creative developments. 
It should be followed here. (emphasis added)

Appendix A, the Department's Memorandum, at 17.

    Given this public representation in a court filing, the 
Department surely knows that ``these creative developments'' will 
occur only if ``the raw materials of legal research''--case law and 
statutes--are universally available. Why, then, is the availability 
of the raw material of legal research, the absence of which is part 
of the Department's prima facie case against the defendants, not 
made a condition of settlement in the proposed Final Judgment?
    Moreover, the proprietary rights West claims, with Justice's 
support, in the compilation or arrangement of federal case law in 
JURIS is inapposite in a digital platform. There is no such thing as 
one arrangement or compilation in an electronic format. Unlike the 
print medium which permits presentation by only the arrangement 
appearing in the order designed on the printed page, information 
presented in digital media is accessible through a variety of entry 
points. There is no ``Table of Contents,'' only a vast, chaotic 
collection of digital bits, or data; analog material that has been 
randomly digitized and is accessible as randomly. While electronic 
formatting for search purposes is arguably copyrightable, West's 
formatting is not part of JURIS.

4. Small Publishers Must Have Access to Past Case Law or They Will 
Perish

    The Department has demonstrated either wanton disregard or 
benign neglect of smaller legal publishers in this antitrust review. 
Not once is this dynamic and innovative segment of the industry 
mentioned in any pleading or proposed order. We urge the Department 
now to give fair attention to the critical competitive need of small 
legal publishers to gain access to past case law, as they are the 
ones most injured by the competitive barriers created by West's 
monopoly. Without the ability to provide complete primary law 
products with retrospective case law obtained at reasonable cost, 
particularly in electronic format, small publishers will not be able 
to launch primary law products on a competitive track with Thomson/
West. It is well known in our industry that West's ability to 
maintain its monopolistic market position is largely based on its 
government sanctioned assertion of proprietary rights over the raw 
materials of legal research; viz., case law and statutes.
    Indeed, as the attached statements of small publishers make 
clear, many of them already have suffered commercially and been 
forced to abandon projects because of their inability to gain access 
to past case law. (Other publishers have informed us that they will 
be sending to you directly their statements regarding this issue.) 
These smaller publishers experienced the anticompetitive effects of 
that monopoly when they tried to release new products. This is 
detrimental to a healthy economic climate and will only continue 
with the aggregated market share of Thomson/West. The Department has 
rightly cited this competitive harm in paragraph 30 as part of its 
prima facie case but has ignored the reality of its continuing harm 
in the Final Judgment.
    In short, without public domain access to past case law, the 
legal publishing industry will become less and less competitive as a 
result of Thomson's acquisition of West, as Thomson will also 
acquire West's unsubstantiated and unproven proprietary claims to 
past case law; including the largest national, publicly financed 
electronic database of past case law that was maintained by the 
Department for decades for internal legal research, JURIS.
    The Department's role as the nation's antitrust law enforcer 
mandates the formulation of an economic climate for the legal 
publishing industry that fosters a truly competitive and fair 
nonmonopolistic environment for all members of the industry. Public 
access to government-generated raw data--case law and statutes--is 
an essential component of such an economic environment:
    The interest of the United States in ensuring the proper 
preservation of that

[[Page 53422]]

balance [between protecting private ownership of expression and 
establishing the free use of basic building blocks for future 
creativity] also reflects the fact that it has primary 
responsibility for enforcing the antitrust laws, which establish a 
national policy favoring economic competition as a means to advance 
the public interest''

Appendix A, the Department's Memorandum, at 2.

5. The Electronic Legal Publishing Industry Is Not a Duopoly

    The Department's treatment of the electronic legal publishing 
industry as a duopoly between Lexis and Westlaw and its exclusive 
inclusion of Lexis/Nexis in the Final Judgment adds insult to injury 
for smaller publishers. The fact that the Department was willing to 
craft a special remedy for one third-party legal publisher, and 
attempt to portray that publisher as the only competitor in 
electronic publishing, is astonishing to industry members.
    There are scores of small legal publishers engaged in new, 
innovative, and entrepreneurial electronic products from CD-ROM to 
internet-based products formatted from and for multimedia platforms. 
Tax Analysts refers the Department to any of several listings of 
these many legal publishers, including the Directory of Law-Related 
CD-ROMS, 1996, Infosources Publishing. The Department demonstrates 
little understanding of and concern for the less powerful elements 
of the industry under review and, therefore, little regard for 
offering appropriate remedies for the enormous competitive barriers 
posed by West's monopolistic control over archival case law.
    Tax Analysts is deeply concerned that the competitive damage 
done to small, especially electronic, legal publishers will only 
continue if the Department remains unwilling to address the 
competitive barrier named in paragraph 30. We bring their concerns 
to you because the cost of participation and legal representation 
prohibits most of them from doing so independently. An antitrust 
settlement that addresses only the competitive harm to consumers and 
to the largest of the defendants' competitors is not a fair or just 
settlement.
    We urge you to reconsider the proposed Final Judgment so that 
the anticompetitive experiences of third-party legal publishers 
resulting from West's monopolistic control over past United States 
case law, soon to be in the hands of Thomson, will be terminated by 
this proceeding. There will not likely be another opportunity for 
the Department to stop the monopolistic practices cited in the 
Complaint. All members of the industry deserve the same deference 
reserved in the Final Judgment for Lexis/Nexis.
    We are pleased to provide these comments and look forward to 
discussing them further with you.

      Sincerely,
Thomas F. Field,
Publisher.

In the United States District Court for the Southern District of 
New York

    Matthew Bender & Co., Inc., Plaintiff, v. West Publishing 
Company, Defendant. 94 Civ. 0589 (JSM)

Memorandum of United States of America as Amicus Curiae in Support of 
the Proposition That Bender's Star Pagination to West's National 
Reporter System Does Not Infringe any Copyright Interest West May Have 
in the Arrangement of the National Reporter System Volumes

ANNE K. BINGAMAN,
Assistant Attorney General.

JOEL I. KLEIN,
Deputy Assistant Attorney General.

CATHERINE G. O'SULLIVAN, DAVID SEIDMAN,
Attorneys, U.S. Department of Justice 10th & Pennsylvania Ave. NW, 
Washington, DC 20530, (202) 514-4510.

RALPH T. GIORDANO (RG0114),
Attorney, U.S. Department of Justice, 29 Federal Plaza, Room 3630, New 
York, NY 10278-0140, (212) 264-0390.

Table of Contents

INTEREST OF THE UNITED STATES
STATEMENT
ARGUMENT
I. The Copyright On A Compilation Is Thin, Protecting Only Those 
Components Of The Work That Are Original To The Author And Only 
Against Copying Of Those Components
II. The Arrangement of Bender's Compilation of Cases Is Not A Copy 
Of The Arrangement Of West's Compilation Of Cases
III. Bender's Star Pagination May Describe, But It Does Not Copy, 
West's Arrangement Of Cases
CONCLUSION

Table of Authorities

Cases

Banks Law Publishing Co. v. Lawyers Co-operative Publishing Co., 169 
F. 386 (2d Cir. 1909), appeal dismissed, 223 U.S. 738 (1911)
Callahan v. Myers, 128 U.S. 617 (1888)
Computer Associates International v. Altai, Inc., 982 F.2d 693 (2d 
Cir. 1992)
Eggers v. Sun Sales Corp., 263 F. 373 (2d Cir. 1920)
Feist Publications, Inc. v. Rural Telephone Service Co., 499 U.S. 
340 (1990)
Financial Information, Inc. v. Moodys Investors Service, Inc., 751 
F.2d 501 (2d Cir. (1984)
Financial Information, Inc. v. Moodys Investors Service, Inc., 808 
F.2d 204 (2d Cir. 1986), cert. denied, 484 U.S. 820 (1987)
Harper & Row Publishers, Inc. v. Nation Enterprises, 471 U.S. 539 
(1985)
Hoehling v. Universal City Studios, Inc., 618 F.2d 972 (2d Cir.), 
cert. denied, 449 U.S. 841 (1980)
Hutchinson Telephone Co. v. Fronteer Directory Co., 770 F.2d 128 
(8th Cir. 1985)
International News Service v. Associated Press, 248 U.S. 215 (1918)
Jeweler's Circular Publishing Co. v. Keystone Publishing Co., 281 F. 
83 (2d Cir.), cert. denied, 259 U.S. 581 (1922)
Kewanee Oil Co. v. Bicron Corp., 416 U.S. 470 (1974)
Key Publications, Inc. v. Chinatown Today Publishing Enterprises, 
Inc., 945 F.2d 509 (2d Cir. 1991)
Kipling v. G.P. Putnam's Sons, 120 F. 631 (2d Cir. 1903)
Leon v. Pacific Telephone Co., 91 F.2d 484 (9th Cir. 1937)
Lipton v. The Nature Co., 71 F.3d 464 (2d Cir. 1995)
Matthew Bender & Company v. West Publishing Co., 1995 WL 702389 
(S.D.N.Y.) (``Bender I'')
Matthew Bender & Company v. West Publishing Co., 1996 WL 223917 
(S.D.N.Y.) (``Bender II'')
National Business Lists v. Dun & Bradstreet, Inc., 552 F. Supp. 89 
(N.D. Ill. 1982)
New York Times Co. v. Roxbury Data Interface Inc., 434 F. Supp. 217 
(D.N.J. 1977)
Oasis Publishing Co. v. West Publishing Co., 924 F. Supp. 918 (D. 
Minn. 1996), appeal docketed, No. 96-2887 (8th Cir. July 19, 1996)
Rand McNally & Co. v. Fleet Management Systems, Inc., 600 F. Supp. 
933 (N.D. Ill. 1984)
Schiller & Schmidt, Inc. v. Nordisco Corp., 969 F.2d 410 (7th Cir. 
1992)
Sony Corp. v. Universal City Studios, Inc., 464 U.S. 417 (1984)
Twentieth Century Music Corp. v. Aiken, 422 U.S. 151 (1975)
West Publishing Co. v. Mead Data Central, Inc., 616 F. Supp. 1571 
(D. Minn. 1985), aff'd, 799 F.2d 1219 (8th Cir. 1986), cert. denied, 
479 U.S. 1070 (1987)
West Publishing Co. v. Mead Data Central, Inc, 799 F.2d 1219 (8th 
Cir. 1986), cert. denied, 479 U.S. 1070 (1987)
Worth v. Selchow & Righter Co., 827 F.2d 569 (9th Cir. 1987)

Statutes

 17 U.S.C. 101
 17 U.S.C. 103(b)
 17 U.S.C. 107(4)
 17 U.S.C. 301

Other Materials

H.R. 3531, 104th Cong., 2d Sess. (1996)
Robert C. Denicola, Copyright in Collections of Facts: A Theory for 
the Protection of Nonfiction Literary Works, 81 Colum. L. Rev. 516 
(1981)
L. Ray Patterson & Craig Joyce, Monopolizing the Law: The Scope of 
Copyright Protection for Law Reports and Statutory Compilations, 36 
UCLA L. Rev. 719, 740-49 (1989)

[[Page 53423]]

United States v. The Thomson Corp., No. 96-1415 (D.D.C. filed June 
19, 1996), Proposed Final Judgment, 61 Fed. Reg. 35250, 35254 (July 
5, 1996)
U.S. Dept. of Justice, Press Release No. 96-287, 1996 WL 337211 
(DOJ)
World Intellectual Property Organization, Preparatory Committee of 
the Proposed Diplomatic Conference (December 1966) on Certain 
Copyright and Neighboring Rights Questions, Proposal of the United 
States of America on Sui Generis Protection of Databases, CRNR/PM/7 
(May 20, 1996)

In The United States District Court For The Southern District of 
New York

    Matthew Bender & Co., Inc., Plaintiff, v. West Publishing 
Company, Defendant. 94 Civ. 0589 (JSM)

MEMORANDUM OF UNITED STATES OF AMERICA AS AMICUS CURIAE IN SUPPORT OF 
THE PROPOSITION THAT BENDER'S STAR PAGINATION TO WEST'S NATIONAL 
REPORTER SYSTEM DOES NOT INFRINGE ANY COPYRIGHT INTEREST WEST MAY HAVE 
IN THE ARRANGEMENT OF THE NATIONAL REPORTER SYSTEM VOLUMES

    The United States submits this Memorandum to express its view that 
Bender's star pagination to West's National Reporter System does not 
infringe any copyright interest West may have in the arrangement of the 
National Reporter System volumes. We believe that the Court will be 
able to reach this conclusion without deciding disputed issues of fact 
and that the conclusion will permit the Court to rule for Bender on the 
critical issue in the parties' motions for summary judgment. This 
Memorandum, however, was prepared before the parties served their 
motions and without access to those portions of the summary judgment 
record under protective order.

INTEREST OF THE UNITED STATES

    The United States has a substantial interest in the resolution of 
the issue discussed in this Memorandum. It has numerous 
responsibilities related to the proper administration of the 
intellectual property laws and to advancement of the public interest. 
The standards for copyright protection embody a balance struck between 
protecting private ownership of expression as an incentive for 
creativity and enabling the free use of basic building blocks for 
future creativity. See Twentieth Century Music Corp. v. Aiken, 422 U.S. 
151, 156 (1975). The United States therefore has an interest in 
properly maintaining the ``delicate equilibrium,'' Computer Associates 
International v. Altai, Inc., 982 F.2d 693, 696 (2d Cir. 1992), 
Congress established through the copyright law.
    The interest of the United States in ensuring the proper 
preservation of that balance also reflects the fact that it has primary 
responsibility for enforcing the antitrust laws, which establish a 
national policy favoring economic competition as a means to advance the 
public interest. Moreover, the United States is a substantial purchaser 
of legal research materials of the kind at issue in this case.
    Finally, the United States has recently taken actions relating to 
the issue discussed. On June 19, 1996, the United States, together with 
seven states, filed an antitrust suit challenging the acquisition of 
West Publishing Co. by The Thomson Corp., together with a proposed 
settlement of that suit. Part of that settlement requires Thomson to 
license to other law publishers the right to star paginate to West's 
National Reporter System. United States v. The Thomson Corp., No. 96-
1415 (D.D.C. filed June 19, 1996), Proposed Final Judgment, 61 Fed. 
Reg. 35250, 35254 (July 5, 1996). In announcing the settlement, the 
U.S. Department of Justice stated:

    Today's settlement, with its open licensing requirement does not 
suggest * * * that the Department believes a license is required for 
use of such pagination. The Department expressly reserves the right 
to assert its views concerning the extent, validity, or significance 
of any intellectual property right claimed by the companies [West 
and Thomson]. The Department also said that the parties agree that 
the settlement shall have no impact whatsoever on any adjudication 
concerning such matters.

U.S. Dept. of Justice, Press Release No. 96-287, at 3-4, 1996 WL 337211 
(DOJ) *2 (June 19, 1996). This Memorandum asserts those views.

STATEMENT

    1. West Publishing Company (``West'') publishes the well-known 
National Reporter System, which includes case reports of federal and 
state courts in the United States. In particular, it is ``the only 
entity to publish decisions of the United States Courts of Appeals and 
United States District Courts in comprehensive book form,'' Matthew 
Bender & Company v. West Publishing Co., 1995 WL 702389 at *1 
(S.D.N.Y.) (``Bender I''), in the familiar Federal Reporter and Federal 
Supplement series and other series. It also ``publishes the opinions of 
New York state courts,'' id., in several series of volumes. West claims 
copyright in these volumes.
    Matthew Bender & Company (``Bender''), another publisher of various 
legal materials, has prepared for publication in Compact Disk-Read Only 
Memory (CD-ROM) format a work (the ``New York product'') which 
includes, among other things, the text of opinions of the United States 
Court of Appeals for the Second Circuit, four United States district 
courts, and various New York state courts, all for a number of recent 
years.\1\ Bender has inserted into the text of some of the opinions 
appearing in its New York product--those also published in West's 
volumes--information about the places in West's volumes where the text 
may also be found. Bender provides the West volume and page number 
where the beginning of each such case may be found; it also marks with 
West page numbers the places in its text where page breaks occur in 
West's publication of these opinions. In other words, Bender has star-
paginated to West's volumes. Bender II at *3 & n.2.
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    \1\ Although West contends that a different Bender product, the 
``Texas product,'' contains ``textual additions'' copied from West's 
volumes, Matthew Bender & Company v. West Publishing Co., 1996 WL 
223917 at *7 (S.D.N.Y.) (``Bender II''), it makes no such claims 
regarding the New York product.
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    2. Bender sued West for a declaratory judgment that ``West does not 
possess a federal statutory copyright in the pagination in West's 
federal reporters or West's New York reporters,'' and that ``Bender 
does not and will not infringe any copyright of West's by its current 
and intended copying of the pagination from West's federal reporters 
and West's New York reporters.'' Second Supplemental Complaint 9. West 
moved to dismiss for lack of an actual controversy between the parties, 
and this Court denied that motion on May 2, 1996. The parties agreed to 
serve each other with motions for summary judgment on August 5, 1996.
    West has contended that the pagination of its volumes reflects the 
arrangement of cases in those volumes, that the arrangement is 
protected by West's copyright, and that therefore star pagination to 
West's volumes infringes West's copyrights. See, e.g., Oasis Publishing 
Co. v. West Publishing Co., 924 F. Supp. 918, 922 (D. Minn. 1996), 
appeal docketed, No. 96-2887 (8th Cir. July 19, 1996). These 
contentions lie at the core of this case.

ARGUMENT

    Bender's star pagination does not infringe West's copyright 
interest in the arrangement of cases within the National Reporter 
System volumes. To reach that conclusion, this Court need not determine 
whether that arrangement rises to the level of originality necessary 
for copyright protection. Even supposing the necessary level of

[[Page 53424]]

originality in West's arrangement, Bender does not infringe unless it 
copies that which is protected. And only a discredited reading of 
copyright law suggests that Bender copied West's arrangement of cases.

I. The Copyright on a Compilation Is Thin, Protecting Only Those 
Components of the Work That Are Original to the Author and Only Against 
Copying of Those Components

    The Supreme Court has made clear that copyright protection for 
compilations like West's is thin, far thinner than some courts had 
previously assumed. Even if the arrangement of West's volumes is 
protected by copyright, that protection extends no further than West's 
original contributions.
    In Feist Publications, Inc. v. Rural Telephone Service Co., 499 
U.S. 340 (1990), which concerned copying from a telephone directory, 
the Court addressed two fundamental tensions in copyright law. One is 
between the principle that facts are not protected by copyright and the 
principle that compilation of facts \2\ generally are protected. Id. at 
344-45.\3\ The other is between the means of ``assur[ing] authors the 
right to their original expression'' and the end of ``encourag[ing] 
others to build freely upon the ideas and information conveyed by a 
work.'' Id. at 349-50. The Court resolved those two tensions by 
emphasizing that ``the copyright in a factual compilation is thin.'' 
The facts themselves are not protected because they are not the product 
of an act of authorship. Id. at 349.
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    \2\ A compilation is defined as ``a work formed by the 
collection and assembling of preexisting materials or of data that 
are selected, coordinated, or arranged in such a way that the 
resulting work as a whole constitutes an original work of 
authorship.'' 17 U.S.C. 101.
    \3\ The Copyright Act provides that ``[t]he copyright in a 
compilation * * * extends only to the material contributed by the 
author of such work, as distinguished from the preexisting material 
employed in the work, and does not imply any exclusive right in the 
preexisting material. The copyright in such work is independent of, 
and does not affect or enlarge the scope, duration, ownership, or 
subsistence of, any copyright protection in the preexisting 
material.'' 17 U.S.C. 103(b).
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    The overriding principle is that ``copyright protection may extend 
only to those components of a work that are original to the author,'' 
id. at 348, where the concept of originality encompasses both 
independent creation and ``a modicum of creativity.'' Id. at 346. If 
the words expressing facts are original, they are protected; another 
author may copy the facts, but not the precise words. Id. at 348. But 
if ``the facts speak for themselves,'' protectible expression exists, 
if at all, only in ``the manner in which the compiler has selected and 
arranged the facts,'' and then only the original selection and 
arrangement are protected. Id. at 349. Because such a copyright is 
thin, copying from the copyrighted work is not infringement ``so long 
as the competing work does not feature the same selection and 
arrangement.'' Ibid.
    This holding has economic bite. The value of a factual compilation 
may lie less in the compiler's selection and arrangement of the facts 
than in the industriousness required to compile them, and the thinness 
of the copyright may permit others to appropriate that value. As the 
Court observed, while, at first blush, it ``may seem unfair,'' ibid., 
to permit that appropriation, ``[t]his result is neither unfair nor 
unfortunate. It is the means by which copyright advances the progress 
of science and art.'' Id. at 350.\4\
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    \4\ Copyright is not the only conceivable legal regime for 
protecting the fruits of industrious collection. The Delegation of 
the United States of America recently proposed to the World 
Intellectual Property Organization an international treaty that 
would provide to the ``maker'' of certain databases the exclusive 
right to extract all or a substantial part of the contents, without 
regard to copyrightability. World Intellectual Property 
Organization, Preparatory Committee of the Proposed Diplomatic 
Conference (December 1966) on Certain Copyright and Neighboring 
Rights Questions, Proposal of the United States of America on Sui 
Generis Protection of Databases, CRNR/PM/7 (May 20, 1996). 
Legislation providing such protection has been introduced in 
Congress. See H.R. 3531, 104th Cong., 2d Sess. (1996). The Supreme 
Court long ago held that the common law of unfair competition or 
misappropriation protected uncopyrighted news reports. International 
News Service v. Associated Press, 248 U.S. 215, 239-40 (1918), 
although the preemption provision of the Copyright Act, 17 U.S.C. 
301, may limit such protection to the case of systematic 
appropriation of ``hot'' news, Financial Information, Inc. v. 
Moody's Investors Service, Inc., 808 F.2d 204, 208-09 (2d Cir. 
1986), cert. denied, 484 U.S. 820 (1987). Trade secret law may also 
provide some protection in appropriate circumstances. See Kewanee 
Oil Co. v. Bicron Corp., 416 U.S. 470 (1974).
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    Feist repudiated a body of case law that had used the so-called 
``sweat-of-the-brow'' theory to provide broad copyright protection for 
factual compilations, thus protecting the fruits of mere industrious 
collection. The Court specifically rejected Leon v. Pacific Telephone & 
Telegraph Co., 91 F.2d 484 (9th Cir. 1937), and Jeweler's Circular 
Publishing Co. v. Keystone Publishing Co., 281 F. 83 (2d Cir.), cert. 
denied, 259 U.S. 581 (1922), precisely because these cases `'extended 
copyright protection in a compilation beyond selection and 
arrangement--the compiler's original contributions--to the facts 
themselves.'' 499 U.S. at 352-53.\5\
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    \5\ Although the Court specifically rejected a 1922 opinion of 
the Second Circuit, it also noted that the Second Circuit had since 
``fully repudiated the reasoning of that decision.'' 499 U.S. at 
360, citing Financial Information, Inc., v. Moody's Investors 
Service, Inc., 808 F.2d 204, 207 (2d Cir. 1986), cert. denied, 484 
U.S. 820 (1987); Financial Information, Inc. v. Moody's Investors 
Service, Inc., 751 F.2d 501, 510 (2d Cir. 1984) (Newman, J., 
concurring); and Hoehling v. Universal City Studios, Inc., 618 F.2d 
972, 979 (2d Cir.), cert. denied, 449 U.S. 841 (1980).
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    Feist also addressed whether the alphabetical arrangement of a 
telephone book involved the ``quantum of creativity'' necessary for 
copyright protection. 499 U.S. at 363-64. It therefore speaks to 
whether West's arrangement of cases exhibits the necessary quantum of 
creativity to permit copyright protection. But it is not necessary to 
resolve that question to decided this case. It is enough that Feist 
makes clear that even if West's arrangement is protected by copyright, 
the protection resulting form that creativity does not extend beyond 
arrangement to protect other components of a work.

II. The Arrangement of Bender's Compilation of Cases Is Not A Copy Of 
The Arrangement Of West's Compilation Of Cases

    No one seriously contends that Bender's CD-ROMs actually ``feature 
the same . . . arrangement,'' Feist, 499 U.S. at 349, of cases as 
West's National Report System, even in the limited sense of putting one 
case before the other in a pattern identical, or even notably similar, 
to the pattern found in West's volumes, let alone in a sense 
encompassing the arrangement of text on pages within each case.\6\ This 
is true

[[Page 53425]]

whether ``arrangement'' refers to the physical ordering of electronic 
bits of information on Bender's CD-ROMs, to the order in which the 
Bender computer software presents cases to the user, or to any other 
concept of ``arrangement.'' Indeed, it is hard to see how there could 
be any such contention.
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    \6\ In that respect, this case is unlike Callahan v. Myers, 128 
U.S. 617, 660-61 (1888), where the infringing volumes of case 
reports substantially duplicated the paging of the infringed 
volumes. Cf. Banks Law Publishing Co. v. Lawyer's Co-operative 
Publishing Co., 169 F. 386 (2d Cir. 1909) (implying same ordering of 
cases but different pagination; star pagination used in allegedly 
infringing work; held, no infringement), appeal dismissed, 223 U.S. 
738 (1911). We note that the Callahan Court, following the lower 
court, did not treat duplication of the paging as an independent 
basis for finding infringement, apparently on the ground that 
arranging and paginating the cases involved inconsiderable labor and 
was not worthy of protection in and of itself. 128 U.S. at 662. The 
Eighth Circuit has read Banks as turning on the official status of 
the reporter whose works were copied. West Publishing Co. v. Mead 
Data Central, Inc., 799 F.2d 1219, 1225 (8th Cir. 1986) (``Mead''), 
cert. denied, 479 U.S. 1070 (1987). That reading has been strongly 
criticized, id. at 1245-47 (Oliver, J., concurring in part and 
dissenting in part); L. Ray Patterson & Craig Joyce, Monopolizing 
the Law: The Scope of Copyright Protection for Law Reports and 
Statutory Compilations, 36 UCLA L. Rev. 719, 740-49 (1989), and a 
post-Banks case in the Second Circuit casts doubt on the Eighth 
Circuit's reading, Eggers v. Sun Sales Corp., 263 F. 373, 375 (2d 
Cir. 1920) (copying from plaintiff's publication of uncopyrightable 
official report suggested by identity of pagination in defendant's 
publication, ``but legally that is not of sufficient importance to 
constitute infringement of copyright,'' citing Banks), but our 
argument does not turn on the correct reading of Banks.
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    Courts routinely analyze whether an arrangement protected by 
copyright has been impermissibly copied by looking at the two works and 
comparing the ordering of material in the accused work with the 
ordering of material in the allegedly infringed compilation. Seem, 
e.g., Lipton v. The Nature Co., 71 F.3d 464, 470, 472 (2d Cir. 1995) 
(plaintiff's arrangement of terms of venery protectible; defendant's 
arrangement of 72 of these terms is ``so strikingly similar . . . as to 
preclude an inference of independent creation'' when 24 of first 25 
terms are listed in same order, and in four other places four or more 
terms appear in the same order); Schiller & Schmidt, Inc. v. Nordisco 
Corp., 969 F.2d 410, 414 (7th Cir. 1992) (office supply catalog not 
infringed as compilation when plaintiff did not contend that defendant 
copied ``the order of products or other typical features of a 
compilation''); Key Publications, Inc. v. Chinatown Today Publishing 
Enterprises, Inc., 945 F.2d 509, 515, (2d Cir. 1991) (no infringement 
when arrangement of categories in business directory is protectible, 
but facial examination reveals great dissimilarity between arrangement 
in copyrighted directory and in allegedly infringing directory); Worth 
v. Selchow & Righter Co., 827 F.2d 569, 573 (9th Cir. 1987) 
(alphabetical arrangement of factual entries in trivia encyclopedia not 
copied when trivia game organizes factual entries by subject matter and 
by random arrangement on game card).
    Infringement does not require exact identity of arrangement, but 
only substantial similarity between the protectible components of the 
copyrighted work and the corresponding components of the allegedly 
infringing work. Key Publications, 945 F.2d at 514. Nevertheless, a 
comparison may show some similarity of arrangement without suggesting 
copying. Some similarity of arrangement may result not from copying, 
but instead from common influences. Thus, for example, if Bender 
arranges cases in strict chronological order, while West's arrangement 
relies in part on chronology, there will be some similarity of 
arrangement. But that level of similarity does not ``preclude an 
inference of independent creation,'' Lipton, 72 F. 3d at 472, by Bender 
of its arrangement of cases, or even suggest that Bender has copied 
West's arrangement of cases, for it would suggest only the common 
influence of chronology.
    A comparison of Bender's New York product and West's volumes in 
this case should be enough to decide the question of infringement of 
arrangement in Bender's favor. Our examination of Bender's product did 
not leave us confident that we understood the physical arrangement of 
the cases on the CD-ROM itself, unobservable by the naked eye. However, 
the computer program that allows the user to search for and read these 
cases did not present them to us in an order that closely matched the 
West ordering of cases. Thus, the Bender ``table of contents'' for the 
decisions of the United States Court of Appeals for the Second Circuit 
appeared to present all those decisions in strict chronological order 
(with the order of cases decided the same day following no principle we 
could discern). West can hardly tell the Court that it simply arranges 
cases chronologically. West has only recently explained to another 
federal district court its extensive departures from a chronological 
order, thus persuading that court that the arrangement is sufficiently 
creative to merit copyright protection. See Oasis, 924 F. Supp. at 
924.\7\ Some cases also in West's volumes appeared in the Bender table 
of contents in the same order as they appear in West's volumes 
(although generally separated by other cases in the Bender table of 
contents), while others appeared in an order that differed from West's. 
The Bender and West arrangements are clearly different. Nothing 
suggests that Bender's arrangement is a copy of West's arrangement.
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    \7\ As explained in Oasis, 924 F. Supp. at 924, West's 
arrangement of Florida cases in the Southern Reporter in general 
first separates cases by court level, then places the ``fully 
headnoted opinions and jacketed memoranda'' (arranged 
chronologically), before ``sheet memoranda,'' which in turn precede 
``table dispositions'' (arranged alphabetically); West also makes 
exceptions to these general principles. Purely chronological 
ordering for a single court level would not separate by type of 
disposition, would not arrange some dispositions alphabetically, and 
would not make exceptions.
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III. Bender's Star Pagination May Describe, But It Does Not Copy, 
West's Arrangement of Cases

    West relies on West Publishing Co. v. Mead Data Central, Inc., 799 
F.2d 1219 (8th Cir. 1986) (``Mead''), cert. denied, 479 U.S. 1070 
(1987), in order to argue that Star pagination impermissibly copies 
West's arrangements despite clearly differing arrangement in the 
allegedly infringing work. In Mead, a divided panel of the Eight 
Circuit, ruling before Feist, concluded that a product that Star 
paginated to West's volumes impermissibly copied West's arrangement of 
cases. In effect, Mead holds that Star pagination, without more, is 
sufficient copying of the arrangement to infringe.\8\ West had alleged 
that ``the LEXIS Star Pagination Feature is an appropriation of West's 
comprehensive arrangement of case reports in violation of the Copyright 
Act of 1976.'' 799 F.2d at 1222. The district court granted a 
preliminary injunction and the Eight Circuit affirmed.
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    \8\ In the recent Oasis decision, the district court in 
Minnesota followed the court of appeals for its circuit. 924 F. 
Supp. at 925-26.
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    Mead rests on the discredited ``sweat-of-the-brow'' theory of 
compilation copyright and cannot be reconciled with Feist. As we show 
below, to follow the Mead analysis is to eviscerate Feist, with 
substantial, and undesirable consequences for the progress of science 
and art in the modern technological era. This Circuit has not followed 
Mead, and this Court should not do so now.
    The Mead district court recognized that the arrangement of cases in 
the Lexis database differed significantly from the West arrangement. 
Faced with the argument that the Lexis ``star pagination will not 
infringe West's arrangement because its random generated arrangement is 
entirely different from West's arrangement * * * [and] star pagination 
will not bring the arrangements closer together,'' West Publishing Co. 
v. Mead Data Central, Inc., 616 F. Supp. 1571, 1579-80 (D. Minn. 1985), 
aff'd, 799 F.2d 1219 (8th Cir. 1986), cert. denied, 479 U.S. 1070 
(1987), the district court held that ``for infringement purposes, 
[Mead] need not physically arrange it's [sic] opinions within its 
computer bank in order to reproduce West's protected arrangements.'' 
616 F. Supp. at 1580. That is, it did not matter that Mead's work did 
not ``feature the same * * * arrangement,'' Feist, 499 U.S. at 349, as 
West's. As support for this pre-Feist holding, the court relied (616 F. 
Supp. at 1580) on Rand McNally & Co. v. Fleet Management Systems, Inc., 
600 F. Supp. 933, 941 (N.D. Ill. 1984): `` `[D]atabases are simply 
automated compilations--collections of information capable of being 
retrieved in various forms by an appropriate search program[.] * * * 
[I]t

[[Page 53426]]

us often senseless to seek in them a specific fixed arrangement of 
data.' '' \9\
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    \9\ Rand McNally quoted those words from Professor Denicola. 
Rand McNally also supported its denigration of arrangement as the 
basis of protection for factual compilation by citing National 
Business Lists v. Dun & Bradstreet, Inc., 552 F. Supp 89 (N.D. Ill. 
1982), which expresses the view that because computers store 
information ``without arrangement * * * [,] an emphasis upon 
arrangement and form in compilation protection becomes even more 
meaningless than in the past.'' 552 F. Supp. at 97.
    If it were true that data in an electronic database necessarily 
lacked arrangement, it would seem to follow that an electronic 
database simply could not infringe the copyright-protected interest 
in the arrangement of a compilation. Under Feist, the impossibility 
of copying the arrangement does not allow one to prove infringement 
without proof of copying. We doubt that it is true, however, since 
data lacking any arrangement at all would be difficult to use.
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    Rand McNally, however, rests entirely on the theory Feist rejected: 
``the basis for compilation protection is the protection of the 
compiler's efforts in collecting the data.'' 600 F. Supp. at 941. While 
the Feist Court thought selection and arrangement were the only 
protectible elements in the typical factual compilation, the Rand 
McNally court saw little significance to arrangement, relying on 
Professor Denicola: `` `The creativity or effort that engages the 
machinery of copyright, the effort that elicits judicial concern with 
unjust enrichment and disincentive, lies not in the arranging, but in 
the compiling. * * * The arrangement formulation * * * is dangerously 
limited. At face value the rationale indicates that the entire 
substance of a compilation can be pirated as long as the arrangement of 
data is not substantially copied.' '' 600 F. Supp. at 941 (emphasis 
added) (quoting Robert C. Denicola, Copyright in Collections of Facts: 
A Theory for the Protection of Nonfiction Literary Works., 81 Column L. 
Rev. 516, 528 (1981)). However limited, the ``arrangement'' formulation 
is the Supreme Court's. Specifically referring to the very same article 
by Professor Denicola, the Feist Court wrote, ``[e]ven those scholars 
who believe that `industrious collection' should be rewarded seem to 
recognize that this is beyond the scope of existing copyright law.'' 
499 U.S. at 360.
    Nevertheless recognizing that West's case rested on the copying of 
the arrangement of cases, the Mead district court found, without 
further explanation, ``that [Mead] will reproduce West's copyrighted 
arrangement by systematically inserting the pagination of West's 
reporters into the LEXIS database. LEXIS users will have full computer 
access to West's copyrighted arrangement.'' 616 F. Supp. at 1580. One 
must look elsewhere for the reasons why the fact that Mead 
systematically inserted the pagination means that Mead reproduced 
West's arrangement.
    On appeal, the Eight Circuit, which never questioned the district 
court's recognition that the Lexis arrangement of cases different 
significantly from the West arrangement, attempted to explain how Lexis 
could copy West's arrangement while not arranging its cases as West 
did. The court began by asserting that Mead's proposed star pagination 
would infringe West's copyright in the arrangement because, in 
combination with another feature of Lexis, it would permit Lexis users 
``to view the arrangement of cases in every volume of West's National 
Reporter System,'' 799 F.2d at 1227, even if users were not likely to 
do so.\10\ But the court added that it would find infringement even 
absent this capability. It is enough, the Court explained, that star 
pagination communicates to users ``the location in West's arrangement 
of specific portions of text,'' with the result that ``consumers would 
no longer need to purchase West's reporters to get every aspect of 
West's arrangement. Since knowledge of the location of opinions and 
parts of opinions within West's arrangement is a large part of the 
reason one would purchase West's volumes, the LEXIS star pagination 
feature would adversely affect West's market position.'' Id. at 1228.
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    \10\ Under appropriate circumstances, users' actions might lead 
to vicarious liability for infringement. But vicarious liability 
must rest either on the alleged vicarious infringer's right to 
control the conduct of the individual who actually performs the 
infringement, Sony Corp.  v. Universal City Studios, Inc., 464 U.S. 
417, 437 (1984), or on an absence of substantial noninfringing uses, 
id. at 442. Neither requisite has been, or could be, established 
with respect to either Lexis or the Bender CD-ROMs.
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    Missing in the court's analysis is any explanation of how 
communicating location--that is, describing West's arrangement--amounts 
to copying West's arrangement. The court leapt directly from the fact 
of the communication to the economic consequence of that communication. 
Thus the vice of unauthorized star pagination, in the Eight Circuit's 
eyes, is made clear. The vice is not that original expression is 
copied; rather, it is that unauthorized star pagination permits unfair 
appropriation of the fruits of industrious collection.\11\
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    \11\ Mead's protection of industrious collection is underscored 
by the court's response to the argument that star pagination does 
not infringe because citations to West page numbers are merely 
statements of fact. In rejecting the argument, the Court said, ``The 
names, addresses, and phone numbers in a telephone directory are 
`facts'; though isolated use of these facts is not copyright 
infringement, copying each and every listing is an infringement,'' 
799 F.2d at 1228, citing Hutchinson Telephone Co. v. Fronteer 
Directory Co., 770 F.2d 128 (8th Cir. 1985). Hutchinson adopts 
precisely the view of copyright rejected in Feist; it even relies on 
Leon and Jeweler's Circular, 770 F.2d at 130-31, two cases 
specifically rejected in Feist. See page 6 supra.
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    Feist, however, makes clear that, as a matter of copyright law, 
this appropriation is not unfair, and that this test is not the proper 
test of infringement. See page 6 supra. Assuming the copying of 
protected arrangement, the resulting impact on West's market position 
would properly be considered in addressing a fair use defense to 
infringement. See 17 U.S.C. 107(4) (fair use analysis to consider ``the 
effect of the use upon the potential market for or value of the 
copyrighted work''). But under Feist it plays no role in a 
determination of whether protected arrangement has been copied.\12\
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    \12\ In its infringement analysis, the Eight Circuit quoted the 
Senate Report on the Copyright Act of 1976, as quoted in Harper & 
Row Publishers, Inc. v. Nation Enterprises, 471 U.S. 539, 568 
(1985): `` `[A] use that supplants any part of the normal market for 
a copyrighted work would ordinarily be considered an infringement.' 
'' 799 F.2d at 1228. Harper & Row, however, involved admittedly 
verbatim copying of protected expression, 471 U.S. at 548-49, and 
the issue was fair use.
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    There remains the fact that star pagination communicates to users 
``the location in West's arrangement of specific portions of text.'' 
799 F.2d at 1228. A compilation copyright, however, protects original 
components of the compilation against copying; it does not protect even 
original components against description. Many ways of describing West's 
volumes and their content other than star pagination would also 
communicate such information. Essentially any index, any topical or 
other table of contents, any concordance, or any other finding aid 
would do so.\13\ But surely that does not mean that all such finding 
aids would copy West's arrangement, even though they might be said to 
describe that arrangement. An index is only an index, not a copy of the 
book it indexes.\14\
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    \13\ We realize, of course, that the economic significance of 
these finding aids differs substantially from the economic 
significance of star pagination of a collection of case reports. The 
pure finding aids no doubt do not reduce market demand for West's 
products. But as we have just observed, such marketplace factors go 
to fair use, not whether there is copying.
    \14\ Few cases address infringement by indexing. In New York 
Times Co. v. Roxbury Data Interface, Inc., 434 F. Supp. 217 (D.N.J. 
1977), the district court denied a preliminary injunction against 
publication of a personal name index to the New York Times Index. 
Although the court determined the likelihood of success in light of 
fair use factors, it noted that the ``personal name index differs 
substantially from the Times Index, in form, arrangement, and 
function,'' id. at 226 (emphasis added), even though it communicated 
the locations in the Times Index at which particular personal names 
could be found. The court greeted with incredulity the plaintiff's 
argument ``that a copyrighted work cannot be indexed without 
permission of the holders of the copyright to the original work.'' 
Id. at 224-25. See also Kipling v. G.P. Putnam's Sons, 120 F 631, 
635 (2d Cir. 1903) (defendants ``were at liberty to make and publish 
an index'' of copyrighted material).

---------------------------------------------------------------------------

[[Page 53427]]

    Star pagination thus does not copy West's arrangement. To find 
infringement despite the absence of copying of original expression, and 
thus to protect its compilation from a competitor's description, West 
must rely on some other principle. The alternative principle on which 
West would rely, however, cannot be reconciled with Feist and if 
adopted would eviscerate Feist. Feist's thin copyright leaves facts 
unprotected while protecting only creative selection and arrangement. 
West's principle, in contrast, effectively protects facts. It has 
substantial implications for circumstances far beyond those of this 
case.
    In essence, West's principle is this: Where the arrangement of a 
factual compilation is protected by copyright even though the facts are 
not, it is infringement for another to publish the facts if those facts 
include sufficient information to permit the protected arrangement to 
be recreated, even though the allegedly infringing publication does not 
itself recreate the protected arrangement. Indeed, if the ordering of 
the first compilation were based on the facts in that compilation, 
under West's principle it would seem to be infringement to obtain those 
facts from another source and publish them in an original order.\15\ To 
escape a claim that it copied the first compilation's arrangement, the 
second compilation would have to leave out facts found in the first 
compilation.\16\
---------------------------------------------------------------------------

    \15\ Some compilations are arranged in orders not based on the 
data found in the compilation. In Lipton, for example, the 
compilation was arranged according to the compiler's esthetic 
judgments. 71 F.3d at 470. The copyright on a volume of 
Shakespeare's sonnets, all in the public domain, arranged in order 
of the editor's judgment of esthetic merit would, we assume, protect 
that original arrangement. Another editor could, without infringing 
the copyright, copy the sonnets from that volume and publish them in 
a different arrangement. But as we understand West's principle, it 
would be infringement were the editor of the second volume to 
include an appendix telling the reader the order in which the 
sonnets appear in the first volume.
    \16\ Even under Feist, there may be infringement if a creative 
selection of facts is copied. We do not understand the star 
pagination question here to raise an issue of protected selection, 
so we simplify the analysis by abstracting from issues of selection.
---------------------------------------------------------------------------

    A hypothetical example may clarify the implications of West's 
principle. Suppose a firm obtains from the 1990 Census of the United 
States data concerning every county in the United States and publishes 
a compilation of those data, listing the counties in descending order 
of one of the included data elements, the proportion of the population 
consisting of males of ages 18 through 40. Suppose further that this 
arrangement, which may meet the Feist test of originality and which may 
interest those marketing products to adult males, is protected by the 
firm's copyright on the compilation. Under Feist, another firm may copy 
all the data from the first firm's compilation, while arranging its 
compilation alphabetically by state and county. It may do so because 
even though the arrangement of the first compilation is protected by 
copyright, the data themselves are not, and the second compilation does 
not ``feature the same * * * arrangement,'' Feist, 499 U.S. at 349, as 
the first. But the second compilation contains all the information a 
user needs to recreate the arrangement of the first, and so under 
West's principle, creation of the second compilation would infringe the 
copyright on the first.\17\ West's principle therefore protects the 
facts themselves in many circumstances where Feist would leave them 
unprotected.
---------------------------------------------------------------------------

    \17\ To avoid infringing under West's principle, the publisher 
of the second compilation would have to omit the data concerning the 
proportion of the population consisting of males of ages 18 through 
40, even though Feist would allow copying those data. And there 
would be no infringement even under West's principle if the first 
compilation arranged the counties in order of the first publisher's 
assessment of the moral worthiness of the county's population, and 
the second publisher listed the counties in a different order.
---------------------------------------------------------------------------

    This case, like Mead before it, arose primarily because new 
technologies, new means of managing information, became available, a 
frequent event in the information age. We have seen, in on-line 
computer searchable databases and in CD-ROM products, new ways of 
working with the raw materials of legal research--case reports, 
statutes, and other materials that once appeared only in print form. 
Neither we nor this Court can predict what new technological 
developments will next year or in the next decade further revolutionize 
the practice of law and make the substance of law more readily 
available to all. By making clear the limited scope of copyright 
protection for factual compilations, Feist cleared the way for these 
creative developments. It should be followed here.

CONCLUSION

    Star pagination to West's volumes does not in itself infringe any 
copyright interest West may have. The Court should therefore rule for 
Bender.

    Respectfully submitted.

Anne K. Bingaman,
Assistant Attorney General.

Joel I. Klein,
Deputy Assistant Attorney General.

Catherine G. O'Sullivan,
David Seidman,
Attorneys.

U.S. Department of Justice, 10th & Pennsylvania Ave., NW., 
Washington, DC 20530, (202) 514-4510.

Ralph T. Giordano (RG0114),

Attorney.

U.S. Department of Justice, 29 Federal Plaza, Room 3630, New York, 
NY 10278-0140, (212) 264-0390.

    This page could not be reprinted in the Federal Register, however, 
they may be inspected in Suite 215, U.S. Department of Justice, Legal 
Procedures Unit, 325 7th St., N.W., Washington, D.C. at (202) 514-2481 
and at the Office of the Clerk of the United States District Court for 
the District of Columbia.

Civic Research Institute, Inc.

July 31, 1996.

Certification

    I, Arthur H. Rosenfeld, upon my oath depose and state:
    1. I am the President of Civic Research Institute, Inc., 
(hereinafter referred to as ``CRI'') a publisher of legal materials, 
located at 4490 U.S. Rout 27, PO Box 585, Kingston, NJ 08528.
    2. CRI published professional reference materials for lawyers 
and others including the following:
    Correctional Law Reporter (``CLR''), a print on paper, bi-
monthly report on legal developments affecting prisons and jails. It 
includes reports on new legislation and legislative trends and 
recent court cases, on the federal level and in all of the states. 
An annual subscription is $125. It is used by lawyers and other 
professionals working in the criminal justice system and in private 
practice.
    Community Corrections Report on Law and Corrections Practice, a 
print on paper bi-monthly that covers programs and legal 
developments, as described in CLR above, affecting community 
corrections. Price, $125 a year. It is used by lawyers and other 
professionals working in community corrections and by lawyers in 
private practice.
    Juvenile Justice Update, same format, frequency and price as 
above publications. It covers legal developments on all levels as 
they do and programs involving juvenile crime and delinquency. It is 
used by lawyers and other professionals working in the system and by 
lawyers in private practice.
    3. If CRI was able to obtain federal judicial opinions from 
federal appellate courts at a reasonable price or for the cost of 
transmission, we would publish compilations of the above 
publications and others that would contain the full text of the 
opinions referred to in those publications. These new publications 
would be issued in an electronic format, such as CD ROM, and would 
be a very useful service for our present subscribers and others in 
the market we now serve.

[[Page 53428]]

    4. Our legal system depends on full and equal access to the law, 
to all federal and state statutes, past and present, and to all 
federal and state appellate court opinions, past and present, and it 
is inconceivable to me that any private company can be allowed to 
control access to these materials and charge whatever they choose to 
charge for access when they are willing to grant it. It is contrary 
to and undermines our system. Furthermore, even if there were some 
arrangements that could be made that would make it proper for one 
company to maintain such materials, it seems to me unwise and 
against our national interests to allow such company to be a foreign 
company subject to the control of another country.
    I understand that if any statements made by me are knowingly 
false, I am subject to punishment.
Arthur H. Rosenfeld,
President.

InfoSynthesis, Inc.

CERTIFICATE

    I. Clayton R. Smalley, certify that I am President and Executive 
Editor of InfoSynthesis, Inc., 10301 University Ave., N.E., Ste. 
105, Minneapolis MN, 55434.
    Since March, 1994, this Company has published USSC+ CD-ROM, a 
CD-based collection of the full text of United States Supreme Court 
decisions. Presently, the disc contains complete coverage of full 
decisions by the Court from 1966 to date, together with assorted 
earlier leading cases dating back to 1793--5000+ cases comprising 
some 250 megabytes of data. The cases are searched and retrieved by 
means of Folio Views(tm) software, the latter included at no extra 
charge.
    The cost of initial purchased of USSC+ is presently $145. 
Semiannual optional cumulative supplements cost $95, and each 
expands coverage of both older and newer cases.
    Our present subscriber base is approximately 400, although we 
are confident that it could be much higher if we had the funds for 
extensive promotion.
    We have recently made the cases in our collection accessible 
over the World Wide Web (see http://usscplus.com), where they may be 
searched and retrieved by use of the Folio Views Web Server. This 
service is currently free, but a nominal fee (probably less than 
$100 per year for unlimited access) will shortly be attached.
    We have received many inquiries from customers and prospective 
customers as to what other bodies of cases and statutes are 
available. To date, we have had to respond to such inquiries that no 
other databases are offered, primarily because West Publishing 
Company, the sole present provider of printed versions of many state 
and federal reporters, claims a copyright on the inner pagination of 
its reporters. Although there has recently been word that West would 
license such pagination to others, the fees to be charged are far to 
high to be afforded by ``boutique'' electronic publishers such as 
our company.
    Because of what we conceive to be the clear superiority of the 
Folio Views platform for search and retrieval purpose, particularly 
when that platform is implemented in the manner we have developed 
for USSC+, we believe we could be a significant competitor to other 
much larger legal publishers in both the CD-ROM and World Wide Web 
marketplace, particularly in the field of judicial decisions.
    We currently obtain our information by scanning the official 
``United States Reports'' version of the Supreme Court's opinions, 
thereafter enhancing the text with the indexing, internal 
segmentation, and ``hot links'' available through Folio Views 
technology. The acquisition and editing of the underlying data is a 
very expensive, exacting, and time-consuming process.
    If the text of other bodies of federal and state judicial 
opinions were available to us in electronic form, and the copyright 
asserted by West were somehow eliminated as a barrier, we would be 
very interested in offering for sale other federal and state 
judicial decision databases, and are confident that our presence on 
those markets would (as it has in the case of the Supreme Court) 
lower the price of this information to the consumer by a factor of 
at least ten (i.e., an order of magnitude). Such price reductions 
are made possible by the recent advent of computer, CD, and internet 
technologies, which are revolutionizing legal (and other) 
publishing. The only barrier to that revolution remain the 
availability of the underlying data.

    Dated: August 6, 1996.
Clayton R. Smalley,
Pres., InfoSynthesis, Inc.

    I, Peter Wayner, certify that I am the President of NewRay Inc., 
a Maryland corporation that marketted disks filled with court 
opinions. These disks contained the electronic versions of the 
opinions of the U.S. Supreme Court supplied by the Court itself 
through the Hermes project. Unfortunately, the Court only released 
data beginning in 1990. The easy access to this data made it 
possible for me to offer the disk at a low price that was generally 
under $40.00.
    Many customers asked for a larger and more comprehensive 
collection of opinions, but I was unable to supply them because I 
did not have the funds to either scan in the past opinions or pay 
for someone who could type them in. In the end, this prevented me 
from serving the needs of the customer.
    If the Department of Justice could release the electronic 
versions of the case law that they control, I could easily produce a 
high-quality disk with many advanced searching features for a low 
price. It is silly for me to duplicate the work that was already 
done at the tax payer's expense. The customer would be forced to pay 
for the digitization twice--once in tax dollars and once by my 
corporation.
Peter Wayner,
President.
    28 August 1996

WILSON SONSINI GOODRICH & ROSATI

August 29, 1996.

via Federal Express

Craig W. Conrath, Esq.,
Chief, Merger Task Force, U.S. Department of Justice, Antitrust 
Division, 1401 H. Street, Suite 4000, N.W., Washington, D.C. 20530

Re: United States v. The Thomson Corporation and West Publishing 
Company Case No. 1:96CV01415 (U.S. District Court for the District 
of Columbia)

    Dear Mr. Conrath: On behalf of our client, Lexis-Nexis, a 
division of Reed Elsevier Inc. (``Lexis-Nexis''), we submit these 
comments concerning the Proposed Final Judgment in the above-
referenced case.\1\
---------------------------------------------------------------------------

    \1\ The economic analysis set forth herein was prepared in 
extensive consultation with Garth Saloner, Magowan Professor of 
Economics and Strategic Management, Graduate School of Business, 
Stanford University.
---------------------------------------------------------------------------

    This acquisition involves the combination of the largest 
publisher of legal research materials (West Publishing Company) with 
the second largest legal publisher (Thomson Corporation) in an 
industry that is already highly concentrated. In permitting this 
acquisition to proceed, the Department of Justice has failed to 
achieve the level of safeguards necessary to preserve competition in 
the markets identified in the Complaint. Indeed, it is almost 
certain that the Proposed Final Judgment will result in 
substantially lessened competition in these markets for legal 
materials. Consumers will pay for this reduced competition through 
increased prices, reduced choice, and reduced innovation.
    There are three principal flaws in the Proposed Final Judgment. 
First, West and Thomson are the only two companies that provide 
editorially enhanced case reporters and codes in the relevant 
product markets.\2\ Yet the Proposed Final Judgment requires West 
and Thomson only to spin off the weakest of the overlapping 
products, and even then they are spinning off what amount to nothing 
more than product fragments. There is no chance (much less a 
significant chance) that an actual or potential competitor could 
take these fragments and put together a rival set of enhanced 
products that could compete effectively with West-Thomson.
---------------------------------------------------------------------------

    \2\ The Department's Competitive Impact Statement acknowledges 
this. See 61 Fed. Reg. 35250, 35260 (``For both law reporters and 
codes, Thomson and West provide unique, enhanced primary law 
products. * * * There are no other codes or case law reporters in 
the above markets that offer this set of enhancements to 
consumers.'').
---------------------------------------------------------------------------

    Under these circumstances, the proposed acquisition never should 
have been permitted to be consummated: its likely harm to 
competition is obvious and inevitable. Even if the acquisition were 
permitted to proceed, however, the Department could have taken steps 
that would at least have ameliorated the acquisition's 
anticompetitive consequences. In particular, the Department should 
have required the divestiture of all of the essential Thomson 
materials--particularly its American Law Reports (``ALRs'') and 
American Jurisprudence 2d (``Am Jur'')--necessary for an acquiror to 
offer enhanced primary law products that can compete effectively 
with West-Thomson. By failing to do so, competition in the markets 
for enhanced case reporters and codes will

[[Page 53429]]

wither, and monopoly in these markets is the likely outcome.
    Second, the failure to require the effective divestiture of 
Auto-Cite, Thomson's electronic citator product, will have a 
substantial adverse effect in the market for comprehensive online 
services. The Department's Complaint recognizes that ``a price 
increase, reduction in quality and innovation, or loss of access'' 
to Auto-Cite would materially injure competition in the online legal 
research market, in which Lexis-Nexis provides the only significant 
competition to West. Complaint para. 60. Yet, as discussed in more 
detail below, this is precisely the outcome that the Department has 
endorsed in its Proposed Final Judgment.
    Finally, other steps taken by the Department, including its 
failure to lower the high barriers to entry that have caused such 
extreme market concentrations, will exacerbate the acquisition's 
anticompetitive effects. Each of these consequences of the Proposed 
Final Judgment is discussed immediately below.
    1. The Complaint recognizes that what distinguishes the West and 
Thomson case law reporters and codes is that they are enhanced. The 
Complaint identifies two significant features of such enhancements. 
The first is that they contain ``comprehensive written 
descriptions'' of the relevant law, which the Complaint refers to as 
``headnotes'' and ``summaries'' (for case reporters) and 
``annotations'' (for codes). See Complaint Paras.  20-21. The second 
is that ``each product also contains cross-references to relevant 
secondary law products or relevant case law in the same or other 
jurisdictions.'' Id.
    Through the combination of these summaries and cross indexes, 
West and Thomson, prior to the acquisition, each had been able to 
offer their enhanced primary law products as parts of a system. As 
the Complaint reflects, West refers to its system as the West 
National Reporter System. Thomson's system of enhancements and 
cross-references is referred to as the Total Client-Service Library 
(``TCSL''). In both instances, integration of these features into 
case reports and codes provides the means for competitively 
``enhancing'' the primary legal product.
    Thus, for example, one of the product markets identified in the 
Complaint is the provision of editorially-enhanced case reporters 
for decisions by the United States Supreme Court. The West and 
Thomson offerings in this market typify the way their products are 
enhanced and cross-referenced, In the West version of the case 
reporter, each reported Supreme Court decision begins with a series 
of summary paragraphs (``headnotes'') regarding the holding of the 
case. These headnotes are organized by an indexing system known as 
Key Numbers. The Key Number system provides the principal means for 
conducting research in West products across courts in the same 
jurisdiction (for example, federal appellate and district court 
decisions) and across jurisdictions. Through a comprehensive set of 
digests organized by Key Numbers, the headnotes are collected and 
reproduced for all of the states and for all levels of the federal 
courts.
    The Thomson system works quite differently. Prior to the 
acquisition, Thomson published enhanced codes and case reporters in 
just a small fraction of jurisdictions (for example, case reporters 
in only six states, and the Supreme Court in the federal system). A 
digest-based system therefore would have been inferior to the West 
offering, inasmuch as it would have covered only a small fraction of 
the potentially relevant case law.
    Thomson accordingly took quite a different approach to its 
enhanced products, as its Supreme Court reporter reflects. Although 
each Supreme Court decision in the Thomson reporter, like the West 
reporter, is preceded by summary paragraphs organized by subject 
matter (for example, ``Administrative Law Sec. 77''), these subject 
headings to not provide a means for cross-referencing decisions in 
other jurisdictions. Indeed, Administrative Law Sec. 77 refers to 
one subject in Thomson's Supreme Court reporter, but a different 
subject, for example, in its California case reporter.
    Instead of relying on such subject categories, the enhancements 
in Thomson's Supreme Court reporter are organized principally around 
a system of selective reporting, referred to as ``annotations.'' 
These annotations provide exhaustive coverage on selective, discrete 
subjects. Thus, for example the back portion of each Thomson Supreme 
Court reporter contains several annotations relating to subjects 
addressed recently by a decision of the Supreme Court. In addition, 
each Supreme Court decision in the volume begins (after a brief 
summary of the case) with a prominent box denominated ``Total 
Client-Service Library References.'' The box identifies other 
annotations, collected in Thomson's ALR volumes, that relate to the 
issues addressed in the opinion (as well as to other secondary 
products published by Thomson) The annotations thus serve as the 
springboard for comprehensive, cross-jurisdictional research in the 
Thomson system, in the same way that Key Numbers provide such a 
function in the West system.
    As the Complaint recognizes, West and Thomas are able to charge 
significantly more for their products because of their enhancement 
systems. Unenhanced codes and case reporters sell for 
``significantly less'' than the West and Thomson products. Complaint 
Paras. 23-24. This increased value is predicted by economic theory, 
which recognizes that users gain utility not just from the 
components but because of the way they are interconnected. For 
example, as Katz and Shapiro observed: ``Many products have little 
or no value in isolation, but generate value when combined with 
others. * * * We describe them as forming systems, which refers to 
collections of two or more components together with an interface 
that allows the components to work together.'' Michael L. Katz & 
Carl Shapiro, Systems Competition and Network Effects, J. Econ. 
Persp., Spring 1994, at 93.
    The Complaint acknowledges (and the extraordinarily high HHIs 
cited by the Department confirm) that West and Thomson provide 
virtually the only enhanced primary case reports and codes in the 
product markets identified in the Complaint. If the merger is 
allowed to go through as proposed, competition in these markets will 
be adversely affected. That is because some of the central 
enhancements of the Thomson products--most notably, the ALRs that 
are at their core--will remain under the control of West-Thomson. 
Whereas divestiture of the ALRs (together with a relatively small 
number of other Thomson publications such as Am Jur) would 
potentially have enabled competition to continue, the Proposed Final 
Judgment effectively permits West-Thomson to avoid any meaningful 
threat of competition.
    Competition will be adversely affected for two main reasons. 
First, the merged company has an obvious incentive to eliminate 
competition from whatever set of cross-references a competitor might 
try to cobble together using the fragmentary Thomson products. 
Control of important components of the Thomson system provides West-
Thomson with a ready means of doing so. For example, West-Thomson 
can foreclose access to ALR (as well as other important elements of 
the TCSL) to the purchaser of its divested assets. In so doing, 
West-Thomson can destroy the effectiveness of the competitor's use 
of the divested assets, and accordingly monopolize the market for 
enhanced primary products.\3\
---------------------------------------------------------------------------

    \3\ Under these circumstances, West-Thomson might continue to 
provide ALR and other Thomson components as part of a bundle with 
West products. It would do so, however, at monopoly prices. 
Alternatively, as a monopolist, West-Thomson might decide to save 
itself the cost of maintaining ALR. In that case, consumers would 
face not only monopoly prices but also reduced variety.
---------------------------------------------------------------------------

    Second, even if a competitor were somehow able to remain in 
competition in these markets in the short run, control over ALR and 
other Thomson references would enable West-Thomson to eliminate the 
ability of the competitor to compete effectively in the long run. 
Thus, West-Thomson could choose to maintain ALR and to continue to 
offer access, but simply raise the price so as to extract it 
monopoly rents in that way. Clearly the incentive for the merged 
company is to charge a much higher price for ALR than Thomson does 
as a stand-alone company competing with the West Key Number system. 
Here too consumers would be harmed by having to face significantly 
higher prices.\4\
---------------------------------------------------------------------------

    \4\ Lexis-Nexis believes that, as between these two 
alternatives, it is unlikely that West-Thomson will continue to 
invest in both sets of classification systems. Moreover, whether it 
integrates the two systems or simply eliminates the Thomson 
products, it is undisputed that West-Thomson will control the only 
comprehensive system of cross-references in the United States. With 
the elimination of competition at the system level, West-Thomson is 
likely to have enhanced leverage from its dominance in editorial 
classification systems into related fields of legal information 
publishing.
---------------------------------------------------------------------------

    In the example of Thomson's Supreme Court reporter, therefore, 
one alternative is that the competitor's product will amount to 
nothing but a shell of the current Thomson offering. If West-Thomson 
decides to foreclose access to its annotations altogether, what is 
currently the back portion of each Thomson reporter will have to be 
omitted, as

[[Page 53430]]

well as the annotation cross-references at the beginning of each 
case. All that will remain are summary paragraphs organized in a way 
that provides no means for researching decisions by any court but 
the Supreme Court. Moreover, even if access to these annotations is 
permitted, it will be at prices that permit West-Thomson to extract 
its monopoly rent and that will harm consumers.\5\
---------------------------------------------------------------------------

    \5\ Even for enhanced products within a single jurisdiction, the 
Department appears to have overlooked critical facts relevant to the 
question whether competition in the market will be adversely 
affected. For example, the summary paragraphs that Thomson includes 
in its California annotated code (and its California Digest) are 
reproduced from the summaries that it prepares for its California 
case reporters. The cost of developing these summaries accordingly 
can be spread out over several products.
    1The Proposed Final Judgment, however, provides for the 
divestiture only of the California code--not of the case reporter or 
digest (unless California elects to place them up for rebid). Yet 
the Department appears to have made no factual finding that the 
enhancement costs that profitably could be undertaken when allocated 
among three sets of products, will be economically viable if 
required to be undertaken separately for the California code alone.
---------------------------------------------------------------------------

    2. Additional inadequacies in the Proposed Final Judgment 
exacerbate these anticompetitive effects. First, the Complaint 
recognizes that a significant barrier to entry in providing enhanced 
legal products is the fat that ``a sophisticated editorial staff 
would be needed to create the headnotes and summaries, as well as to 
identify relevant cross-references to other sources of authority on 
issues presented in each statute or current or historical case.'' 
Complaint para.31. The Department has not identified any actual or 
potential entrant (and Lexis is not aware of any) with an editorial 
staff trained in the Thomson headnote and indexing system. Nor is 
Lexis aware of any actual or potential entrant with a trained 
editorial staff capable of processing the volume of headnotes and 
summaries required by the nine primary law products proposed to be 
divested.
    There are only two companies with trained editorial staffs of 
that size: West and Thomson. Yet the proposed decree does not 
require West-Thomson to spin off the divested products as part of a 
viable operational entity. Instead, it simply invites prospective 
purchasers to try to hire away personnel from West-Thomson. Final 
Judgment para. IV.F.\6\ The Department makes no assessment that a 
prospective purchaser is likely to succeed under these circumstances 
in assembling a ``sophisticated editorial staff'' on the requisite 
scale.
---------------------------------------------------------------------------

    \6\ Notwithstanding this provision, Thomson has required 
potential acquirors to agree, as a condition to receiving 
information needed to bid on the divested assets, that they will not 
solicit any West-Thomson employees for one year ``other than in 
response to a bona fide advertisement for employment.'' In other 
words, West-Thomson has been permitted to tie the hands of any 
potential acquiror, and even the modest proposal of Paragraph IV.F 
effectively has been nullified.
---------------------------------------------------------------------------

    Presumably the Department's silence reflects the fact that any 
such conclusion would be economically unsound. Preservation of West-
Thomson's (newfound) monopoly in editorial staff will permit it to 
extract monopoly rents. West-Thomson therefore will have a 
significantly greater financial incentive in retaining its staff 
than any potential acquiror would have in attempting to hire them 
away. At the same time, given expectations that West-Thomson will be 
the stronger (if not only) long-term provider of enhanced legal 
products, editorial staff would be unlikely to switch employers 
absent significantly greater incentives from the potential acquiror. 
There is accordingly no reason to expect that any potential acquiror 
will be able to assemble the staff needed to offer meaningful 
competition to the West-Thomson enhanced legal products.\7\
---------------------------------------------------------------------------

    \7\ Indeed, any finding that personnel could be hired in the 
requisite numbers would be plain error. In order to offer effective 
competition to West-Thomson, it would be necessary for a competitor 
to hire away not just a few individuals, but an entire editorial 
staff. For the reasons stated above, however, West-Thomson has a 
powerful economic incentive to retain its staff in order to preserve 
its monopoly. These incentives, combined with an incumbent's pre-
existing advantages (such as seniority and pension benefits) make it 
exceedingly unlikely that a competitor could offer terms that would 
secure an editorial staff of the requisite size, training and 
experience.
---------------------------------------------------------------------------

    3. The second way in which the Consent Decree exacerbates the 
proposed acquisition's anticompetitive effects is in its failure to 
require Thomson to provide continued access to, and use of, the 
portions of the Thomson system that the Department is not proposing 
for divestiture. Ironically, the Final Judgment is careful to 
preserve Thomson's continued right to use the enhancements from the 
divested products in its retained products during a transition 
period. See Final Judgment para. IV.D. Yet the Department has failed 
completely to impose a reciprocal obligation on Thomson--even though 
it is apparent, from the most cursory review of the proposed 
divested products, that cross-references to annotations and indexes 
in Thomson's retained products (ALR, AmJur, Witkin for California 
law, and so forth) are at the core of the ``enhanced'' portion of 
the proposed divested products.
    It thus appears that the Department understands the Final 
Judgment to permit West-Thomson to divest piecemeal the nine primary 
law products without permitting continued use of relevant cross-
references and annotations that are an integral part of their 
enhancements. At the same time, there is no finding by the 
Department that an acquiror can develop or maintain effective 
competition with the West-Thomson enhanced products through use of 
only those components of the Thomson system that are included in the 
divestiture. In the words of Katz and Shapiro, supra , the divested 
primary law products ``have little or no value in isolation,'' but 
rather ``generate[d] value when combined with others.'' The Proposed 
Final Judgment permits West-Thomson to retain the crucial components 
of the Thomson system to itself, while divesting only isolated 
fragments from which no rival set of enhanced products can 
effectively be developed.
    4. The failure to ensure continued system competition not only 
impairs competition in the primary law markets identified in the 
Complaint, but also in the market for comprehensive online legal 
research services. See Complaint para. 53 (identifying relevant 
product market). West's most important means of product 
differentiation in the online market is its integrated system of Key 
Numbers and headnotes. In order to compete effectively, Lexis-Nexis 
needs the ability to provide a competing system of enhancements.
    To date, it has done so through the Thomson system of 
enhancements, consisting of its Auto-Cite citation service and other 
TCSL products. For example, when a user on the Lexis-Nexis system 
wishes to check the continued viability of a particular case, Auto-
Cite provides not just the negative history of the case but also 
references to ALR and other Thomson sources. By clicking on the ALR 
reference, the user is taken immediately to the appropriate ALR 
annotation.
    The Proposed Final Judgment injures Lexis-Nexis' ability to 
compete in two ways. First, by permitting West-Thomson to keep the 
key components (indeed, most of the components) of Thomson's system 
of enhancements, the Proposed Final Judgment effectively eliminates 
Lexis-Nexis' ability to offer competition to the West enhancement 
system. As discussed above, neither Lexis-Nexis nor any other actual 
or potential competitor has any reasonable likelihood of being able 
to develop the fragments being spun off into a viable ``non-West'' 
system. The Department in fact appears to have made no assessment 
that Lexis-Nexis (or any other source available to it) will be able 
to develop an alternative system. If the Department now purports to 
have made such a finding, such a finding is factually unsupportable 
and hence plain error.
    Second, the Final Judgment impairs Lexis-Nexis' contract rights 
to Auto-Cite, thus affirmatively damaging its ability to compete. 
Under its existing contract, Lexis-Nexis has the right to use Auto-
Cite in its existing form, which includes cross-references to 
sources such as ALR. Lexis-Nexis specifically bargained for the 
right to prevent Thomson from being able to modify any of these 
existing features without its consent.
    By ``forcing'' West-Thomson to spin off its Auto-Cite license 
with Lexis-Nexis, the Department has abridged these critical 
contract rights. The acquiror of the existing Auto-Cite license 
agreement will have no ability on its own to provide such features 
(they are being retained, or course, by West-Thomson), and West-
Thomson has refused to confirm that the acquiror will be permitted 
to continue to include such features after the divestiture. These 
issues were specifically raised with West-Thomson; West-Thomson 
refused to confirm that such rights would be included in the 
divestiture; and the Department has endorsed West-Thomson's refusal. 
The Department apparently thus intends for its Final Judgment to 
strip Lexis-Nexis of these valuable contract rights (without 
compensation for the taking), with a direct and substantial adverse 
effect on its ability to compete in the online legal research 
market.
    5. In addition to impairing Lexis-Nexis' existing contract 
rights, the Department's

[[Page 53431]]

description of the Auto-Cite divestiture in its press release and 
other public statements has been substantially misleading. In the 
Department's press release, and, indeed, in the Final Judgment 
itself, it appears that West-Thomson is being required to divest 
``all rights and interests'' in Auto-Cite, See, e.g., Proposed Final 
Judgment para. II.B. These rights are defined as ``including'' (not 
limited to) the ``delivery of a transferable royalty-free perpetual 
license of the Auto-Cite case database.'' Id.
    Nevertheless, in West-Thomson's Offering Memorandum, and in 
subsequent communications with the Department, Lexis-Nexis has 
confirmed that transfer of a (non-exclusive) license right (together 
with the Auto-Cite trademarks and associated software and trade 
secrets) is all that the Department intends to require West-Thomson 
to divest. Thomson is thus not divesting itself of Auto-Cite at all: 
it is retaining the database itself; the staff trained in its use; 
the (apparently exclusive) right to use important elements of the 
Auto-Cite system, i.e., the cross-references and integration with 
the ALRs and other Thomson products; and other important incidents 
of ownership, such as the ability to sublicense.
    The Department has made no finding--and none can be made--that 
an acquiror of the Auto-Cite license can provide effective 
competition to West-Thomson with no trained staff, no ability to use 
key elements of the Auto-Cite system, and no ability to use cross-
licenses as a means of enhancing the content accessible through the 
database. The Complaint recognizes that Lexis-Nexis will be 
materially injured in its ability to compete as a result of ``a 
price increase, reduction in quality and innovation, or loss of 
access'' to Auto-Cite. Complaint para. 60. All three consequences, 
however, would be likely to flow from the Proposed Final Judgment. 
Price increases would be likely because of the failure to require 
divestiture of Auto-Cite as a viable, ongoing product line, 
entailing additional expense, inter alia, in hiring and training 
staff.\8\ Reduction in quality and innovation is likely because of 
the failure to require divestiture of ownership rather than merely a 
non-exclusive license with no ability to sub-license. And Lexis-
Nexis has lost effective access because of the failure to include 
critical components of the service (e.g., prospective access to ALR) 
in the divestiture.
---------------------------------------------------------------------------

    \8\ The failure to spin off Auto-Cite as an ongoing product line 
raises the same concerns regarding the ability to hire trained staff 
that were discussed above.
---------------------------------------------------------------------------

    Given these impairments in the ability to offer an effective 
Auto-Cite product, one of three outcomes is likely, none of which is 
beneficial to consumers. The first is that the absence of adequate 
infrastructure would effectively preclude continued use of Auto-Cite 
as a viable product, resulting in immediate and substantial injury 
to competition in the online legal research market. The second is 
that even if it were possible for Lexis-Nexis to offer an Auto-Cite 
product (either directly or through license), it would be at such a 
competitive disadvantage that West-Thomson would be well-positioned 
to engage in behavior (repackaging Auto-Cite, bundling it with 
Insta-Cite, and then pricing the products aggressively) designed to 
drive it from the market.
    The third potential outcome is that Lexis-Nexis (or some other 
competitor) would offer a non-exclusive Auto-Cite product while 
West-Thomson would offer a bundle of both an Auto-Cite clone and 
Insta-Cite. Because of the influence of learning and network effects 
in this market, consumers would likely gravitate towards West-
Thomson, a process that would become self-reinforcing as market 
shares became more disproportionate. Lexis-Nexis or its licensor 
would therefore have fewer resources to invest in the Auto-Cite 
product, thereby further aggravating the increase in concentration 
in the market. Whatever theoretical short-term efficiency gains 
might be asserted for the cloning of Auto-Cite, therefore, would be 
swamped by the adverse consequences of dramatically increased market 
concentration. Instead of a market characterized by two strong 
competitors, therefore, the only realistic outcome of the Proposed 
Final Judgment would be to substitute a market structure 
characterized by a single dominant player.
    6. The Department has compounded these deficiencies regarding 
Auto-Cite by its failure to enforce Paragraph IV.E of the Proposed 
Final Judgment. That paragraph purports to require West-Thomson to 
provide prospective purchasers with ``any and all financial, 
operational, or other documents and information as may be relevant 
to the divestiture.'' In fact, West-Thomson has provided virtually 
no information regarding the Auto-Cite divestiture that would permit 
any prospective purchaser to evaluate and make a meaningful bid on 
the product. On the one hand, West-Thomson has refused to provide 
even the most basic information regarding what is actually being 
purchased. (What ownership rights is West-Thomson reserving? What 
rights are included in the divestiture?) On the other hand, West-
Thomson has refused to provide any cost information regarding the 
product, so that it was impossible to assess the product's 
profitability. Yet prospective purchasers were required to ``bid'' 
under these (preposterous) circumstances. It is regrettable that, 
having shown the foresight to include Paragraph IV.E in the Proposed 
Final Judgment as an obviously necessary element, the Department now 
appears to have no intention of enforcing it.
    7. The Department recognizes that West's claim of a copyright in 
the page-breaks of its case reporters has been a major barrier to 
entry for potential competitors considering entry into the market 
for enhanced primary products.\9\ Complaint para. 32. Inconsistently 
with its own position in Matthew Bender & Co., Inc. versus West 
Publishing Co., 94 Civ. 0589 (S.D.N.Y.), in which it has sought 
leave to file an amicus brief contending that West's copyright claim 
should not be enforced (and notwithstanding the extreme market 
concentrations in the nine primary law product markets identified in 
the Complaint), the Department did not require West to disclaim its 
copyright claim. Such a step was taken, for example, by the 
Department under the Bush Administration in connection with Borland 
International's acquisition of Ashton-Tate. In the Ashton-Tate 
acquisition, the barriers to entry were far lower, and of far 
shorter duration, than those which West has been able to sustain in 
the market for enhanced primary law products over the course of many 
decades.
---------------------------------------------------------------------------

    \9\ Even though West's copyright claim ultimately may (and 
should) be found invalid, West successfully has used the threat of 
litigation as a substantial deterrent to potential competition.
---------------------------------------------------------------------------

    In this case, however, rather than requiring such a divestiture, 
the Department claims that it has ``significantly lowered'' the 
royalty rates for potential competitors' use of West's ``copyright'' 
page-breaks.\10\ As the Department is aware, however, that claim is 
wrong. The Department claimed that Lexis-Nexis' current licensing 
fee is 17 cents per thousand characters. That is not correct. It 
appears that the Department's figure was derived from a very minor 
license that West granted to Butterworths pertaining to case reports 
for the U.S. Virgin Islands (with license fees of less than $2,000 
per year).
---------------------------------------------------------------------------

    \10\ See, e.g., Albert R. Karr, Thomson's Pact to Acquire Rival 
Receives Government Approval, Wall St. J., June 29, 1996, at B10 
(quoting Department as stating that under the settlement, ``the 
rates that Thomson can charge when licensing the West page-numbering 
system are capped at a `significantly lower' level than those 
charged by West for Lexis-Nexis''). Accord, Maria Shao, Purchase of 
West Publishing Approved; Buyer Agrees to Divest 50 Legal 
Publications, Boston Globe, June 20, 1996, at 42; Sharon Smickle et 
al., West Deal Gets U.S. Go-Ahead, Minneapolis Star-Tribune, June 
20, 1996, at 1D.
---------------------------------------------------------------------------

    In fact, the rates set forth in the Proposed Final Judgment are 
approximately equal (but may under some circumstances exceed) the 
current Lexis royalty rate.\11\ It is worth emphasizing that the 
Lexis license was entered into only (i) after a Court of Appeals 
decision had been entered in favor of West and against Lexis, but 
(ii) before the Supreme Court's 1991 decision in Feist Publications 
v. Rural Telephone, which rejected the principal rationale 
underlying the Court of Appeals decision which found in West's 
favor. The current Lexis rate therefore reflects the maximum rate 
that West would have sought even after the successful conclusion of 
litigation, and if Feist had never been decided. It seems unlikely 
that any higher fees would have resulted from private negotiations 
prior to the acquisition.\12\
---------------------------------------------------------------------------

    \11\ To make matters worse, West-Thomson has taken the 
unilateral position that, notwithstanding the fact that Paragraph 
IX.A of the Proposed Final Judgment provides that ``defendants shall 
grant to any third party'' the right to license star pagination at 
rates beginning at $0.09 for the first year, Lexis-Nexis will be 
charged $0.13 (the third-year rate) as its beginning rate. Lexis-
Nexis has brought this flagrant violation of the Proposed Final 
Judgment to the attention of the Department, but is not aware of any 
steps taken by the Department in response.
    \12\ Other participants in the industry may well now accept 
these rates, however, because West-Thomson's ability to raise 
barriers to entry has been greatly strengthened by the proposed 
acquisition. That is because, as is implicit in the Department's 
submission, Thomson has not previously asserted a copyright claim in 
the page breaks of its reporters. In the primary law markets that 
are the subject of the Complaint (particularly those where Thomson 
was the official reporter), therefore, other competitors could cite 
to the specific page of the Thomson reporter without facing a 
copyright claim. Now, because (for the reasons noted previously) 
there is no substantial likelihood that there will be a viable 
competitor to replace Thomson in the market for enhanced case 
reporters, the ability of West-Thomson to raise barriers to entry in 
these markets has been significantly strengthened.

---------------------------------------------------------------------------

[[Page 53432]]

    8. One final point requires comment. The Department's press 
release claimed that assets representing approximately $72 million 
in sales were to be divested. As the Thomson Offering Memorandum 
reflects, however, the divested assets generated sales of only 
approximately $48 million. The press release thus overstates the 
economic significance of the divested assets by 50%. Notwithstanding 
the misleading nature of the Department's press release (which it 
has been aware of for at least several weeks), the Department has 
not seen fit to issue a corrective press release clarifying that 
only approximately 4% ($48 million out of $1.1 billion) of the sales 
of the number one and number two legal publishers are subject to 
divestiture.\13\
---------------------------------------------------------------------------

    \13\ This number actually significantly overstates the revenue 
that a West-Thomson competitor is likely to receive from the 
divested assets. As noted previously, this is the value of these 
components as part of a unified system. As individual fragments, 
they are likely to generate revenues that are only a fraction of 
their sales under Thomson.

    Sincerely,
Gary L. Reback.

    Dear Sirs: Please consider the enclosed as comment offered in 
regard to the consent decree entered in association with Thomson's 
acquisition of the West Publishing Company or, alternatively, as 
information bearing on anticompetitiveness in legal publishing 
generally.
    I apologize for the informality of the submission and for my 
inability to provide my name.

    Dear Sirs: In regards to the recent acquisition of West 
Publishing Company by the Thomson Corporation, here is some 
important information pertaining to the United States Code Annotated 
(U.S.C.A.), a West publication which is the dominant commercial 
compilation of federal statutes.
    What needs to be understood is that U.S.C.A. is the product of a 
collaboration between West and the Office of the Law Revision 
Counsel of the United States House of Representatives (O.L.R.C.). 
This collaboration has given West a significant advantage over its 
competitors in this lucrative market.
    When laws are enacted by Congress, and sometimes even before 
they are enacted, Ed Willett, the head of the O.L.R.C., seen to it 
that copies are quickly sent to West's Westbury, N.Y. office. There, 
under the direction of Michael Pavesi, Assistant Managing Editor in 
charge of the U.S.C.A., West employees ``classify'' the laws. This 
means they determine what provisions of the United States Code are 
affected by amending and repealing legislation and if, where and in 
what form new statutes are to appear in the Code.
    West faxes these proposed classifications to the O.L.R.C., which 
reviews them and immediately reports any changes and/or corrections 
back to West. At this point, West has the official U.S. Code 
classifications, while its competitors do not. In a field where 
speed of publication and conformity to official classification are 
at a premium, this inside scoop virtually insures the dominance of 
West's product.
    Nor does the collusion end here. West editors do all the work 
associated with the codification of the new law. They prepare the 
various notes necessitated by the legislation (Amendment, Reference 
in Text, Codification, etc.) as well as assigning headings where 
needed and making decisions about credits. Once again, all of this 
information is shipped to the O.L.R.C. where it will eventually 
appear, virtually verbatim, in the U.S. Code. In the event that 
major changes are to be made by the O.L.R.C., West is informed and 
incorporates them into U.S.C.A.
    Finally, when the O.L.R.C. prepares new or supplementary 
editions of the U.S. Code, page proofs are sent to Westbury so that, 
as with the classification and codification of new legislation, West 
can be sure that it has the official version before any of its 
competitors.
    Whatever company possesses this privileged, insider 
relationship, whether it be West or Thomson, enjoys an enormous and 
unwarranted market advantage. It borders on scandal that any single 
company is permitted to have a stranglehold on the market for 
federal statutory law, especially when that stranglehold is 
attributable exclusively to a sweetheart deal with an 
instrumentality of the federal government.
    P.S.--For obvious reasons, the writer wishes to remain 
anonymous. Accordingly, the information in this letter has been left 
deliberately vague. The full scope of the relationship described 
herein can almost certainly be exposed with minimal investigation.

Marc L. Ames, Attorney at Law

July 9, 1996.
Philip Cody, Esq.,
Chief Attorney, U.S. Department of Justice, Anti-Trust Division, 26 
Federal Plaza, 36th floor, New York, NY 10278

Re: Merger of Thompson Publishing Co. (which includes Lawyers' 
Cooperative Publishing Co.) and West Publishing Co.

    Dear Mr. Cody; I am advised that the Department of Justice 
recently approved the merger between the two above captioned 
companies for reasons that remain unclear to me.
    In any event, as one who has practiced law for almost thirty 
years I can tell you, without equivocation, that Lawyers' Coop and 
West have always been arch competitors and have presented and 
alternative for attorneys who sought information which these 
companies marketed. More particularly, as you know, both companies 
specialize in the publishing of legal research materials which are 
indispensable to any viable law practice.
    Most recently, I became involved in a dispute with the Lawyers' 
Cooperative Publishing Co. over my account (017249-11801) which 
contains a balance reflecting certain large purchases that I had 
previously made of legal research materials on CD ROM as well as 
other subscriptions. Prior to making those purchases I had arranged 
with the Lawyers' Cooperative Publishing Co. to have all of the 
materials to which I subscribe paid by one monthly payment. 
Thereafter, at the time that the additional materials were sold to 
me I was informed that this would raise my monthly payment of 
approximately $125.00 only slightly, leaving it below $200.00 per 
month. However, in my subsequent dealings with the company and 
another salesman I was informed that the monthly payment must be 
increased to the sum of $205.00 in order to cover all of my 
outstanding charges for the various services and materials to which 
I subscribe. I reluctantly consented to this increase believing it 
would cover all of the materials.
    Most recently, I was informed by somebody of Lawyers' 
Cooperative Publishing Co. that I was being undercharged on a 
monthly basis and that I should be charged $250,000 a month and 
failing my paying that amount or the arrears of $505.54 my 
subscriptions (apparently all of them) would be cancelled.
    I thereafter wrote a letter to the President of Lawyers' 
Cooperative Publishing a copy of which is enclosed. It is 
regrettable that I shortly thereafter received a letter from Ms. 
Margaret Cook, the Delinquent Accounts Manager advising me my 
subscriptions had been canceled! A copy of that letter is well 
enclosed. There followed shortly on heels of Ms. Cook's 
correspondence a letter from Ms. Michele Miller also of the 
Account's Receivable Department, advising me I had given them 
authorization during May of 1994 to raise the monthly amount of my 
installment to $250.00 beginning with the September installment and 
she would accordingly charge my bank account (despite the 
cancellation of my subscriptions). I never authorized them to charge 
my bank account directly the sum of $250,000, monthly as a copy of 
the agreement enclosed will show. Ms. Miller's letter is obviously 
in error to put it euphemistically.
    The point of my writing this letter is not to show you that such 
a company can make mistakes but rather to point out and underscore a 
shift in attitude when business becomes too large as the result of 
mergers and acquisitions. In years gone by it was eminently clear to 
me that the Lawyers' Coop would do everything in its power to 
straighten out and adjust any misunderstanding with one of its 
customers. This is apparently no longer the case because the company 
feels that it has the market cornered. More particularly, I point to 
the fact that West always presented an alternative to the materials 
published by Lawyers' Coop however now that the company has been 
acquired, any disagreement with Lawyers Coop leaves me without the 
alternative of seeking refuge with West and visa-versa.
    Thus, the poor consumer is left at an inordinate disadvantage 
and the acquisition of the West Publishing Company by the Thompson 
Legal Publishing group should not be and should not have been 
approved.

[[Page 53433]]

As you are no doubt aware, law book publishing companies stand in a 
rather unique position in relation to their customers. The materials 
sold to customers are often of a extremely high price. Moreover, 
these materials are supplemented very regularly at an additional 
cost--generally a very substantial additional cost! Further, if one 
does not choose to subscribe to the supplementation he is paying a 
rather exorbitant fee for materials which when initially purchased 
are current but which soon become worthless if not kept up-to-date. 
In the circumstances the Justice Department should be extremely 
circumspect about approving any mergers among law book publishers 
that are giants and competitors, and which virtually control the 
field.
    I sincerely believes in this instance you have left me and 
others with very little alternative in our dealings and urge that 
you do all necessary to reverse whatever action you have taken and 
undo the approval of this consolidation and merger.
    I sincerely hope that you will give your attention to this 
matter in earnest and advise me of your thinking and any action 
taken herein.

    Sincerely yours.
Marc L. Ames

Marc L. Ames

Attorney at Law

June 24, 1996.
Mr. James Lupisella,
Lawyers Cooperative Publishing, Aqueduct Building, Rochester, NY 
14694
    Dear Mr. Lupisella: As stated during our conversation as an 
inducement to purchase materials from your company I was told that 
one easy monthly payment of $205.00* charged to my bank account 
would take care of all payments required in connection with the open 
items on my account including supplementation. I made clear that I 
did not want my monthly obligation to exceed that sum. I was assured 
it would not.
---------------------------------------------------------------------------

    *Initially stated to be less.
---------------------------------------------------------------------------

    Your recent letter threatening to terminate my subscription 
unless I cough up another $100/month is irksome, problematic and 
otherwise unappealing. Perhaps this is diagnostic of internal 
problems the consequences of which will be visited upon attorneys 
such as myself by reason of your recent acquisition of West.
    By copy of this letter sent to Mr. Bryan Hall, the president of 
your company, I am requesting that someone in a higher position then 
yourself be in touch with me concerning this potential controversy 
and public relations problem.

        Sincerely,
Marc L. Ames,

MLA/is

Lawyers Cooperative Publishing

July 1, 1996
Marc L. Ames,
225 Broadway Rm 3005, New York, NY 10007

Re: Account #017249 11801
    Dear Mr. Ames: Your subscriptions have been cancelled!
    Recently we advised you that failure to pay on your account 
would result in cancellation of your subscriptions. Your failure to 
respond precipitated that action.
    To prevent your library from becoming outdated, forward a check 
for $505.54. This will allow us to put your subscriptions back in 
line.
    If you have made payment arrangements with our office or have 
forwarded the amount indicated above within the last 30 days, please 
disregard this letter.

Margaret Cook,
Delinquent Accounts Manager, 1-800-231-3120.
    P.S. To make payment as convenient as possible, we will accept 
Visa, Mastercard, Discover and American Express. Simply fill out the 
information requested below:

Visa/MC/Disc/AE Account # ---------------------------------------------

Expiration date -------------------------------------------------------

Total amount paid -----------------------------------------------------

Authorized signature --------------------------------------------------

Lawyers Cooperative Publishing

January 11, 1995.
Re: Account Number 01724911801
    Dear Client: Please consider this letter as a reminder that our 
terms are net 30 days.
    The amount due on your account is $463.47. According to our 
records a portion of this amount includes items which are 60 days 
past due. Please use the enclosed envelope to mail your payment.
    If you have made payment arrangements with our office, or have 
forwarded your check within the past 30 days, please disregard this 
letter.

    Thank you.
Lori Smith,
Regional Collection Manager, 1-800-231-3120-ext 6482

    P.S. To make payment as convenient as possible, we will accept 
Visa, Mastercard and American Express. Simply fill out the 
information requested below:

Visa/MC/AMEX Account---------------------------------------------------

Expiration Date--------------------------------------------------------

Total Amount paid------------------------------------------------------

Authorized Signature---------------------------------------------------

Geronimo Development Corporation

September 3, 1996.
Craig W. Conrath,
Chief, Merger Task Force, Antitrust Division, United States 
Department of Justice, Suite 4800, 1401 H Street, N.W., Washington, 
D.C. 20530

RE: United States v. The Thomson Corporation and West Publishing 
Company Case No. 1:96CV01415 (U.S. District Court for the District 
of Columbia)

    Dear Mr. Conrath: Geronimo Development Corporation, a Virginia 
corporation hereinafter ``Geronimo''), 1 submits the following 
Comments regarding the Final Judgment in the above matter.
    Geronimo publishes, exclusively in CD-Rom format, Virginia case 
law, statutes and administrative materials, along with U.S. Fourth 
Circuit and U.S. Supreme Court cases. We compete directly with two 
giants, West Publishing Company and the Michie division of Reed-
Elsevier, and with a small electronic, publisher, DiscSense, 
Incorporated.
    The Complaint identifies nineteen product markets in which West 
and Thomson compete directly and identifies anti-competitive 
consequences of the merger in those product markets. The Final 
Judgment addresses those concerns. Comments from other parties 
address and express the concerns we have over the issues raised in 
the Complaint (most notably the comments from Gary L. Reback, 
counsel for Lexis-Nexis, and Robert S. Oakley on behalf of the 
American Association of Law Libraries [``AALL'']).
    Our major concern is that the Complaint ignores the fact that 
West has a monopoly in the market for enhanced primary law products 
for the lower federal courts (the Federal District Courts and the 
Circuit Courts of Appeal). Only West publishes a complete set of 
enhanced opinions for these decisions. Although the Lexis online 
service includes all of the same opinions, West's monopoly is not 
broken thereby. The Complaint notes that online legal research 
services are ``not good substitute(s)'' for enhanced primary law 
products because they don't provide users with editorial analyses.
    West has actively maintained its monopoly. For example, despite 
the decision in Feist Publications, Inc. v. Rural Telephone 
Services, Inc., 499 U.S. 340, 111 S. Ct. 1282 (1991), West continues 
to claim that the interior page numbers of cases reported in its 
publications are entitled to protection under the copyright laws. 
West will not unequivocally state that the first page citation to 
cases in its reporters is in the public domain. West claims that its 
``enhancements'' to the official text of decisions, including the 
correction of typographical errors, are entitled to copyright 
protection.\2\ Finally, West actively opposes the adoption by any 
court of a public-domain citation system.\3\
    To compete in this market while avoiding litigation, a potential 
competitor would need to obtain the original text of all the 
decisions from all federal courts, convert that text into digital 
format for either printing or electronic publication, create a new 
citation system, prepare headnotes and correlate such headnotes into 
a digest or encyclopedia. This is a daunting, if not impossible, 
task.
    As noted at Paragraph 30 of the Complaint, accessing opinions in 
the product markets identified in Paragraph 19 is difficult because 
``past and/or current opinions simply are not available from many 
courts, and in many others, obtaining access is costly and time-
consuming.'' Because the lower federal courts have relied upon West 
for such a long time, it is likely that access to the original 
copies of these opinions would be even more difficult than in the 
state courts identified in Paragraph 19.\4\
    The only entities with the financial ability and publishing 
expertise to produce and market a competing federal product would be 
other large legal publishers. After the West-Thomson merger, there 
will be one less potential competitor; possibly, none. Further, as 
noted in the comments of Lexis-Nexis and

[[Page 53434]]

AALL, this merger poses a threat to the continued viability of 
Lexis-Nexis, which is the only other source of the text of the 
decisions of the lower federal courts (albeit, electronic and 
``unenhanced''). Thus, if the merger is allowed in its present form, 
West's monopoly over federal reports will be strengthened.
    15 U.S.C. Sec. 18 prohibits mergers.
    ``* * * where in any line of commerce or in any activity 
affecting commerce in any section of the country, the effect of such 
acquisition may be substantially to lessen competition, or to tend 
to create a monopoly.''
    If an acquisition that might ``tend to create a monopoly'' is 
prohibited, then certainly an acquisition that would strengthen an 
existing monopoly must likewise be banned. The evil to be prevented, 
lessened competition, is the same in both instances.
    Nothing in the Final Judgment addresses West's monopoly over 
federal case law. The provisions dealing with the licensing of 
interior page numbers will not foster competition in this market 
(see below). Three provisions should be added to the Final Judgment 
to encourage competition in this market:
    1. Require West/Thomson to acknowledge that the text of court 
decisions reported in its products is in the public domain, 
regardless of trivial enhancements thereto, and to disclaim any 
copyrights in such text.
    This would lower, slightly, the major barrier to entry into the 
market for primary lower federal case law, encouraging competition 
which might offset the harmful effects of this merger.
    In many instances, especially with older materials, the text of 
decisions in the West federal publications is the only printed 
version of the decision. The only citation to a decision of a lower 
federal court allowed by the Harvard Blue Book is the West cite. The 
rules of all state and federal courts require that citations to 
lower federal court decisions cite the West reports.\5\ Clearly, 
West's federal decisions represent the de facto official text of 
this fundamental body of law. It is inconceivable that the official 
text of the decisions of the federal courts would not belong to the 
people.
    2. Require West/Thomson to allow third parties to retrieve the 
public domain portions of federal case law from West's print and/or 
electronic publications, and require West/Thomson to acknowledge 
that the inadvertent and temporary copying of materials in which 
West legitimately possesses a copyright during such retrieval 
constitutes ``fair use'' under copyright law.
    By itself, an acknowledgment by West/Thomson that the text of 
federal court decisions contained in its reports is in the public 
domain will not foster competition because West/Thomson would be 
able to utilize current copyright law to thwart potential 
competitors from retrieving the text in any efficient manner 
(scanning and optical character recognition or direct extraction 
from CD-Rom databases). The only alternative for a potential 
competitor would then be to manually key in the text.
    A competitor could digitally scan the pages of the printed 
reports and convert the text into computer format with optical 
character reading software. Such software allows the user to 
``preview'' a page of text on the computer screen and to mark those 
portions (such as headnotes, West Key numbers, etc.) which should 
not be processed. However, current copyright law can be interpreted 
to hold that the image of the page in the computer's memory, and 
thus the image on the monitor, is itself a copy (See MAI Sys. Corp. 
v. Peak Computer, Inc., 991 F.2d 511 (9th Cir. 1993), cert. dism'd 
114 S.Ct. 671 (1994). Potential competitors would, of course, 
exclude West/Thomson's copyrighted materials from their finished 
product, and the only reason for displaying such materials 
temporarily on their computer monitors would be for the purpose of 
identifying them in order to exclude them. Thus, West/Thomson should 
be required to acknowledge that such ``copying'' falls within the 
``fair use'' exclusion of U.S. copyright law.
    Of course, scanning public domain materials from printed text 
and converting them into digital format is absurdly inefficient in 
light of the fact that the public domain text already exists in 
digital databases on West's CD-Rom products. Nothing could be 
simpler than for a competitor to ``download'' the public domain text 
from West's digital products for use in preparing a new electronic 
or print publication. Such an act, however, would surely assure a 
lawsuit from West/Thomson claiming violation of copyright in the 
database containing the public domain text, or violation of the 
license agreement pursuant to which the electronic media was 
accessed. Unfortunately, the law in this area is not sufficiently 
clear that a competitor could hazard such litigation.
    The copyright office considers a computer database to be 
copyrightable as a ``compilation.'' Copyright law extends protection 
to compilations as a form of literary work. 17 U.S.C. Sec. 103. When 
the compilation is composed of public domain materials, copyright 
protection may extend to the selection and arrangement of the 
materials, but it does not extend to the materials themselves. 
Feist, supra.
    The medium on which material is recorded is irrelevant to the 
question of whether it is in the public domain. There is no question 
that the text of the U.S. Constitution, recorded in ink on a piece 
of paper, could be copied by anyone. Recording the same document on 
a floppy disk should not take it out of the public domain. Further, 
there is no question that a page containing the Constitution within 
a book (a ``compilation'') could be copied--even if the book itself 
was copyrighted. Likewise, placing the Constitution into a database 
(also a ``compilation'') should not remove it from the public 
domain, even though the database itself might be copyrightable.
    Unfortunately, many opinions from U.S. courts reveal a lack of 
understanding of computer technology, much less the application of 
copyright law to electronic information. Would-be competition will 
be chilled by the threat of litigation. Thus, in order to encourage 
competition in this long-monopolized market, West/Thomson should be 
required to allow third parties to retrieve the public domain texts 
from the West CD-Rom databases.
    3. Require West/Thomson to abandon claims that its internal page 
numbers are entitled to copyright protection.
    The Eighth Circuit has held that West has a copyright in the 
arrangement of cases in its National Reporter System and that the 
internal page numbers of those books ``reflect and express'' this 
copyright, so that commercial use of those numbers infringes West's 
copyright in the arrangement. West Publishing Co. v. Mead Data 
Central, Inc., 799 F.2d 1219 (8th Cir. 1986), cert. denied, 107 
S.Ct. 962 (1987), aff g. 616 F.Supp. 1571 (D. Min. 1985). This 
decision, combined with West's de facto monopoly in the enhanced 
primary law of the lower federal courts, severely limits competition 
in this market.
    The legal theories trotted out to support the decision in West 
break down upon closer examination. The Eighth Circuit granted 
copyright protection to interior page numbers because they 
``express'' the arrangement of the cases in a volume. However, the 
Court also states ``West concedes that citation to the first page of 
its reports is a noninfringing `fair use' * * * so these citations 
are not at issue here.'' Certainly the arrangement of the cases in a 
volume could be easily reproduced using the first page citations--
which the Court does not protect. Consider the publisher who wishes 
to reproduce the cases as arranged in a West volume, but wants to 
use a page size that is somewhat larger than the page size used by 
West. In order to reproduce the arrangement, this publisher will 
refer to the first page citation (which West says is in the public 
domain), rather than any of the interior page numbers. Clearly, the 
interior page numbers have no value in protecting the arrangement of 
the cases in the West publications, they only serve to indicate 
where the page breaks fall in a particular report.
    Further, while the Court allows West's claim of a copyright in 
the arrangement of cases within a volume, it ignores the fact that 
the arrangement of cases within a reporter is totally irrelevant to 
the use of those cases. No lawyer or judge I have ever known has 
ever read all of the cases, front to back, within a report. No case 
in a reporter is any more or less ``important'' than any other case 
to the researcher. West's ``arrangements'' serve no purpose other 
than to provide a means of removing public materials from the public 
domain.
    While nothing that West does not and cannot claim any copyright 
in the judicial opinions themselves, the Court in West elaborated at 
length on the time and effort expended by West in preparing these 
reports, revealing that the true rationale for its decision was the 
``sweat of the brow'' theory. However, in 1991 the Supreme Court 
opinion in Feist destroyed the ``sweat of the brow'' theory.
    In light of the foregoing, it is clear that West's claim of 
copyright in the interior page numbers lacks any continuing 
legitimacy, and is being used solely to strengthen its monopoly over 
the publication of decisions of the lower federal courts. Requiring 
West/Thomson to license these page numbers is not a solution to a 
problem; it is an

[[Page 53435]]

abdication of responsibility. If West/Thomson has a legitimate 
copyright in the interior page numbers, then they should be allowed 
to charge whatever they want and to license them to whomever they 
wish, without coercion from DOJ. If West/Thomson does not have a 
legitimate copyright in the page numbers, then competitors should be 
allowed to use them for free. DOJ should institute litigation for 
the purposes of deciding the legitimacy of the copyright claim, 
rather than `duck'' the issue by requiring West/Thomson to license 
them at a specified price.
    4. DOJ should comply with the Freedom of Information Act 
(``FOIA'') request made by Tax Analysts, Incorporated of Falls 
Church, Virginia, which seeks release of the public domain portions 
of tapes of federal cases contained in the now-defunct Juris 
database.
    The Tax Analysis FOIA request is the subject of an appeal 
pending in the United States Court of Appeals for the District of 
Columbia. The decision on appeal was rendered by Judge Gladys 
Kessler of the Federal District Court for the District of Columbia, 
the same Court which is now reviewing this merger. In that appeal, 
DOJ is a Co-Appellee with West, taking the position that a large 
electronic archive of predominately public domain material should 
not be released to the Appellant. That position is at odds with 
DOJ's acknowledgment in the Complaint that the difficulty or 
impossibility of obtaining opinions is one of the barriers to entry 
in primary case law markets. DOJ's contrary positions on this issue 
should be reconciled, or in the alternative, a neutral party should 
be designated to represent the public interest in this matter.
    Lest we forget: At issue in this proceeding is not some mean 
commercial commodity, not forest products, or steel, or computer 
programs. At issue is the Law; the fuel that fires the flame of 
freedom; the vehicle by which free people govern themselves. The Law 
belongs to no one, it belongs to all. It was purchased for us with 
patriot's blood; we have a sacred duty to hand it down, unshackled, 
to generations yet to come.
    Thank you for your attention to our concerns. Please don't 
hesitate to contact me if you wish to discuss any of the points 
raised or would like additional information.

        Sincerely,
O.R. Armstrong,
President.

Footnotes

    \1\ About Geronimo:
    Virginia's open access to its primary law materials enabled 
Geronimo to enter the legal publishing business in 1991. The printed 
volumes of Virginia Supreme Court and (until recently), when West 
was awarded the publishing contract) Virginia Court of Appeals 
reports contain no claim of copyright whatsoever. Further, the 
contract for publication of the Virginia Code provides that the text 
of the statutes, along with catch lines and title, chapter and 
article headings are not copyrightable by the publisher.
    Though we were the first to offer a stand-alone computerized 
research system for Virginia law, Michie (a subsidiary of Lexis-
Nexis) and then West soon brought out competing products. Later, a 
small electronic, publisher, DiscSense, Inc. also entered the fray.
    Since we were a new, small company, and we could not out-market 
the giants, our plan was to make our product easier to use, price it 
significantly lower than the competition, provide more databases and 
offer technical support. The plan worked. Our product was chosen, in 
head-to-head competition, for installation in all Commonwealths' 
Attorneys' offices throughout Virginia.
    The real beneficiaries of this competition are all the 
attorneys, judges, prosecutors, government officials, law 
enforcement agencies, inmates, libraries, title companies, banks, 
and private citizens who are able to easily and economically access 
most of the law which applies to the citizens of the Commonwealth of 
Virginia.
    \2\ For example, the Complaint in West Publishing Company v. 
Mitchell Gross, Civil Action CV2071, Northern District, Georgia 
(1993) alleges, inter alia, that the Defendant violated West's 
copyrights by wholesale copying of its books. The Complaint states 
at pages 3-4.
    Each Southern Reporter case report contains the following 
editorial enhancements created entirely by West: (a) West citation 
of the case; (b) case synopsis, including summary of the facts, the 
court's holding and the procedural history of the case; (c) numbered 
headnote(s) summarizing portions of the opinion relating to specific 
points of law, including the editorial designation of the statutes 
that relate to each headnote; (d) topic designations for each 
headnote; (e) topic designations for each headnote with individual 
``Key Number System'' registered trademark symbols (keys) and 
numeric designations (key numbers) to which headnotes are 
referenced; (f) miscellaneous information prepared by West inserted 
within the text of the judicial opinion including parallel 
citations, corrections and cross-reference numbers relating back to 
corresponding headnote numbers; and (g) at the conclusion of each 
West case report, a West trademark, the symbol of a key enclosing 
the words ``West Key Number System.''

(Emphasis supplied)

    \3\ It should be noted that the House of Delegates of the 
American Bar Association passed a resolution at its recent Annual 
Convention urging all courts to adopt a public-domain citation 
system in which the court would assign the citation at the time a 
decision is issued and the paragraphs in the text would be numbered.
    \4\ In this regard, it is our understanding that the American 
Association of Legal Publishers has recently submitted to DOJ a 
study of the difficulties encountered in attempting to obtain 
original copies of opinions from the 1960's and 1970's from the 
federal courts. The study reveals that opinions are missing from 
files, that files are missing from filing cabinets, that opinions 
are mis-filed, that the courts limit the number of case files (to as 
little as three) which may be accessed, and that delay, confusion 
and expense hamper the process.
    \5\ West's domination of the federal market is so pervasive that 
most courts require attorneys to provide citations to West products 
(federal and state). Attorneys purchasing a competing product would 
still need to access West products for these citations. Thus, 
successful marketing of a competent product would require 
significantly lower pricing, reducing the return on the investment 
in the competing product, stifling competition.

Irell & Manella LLP

August 31, 1996

Via Federal Express

Craig W. Conratrh,
Chief, Merger Task Force, Antitrust Division, 1401 H Street, N.W., 
Suite 4000, Washington, D.C. 20530

Re: United States v. The Thomson Corporation and West Publishing 
Company, No. 96-1415 (D.D.C.)

    Dear Mr. Conrath:

Introduction

    Matthew Bender & Company, Inc. submits the following comments in 
opposition to the terms of the Proposed Final Judgment in the above-
mentioned matter relating to ``star pagination.'' These comments are 
intended to supplement and amplify comments made by Lexis-Nexis in a 
letter dated August 30, 1996.
    As the Department is well aware, defendant West Publishing 
Company claims that its copyright interests are infringed by 
competitors who use ``star pagination'' to West's reporters. The 
Complaint identifies this assertion of an intellectual property 
right as a significant barrier to entry into the relevant legal 
publishing markets. Moreover, the Department, acting as an amicus in 
copyright litigation between Matthew Bender and defendant West 
Publishing Company in the Southern District of New York, has 
recently expressed its views on behalf of the United States that 
West's copyright claim is without merit. Yet despite recognizing 
that West has imposed a barrier to entry through the erroneous 
assertion of a legally cognizable intellectual property interest, 
the Department has not sought to remove that barrier. Rather, the 
Proposed Final Judgment seeks to ameliorate the problem by mandating 
that West offer a license to its non-existent rights. Not only does 
this solution not remove the barrier to entry, it creates new anti-
competitive effects through license terms that would cause harm both 
to licensees and to other potential competitors of the merged 
Thomson/West entity in the markets at issue. Matthew Bender 
accordingly urges that the proposed Final Judgment not be approved 
by the Department or the Court without modification to prohibit 
Thomson/West from enforcing any alleged rights with respect to star 
pagination.

The Importance of Star Pagination

    Matthew Bender is one of this country's leading publishers of 
legal secondary literature, including such well known treaties as 
Moore's Federal Practice, Nimmer on Copyright, Collier On 
Bankruptcy, and Weinstein's Evidence. In recent years, Matthew 
Bender has offered many of its titles

[[Page 53436]]

on CD-ROM. In order to remain competitive in the legal secondary 
source market, Matthew Bender must offer its CD-ROM titles in 
conjunction with pertinent primary materials. By having primary 
materials available together with secondary sources, a person using 
Matthew Bender's legal secondary source product will be able to 
move, at the touch of a button, from a citation to a primary source 
to the primary source itself. Thus, for example, if Moore's Federal 
Practice cites a particular page of an appellate decision as stating 
a particular holding, a person using an integrated CD-ROM product 
will be able to go from citation to the cited portion of the 
opinion, and then go back to the treatise (or to another authority 
cited in the opinion). Consumers of legal products benefit from this 
integration of secondary and primary sources through improved 
secondary source products.
    In order to integrate judicial opinions with the existing base 
of legal secondary literature, and to make them competitive primary 
sources in their own right, those judicial opinions must include 
information about the location of page breaks from the version of 
the opinion appearing in the National Reporter System published by 
defendant West Publishing Company. This page break information is 
typically provided via the efficient shorthand of ``star 
pagination.''\1\
---------------------------------------------------------------------------

    \1\ The Compliant recognizes this business reality. See 
Complaint para. 43 (``Particularly for CD-ROM products, where it is 
possible to include both primary and secondary law products on the 
same CD-ROM, the ability to include star pagination is an important 
competitive factor.'').
---------------------------------------------------------------------------

    It is necessary to provide information about the location of 
page breaks in West's reporters for three primary reasons: (1) to 
allow users of Matthew Bender products to cite cases in the form 
that is mandated by law, practice and necessity; (2) to allow users 
of Matthew Bender products to locate the portion of a judicial 
opinion that is cited in a secondary or primary source; and (3) to 
allow the integration of primary sources with secondary sources that 
contain pinpoint citations to West's reporters.
    The necessity of providing information about the page breaks in 
West's reporters emerges from many factors. West's federal reporters 
(i.e., Federal Cases, Federal Reporter, Federal Reporter--Second 
Series, Federal Reporter--Third Series, Federal Supplement, Federal 
Rules Decisions and Bankruptcy Reporter) are the de facto official 
reporters of the U.S. district courts and courts of appeals and thus 
are the standard citation source for the bench and bar. Only West 
publishes in book form a comprehensive collection of the published 
decisions of the lower federal courts. Consequently, the rules 
adopted by many of the federal courts require that citations in 
briefs be to the appropriate volume and page number of West's 
federal reporters. See e.g., Third Cir. R. 28.3(a). The preeminent 
legal citation manual also requires citation to West's federal 
reporters, including pinpoint citation. See generally the Bluebook; 
A Uniform System of Citation at 34-36, 165-67 (15th ed. 1991) (the 
``Bluebook''). The Bluebook citation form, which the legal community 
regards as setting the standards for citations in legal writing, has 
been formally adopted by the local rules of various courts, thereby 
further extending the official status of West's federal reporters. 
See, e.g., Eleventh Cir. 28-2(k).
    The de facto official status of citations to the volume and page 
numbers of West's federal reporters is further reflected in their 
use as the standard citation form in the printed opinions of the 
United States Supreme Court and the printed slip opinions of the 
lower federal courts. In the United States Reports, for example, the 
government's official reporter of Supreme Court decisions, citations 
to lower federal court decisions almost invariably consist of a 
citation to the volume and appropriate page numbers, including the 
pinpoint citation, of the West federal reporter in which the 
decision and pertinent passages were published.
    The primacy of citations to West state court judicial reports is 
also a condition dictated by the requisites of legal practice. The 
judicial decisions of at least nineteen state court systems are not 
currently published in any ``official'' reporter. See Robert C. 
Berring, On Not Throwing Out the the Baby: Planning the Future of 
Legal Information, 83 Cal. L. Rev. 615, 633 n.66 (1995). Citations 
to judicial authority in states such as Texas are by necessity to an 
unofficial reporter, such as the reporters in West's National 
Reporter System. In yet other states, West is the official reporter. 
For example, in Florida, West publishes the official Florida Cases, 
which is a collection of Florida judicial opinions reprinted--
including volume and page numbers--from West's Southern Reporter. A 
citation to Florida's ``official'' reporter is thus identical to a 
citation to West's ``unofficial'' Southern Reporter.
    Even in the remaining states, such as New York, where there are 
non-West ``official'' reporters of judicial opinions (owned, in this 
case, by Thomson's subsidiary, Lawyers Cooperative Publishing Co.), 
law and practice nonetheless require parallel citations to West's 
New York reporters. For example, the rules adopted by certain 
federal courts require citations to West's New York reporters. See, 
e.g., D.C. Cir. R. 28(b). The Bluebook (which, as noted above, 
various local rules of court adopt by reference) also requires 
citation to West's New York reporters, including pinpoint citation, 
in documents submitted to federal and state courts. See id. at 195-
97. In accord with the standards promulgated by the Bluebook, 
citation to West's National Reporter System volumes, including 
pinpoint citation, is considered by the legal community to be the 
proper method of citation in memoranda of law submitted to the 
federal and state courts. Indeed, the Bluebook requires citation to 
West's reports of state judicial opinions in the National Reporter 
System in documents submitted to federal and state courts in every 
single state. See generally Bluebook at 169-216.
    In sum, the bench and bar must (and do) cite to West's 
reporters. Pinpoint citations to West's National Reporter System 
volumes are thus ubiquitous in the U.S. state and federal corpus 
juris, in submissions to the courts, as well as in the vast 
secondary literature about our laws. Information about the location 
of page breaks in West National Reporter System volumes has thus 
become a standard frame of reference for discussion, debate and 
advocacy about the law of this country. Primary sources that do not 
contain information about the location of page in West's National 
Reporter System volumes are cut-off from this ubiquitous frame of 
reference.

West's Use of Its Alleged Copyright To Destroy Competition

    As the Complaint recognizes, a significant barrier preventing 
Matthew Bender and other potential competitors from using star 
pagination to create better secondary source products, and to create 
new enhanced primary source products, has been erected by West's 
assertion of claims that star pagination infringes West's purported 
copyright in the arrangement of its reporters. See Complaint 
Paras. 32, 43. West aggressively pursues litigation against 
competitors who use star pagination. It also relies on 
jurisdictional machinations to make that litigation more expensive 
for those competitors and to confine examination of its alleged 
copyright interest in star pagination to its home base.
    West's first action of this type was its successful litigation 
against Mead Data Central to enjoin Mead's intended inclusion of 
star pagination in the Lexis database. That suit resulted in the 
much-criticized West Publishing Co. v. Mead Data Central, Inc., 799 
F.2d 1219, 1227 (8th Cir. 1986), cert, denied, 479 U.S. 1070 (1987) 
decision, in which a two-judge majority of an Eighth Circuit panel 
held, over a vigorous dissent, that the internal page numbers of 
opinions published in West reporters are subject to copyright, and 
that a competitor that provided star pagination to those internal 
page numbers was liable for copyright infringement.\2\
---------------------------------------------------------------------------

    \2\ The matter came before the Eighth Circuit on interlocutory 
appeal of a grant of preliminary injunction. The case settled before 
a decision was rendered after trial on the merits.
---------------------------------------------------------------------------

    The West v. Mead decision has been roundly denounced by 
copyright scholars,\3\ the U.S. Copyright Office,\4\ and most 
recently

[[Page 53437]]

by the U.S. Department of Justice,\5\ as wrongly decided and clearly 
overruled by the subsequent U.S. Supreme Court decision in Feist 
Publications, Inc. v. Rural Tel. Service Co., 499 U.S. 340, 111 S. 
Ct. 1282 (1991) which uprooted the ``sweat-of-the-brow'' copyright 
doctrine undergirding West v. Mead.
---------------------------------------------------------------------------

    \3\ See, e.g., William F. Patry, Latman's The Copyright Law 63, 
n.212 (1986) (case is ``a most extreme misreading'' of the Copyright 
Act); 1 Nimmer on Copyright Sec. 3.03 (``this case extends 
compilation copyright too far''). Two scholars devoted a hundred-
page article to criticizing the West v. Mead case and decrying the 
majority's position as disturbing ``a century-and-a-half of 
precedent dating from the Supreme Court's first copyright decision, 
Wheaton v. Peters, in 1834.'' L. Ray Patterson & Craig Joyce, 
Monopolizing the Law; The Scope of Copyright Protection for Law 
Reports and Statutory Compilations, 36 UCLA L. Rev. 719, 723 (1989). 
In Feist Publications, Inc. v. Rural Tel. Service Co., 499 U.S. 340, 
111 S. Ct. 1282 (1991), the Supreme Court cites repeatedly to the 
Patterson and Joyce article in reaching the conclusion that no 
compilation copyright protected the telephone book there at issue. 
See Feist, 499 U.S. at 347, 348-349, 351, 361-362, 111 S. Ct. at 
1288, 1289 (twice), 1291, 1296 (twice).
    \4\ The Register of Copyrights (the senior official of the U.S. 
government charged with the formulation of copyright policy) 
testified before Congress regarding proposed legislation to amend 
the U.S. Copyright Act to clarify that there is no copyright in the 
volume and page numbers of judicial reporters that in the view of 
the Copyright Office, West v. Mead was a ``substantial departure'' 
from ``150 years of settled contrary precedent.'' Testimony of Ralph 
Oman, Exclusion of Copyright Protection for Certain Legal 
Compilations: Hearings on H.R. 4426 Before the Subcomm. on 
Intellectual Prop. and Judicial Admin., 102nd Cong., 2d Sess., 
Serial No. 105 at 6, 12 (1992). He further elaborated that even if 
that ruling had been consistent with previous doctrine, its reliance 
on sweat-of-the-brow considerations means that Feist ``tolled the 
death knell'' for West v. Mead. Id. at 6. In fact, the Copyright 
Office labeled H.R. 4426 ``unnecessary legislation'' on the basis 
that the old Eighth Circuit ruling represented bad law post-Feist. 
Id. at 31.
    \5\ On August 20, 1996, the Department filed a memorandum amicus 
curiae on behalf of the United States in Matthew Bender & Co., Inc. 
v. West Publishing Co., 94 Civ. 0589 (JSM) (S.D.N.Y.) arguing that 
West v. Mead ``rests on the discredited `sweat-of-the-brow' theory 
of copyright and cannot be reconciled with Feist. * * * [T]o follow 
the [West v.] Mead analysis is to eviscerate Feist, with 
substantial, and undesirable, consequences for the progress of 
science and art in the modern technological era.'' Memorandum of 
United States of America as Amicus Curiae at 10-11 (filed August 20, 
1996). The Department's brief is discussed in greater detail below.
---------------------------------------------------------------------------

    Nonetheless, the West v. Mead decision has not yet been 
explicitly overturned, and West has in fact continued its use of 
litigation to prevent competitors from using star pagination. See, 
e.g., Matthew Bender & Co., Inc. v. West Publishing Co., 39 
U.S.P.Q.2d 1079, 1082 (S.D.N.Y. 1996) (noting ``West's history of 
litigation against other legal publishers'' and its employees' 
testimony ``that they do not know of any companies that have used 
West's star pagination that West has not sued''); Susan Hansen, 
Fending Off the Future, American Lawyer 73, 73 (September, 1994) 
(``West's lawyers have earned a reputation for menacing letters and 
quick-strike lawsuits, hunting down infringers from coast to coast. 
One by one, `copyists,' as [Vance] Opperman[, West's president,] 
likes to call them, have been marched into court and crushed.'').
    Having succeeded before Feist in obtaining one favorable ruling 
in its home forum, West has attempted even past Feist to prevent 
courts outside the Eight Circuit for examining its ``scarecrow'' 
copyright. As Professor Craig Joyce, a strong critic of the Mead 
decision, explained to Congress:
    The West Publishing Company is an able litigator. If it decides 
on a `preemptive strike,'' it sues competitors asserting the right 
to use `its' identifying matter--that is, the matter for which it 
claims protection by virtue of the Mead case--in the federal trial 
court for the District of Minnesota, the very jurisdiction in which 
it filed and won in Mead. For quite proper reasons, West likehood of 
success in that court, or anywhere in the Eight Circuit, is very 
high.
    If, however, West is sued elsewhere by a potential competitor 
seeking to employ in its own works the identifying matter in which 
West claims ownership, West can in all likelihood get the case 
transferred to the District of Minnesota. Again, West's chances 
there are good.
    Exclusion of Copyright Protection for Certain Legal Compilation: 
Hearings on H.R. 4426 Before the Subcomm. on Intellectual Prop, and 
Judicial Admin., 102nd Cong., 2d Sess., Serial No. 105 at 39-40 
(1992) (footnotes omitted) (emphasis original).
    Recently, West's project of confining examination of its 
pagination copyright to the Eight Circuit has been implemented 
through the attempted manipulation of federal jurisdiction. In two 
declaratory judgment actions brought by Matthew Bender against West 
in the Southern District of New York, Matthew Bender & Co., Inc. v. 
West Publishing Co., 94 Civ. 0589 (JSM) (S.D.N.Y.) and matthew 
Bender & Co., Inc. v. West Publishing Co., 95 Civ. 4496 (JSM) 
S.D.N.Y.) (seeking declarations that Matthew Bender's use of star 
pagination does not infringe any West copyright), West moved to 
dismiss for lack of subject matter jurisdiction on the ground that 
the actions allegedly do not involve actual controversies.\6\ After 
extensive discovery, briefing and oral argument on the 
jurisdictional issue, the court denied West's motions, see Matthew 
Bender & Co., Inc. v. West Publishing Co.,  39 U.S.P. Q.2d 1079, 
1082 (S.D.N.Y. 1996), as well as West's subsequent motion for 
reconsideration or interlocutory review. West's failed 
jurisdictional ploy delayed adjudication of the merits by at least 
two years and caused significant litigation costs.
---------------------------------------------------------------------------

    \6\ To underscore West's desperation to avoid a decision outside 
the Eight Circuit, West originally took the remarkable position in 
Matthew Bender v. West that the action should be dismissed, or 
transferred to Minnesota, on the ground of improper venue because 
West--the nation's largest legal publisher--purportedly ``does not 
do business in the Southern District of New York.'' See Report of 
parties' Planning Meeting dated March 8, 1994 at 6.
---------------------------------------------------------------------------

    The purposes animating West's attempts to evade the jurisdiction 
of the Southern District of New York become clear when evaluated in 
light of West's conduct in a concurrent proceeding now on appeal 
from the United States District Court for the District of Minnesota 
to the Eight Circuit--Oasis Publishing v. West Publishing Co., CV3-
95-563. In that action, West has taken a dramatically contrary 
stance regarding the conditions under which justiciability is 
established for the purpose of obtaining an advisory ruling in its 
forum-of-choice regarding a hypothetical product.
    In Oasis, plaintiff Oasis Publishing, Inc., a CD-ROM publisher, 
initiated suit against West in the United States District Court for 
the District of Florida seeking a declaration that West does not 
have a copyright in the page numbers contained in Florida court 
decisions published in West's Southern Reporter and that Oasis' 
intended use of star pagination to West's Southern Reporter in 
Oasis' planned CD-ROM product will not infringe West's copyright. 
West responded to the Oasis complaint by moving to dismiss the 
declaratory judgment claim for lack of a justiciable controversy and 
alternatively to transfer the action from Florida to the District of 
Minnesota. Before ruling on West's motion to dismiss, the court 
granted West's motion to transfer the case to the District of 
Minnesota.
    Once West succeeded in transferring the Oasis case to Minnesota, 
West withdrew its motion to dismiss for lack of a justisiable 
controversy. It did so even though there had been no intervening 
change in the facts or law. But West did not simply withdraw its 
motion. Rather, it entered a stipulation filed with the Minnesota 
court in which it dismissed ``with prejudice'' from its answer the 
affirmative defense that the case was not justiciable and all 
allegations in West's answer based upon that defense. In other 
words, once West successfully transferred the case to Minnesota, 
West not only withdrew its motion challenging justiciability, but 
actively attempted to expunge the issue from the record.
    After West in effect stipulated to jurisdiction, the parties 
submitted cross-motions for summary judgment on Oasis' copyright 
declaratory judgment claim. Just four weeks after oral argument, 
West's jurisdictional strategy to obtain a favorable opinion from 
its forum-of-choice paid off. The Minnesota court followed the much-
criticized West v. Mead and granted West's motion for summary 
judgment. See Oasis Publishing Co. v. West Publishing Co., 924 F. 
Supp. 918, 925-926 (D. Minn. 1996). In rendering its opinion, the 
court below never examined the existence of subject matter 
jurisdiction.\7\
---------------------------------------------------------------------------

    \7\ On appeal, neither party in Oasis intends to discuss the 
threshold jurisdictional issue. West is attempting to cover up its 
attempted manipulation of the District of Minnesota's jurisdiction 
by refusing to consent to Matthew Bender briefing the issue to the 
Eighth Circuit. See Letter of Joseph Musilek to Elliot Brown, dated 
July 22, 1996 (``West Publishing Company, like Oasis, has no 
objection to Matthew Bender filing an amicus curiae brief in the 
Eighth Circuit on the merits of the appealed issues. However, West 
does not consent to an amicus brief on any jurisdictional or 
justiciability issue.'')
---------------------------------------------------------------------------

    In sum, a comparison of West's actions in response to Matthew 
Bender's New York declaratory judgment actions with its stance in 
the Oasis case suggests that West's simultaneous assault on 
jurisdiction outside the Eighth Circuit and attempted stipulation to 
jurisdiction in the Eighth Circuit is based on a deliberate strategy 
to confine examination of its alleged copyright in star pagination 
to courts in the Eighth Circuit. This strategy decreases the 
likelihood that the Mead decision will be critically examined, and 
increases costs for potential challengers of West's copyrights who 
must engage in lengthy jurisdictional fights against a well-heeled 
and aggressive adversary.
    In its recently filed opposition to Matthew Bender's motion for 
summary judgment in Matthew Bender v. West, West has taken its game 
playing to new heights--contending, despite numerous public 
statements to the contrary, that it has a copyright interest in the 
initial parallel citations (i.e., the cite to the first page of a 
case) in the National Reporter System that may be infringed when

[[Page 53438]]

a competitor uses such citations.\8\ See West Publishing Company's 
Memorandum of Law In Opposition To Plaintiff Matthew Bender & 
Company's Motion For Summary Judgement at 5 (``West has not conceded 
that copying of first page citations by Matthew Bender is non-
infringing.'') (emphasis original). West apparently wishes to 
backtrack from its admissions and leave the door open to suing a 
competitor for infringement based on its use of initial parallel 
citations.
---------------------------------------------------------------------------

    \8\ West's counsel have repeatedly admitted that no such 
copyright interest exists. See, e.g., Statement of West's outside 
counsel, James E. Schatz, Transcription of American Association of 
Law Libraries 1995 Annual Meeting at Pittsburgh, Pennsylvania, July 
15-20, 1995 at 14 (``West has made it very clear it has no objection 
to, never has, doesn't now and never will to the use of initial West 
citations, the volume and first page number by other publishers or 
by anybody else.''; ``[T]he initial citations are in the public 
domain because West has no objection to anybody using them. West has 
said that for a long time. West has basically said that since 
1876.''); Transcript of Hearing, In the Matter of the Amendment of 
Supreme Court Rules: Electronic Archive of Appellate Opinions, Rules 
and Orders, Case No. 95-01 (March 21, 1995) at 114:6-8, 118:13-14 
(``The volume and first page number of every case report published 
by West is in the public domain.''; ``West's volume and initial page 
number are matters of public domain'') (testimony of West's counsel 
Brady Williamson); Supplemental Brief of West Publishing Co., In the 
Matter of the Amendment of Supreme Court Rules: Electronic Archive 
of Appellate Opinions, Rules and Orders, Supreme Court of Wisconsin, 
Case No. 95-01 (April 3, 1995), at 8 (``Since West has no objection 
to the use of initial citations to its case reports, even by its 
competitors, those initial citations are effectively `in the public 
domain.' '').
---------------------------------------------------------------------------

    In the summary judgment proceedings in Matthew Bender v. West, 
the Department filed an amicus curiae brief in that suit on behalf 
of the United States arguing, that ``Bender's star pagination to 
West's National Reporter System does not infringe any copyright 
interest West may have in the arrangement of the National Reporter 
System.'' Explaining why the Department had taken the unusual step 
of filing an amicus brief at the district court level in a copyright 
action, the Department explained,
    The United States has a substantial interest in the resolution 
of the issue discussed in this Memorandum. It has numerous 
responsibilities related to the proper administration of the 
intellectual property laws and to advancement of the public 
interest. The standards for copyright protection embody a balance 
struck between protecting private ownership of expression as an 
incentive for creativity and enabling the free use of basic building 
blocks for future creativity * * *. The United States therefore has 
an interest in properly maintaining the ``delicate equilibrium'' * * 
* Congress established through the copyright law.
    The interest of the United States in ensuring the proper 
preservation of that balance also reflects the fact that it has 
primary responsibility for enforcing the antitrust laws, which 
establish a national policy favoring economic competition as a means 
to advance the public interest. Moreover, the United States is a 
substantial purchaser of legal research materials of the kind at 
issue in this case.
    Finally, the United States has recently taken actions relating 
to the issue discussed. On June 19, 1996, the United States, 
together with seven states, filed an antitrust suit challenging the 
acquisition of West Publishing Co. by The Thomson Corp., together 
with a proposed settlement of that suit. Part of that settlement 
requires Thomson to license to other law publishers the right to 
star paginate to West's National Reporter System. United States v. 
The Thomson Corp., No. 96-1415 (D.D.C. filed June 19, 1996), 
Proposed Final Judgment, 61 Fed. Reg. 35250, 35254 (July 5, 1996). 
In announcing the settlement, the U.S. Department of Justice stated:
    Today's settlement, with its open licensing requirement, does 
not suggest * * * that the Department believes a license is required 
for use of such pagination. The Department expressly reserves its 
right to assert its views concerning the extent, validity, or 
significance of any intellectual property right claimed by the 
companies [West and Thomson]. The Department also said that the 
parties agree that the settlement shall have no impact whatsoever on 
any adjudication concerning such matters.
    U.S. Dept. of Justice, Press Release No. 96-287, at 3-4, 1996 WL 
337211 (DOJ) *2 (June 19, 1996). This memorandum asserts those 
views.
    Memorandum of United States of America as Amicus Curiae, Matthew 
Bender & Co., Inc. v. West Publishing Co., 95 Civ. 0589 (JSM) 
(S.D.N.Y.) at 1-2 (citations omitted) (``U.S. Amicus Memorandum'').
    As a result of West's substantive positions and procedural game 
playing, potential competitors in the primary and secondary legal 
product markets, use star pagination at the risk that they will be 
sued by West for copyright infringement. The Department recognizes 
this reality. See Competitive Impact Statement, 61 Fed. Reg. 35250, 
35261-62 (July 5, 1996) (``[E]xisting or potential participants in 
the markets for primary law products cannot offer products with star 
pagination without the threat of costly infringement litigation.''). 
As the former President and COO of Thomson Electronic Publishing, 
testified before Congress in 1992 on behalf of numerous Thomson 
legal publishing entities,\9\ the West v. Mead Data Central 
``decision has made it commercially impossible for Thomson or anyone 
else to publish, with page number citations, the decisions of the 
lower federal courts * * *.'' Exclusion of Copyright Protection for 
Certain Legal Compilations: Hearings on H.R. 4426 Before the 
Subcomm. on Intellectual Prop. and Judicial Admin., 102nd Cong., 2d 
Sess., Serial No. 105 at 82 (1992) (testimony of Kathryn M. 
Downing); see also Gary Wolf, Who Owns the Law?, Wired 98, 138 (May 
1994) (``West's provisional victory [in West Publishing] has kept 
other electronic publishers at bay.''). From an antitrust 
perspective, West's repeated, even dogged, attempts to assert its 
baseless copyright have greatly reduced competition by erecting a 
huge barrier to entry in legal publishing markets.
---------------------------------------------------------------------------

    \9\ Ms. Kathryn M. Downing testified on behalf of Thomson 
Professional Publishing, Lawyers Cooperative Publishing Company, 
Clark Boardman Callaghan Company, Bancroft-Whitney Company, Research 
Institute of America Inc., Warren, Gorham and Lamont and Thomson 
Electronic Publishing. In 1995, Ms. Downing left Thomson to serve as 
Matthew Bender's CEO.
---------------------------------------------------------------------------

Neither the Department Nor the Court Should Approve the Final 
Judgment Unless It Is Modified To Preclude The Merged Entity From 
Enforcing its Alleged Star Pagination Copyrights

    In light of the foregoing, the deficiency in the Proposed Final 
Judgment's remedy to West's star pagination claims becomes 
apparent.\10\ The Complaint recognizes that West's assertion of its 
claim that star pagination infringes its copyright has an 
anticompetitive effect by serving as a barrier to entry into the 
relevant markets. See Complaint Paras. 32, 43. The Department 
further recognizes that West's copyright claim is baseless. See 
generally U.S. Amicus Memorandum. Yet, the Department has not taken 
the obvious and desirable step of removing that barrier by 
forbidding West from asserting its baseless copyright interest as a 
tool to stifle competition. This failure flies in the face of the 
Department's recognition that West's copyright claim is baseless. It 
also deviates from the remedies the federal government has demanded 
in other merger cases. See, e.g., Hoechst AG: Proposed Consent 
Agreement, 60 Fed. Reg. 49609, 49611 (September 26, 1995) (filed by 
FTC); United States v. Borland Int'l. Inc., 56 Fed. Reg. 56096 
(October 31, 1991). In both Hoechst AG and Borland, Int'l., the 
government conditioned approval of the merger on the consent of the 
merging entity not to enforce an intellectual property right. In 
neither of those instances did the government dispute the validity 
of the intellectual property at issue. One is therefore left to 
wonder why the government has chosen to settle for less where it 
believes that the intellectual property interest asserted is 
invalid.
---------------------------------------------------------------------------

    \10\ Neither the Complaint, the Proposed Final Judgment nor the 
License addresses the use by competitors of initial parallel 
citations to West's National Reporter System. This is not surprising 
given West's public statements that initial parallel citations are 
in the ``public domain.'' Nevertheless, in light of the position 
that West has taken in Matthew Bender v. West, the Department should 
put an end to this game playing and not approve the merger unless 
Thomson/West agrees that it will never assert that any of its rights 
have been infringed by a competitor's use of initial parallel 
citations.
---------------------------------------------------------------------------

    Matthew Bender believes that the Department should not let 
Thomson/West consummate their merger unless Thomson/West agrees that 
it will not seek to enforce any star pagination copyrights.\11\ In 
its

[[Page 53439]]

Competitive Impact Statement, the Department recognizes that, in 
light of the proposed Thomson/West merger, it is critical to lower 
the barriers to entry in legal publishing markets to maintain the 
vigorous competition that currently exists. 61 Fed. Reg. at 35263. 
Moreover, Matthew Bender believes that the maintenance of vigorous 
competition after the consummation of the Thomson/West merger 
requires elimination of the barrier to entry caused by the erroneous 
assertion of the star pagination copyright for reason not mentioned 
by the Department in its Competitive Impact Statement. By merging 
West's virtual monopoly position in enhanced primary law products 
with Thomson's capability in secondary law products, the merged 
Thomson/West entity will be able to use its market power in the 
enhanced primary law product markets to gain an unfair competitive 
advantage in the secondary law product markets. No longer will West 
have to develop its own secondary law products. Instead, Thomson/
West will be able to marry West's primary law products with 
Thomson's secondary law products to create products that competitors 
in the secondary law product markets cannot match without the right 
to use West's star pagination. The newly achieved strength of 
Thomson/West in the secondary law product markets will thus greatly 
increase the anticompetitive effects of continued attempts to 
enforce West's star pagination copyright.
---------------------------------------------------------------------------

    \11\ Recent reports suggest that Thomson has done a complete 
flip-flop on this issue. Thomson previously backed legislation to 
amend the U.S. Copyright Act that would have removed the star 
pagination barrier by clarifying there is no copyright in the volume 
and page numbers of judicial reporters. See generally Exclusion of 
Copyright Protection for Certain Legal Compilations: Hearings on 
H.R. 4426 Before the Subcomm. on Intellectual Prop. and Judicial 
Admin., 102nd Cong., 2d Sess., Serial No. 105 at 91 (1992) (Thomson 
supports legislation because it ``would overrule the West [v. Mead] 
decision and enable Thomson and others to publish . . . primary 
legal texts.'') (Testimony of Kathryn Downing). West's then outside 
counsel and later president, Vance K. Opperman, proving yet again 
the lengths to which West will go to protect its sham copyright, 
outrageously derided the bill as an attempt by Canadian Thomson to 
rob an American company's assets. See, e.g., Prepared Statement of 
Vance Opperman, id. at 159 (``Perhaps more disturbing is the motive 
of the primary proponent of H.R. 4426, Lord Thomson and his foreign-
based Thomson conglomerate. We have all witnessed past efforts by 
foreign firms, acting under the guise of the U.S. subsidiaries they 
have bought up, to alter or dismantle fundamental American laws for 
their own profit and at the expenses of American jobs and 
prosperity.''); see also Testimony of Minnesota Congressman James 
Ramstad, id. at 5 (``The legislation being considered today 
represents an effort by one of the largest and most powerful foreign 
conglomerates in the world, led by an English lord, to win in the 
U.S. Congress what it knows it cannot win in the courts.''). The 
prospect of merger appears to have caused Thomson to adopt West's 
views on star pagination. See Vera Titunik, That Was Then, This Is 
Now, American Lawyer 21 (April 1996) (quoting Thomson's general 
counsel Michael Harris as saying, ``We believe star pagination is 
copyrightable''). Accordingly, Matthew Bender expects that Thomson 
will continue West's aggressive assertion of claims that star 
pagination infringes West's copyrights.
---------------------------------------------------------------------------

    For these reasons, the Thomson/West merger presents a compelling 
example of the need to condition government approval of a merger on 
an agreement not to enforce an alleged intellectual property right. 
The merger here, like the mergers in Hoechst AG and Borland Int'l, 
increases concentration in already concentrated markets. However, 
unlike those cases, the intellectual property right at issue is 
baseless, and the merger itself increases the harm from assertion of 
the intellectual property right.
    The Department is apparently under the impression that the 
proposed mandatory license will fulfill the objective of removing 
the barrier to entry caused by West's assertion of the star 
pagination copyright. For several reasons, the Department is wrong. 
First, the terms of the license are so onerous that few, if any, 
competitors of West will be able to take advantage of it. As noted 
in the letter submitted to the Department by Lexis-Nexis, the 
pricing is very high (of course, any fee for what even the 
Department recognizes is a non-existent right is too high). Indeed, 
if the information cited by Lexis-Nexis is correct, the price is 
being set at a level that West negotiated as a settlement after its 
courtroom victory in West v. Meed.\12\ In light of the Supreme 
Court's decision in Feist, it is inconceivable that West could 
insist on that high a royalty again.\13\ The license is also not 
absolute. West apparently can still challenge a licensee's use of 
star pagination if West contends that the licensee has not made its 
own selection, coordination and arrangement of cases. See License at 
para. 1.03.\14\ And, as discussed more fully below, the license 
contains at least two terms that will reduce, not enhance, a 
licensee's ability to compete with Thomson/West in the marketplace. 
See License para. 1.04 (which effectively requires a licensee to 
preview its products for Thomson/West) and para. 3.01 (requiring the 
licensee not to challenge West's copyright during the term of the 
license). Matthew Bender submits that, under these conditions, the 
Department cannot and should not rely upon the mandatory license 
feature of the Proposed Final Judgment as a vehicle for preserving 
vigorous competition in legal publishing markets following a 
Thomson/West merger.
---------------------------------------------------------------------------

    \12\ The problem is exacerbated by the term calling for a 
payment of fees for every ``format.'' License para. 2.03. This means 
that licensees will have to repay fees each time they make their 
content available in a new format, so that the CD-ROM, HDCD and 
Internet versions of a work each will require a repayment of fees 
for the same data. This provision will discourage licensees from 
servicing their installed base as it migrates to new formats and act 
as a barrier to providing products in all but the most popular 
formats.
    \13\ Nonetheless, West has already demonstrated, in a brief 
filed in the Matthew Bender v. West litigation, that it will attempt 
to use these License terms against adversaries by contending that 
the royalties are ``rates which the Antitrust Divisions approved as 
commercially reasonable,'' and that ``the negotiation of the 
Proposed Final Judgment does resolve any possible antitrust concern 
regarding the availability of star pagination licenses to West 
competitors.'' West Publishing Company's Memorandum Of Law In 
Opposition To The Memorandum Of The Antitrust Division Of the 
Department Of Justice As Amicus Curiae at 1 (filed August 26, 1996) 
(emphasis added).
    \14\ West has left the License intentionally ambiguous as to 
whether it applies if a licensee creates a compilation of cases that 
West contends mirrors West's selection of cases. For example, if a 
licensee created a compilation that contains the same selection of 
opinions as found in West's Federal Reporter (i.e., all published 
federal appellate opinions), West could contend that those opinions 
were not independently ``selected for reporting by Licensee,'' para. 
1.03, and therefore are beyond the purview of the License.
---------------------------------------------------------------------------

    Finally, Matthew Bender notes that the Proposed Final Judgment 
will actually result in positive injury to third parties who compete 
with the merged Thomson/West entity. The star pagination License 
Agreement mandated by Section IX of the Proposed Final Judgment 
effectively requires licensees to provide West with an advance 
description of the product or service in which they intend to 
include star pagination. See License para. 1.04. Thomson/West will 
thus be in a position to modify its products to address the 
enhancements offered by its competitor even before its competitor's 
product can be sold. Not only will this give Thomson/West a 
competitive advantage over the particular competitor seeking a 
license, but it will also give an advantage over other competitors 
in the market who will have to wait until the new product is sold to 
develop a competitive response.
    The star pagination license also results in positive injury to 
third parties who compete with Thomson/West because it provides that 
``[d]uring the term of this Agreement, Licensee (i) shall respect 
and not contest the validity of the copyrights claimed by Licensor 
in Licensor's arrangements of case reports in NRS Reporters as 
expressed by NRS Pagination; * * * .'' License Sec. 3.01. This 
provision will effectively prevent a licensee form challenging 
West's copyright.\15\ This not only harms the licensee by subjecting 
it to an expensive, highly restrictive license for a non-existent 
copyright, but it harms all competitors of Thomson/West and all 
consumers of legal research material because it reduces the 
likelihood that an effective court challenge will be mounted that 
invalidates West's copyright claims. Thus, the Proposed Final 
Judgment simultaneously fails to take the opportunity that now 
exists to remove the artificial barrier to entry caused by West's 
improper assertion of its star pagination copyright and diminishes 
the likelihood the problem will be solved later by private 
litigation.
---------------------------------------------------------------------------

    \15\ There is some question about whether this provision is 
enforceable. Compare, Lear v. Adkins, 395 U.S. 653 (1969) (a patent 
case invalidating on public policy grounds the doctrine of 
``licensee estoppel,'' i.e., the doctrine that a licensee may not 
challenge the validity of the licensed patent), with Saturday 
Evening Post Co. v. Rumbleseat Press, Inc., 816 F.2d 1191, 1200 (7th 
Cir. 1987)(allowing enforcement of a no contest clause in a 
copyright license). Rumbleseat in turn has been criticized by the 
leading copyright commentator. See, 3 Melville Nimmer & David Nimmer 
Nimmer on Copyright Sec. 10.15[B]).
---------------------------------------------------------------------------

    For the reasons stated in this letter, Matthew Bender urges the 
Department not to approve the proposed Final Judgment without 
modification to prohibit Thomson/West from enforcing any alleged 
star pagination copyright. In the event that the Department does 
give its approval, Matthew Bender urges the Court to recognize the 
positive injury to third parties caused by the proposed final 
judgment and to refuse to approve it absent the same modification.

        Sincerely,
James Imbriaco,

Associate General Counsel, and General Counsel, Professional 
Publishing, The Times Mirror Company, 780 Third Avenue, 40th Floor, 
New York, New York 10017.


[[Page 53440]]


James Imbriaco,

Counsel for Matthew Bender & Company, Inc., a wholly-owned 
subsidiary of The Times Mirror Company.

Irell & Manella LLP,

Morgan Chu, Alex Wiles, Elliot Brown.

Morgan Chu,

Counsel for Matthew Bender & Company, Inc.

Alexander Wiles,

Counsel for Matthew Bender & Company, Inc.

Elliot Brown,

Counsel for Matthew Bender & Company, Inc.

CD Law

August 29, 1996.
Craig W. Conrath,
Chief, Merger Task Force, Antitrust Division, United States 
Department of Justice, Suite 4800, 1401 H. Street, N.W., Washington 
D.C. 20530

Re: Thomson Acquisition of West: Public Comment re Proposed Final 
Judgment

    Dear Mr. Conrath: I have reviewed the Antitrust Division's July 
5, 1996 filing in the Federal Register with respect to the above-
referenced matter (61 Fed. Reg. 35250). Please consider this letter 
responsive to that request for public comment.
    I founded CD Law, Inc., of Seattle, Washington, in 1989. We 
publish case law, statutes, administrative law, and other Washington 
State legal materials on CD-ROM and on the Internet. Our computer-
assisted legal research products are exclusively digital, not print.
    We compete directly with West Publishing in the Washington legal 
CD-ROM business. To a lesser extent, we compete with Michie 
Publishing, the Reed-Elsevier subsidiary, which publishes a CD-ROM 
for Washington. Additionally, we have a somewhat unusual short-term 
contract with Lawyers Cooperative Publishing (``LCP'') to produce 
headnotes that are used in their Official Washington Reports. Given 
these facts, I have been in a unique position to observe the state 
of the Washington legal publishing market. My comments are based on 
six years of first-hand experience competing with the largest legal 
publishers in the United States.
    In a nutshell, I feel that the proposed final judgment not only 
will do nothing to preserve competition in Washington State, but 
that in fact it will reduce competition and do grave damage to the 
market for legal materials in Washington. This is true even though 
Washington was one of three states given the option to rebid their 
official court reports. The acquisition eliminates competition for 
enhanced case law reports in Washington, and will adversely impact 
the market for competing electronic products. I strongly urge the 
Department of Justice to withdraw its consent to the Proposed Final 
Judgment and deny the Thomson Corporation permission to acquire West 
Publishing. Failing that, the DOJ should at a minimum require 
Thomson to divest Lawyers Cooperative Publishing as a precondition 
of the purchase of West.
    The following pages detail my objections to the Proposed Final 
Judgment and the proposed pagination licensing agreement. While my 
focus in this letter is primarily on Washington State, my objections 
also extend to matters of a more national scope.

I. Thomson and West Competed Vigorously for the Contract to Publish the 
Official Washington State Reports

    As the Department of Justice's filing in the Federal Register on 
July 5, 1996 recognizes, Washington State is one of at least nine 
markets in which the HHI measure of market concentration 
presumptively raises antitrust concerns. The post-merger HHI 
increase in Washington (996) is substantially above the number (100) 
that raises the presumption. As I indicated in a previous letter to 
DOJ, the Washington State legal publishing market is pervaded with 
anti-competitive practices that include predatory pricing, exclusive 
contracts for certain legal materials, and tying agreements. The DOJ 
consent decree does little or nothing to prevent or ameliorate these 
practices. A brief review of recent developments in the Washington 
State legal publishing business made these facts clear.

a.) Washington Case Law Was Published by the State From 1982-1995

    A Washington state agency known as the Commission on Supreme 
Court Reports published the printed Washington case law from 1982 to 
June 30, 1995. The printed advance sheet annual subscription to the 
Washington Reports were sold by the Commission at an ``an cost'' 
basis: $52.50 per year for the Supreme Court Reports and $52.50 per 
year for the Court of Appeals Reports in advance sheet form. Bound 
volumes cost $19.50 for ``current volumes'' (recently issued 
volumes) and $22.50 for older volumes.

b.) The Official Washington Reports Were Privatized in 1995

    In early 1995, in response to funding cuts by the 1994 
Legislature, the Washington Supreme Court decided to privatize the 
publication of the Washington case law. The Office of the 
Administrator for the Courts in Olympia, WA issued RFP #95055, which 
called for bids on a combined print and CD-ROM version of the 
Official Washington Reports. Both West Publishing and Lawyers 
Cooperative Publishing (``LCP''), a Thomson subsidiary, bid on the 
job.

c.) ``Cost Comparison'' Analysis by Court Reveals West/Thomson 
Competition

    Lawyers Cooperative Publishing and West Publishing submitted the 
two lowest bids for the print version of the Washington case law. I 
enclose a sheet labelled ``Cost Comparison'' that breaks down each 
vendor's response to the RFP. The Cost Comparison information was 
compiled by the Office of the Administrator for the Courts. Their 
telephone number in Olympia, Washington is (360) 705-5239.

d.) West Cut Prices by Over $40.00 per Volume in Attempt To Win 
Washington Bid

    At the time of the RFP, West published a competing set of 
printed Washington case law volumes titled ``Washington Reporter.'' 
The cost for West's volumes was and is $57.62 per bound volume and 
$97.38 for advance sheets. Compare that price with their bid of 
$17.50 plus $2.75 shipping for bound volumes in response to the RFP.

e.) Competition led to substantially lower consumer prices in 
Washington

    The successful vendor on the RFP was Thomason subsidiary Lawyers 
Cooperative Publishing (``LCP''), who began publishing the Official 
Washington Reports effective July 1, 1995. As the Cost Comparison 
shows, there was significant competition between LCP and West. As a 
result of this competition, Washington lawyers and law firms are now 
paying $9.00 per year less for advance sheets and $5.50 less for 
bound volumes than they were when the Reports were published by the 
State.

II. The Acquisition Eliminates ``Enhanced Case Law'' Print Competition 
in Washington, and Thereby Significantly Undermines Competing 
Electronic Publications

a.) The Official Publisher May Claim Copyright in the Washington 
Headnotes

    Under the terms of the contract to publish the Washington 
Reports, the official publisher is allowed to claim copyright in the 
headnotes produced for the State of Washington. The DOJ recognizes 
that ``. . . a sophisticated editorial staff would be needed to 
create the headnotes and summaries . . .'' (See Complaint, at para. 
31.) From first-hand experience, I know that headnotes and case 
summaries are both useful and expensive to produce.

b.) The printed Official Reports control the electronic market

    My company entered into a short-term contract with Lawyers 
Cooperative Publishing whereby we draft the official headnotes for 
the Washington case law and fax them to the Reporter of Decisions in 
Olympia, WA. The headnotes are then reviewed by the Washington 
Supreme Court and Court of Appeals, finalized, and returned to us. 
We then send the headnotes by e-mail to LCP. Under the terms of our 
contract with LCP, LCP retains the copyright to the headnotes, while 
we retain the right to use these headnotes in our electronic 
products during the term of the contract. LCP paid us a flat sum for 
the time period in question. The contract ends in mid-December, 
1996. This will leave Thomson/West the only vendor of enhanced case 
law for Washington.
    The upshot is that a competing publisher (my company, CD Law) is 
now authoring and using the official Washington headnotes in our 
unofficial CD-ROM product, while the copyright to the headnotes is 
held by LCP and used in their official print product. The presence 
of the official Washington headnotes in our product is a definite 
sales advantage for my company. We have been told by LCP executives 
that their company is in a dilemma as to how to market a competing 
CD-ROM product against us (as they are required to do by their 
contract with the State of Washington) given this factual situation.
    I believe that Thomson/West will seek to gain a competitive 
advantage against us by not renewing our contract. We will be forced 
to attempt to compete with Thomson/West with an unenhanced case law 
product. As the

[[Page 53441]]

DOJ recognizes, ``[U]nenhanced case law publications . . . are not 
substitutes for enhanced case law.'' Complaint, at para. 24. The 
practical lesson is this: Whoever controls the right to publish the 
Official Washington Reports also controls the headnotes. Whoever 
controls the headnotes can, to a large degree, control the 
marketplace in the CD-ROM Market.

c. There are virtually no publishers capable of competing with 
West/Thomson

    If the West/Thomson merger is approved, there will be no 
competition for enhanced case law in Washington. Should the 
Washington Supreme Court decide to exercise its option to rebid the 
Washington Reports, there is only one other publisher that has the 
expertise, printing presses, capital, trained staff, and know-how to 
produce an enhanced case law product for Washington: Michie 
Publishing Company.
    However, Michie has met with very limited success in Washington 
with is CD-ROM case law product. And according to Kendall Svengalis' 
``Legal Information Buyer's Guide & Reference Manual,'' Michie 
publishes enhanced print case law products in a tiny handful of 
states, far fewer than the combined West/Thomson entity. From what I 
can determine, I believe it is unlikely that Michie would bid on the 
Washington Reports should they be rebid, or be the successful vendor 
if they did bid. Similarly, the other company that bid on the 
Washington RFP, Darby Publishing of Georgia, publishes enhanced case 
law in only one state. Both Michie and Darby's bids were 
significantly higher than West and LCP's.
    My company, CD Law, is certainly not a potential competitor with 
West/Thomson for the official printed Washington Reports. We simply 
do not have the ability to produce a competitively priced print 
product. While we were the lowest bidder on the CD-ROM side of the 
Washington RFP, we were far and away the highest bidder on the print 
side. It is not reasonable to assume that a company the size of mine 
can compete effectively with a company like West/Thomson for printed 
enhanced case law legal materials. Both West and Thomson enjoy 
enormous economies of scale in producing numerous print publications 
that cannot be duplicated by smaller publishers like CD Law. If the 
acquisition is permitted to go through, there would be no effective 
check on Thomson's ability to engage in below-cost pricing and 
eventually to charge monopoly prices for its products.

d. Print concentration will destroy competing digital products

    Given these facts, it is a foregone conclusion that West/Thomson 
will control the market for enhanced case law materials in 
Washington. The only remaining competitor will be my company, CD 
Law, whose CD-ROM product will lack headnotes and case summaries, 
and Michie, who has to my knowledge sold very few, if any, of its 
CD-ROM product for Washington State. As the DOJ pointed out in para. 
22 of its Complaint, ``Full-text searching of primary law on an 
online legal research service or a CD-ROM is a partial substitute 
for the enhanced primary law materials sold by each of the parties. 
It is not a good substitute, for most users and most uses, because 
full text searching does not provide users with the editorial 
analysis of the West or Thomson enhanced primary law products.'' 
(Emphasis added.)

III. Predatory Practices Will Continue Unabated With This Final 
Judgment

a. Exclusive Contracts

    Since 1963, West Publishing has enjoyed an exclusive contract 
with the Washington Committee on Pattern Jury Instructions, which is 
charged with publishing our State's Jury Instructions. West used the 
threat of litigation to force the Washington State Bar Association 
(``WSBA'') to remove the Washington Pattern Jury Instructions from 
the WSBA's ``LAW BBS,'' a Bulletin Board Service run by the WSBA 
that contains miscellaneous Washington legal materials to the Bar 
and to the public. When my company approached West Publishing for a 
license to reproduce these materials, West offered the materials to 
my company for $7,000 plus $3,500 in ``annual fees.'' I enclose a 
letter from James Schatz, West's counsel, as Exhibit Two.
    As Schatz's letter indicates, West would not agree to license 
the notes, comments or other materials written by the Committee. It 
is these analytical materials, none of which were written or 
enhanced by West, that make the Pattern Jury Instructions useful. 
Interestingly, West sales representatives have sent out mailings 
indicating that they give away the Washington Pattern Jury 
Instructions without charge to CD-ROM subscribers (see copy attached 
as Exhibit Three).
    West's proposed $10,500 license for the Washington Pattern Jury 
Instruction contains about 800,000 bytes of data or about 400 pages, 
which easily fits on to one floppy disk. If this is indicative of 
the licensing agreements that we can expect from the new West/
Thomson consortium, I think that ``higher prices and reduced product 
quality'' noted in the Competitive Impact Statement has been vastly 
understated.
    West Publishing also paid $25,000 to purchase an exclusive 
contract to republish Washington Jury Verdicts. The sum was paid to 
a Washington company called Jury Verdicts Northwest. These are just 
two examples of exclusive contracts paid for by monopoly profits.

b. Predatory Pricing and Tying Practices

    West charges $30 per month for updates to its Washington case 
law CD-ROM. I believe that this is one of the lowest charges in the 
United States by West and that this figure is below their cost of 
production. West also waives monthly access charges to its online 
service, Westlaw, for its Washington CD-ROM subscribers. Finally, 
West has recently announced that effective April 1, 1996, it will 
provide access to the latest Washington case law and statutes ``at 
no extra charge.'' To quote the direct mail piece. ``[T]he new 
online update service comes with no increase in your regular 
subscription charge.'' See copy of mailing, attached as Exhibit 
Four. Ordinarily, West charges on the order of $175 per hour to 
access these same materials. This is yet another indication of 
below-cost pricing.
    The practice of tying print, CD-ROM, and online services 
together at or below cost make it very difficult for smaller 
publishers to compete in the market place. I have no reason to 
believe that the tying practices, below cost and/or predatory 
pricing now engaged in by West will be improved after the Thomson 
takeover.
    The Department of Justice and the Attorney General of the State 
of Washington have done nothing in the Proposed Final Judgment to 
address these concerns, all of which were documented in previous 
filings with the Department of Justice.

c. Meaningless Divestiture Assets in Washington

    Thomson was required to divest the ``Washington Trial Handbook'' 
as part of the consent decree. Evidently, this is a Bancroft Witney 
publication. Before I started CD Law, I practiced law in Seattle for 
six years. I never once heard of this publication or used it. In the 
nearly seven years I've been in the legal publishing business I have 
never seen this title on anyone's bookshelf. It is not in any sense 
a meaningful divestiture item and will do nothing to preserve 
competition in Washington State.

IV. Other Concerns

    I have other concerns with the proposed consent decree that are 
less provincial. The fact that DOJ required West to license its 
pagination is fine, but the cost ($.09 per 1.000 characters in the 
first year) is prohibitive for all but the biggest publishers. The 
fact that the pagination license agreement prevents the licensee 
from disputing copyright claims held by West/Thomson is odious. The 
fact that arbitration is held in Minnesota if disputes arise under 
the proposed license gives Thomson an unfair home advantage.
    The root of my objection to the proposed licensing agreement is 
that the fact remains that there is great uncertainty in the 
validity of the West pagination copyright. I believe that putting 
such an expensive premium on what the Department of Justice 
evidently does not itself believe to be a valid copyright will 
result in few, if any, pagination licenses being issued. It is 
therefore a meaningless gesture.
    In my opinion, the Department of Justice should have litigated 
this proposed acquisition. The DOJ amicus brief filed in the Bender 
v. West action in the Southern District of New York is indicative 
that someone at DOJ wanted to litigate one or more of the issues 
presented in this merger/acquisition. As indicated in the DOJ filing 
in the Federal Register on July 5, 1996, the Antitrust Division is 
free to withdraw its consent to the proposed Final Judgment, and I 
urge it to do so now.

V. Conclusion

    If I were to suggest one single action that would allay most if 
not all of my concerns, it would be to require the complete 
divestiture of Lawyers Cooperative Publishing from the proposed 
West/Thomson conglomerate. That would have the practical effect of 
requiring the two biggest state law publishers in the United States 
to continue

[[Page 53442]]

to do what they have done in the past: compete vigorously, to the 
great advantage of the American legal community and citizens.

        Sincerely,
Scott Wetzel

Enclosures

    This chart could not be reprinted in the Federal Register, 
however, they may be inspected in Suite 215, U.S. Department of 
Justice, Legal Procedures Unit, 325 7th St., N.W., Washington, D.C. 
at (202) 514-2481 and at the Office of the Clerk of the United 
States District Court for the District of Columbia.

Schatz Paquin

Lockridge Grindal & Holstein P.L.L.P.

May 10, 1996
VIA FACSIMILE #206/624-8458
Mr. Scott Wetzel,
CD Law, Inc., Suite 1610, 1900 Second Avenue, Seattle, WA 98104
    Dear Scott: West has now had a chance to consider your request 
and is willing to grant CD Law a license to include the civil and 
criminal jury instructions contained in its Washington Pattern Jury 
Instructions publications on CD Law's Washington CD-ROM product. 
This would not include the notes, comments or any other contents of 
such publications. West would be willing to provide the jury 
instructions to CD Law in electronic form (800,000 plus characters), 
and to provide complete new electronic forms (i.e., all jury 
instructions whether or not changed) every time a pocket part 
(containing new or revised jury instructions) or a new edition of 
either publication is published. West would be willing to grant this 
license for an initial fee of $7,000 and annual fees of $3,500 over 
a reasonable term, all subject to reasonable mutually-agreed 
contract terms.
    If you are interested in pursuing this matter, please get back 
to me with any other specific contract details you desire such as 
length of agreement, any timing details, etc. I look forward to 
hearing from you.

    Very truly yours,

Schatz Paquin
Lockridge Grindal & Holstein P.L.L.P.

James E. Schatz.

    This page could not be reprinted in the Federal Register, 
however, they may be inspected in Suite 215, U.S. Department of 
Justice, Legal Procedures Unit, 325 7th St., N.W., Washington, D.C. 
at (202) 514-2481 and at the Office of the Clerk of the United 
States District Court for the District of Columbia.
    This page could not be reprinted in the Federal Register, 
however, they may be inspected in Suite 215, U.S. Department of 
Justice, Legal Procedures Unit, 325 7th St., N.W., Washington, DC at 
(202) 514-2481 and at the Office of the Clerk of the United States 
District Court for the District of Columbia.

Broad and Cassel

Attorneys at Law

August 27, 1996
Mr. Craig W. Conrath,
Chief, Merger Task Force, Antitrust Division, United States 
Department of Justice, 1401 H Street, N.W., Suite 4000, Washington, 
DC 20530

Re: Proposed Consent Decree Between United States of America v. The 
Thompson Corporation and West Publishing Company Publication dated 
July 5, 1996, Our File No. 17666.0001

    Dear Mr. Conrath: This firm represents Oasis Publishing Company, 
Inc. Oasis is a Nebraska corporation, whose business is the 
publication of court decisions and statutes on CD-ROM. Pursuant to 
Section V, Oasis notifies you of its opposition to the proposed 
Consent Decree for two (2) primary reasons. First, Oasis objects to 
the decree in that such decree would add legitimacy to West's 
assertion, contrary both to age-old precedent and to recent trends, 
that its copyrights extend to the pagination of its reports. Oasis 
submits to you, as it is currently arguing in the United States 
Eighth Circuit Court of Appeal, that West does not have such a 
copyright. Unfortunately, the proposed license agreement that is 
part of the settlement would inappropriately require a licensee to 
recognize West's claim of copyright to the pagination, as a 
condition of such license.
    Second, the proposed licensing fee caps set forth in the Consent 
Decree are prohibitive to competitors like Oasis, whose market niche 
would primarily be the users of low-cost, unenhanced, primary law 
materials. For example, in Florida during 1995, West published 
Volumes 647 through 668 of Florida Cases. The approximate total 
number of pages for that year was 7,787, with each page containing 
roughly 3,710 characters. Assuming a similar number of pages and 
characters for each year since the beginning of Florida Cases, 1949, 
the annual license fee for this information could be as high as 
$2,566,247.00 (at $.09 per 1,000 characters) or $3,706,846.20 (at 
$.13 per 1,000 characters)--a ridiculously and prohibitively 
excessive amount. These estimates show, at a minimum, that entry 
into the market at a level which would permit competition with West/
Thomson would be a monumental hurdle that few, if any, could 
overcome, based on the proposed maximum licensing fees set forth in 
the proposed consent decree.
    On the basis set forth herein, Oasis urges withdrawal of the 
Consent Decree, and submits that such decree would create an 
improper guise of legitimacy for West's continued monopolistic 
conduct and an illusory solution to the significant barrier to 
market entry that currently exists as a result of West's claims. 
Oasis respectfully suggests that any settlement should require 
Thomson/West to stop asserting any claim of copyright to the 
pagination of its reporters, as a condition to the Merger.

        Sincerely,
Jose I. Rojas, P.A.,
For the Firm, Attorneys for Oasis Publishing Company.

Broad and Cassel

Attorneys at Law

August 30, 1996.
Mr. Craig W. Conrath,
Chief, Merger Task Force, Antitrust Division, United States 
Department of Justice, 1401 H Street, N.W., Suite 4000, Washington, 
D.C. 20530.

Re: Oasis Publishing Company v. West Publishing Company, Our File 
No. 17666.0001

    Dear Mr. Conrath: This letter is sent in follow-up to our letter 
dated August 27, 1996 for the purpose of clarifying the calculations 
set forth therein.
    The Consent decree requires that the license fee be paid each 
year. Therefore, based again on 1995, wherein a total of 7,787 pages 
were published in Florida Cases, and which contained pages including 
an average of 3,710 characters per page, the license fee (for data 
needed from 1949 through 1995) would total approximately $119,603.22 
(at $.09 per 1000 characters) or $172,760 per year (at $.13 per 1000 
characters), each year. Moreover, this fee paid to West would 
increase every year as more and more volumes are added. As stated in 
our August 27, 1996 letter, this amount is prohibitive to a company 
like Oasis, and would not only discourage competition, but 
effectively prohibit it.
    If you have any questions, or need additional information, 
please call.

        Very truly yours,
Jose I. Rojas, P.A.,
For the Firm.

American Association of Legal Publishers

September 3, 1996.
Mr. Craig Conrath, Esq.,
Chief, Merger Task Force, Antitrust Division, U.S. Department of 
Justice, Suite 4800, 1401 H Street, NW, Washington, DC 20530

Re: Pending Settlement of West/Thomson Merger

    Dear Mr. Conrath: The American Association of Legal Publishers 
(AALP) submits these comments in response to the July 5, 1996 
announcement in the Federal Register for comments on the proposed 
settlement of the merger of West and Thomson Publishing Companies. 
We are limiting our comments to two barriers to competition of great 
concern to AALP members: (1) the unavailability of an archive of 
judicial decisions as discussed in paragraph 30 of the Department's 
complaint in this matter, and (2) the proposed license agreement to 
make West's internal pagination in an opinion available to other 
legal publishers.
    AALP is a trade association of small legal publishers and 
creators of computer software used in electronic legal research 
materials. Our members produce products in print, CD and online. A 
copy of our Statement of Principles is attached.
    Many of our members have submitted statements directly to your 
office. One member, International Compu Research, Inc. is submitting 
its statement herewith. It is Exhibit 1 hereto.

Access to an Archive of Judicial Opinions

    To produce a meaningful and useful primary or secondary legal 
research product, a publisher must have access to an archive

[[Page 53443]]

of judicial decisions. Although there is no agreement as to how 
extensive the archive should be, most publishers seek as much depth 
as possible and consider 35 years to be a minimum. For state and 
federal supreme courts, a complete archive of all judicial opinions 
issued is considered desirable while a less complete archive of 
lower court opinions may be acceptable. However, as long as there is 
one publisher offering a complete archive of all opinions issued by 
a particular court, competitors offering less are at a severe 
disadvantage and must sell their product for a lower price.
    It is widely believed that anyone can easily obtain judicial 
opinions. For example, Judge Gladys Kessler of the Federal District 
Court for the District of Columbia in her January 16, 1996 
memorandum opinion in the case of Tax Analysts v. U.S. Department of 
Justice, 913 F. Supp 599 (D.D.C. 1996).
    ``And as Defendants properly point out, the public may still 
obtain public-domain material--i.e., non-West formatted material--
from the government directly for nominal copying costs (e.g. through 
the clerk's office in a courthouse).'' 913 F. Supp 605.
    In this quote, the ``Defendants'' to which Judge Kessler is 
referring are the Civil Division of the U.S. Department of Justice 
and defendant-intervenor West Publishing Company.
    In paragraph 30 of its complaint in this matter, the Antitrust 
Division of the Department of Justice states that ``Past and/or 
current opinions simply are not available from many courts, and in 
many others, obtaining access is costly and time-consuming.'' Since 
reading this paragraph, AALP has spent considerable time, energy and 
funds trying to obtain a copy of an original decision issued by 
judges in a specific case in the following federal district courts:

Southern District of New York
District of New Jersey
District of Delaware
Eastern District of Pennsylvania
Middle District of Pennsylvania, Erie Division
Western District of Pennsylvania
District of Maryland
District of Columbia
Eastern District of Virginia, Richmond Division
Eastern District of Virginia, Newport News Division
Eastern District of South Carolina, Florence Division
Northern District of Illinois, Eastern Division
Southern District of Iowa, Central Division

    There are three ways to obtain materials from closed cases. They 
are to purchase them from a commercial search service, have them 
sent to the federal district court in which the case was venued and 
go to the federal records center in which the file is stored. AALP 
tested all three methods.
    Opinions from three closed files were ordered from Prentice-
Hall's document location service on August 12, 1996. One of the 
opinions from a federal district court in Illinois was received in 
about 18 days at a cost of $65.50 for a 6 page opinion. The other 
two decisions requested from the federal district courts in South 
Carolina and Iowa were not received by September 3rd and AALP was 
advised it would take an additional one to three weeks to obtain 
these cases. See Affidavit A attached.
    Five files were requested from the Federal District Court of 
Maryland in Baltimore. Only one file was ever available. AALP was 
not told until almost three weeks after the request was made that 
the other four files were in the archives in Philadelphia. See 
Affidavit B attached.
    A total of 10 cases were reviewed at Federal Records Centers 
(FRC). Three cases reviewed at the FRC in New Jersey were from the 
Federal District Court of New Jersey and the desired opinions were 
available. However, the FRC in New Jersey also stores closed files 
from federal courts in New York and they constitute a significant 
portion of reported cases. This FRC only permits a visitor to review 
3 closed files per day, so any effort to obtain many cases will take 
a very long time, perhaps years, or have to involve many persons 
working simultaneously. See Affidavit C attached. Seven closed files 
from federal district courts in Virginia, Delaware and Pennsylvania 
were reviewed at the FRC in Philadelphia and two of the files did 
not contain the desired opinion. In one case, none of the materials 
concerned the case except for a cover sheet. See Affidavit D 
attached.
    Two cases had to be obtained from federal archives in New York 
and Philadelphia and those efforts were successful, see Affidavits B 
and E. The minimum charge is $6 per order and beyond that the cost 
is .25 per page copied.
    Major impediments exist in obtaining the closed file numbers, 
called accession numbers, needed to access a case located in a 
federal records center. District Courts in Washington, DC, 
Pittsburgh and New York City only supply this information by mail or 
to visitors. In several cases the information from F. Supp was 
incorrect, so the court could not provide AALP with an accession 
number. See Affidavits F, G and H. The Eastern Division of the 
Federal Districe Court of Philadelphia took almost 3 weeks to 
provide an accession number and even then was not sure it was 
correct. See Affidavit I. It also can take several phone calls 
before the correct person is reached, is available and finds the 
required numbers.
    Further, when first investigating how to obtain access to closed 
files, AALP received a wide variety of information, much of which 
was false or confusing. Affidavits L through T report on these 
efforts concerning nine other district courts not discussed nor 
listed above.

Proposed License Agreement

    AALP is strongly opposed to the proposed licensing agreement for 
several reasons. First and foremost the license agreement only 
covers access to West's internal page numbers. However, given the 
difficulties described above in obtain judicial opinions and the 
failure of the Department to remedy this situation, page numbers are 
a secondary concern. A page number is meaningless if one does not 
have the text to put on the page.
    If by some miracle a publisher obtained the text, one must then 
confront a licensing agreement which, as proposed, could serve as a 
textbook example of a contract of adhesion. The agreement in its 
entirety favors West and emasculates the licensee. Among the most 
onerous portions are the following:
    Article 1 The purpose of the license--to lower barriers to 
competition--is totally undermined by only licensing original 
compilations and West's right to determine what is an original 
compilation. This would eliminate any possibility of a licensee's 
product competing with an existing West product, such as Oasis 
Publishing Company's attempt to create a Florida product of judicial 
decisions. Competition occurs between an existing product and a new 
version of it, but this agreement gives West the authority not to 
license a competing product.
    The list of reporters subject to the license should include all 
West state reporters where it claims a proprietary right or does 
not. For each state reporter listed in the license agreement, West 
should state whether or not it claims a proprietary right.
    A licensee should be required to disclose to West only the most 
general ideas about the proposed use of the licensed materials. As 
written, Section 1.03 requires the licensee to provide the largest 
legal publisher in the world with advance notice of a new product, 
just the type of information a company wants to keep secret. Given 
that West always wants to keep secret everything it does or signs, 
it can certainly understand another publisher's reluctance to tell 
West its new product plans. Instead, the agreement should provide 
that the license is for the use of the licensed materials in 
professional quality materials to be used by the legal profession 
and others doing research. Products lacking an appropriate 
professional approach will be subject to revocation of the license 
with an arbitration in the home state of the licensee or in 
Washington, DC if revocation is contested.
    Section 2.03  License Fees--The fee is too high for a small 
publisher to afford. It is clear to AALP that this fee was developed 
without an understanding of the economics of legal publishing. Mr. 
Conrath called me in late June to discuss the proposed settlement 
and said ``the fee is less than Lexis pays West''. That may be true, 
but Lexis is a rich giant compared to 99 percent of all other legal 
publishers. If the proposed fees are not reduced by at least 75 
percent, AALP members have told me that no publisher will be able to 
afford them.
    Further, the fee should be paid by a publisher only once and not 
each year for each product, so if a publisher issues print and CD 
products with a case, he pays two license fees per year. There 
should be no license agreement for a publisher using fewer than 
5,000 opinions. Royalty payments should be payable upon publication 
for all licensees.
    Section 3.01  Copyrights. This section requires competing 
publishers to renounce their First Amendment right to express their 
opinions about the Licensor's alleged copyright during the term of 
the license. AALP cannot believe the U.S. Department of Justice 
would consent to or recommend such an onerous provision, 
particularly one which limits a person's constitutionally-protected

[[Page 53444]]

rights under any circumstances, much less in connection with a 
license agreement for page numbers to judicial opinions, even 
opinions which discuss and uphold the First Amendment. In the grand 
scheme of life in a democracy, access to West's internal page 
numbers are trivial compared to the First Amendment, so the quid pro 
quo proposed is all the more surreal.
    Article 4 AALP opposes all efforts to make the agreement 
confidential. Since the basic terms are going to be approved by the 
federal court reviewing this matter, the agreement is already public 
except for the individual details concerning each licensee. Under no 
circumstances should a licensee who consents to a secret agreement 
receive a better deal than one who does not.
    Section 6.07 Arbitration. This agreement is being issued under 
the supervision of the U.S. Department of Justice and is being 
reviewed and approved by the Federal Court for the District of 
Columbia, both entities located in Washington, D.C. Thus, all 
arbitration concerning this agreement should occur in Washington, 
D.C. under the auspices of the American Arbitration Association and 
should consist of a three person panel, one each selected by the 
Licensee and Licensor and one selected by the antitrust division of 
the Department. Under no circumstances should arbitration occur in 
Minnesota, West's home state and where it exerts a major influence 
over the business and legal community and the employment 
opportunities and financial security of thousands of families. If 
Washington, DC is not acceptable, arbitration should occur in the 
home state of the licensee.

    For all of the reasons listed above, AALP requests the 
Department of Justice to change the terms of the proposed settlement 
to truly lower barriers to competition in the legal publishing 
industry.

        Sincerely,
Eleanor J. Lewis.

Attachments

American Association of Legal Publishers

Statement of Principles

    1. Our legal system depends on prompt, unrestricted publication 
and dissemination of the law.
    2. The members of the American Association of Legal Publishers 
have joined together to support the common interests of legal 
publishers to promote and encourage publication and dissemination of 
the primary sources of the law upon which our legal system depends, 
as well as publication and dissemination of information and guidance 
about the law.
    3. Publication and dissemination of the law should not favor one 
medium (such as print) over another (such as electronic).
    4. The judicial opinions, statutes, regulations, and 
administrative rulings of the United States, and each of its states 
and subdivisions, are the property of the public. Notices relating 
to such documents, and all amendments to such documents, are also 
the property of the public.
    5. All judicial opinions, statutes, regulations, and 
administrative rulings, and all notices and amendments relating 
thereto, should be made easily available to all, on an equal basis, 
by the originating court, legislature, or agency, with only such 
charges as are necessary to defray the actual costs of 
dissemination.

Steps To Carry Out the Principles

    1. Judicial opinions, statutes, regulations, and administrative 
rulings should be identified by means of a vendor-neutral, public-
domain citation system.
    2. The official version of a judicial opinion, statute, 
regulation, or administrative ruling should be the version first 
released to the public by enrolling clerks and similar judicial and 
administrative officers, either in print or electronically. Changes 
should thereafter be made only by means of written orders filed with 
the same office as the original judicial opinion, statute, 
regulation, or ruling.
    3. Courts and other agencies should number the paragraphs in the 
opinions, rulings, and similar legal documents that they issue, in 
accordance with an agreed set of rules, so as to facilitate pinpoint 
references to those opinions, rulings, and similar documents.
    This letter could not be reprinted in the Federal Register, 
however, they may be inspected in Suite 215, U.S. Department of 
Justice, Legal Procedures Unit, 325 7th St., N.W., Washington, D.C. 
at (202) 514-2481 and at the Office of the Clerk of the United 
States District Court for the District of Columbia.

State of Maryland

County of Montgomery

    I, Eleanor J. Lewis, upon my oath state
    1. I am the Executive Secretary of the American Association of 
Legal Publishers.
    2. On Monday, August 12, 1996, I called Prentice Hall Legal and 
Financial Services in Washington, DC, 292/408-3120, and spoke with 
Mr. Freddie Collins. I ordered a copy of the judge's original 
opinion from three closed federal district court cases which I had 
selected from various volumes of Federal Supplement. The three 
opinions I wanted were:
    1. Opinion of December 19, 1961 in the case of Rakowsky v. 
U.S.A., case number 59 C 984 in the US District Court of Illinois, 
Northern District, Eastern Division.
    2. Opinion of November 5, 1962 in the case of Layton James v. 
Atlantic Coast Line Railroad Company, Civ. A. No. 7854 in the US 
District Court of South Carolina, Eastern District, Florence 
Division.
    3. Opinion of February 2, 1962 in the case of John Moeller et 
als, V. ICC, USA, et als, Civ. No. 4-1166 in the US District Court 
of Iowa, Southern District, Central Division.
    3. On August 12th I received the attached 3 pages confirming my 
order and estimating I would receive the requested materials by 
August 14th.
    4. On August 27, 1996 I recieved the requested Illinois decision 
and a bill for $65.50 (copy attached) for these materials.
    5. During the last two weeks of August I called Mr. Collins 
periodically to determine the status of my order. I spoke to Mr. 
Collins or Ms. Gloria Barry and was told that in South Carolina, 
``the correspondence traveled to Florence to get the decision but it 
wasn't there so she was going to Columbia, SC to obtain it.'' I was 
told on August 29th by Mr. Collins that the correspondent had 
determined the South Carolina case was in the archives in Atlanta 
and it would take another 7-10 days to obtain it.
    I was told by Ms. Barry the Iowa opinion was unavailable as of 
August 30th; it would take another 3-4 weeks to obtain it.
    6. I understand if any statements made by me are knowingly 
false, I am subject to punishment.
Eleanor J. Lewis,
    Sworn to and subscribed before me this 3rd day of September 
1996.

State of Maryland,
County of Montgomery.
Karen Klitsch,
Expires 7/1/97.

CSC Networks, Prentice Hall Legal and Financial Services

Status Report

Date: August 12, 1996.
To: Ms. Eleanor Lewis, American Association of Legal Publishers.
From: Freddie Collins/plb.
Fax No.: 301-652-2970.
Order #: 050280.
Client Ref: Not Provided.
Pages: 1.

Re: Interstate Commerce Commission USA, et al.

    The following is a schedule of an estimated turn around for 
copy(s) ordered on the above named subject(s). Should you have any 
questions regarding these requests, please feel free to contact us.

    IA U.S. District Court, August 14, 1996.
    This fax is also to verify the spelling of the debtor(s) and the 
jurisdiction(s).

CSC Networks, Prentice Hall Legal and Financial Services

Status Report

Date: August 12, 1996.
To: Ms. Eleanor Lewis, American Association of Legal Publishers.
From: Freddie Collins/plb.
Fax No.: 301-652-2970.
Order #: 050280.
Client Ref: Not Provided.
Pages: 1.

Re: USA.

    The following is a schedule of an estimated turn around for 
copy(s) ordered on the above named subject(s). Should you have any 
questions regarding these requests, please feel free to contact us.

    IA U.S. District Court, August 14, 1996.
    This fax is also to verify the spelling of the debtor(s) and the 
jurisdiction(s).

CSC Networks

Status Report

Date: August 12, 1996.
To: Ms. Eleanor Lewis, American Association Of Legal Publishers.
From: Freddie Collins/plb.
Fax No: 301-652-2970.
Order #: 050280.
Client Ref.: Not provided.

[[Page 53445]]

Pages: 1.
Re: Atlantic Coast Line Railroad

    The following is a schedule of an estimated turn around for 
copy(s) ordered on the above named subject(s). Should you have any 
questions regarding these requests, please feel free to contact us.

    SC U.S. District Court, August 14, 1996.

    This fax is also to verify the spelling of the debtor(s) and the 
jurisdiction(s).

CSC Networks

------------------------------------------------------------------------
                          Description                            Amount 
------------------------------------------------------------------------
Client Reference: Not Provided                                          
Our Order Number: 050280 015                                            
Order Date: 08/12/96                                                    
ILUCOO  UCC WORK IN ILLINOIS, U.S. DISTRICT COURT.............     $1.00
ILUDSC  COUNTY FEE DISBURSEMENT...............................      8.00
ILUC83  IN-HOUSE UCC COPIES--PER PAGE.........................      1.50
ILU36S  CORRESPONDENT FEE--COPY REQUEST.......................     20.00
ILUC69  SERVICE FEE-COPY REQUEST..............................     20.00
IL601  OVERNIGHT DELIVERY.....................................     16.00
------------------------------------------------------------------------

    Thank you for using CSC Networks. Freddie Collins.

State of Maryland

County of Montgomery

    I, Eleanor J. Lewis, upon my oath state:
    1. I am the Executive Director of the American Association of 
Legal Publishers.
    2. On August 9, 1996, I sent the attached letter and a check for 
$125 to the Federal District Court for the District of Maryland, 
requesting access to 5 closed cases which I had selected from 
various volumes of Federal Supplement.
    3. On August 19th, I received a phone message from Laverne 
Haynes of the Court saying the ``case you want, number 77-1217, is 
at the Court for your review.''
    4. On August 20, I called 410/962-2600 and asked to speak to Ms. 
Haynes; after several transfers I ended up in the Bankruptcy Court. 
The man there told me there is something wrong with the phone system 
and people on hold for the District Court frequently end up in the 
Bankruptcy Court. He told me to hang up and call again which I did. 
This time I reached Ms. Haynes' voice mail and I left a message 
explaining I requested 5 cases and wanted to review all of them 
during the same visit.
    5. Ms. Haynes called me back on August 20th and left a message 
that she did not know when she called me that I had requested 5 
cases, but now she had my letter in front of her. She said the 
``other cases are very old and will take some time to get; they may 
not let them out of the archives because of their age; we will call 
you when we know more about this.'' I never again heard from Ms. 
Haynes or any one else concerning this matter.
    6. On August 29, 1996 I went to the Clerk's Office of the 
Federal District Court in Baltimore to review the files I had 
requested. Only one case was there; the 1977 case of Warren Slater 
6366 v. Ralph William. I reviewed the case and found the opinion in 
the file which I copied at a cost of .50 per page. I also paid $25 
for having the file sent to the Court.
    7. I asked the woman helping me, Ms. Evaleen Gibbons, when I 
could see the other 4 cases I had requested. She said they were very 
old cases and were in the archives; they will not come to the Court. 
She said the employee in the clerk's office dealing with the 
archives rotates weekly, but as far as she knew, the old cases will 
never be sent to the Court. She called and let me speak to the 
Archives about these cases and they told me I must provide them with 
the case name and file number and they will tell me the cost of the 
materials I want. I can then send them a check for minimum of $6.00 
and receive the materials by mail.
    I understand if any statements made by me are knowingly false, I 
am subject to punishment.
Eleanor J. Lewis,
    Sworn to and Subscribed before me this 3rd day of September, 
1996.

State of Maryland,
County of Montgomery.
Karen Klitsch,
Expires 7/1/97.

Eleanor J. Lewis, Esq.

August 9, 1996.
Clerk,
U.S. District Court, 101 West Lombard Street, Baltimore, MD 21201

Re: Obtaining Access To Old Cases

    Dear Sir or Madam: Enclosed is a check for $125 to cover the 
cost of your obtaining from the Federal Records Center 5 closed case 
files which I will then review in your offices. The files I want to 
review are:
    1. Englehardt v. United States of America et al., Civ. A. No. 
3276, decided on January 18, 1947 in the Federal District Court of 
Maryland.
    2. David Nathaniel Harris v. Warden Maryland Penitentiary, Civ. 
A. No. 13030, decided on January 17, 1962 by Judge Chesnut in the 
Federal District Court of Maryland, Civil Division.
    3. Royal Indemnity Company v. Aetna Insurance Company, Civ. A. 
No. 13970, decided on July 15, 1964 by Judge Winter in the Federal 
District Court of Maryland.
    4. Mercantile-Safe Deposit and Trust Co. v. United States of 
America, Civ. No. 15254, decided on June 1, 1966 by Judge Thomsen in 
the Federal District of Maryland.
    5. Warren Slater 6366 v. Ralph William, Civ. No. T-77-1217, 
decided on November 3, 1977 by Senior Judge Thomsen in the Federal 
District Court of Maryland.
    I am eager to review these files as soon as possible so your 
prompt cooperation in this matter is appreciated.

        Sincerely,
Eleanor J. Lewis

State of Maryland

County of Montgomery

    I, Eleanor J. Lewis, upon my oath state:
    1. I am the Executive Secretary of the American Association of 
Legal Publishers.
    2. On Wednesday, August 14, 1996, I called the Newark Office of 
the Federal District Court for New Jersey to request access to 3 
closed case files. I was told to call the Court's Trenton Office at 
609/989-2065.
    3. I called Trenton and made my request to the woman who 
answered the phone. I request 3 cases in which opinions were 
rendered in 1965, 1979, and 1986. She said ``these are old cases and 
not on the computer.'' I asked her what were the earliest cases on 
the computer and she said ``1991.'' She took all identifying 
information, case name and docket number, about the cases and me and 
said she would call me back. When I had not heard from her in over 3 
hours, I again called Trenton.
    4. I spoke with Mark and told him I wanted accession numbers for 
3 closed cases. He said just a minute and then started to find the 
information for the 1979 and 1986 cases on the computer. For the 
1965 case, he left the phone to get a book and then returned and 
gave me the information. He said he was uncertain the information 
for the 1965 case was correct. He also warned me not to go to the 
Federal Records Center until they call and confirm they have the 
cases I want to review.
    5. I called the Federal Records Center (FRC) in Bayonne, NJ at 
about 3:45 PM on August 14 to make an appointment to review the New 
Jersey cases. In an earlier call I had been told I could only review 
3 files per visit. I provided them with the information Mark had 
given me for the cases.
    6. On August 15th I received a call from Mrs. DePalma of the FRC 
informing me the FRC does not have the 1965 case. It has been sent 
to the Federal Archives office in New York City and I should call 
them, 202/337-1300.
    7. On August 16th I called the Federal Archives in New York City 
and requested the judge's opinion in the 1965 case. I was told I 
either must go to their office in New York City or send them a 
letter with all the relevant information and a check for $6.00, 
their minimum charge per order. They charge for copying at the rate 
of .25 per page. I explained to the man that I might come in on 
Monday, August 19th, so he took the identifying information from me 
by phone and told me to call on Monday to confirm they have what I 
requested. If they do, I could come get it or obtain it by mail.
    8. On August 16th I called Mark at the Trenton Office of the New 
Jersey Federal District Court and requested the identifying 
information for another closed NJ case so I will review 3 cases when 
I go to the FRC. He provided me with the information. I then called 
the FRC to request the case; they said it would be available to me 
on August 19th.
    9. On August 19th, I drove to the FRC in Bayonne, NJ. It is a 
few miles from Exit 14A of the New Jersey Turnpike. I was shown to a 
table where the 3 cases I wanted were waiting for me. I went through 
each file and found the decision I wanted in each case and had 
copies made for .50 per page. The staff does the copying, one 
request at a time and then prepares a bill for each visitor. During 
the two hours I was there reviewing files, I observed there was 
always one employee, Mrs. DePalma, helping visitors who are

[[Page 53446]]

looking at files. This employee is also answering the phone, taking 
phone orders for records, copying files, preparing bills and 
obtaining payments. Very occasionally, a second staffer, Maureen, 
was helping Mrs. DePalma.
    10. When I paid Maureen for my copies, I asked her again how 
many cases per visit I could review. She replied ``you are limited 
to 3 cases per day because we are so busy.'' I asked if I could see 
more cases per visit and she said ``No.''
    11. On August 20th, I called the Federal Archives in New York 
City to obtain the decision of the 1965 case which was not at the 
FRC in Bayonne. I told the person who answered about my call on 
August 16th and that the decision would be at the desk waiting for 
me. The man, Greg Plunges, put me on hold and then returned to say 
it was not at the desk. He took the case information and said he 
would look for it and call me back. He called me back within an hour 
and told me he had the decision dated June 8, 1965. He instructed me 
how to send him the $6 check he must receive before he sends me the 
opinion. I mailed him the required letter and check on August 20th. 
I received a copy of the decision by mail on August 30th.

    I understand if any statements made by me are knowingly false I 
am subject to punishment.
Eleanor J. Lewis.

    Sworn to and Subscribed before me this 3rd day of September, 
1996.

State of Maryland

County of Montgomery

    I, Eleanor J. Lewis upon my oath state:
    1. I am the Executive Director of the American Association of 
Legal Publishers.
    2. On Wednesday, August 14, 1996, I called the Federal Records 
Center (FRC) in Philadelphia to make an appointment to see some 
closed files. I had selected these cases from various volumes of 
Federal Supplement and then called each federal district court in 
which they were filed to obtain the closed accession numbers. I was 
transferred to the phone of James Kent and I left a message on his 
voice mail. When I did not receive a return call within a few hours, 
I called twice more during the day and left a message asking how to 
make an appointment.
    3. Late on August 14th, Mr. Kent left me a message explaining 
what I must do to obtain cases from the FRC and telling me to fax my 
response to the FRC. However, he did not provide me with the fax 
number.
    4. I called Mr. Kent the evening of August 14th and left a 
message asking him to give me the fax number to which I should fax 
my response. He called me back on August 15th and provided the fax 
number. I faxed the list of cases I want to review to the FRC on 
August 15, 1996; a copy is attached. The cases I requested came from 
district courts in Delaware, Pennsylvania and Virginia.
    5. I never received a response to my fax, so on August 20th, I 
called Mr. Kent. He said he had never received my fax and put me on 
hold. He then returned and said my fax had been received and the 
files were waiting for me at the FRC in Philadelphia. He said I 
should have been called and told they were available and would be 
available through August 30th. He gave me directions to get to the 
facility.
    6. On August 29th I traveled to the FRC in Philadelphia. The 
building exterior does not have a street number or name, so I was 
not sure I was in the right place.
    7. I was shown to a room where the 7 cases I had requested were 
in a pile. I examined each file, looking for the judge's opinion of 
the date specified in the Federal Supplement case I had selected. I 
found the opinions for case numbers 1, 3, 4, 5 and 7 in my memo.
    For case number 2 in my memo, Wolkind v. Selph, filed in 1979 in 
the Federal District Court of Virginia, Eastern District, Richmond 
office I was given a file that contained 12 pages concerning the 
case, but did not include an opinion. Also in the file was a 26 page 
opinion from the Eastern District of Pennsylvania concerning a case 
related to the case of Brown v. Cameron-Brown, Civil Action #78-
0838-R, venued in the Richmond Office of the Federal District Court 
of Virginia.
    For case number 6 in my memo, Stewart Aviation Co. v. Piper 
Aircraft, filed in 1973 in the Federal District Court of 
Pennsylvania, Middle District, Scranton Office, the file I was given 
had the right name, but only contained a cover sheet concerning the 
case I wanted. All the other documents in the file were from a 1968 
case between the same parties which was filed in the Federal 
District Court of West Virginia, Northern District. A copy of one of 
these documents is attached.
    8. I then explained to David Weber, the FRC employee on duty, 
that I would probably need to look at thousands of old files and 
could they accommodate such a request. He said it would be easiest 
if I could group my requests in the order in which the cases were 
closed by each court, since they are closed in batches and each 
batch is filed together. By grouping them in such a manner, I would 
reduce the time needed to find the files. I explained that might not 
occur, since I am requesting cases from different courts in 
different states. He said they would try to accommodate my needs and 
I should start by requesting 50 cases at a time and provide them 
with as much advance notice as possible.

    I understand if any statements made by me are knowingly false, I 
am subject to punishment.
Eleanor J. Lewis.

    Sworn to and Subscribed before me this 3rd day of September 
1996.

American Association of Legal Publishers

August 15, 1996.
To: James Kent, Federal Records Center, Philadelphia
From: Eleanor J. Lewis
Re: Obtaining Access To Closed Federal Court Files

    I want to come to the Federal Records Center in Philadelphia and 
review and copy portions of the closed case files listed below. 
Please contact me by phone or fax to confirm you have these files 
available for my review, so I review them within the next 10 days. 
Thank you for your cooperation in this matter.

1. Case File Number 76-2961
    Case Name: William Heigler v. William Gatter et al.
    FRC Accession Number: 021-830091
    Location Number: D-11-025-5-1
    Box Number 144
2. Case File Number 79-0311-R
    Case Name: Henry L. Wolkind v. Willard P. Selph
    Accession Number: 021-81-0037
    Location Number: E 3808576
    Box Number 13
3. Case File Number 88-692
    Case Name: Young v. West Coast
    Accession Number: 021-94-0049
    Location Number: E 4004546
    Box Number 45
4. Case File Number 4720
    Case Name: Grossman v. Cable Funding Corp
    Accession Number: 021-84-0006
    Location Number: 87301311
    Box: 2 through 5 of total of 48
5. Case File Number 76-37-NN
    Case Name: Peggie Ann King v. Gemini Food Services
    Accession Number: 021-81-0011, subgroup NNV
    New Location: E-30-065-2-1
    Series Description--CIV CS FLS (closed 1980)
    Box Number 3
6. Case File Number 73-717
    Case Name: Stewart Aviation Co. v. Piper Aircraft
    Accession Number: 021-77-0001
    Location Number: C-26-027-2-1
    Boxes: 112 and 113 of 117 boxes
7. Case File Number 80-86
    Case Name: Metropolitan Life Insurance Co. v. Debra P. McCall et 
als
    Accession Number: 021-87-0097
    Location Number: A0905353
    Box: 7 of 17
    This page could not be reprinted in the Federal Register, however, 
they may be inspected in Suite 215, U.S. Department of Justice, Legal 
Procedures Unit, 325 7th St., N.W., Washington, D.C. at (202) 514-2481 
and at the Office of the Clerk of the United States District Court for 
the District of Columbia.
    This page could not be reprinted in the Federal Register, however, 
they may be inspected in Suite 215, U.S. Department of Justice, Legal 
Procedures Unit, 325 7th St., N.W., Washington, D.C. at (202) 514-2481 
and at the Office of the Clerk of the United States District Court for 
the District of Columbia.

State of Maryland, County of Montgomery

    I, Eleanor J. Lewis, upon my oath state:
    1. I am the Executive Director of the American Association of 
Legal Publishers.
    2. On Wednesday, August 14, 1996, I called the Pittsburgh Office 
of the Federal District Court of Pennsylvania, Western Division and 
spoke with Mr. Keith Anderson. I told him I wanted to obtain the 
closed case numbers for a case, so I could review the cases in the 
Federal Records Center in Philadelphia. He said that information 
could

[[Page 53447]]

not be given over the phone and he does not have a fax machine. I 
could only receive that information from him by mail.
    3. I then provided him with the information for a case with a 
decision rendered on October 4, 1968. He immediately responded 
``that decision is over 25 years old. The case is in the Federal 
Archives in Philadelphia, call 215/597-3000.'' I thanked him and 
hung up.
    4. I promptly called the Federal Archives in Philadelphia and 
was connected to Dr. Plowman. I told him what case I wanted. He 
asked what I wanted and I said I want a copy of the judge's 
decision. He responded, ``opinions are not necessarily included in 
the case file. They are not required to be in the closed file.'' He 
took my name and number and said he would see what he could find.
    5. Dr. Plowman called me back within an hour and reported he had 
found the case and had the decision. If I would send a check for $6 
he would send me a xerox of the decision. I sent him the required 
check and letter on August 14th. I received a copy of the decision 
by mail on August 21st.
    I understand if any statements made by me are knowingly false, I 
am subject to punishment.
Eleanor J. Lewis.

State of Maryland, County of Montgomery

    I, Eleanor J. Lewis, upon my oath state:
    1. I am the Executive Director of the American Association of 
Legal Publishers.
    2. On Wednesday, August 14, 1996, I called the Federal District 
Court of New York, Southern District, in New York City and asked for 
the closed case numbers for some closed files, so I could go look at 
the files in the Federal Records Center. I was connected to a man 
who told me I must come to Room 370 at 500 Pearl Street in New York 
City to obtain the information or send a letter and they will 
respond in writing. When I said I needed to get the information 
quickly and I am in Maryland, I was told I must speak to the 
supervisor, Rosemarie Fugnetti. I was connected to her phone but was 
unable to leave a message because her voice mailbox was full.
    2. I then called the clerk's office again and explained I could 
not leave a message for Ms. Fugnetti. They told me she was at lunch 
and I should call back in an hour.
    3. I called an hour later and spoke with Ms. Fugnetti on August 
14, 1996. She repeated that the court only provides closed file 
numbers to people coming to the court house or inquiring in writing. 
They do not accept faxes and they do not respond by fax because they 
do not have a fax machine in her office. She said I could send her a 
FED EX letter and she would respond by FED EX if I pay for the 
response or they would mail the response by regular mail the day 
they receive it.
    4. On August 14th, I sent Ms. Fugnetti a Fed Ex letter 
requesting the closed file numbers for 4 opinions. She responded on 
August 15th, providing me with the information I requested.
    5. I was unable to review these files from the Federal Records 
Center in New Jersey on August 19th because they only permit a 
visitor to look at 3 files per day and I had already requested 3 
files from the New Jersey Federal District Court.
    I understand if any statements made by me are knowingly false, I 
am subject to punishment.
Eleanor J. Lewis.

State of Maryland, County of Montgomery

    I, Eleanor J. Lewis, upon my oath state:
    1. I am the Executive Director of the American Association of 
Legal Publishers.
    2. On August 15, 1996, I called the Federal District Court for 
the District of Columbia to obtain the closed file numbers for 
several closed cases from which I wanted to obtain a copy of the 
judge's original decision. I had selected these cases from various 
volumes of Federal Supplement. A telephone tape recording provides 
information about extension choices, but none of them concerned 
closed files, so I didn't talk to anyone.
    3. On August 22nd, I traveled to the Court clerk's office and 
requested closed file numbers for 3 cases from Bryant. He asked me 
to wait and returned with the information I needed in about 10 
minutes.
    4. I explained to Bryant that when I called the court I could 
not find an extension that dealt with such requests. He said I 
should call 202/273-0520. I asked if I could obtain closed case 
numbers over the phone. He said, ``No, you must come in to get them 
or write.'' He told me the closed files for this court are stored in 
Suitland, MD.
    I understand if any statements made by me are knowingly false, I 
am subject to punishment.
Eleanor J. Lewis.

State of Maryland, County of Montgomery

    I, Eleanor J. Lewis upon my oath state:
    1. I am the Executive Director of the American Association of 
Legal Publishers.
    2. On Wednesday, August 14, 1996, I called the Wilmington Office 
of the Federal District Court of Delaware and requested the closed 
file numbers for 3 cases with opinions rendered in 1968, 1973 and 
1991 from Ms. White. She took the information the case name and 
docket number from me and said she would call me back with the 
closed case numbers.
    3. Ms. White called back about 2 hours later.
    A. She provided me with the closed case numbers needed to obtain 
access to the 1991 case. I reviewed this case on August 29th at the 
Federal Records Center (FRC) in Philadelphia and found the opinion I 
wanted.
    B. For the 1973 case, James Gerity, Jr. v. Cable Funding Corp., 
Civil Action #4720, decision rendered on November 6, 1973, according 
to 372 F. Supp. 64, she had a problem. The Court records showed that 
docket number corresponded to the case of Grossman v. Cable Funding 
Corp, decision rendered on June 30, 1978. She said her docket sheet 
showed there were many decisions made after November 6, 1973 and 
that ``this is a research project'' I took the information she had. 
On August 29th I reviewed this file at the Philadelphia FRC and 
found the opinion I wanted.
    C. For the 1968 decision of McMilin v. USA, case #1906, decision 
rendered on September 26, 1968 by Judge Steele and amended on 
September 30, 1968, Ms. White said she had a problem. According to 
her records this is the case of Albright v. USA; it concerns a suite 
to refund taxes; the complaint was filed on July 1, 1957 and a 
stipulation and order was entered on May 15, 1958 by Judge Caleb 
Layton. She said the file was sent to the archives on December 1, 
1987. She said this case was so old that its records were not 
automated and she had to go to another location to obtain this 
information. She could not provide me with any information 
concerning my originally requested case--McMilin v. USA--so I was 
unable to acquire a copy of the decision from any source.
    I understand if any statements made by me are knowingly false I 
am subject to punishment.
Eleanor J. Lewis.

State of Maryland, County of Montgomery

    I, Eleanor J. Lewis, upon my oath depose and state:
    1. I am the Executive Director of the American Association of 
Legal Publishers.
    2. On Wednesday, August 14, 1996, I called the Richmond Office 
of the Federal District Court of Virginia, Eastern District to 
obtain the closed case numbers for 3 cases.
    3. I provided the woman with the information I had obtained on 
each case from the West's Federal Supplement, including the case 
name, case number, date of decision and name of the judge.
    4. The woman put me on hold and then provided me with the 
following information:
    A. For the case with a decision rendered in 1979, she went to 
the archive book and found the closed case information and gave it 
to me.
    B. For the case of Frank A. Principe et al. v. McDonald's Corp 
et al., 463 F. Supp. 1149 (1979), Civ. Action #78-0606-R, decision 
rendered on January 16, 1979 by Judge Warriner, the Court records 
show that this is the case of Kennedy v. Stacy, a prisoner claim. 
She said she would investigate this matter and get back to me.
    On August 15th and 16th I received a call from the court, from 
either Mrs. Grant or Mrs. Hatton, telling me they were looking for 
the information. On August 20th I called and spoke with Mrs. Grant; 
she said she would investigate if the information were found and 
call me. She called me back on August 20th and said the case I 
wanted, Principe v. McDonald's is Civil Action #78-601, not 606. She 
then provided me with the closed case numbers I need to obtain the 
case at the Federal Records Center in Philadelphia and the exact box 
in which I would find the opinion dated January 16, 1979.
    C. For the case of Wolkind v. Selph, Case No. 79-0311-R, I was 
provided with the accession numbers. I sent them to the FRC on 
August 15th and went to the FRC on August 29th to review the file. 
The Wolkind v. Selph decision of July 10, 1979 amended on August 15, 
1979 was not in the file but there was an opinion from a case from 
the Eastern District of Pennsylvania in the file. It appeared to be 
related to another case from the Richmond court, the case of Brown 
v. Cameron-Brown, Civil Action #78-0838.

[[Page 53448]]

    I understand if any statement made by me are knowingly false I 
am subject to punishment.
Eleanor J. Lewis.

State of Maryland, County of Montgomery

    I. Eleanor J. Lewis, upon my oath state:
    1. I am the Executive Director of the American Association of 
Legal Publishers.
    2. On Wednesday, August 14, 1996, I called the Philadelphia 
Office of the Federal District Court of Pennsylvania, Eastern 
District and requested the closed case numbers for several cases. I 
was transferred to the file room and told I must come in person to 
obtain that information. I explained I was far away and could not do 
that. I was told to call back and talk to the supervisor, Mr. 
Clewlie, who was not in the office at this time.
    3. I called back about 90 minutes later and spoke with Mr. 
Clewlie who agreed to send me the information by fax. He said it was 
easier than calling. I provided him with the following case 
information.
    USA v. William Henry Burdick, Criminal No. 22487, decision 
rendered on May 31, 1968 by Judge Weiner. I obtained this 
information from 284 F. Supp 685.
    4. Mr. Clewlie called me back within two hours on August 14th 
and told me he was going to have to ``look up this information and 
it will take some time.''
    5. On August 27th I called Mr. Clewlie about this matter because 
I had not heard from him. I was told he was out for the week; I 
should call back on September 3rd.
    6. I called Mr. Clewlie on September 3rd, but no one answered 
his phone, so I called the court clerk and asked to leave a message 
for him. Since he does not have voice mail or a secretary, they took 
the message. About 2 hours later, Bill Jones called and asked what I 
wanted. I told him I needed the closed case number for a file. He 
took the information and called me about 30 minutes later with the 
closed case numbers. He said, the closed case numbers he gave me are 
very old and may not be correct, ``but this is all we have''.
    I understand if any statements made by me are knowingly false, I 
am subject to punishment.
Eleanor J. Lewis.

State of Maryland, County of Montgomery

    I. Eleanor J. Lewis, upon my oath state:
    1. I am the Executive Director of the American Association of 
Legal Publishers.
    2. On Wednesday, August 14, 1996, I called the Newport News 
Office of the Federal District Court of Virginia, Eastern District, 
and spoke with Mrs. Graham. I requested the closed case numbers for 
one case with a decision rendered in 1976. I had selected the case 
from a volume of F. Supp. Ms. Graham took the information, put me on 
hold and then returned in a few minutes with the identifying 
information, including information contained in a February 1996 
letter providing the new location of the file in the Federal Records 
Center (FRC) in Philadelphia.
    3. I requested the case from the FRC on August 15th.
    4. I went to the FRC on August 29th and reviewed the file, 
finding the opinion I wanted.
    I understand if any statements made by me are knowingly false, I 
am subject to punishment.
Eleanor J. Lewis.

State of Maryland, County of Montgomery

    I. Eleanor J. Lewis, upon my oath state:
    1. I am the Executive Director of the American Association of 
Legal Publishers.
    2. On Wednesday, August 14, 1996, I called the Erie office of 
the Federal District Court of Pennsylvania, Western District and 
spoke with a woman.
    3. I provided her with the case name and docket number for a 
case in which the judge rendered a decision on March 6, 1981, in the 
Erie court. I found this case in a volume of F. Supp. She put me on 
hold for a few minutes and then returned with the closed numbers I 
need to obtain the case at the Federal Records Center (FRC) in 
Philadelphia.
    4. On August 15th I requested the case from the FRC.
    5. On August 29th I went to the FRC and reviewed the file, 
finding the opinion I wanted.
    I understand if any statements made by me are knowingly false I 
am subject to punishment.
Eleanor J. Lewis.

State of Virginia, County of Arlington

    I, Allyson E. Manson, upon my oath state;
    (1) I am a law student at the University of Virginia. In July 
and August of 1996 I am working part-time as a legal intern for the 
American Association of Legal Publishers.
    (2) On August 9, 1996, at approximately 3:50 p.m., I called 
(903) 592-1212, the Clerk's office for the U.S. District Court for 
the Eastern District of Texas. I spoke with Mike Lantz.
    (3) I asked Mr. Lantz how I could obtain opinions rendered in 
1968 and 1978 in his district. He responded that his office retains 
original files for six months to one year. After one year, files are 
sent to the Federal Records Center for twenty years. Then the 
original file is destroyed. Mr. Lantz indicated that a case from 
1968 may be difficult to obtain.
    (4) Mr. Lantz said that the charge would be $15 per case without 
a case number. The Clerk's office looks at the docket sheet to see 
when that opinion was sent to the Records Center. Next the Clerk's 
office codes your request onto a sheet which is sent to the Records 
Center.
    (5) Mr. Lantz indicated that it would take a while to research 
and find these cases. He offered to fax me information on search 
procedures.
    I understand that if I made any knowingly false statements that 
I am subject to punishment.
Allyson E. Manson.

State of Virginia, County of Arlington

    I, Allyson E. Manson, upon my oath state;
    (1) I am a law student at the University of Virginia. In July 
and August of 1996 I am working part-time as a legal intern for the 
American Association of Legal Publishers.
    (2) On August 9 at approximately 4:30 p.m. I called the Clerk's 
office for the U.S. District Court for the Western District of Texas 
at (210) 472-6550. I spoke with Wayne Garcia.
    (3) I asked Mr. Garcia how I could obtain opinions rendered in 
1968 and 1978 in his district. He responded that any search for the 
case numbers of documents older than five years would incur as $15 
fee. He then explained that there would be a $25 retrieval fee 
incurred when the document was obtained from the Federal Records 
Center. Mr. Garcia made it clear that each case required a separate 
request and incurred a separate fee.
    I understand that if I made any knowingly false statements that 
I am subject to punishment.
Allyson E. Manson.

State of Virginia, County of Arlington

    I, Allyson E. Manson, upon my oath state;
    (1) I am a law student at the University of Virginia. In July 
and August of 1996 I am working part-time as a legal intern for the 
American Association of Legal Publishers.
    (2) On August 8, 1996 at approximately 2:45 p.m. I called (318) 
676-4273, the Clerk's office of the U.S. District Court for the 
Western District of Louisiana. I spoke with Nancy Lundy.
    (3) I asked Ms. Lundy what the procedures would be for obtaining 
a copy of Louisiana District Court decisions from 1968 and 1978. She 
responded that I would need a case number or the name of the case. 
She added that cases from 1978 would probably be on microfilm at the 
Clerk's office. All cases after 1977 have been put on microfilm 
there.
    (4) Any cases rendered prior to 1977 would have to be retrieved 
from the Federal Records Center in Fort Worth, Texas.
    (5) Ms. Lundy explained that I would need to send a written 
letter to the Clerk's office to request documents. The Clerk's 
office then retrieves documents from the Federal Record Center. A 
$25 retrieval fee would be charged for each case, and it would cost 
fifty cents a page to copy the documents.
    (6) Ms. Lundy explained that if I called and requested an 
opinion, it would take a week to ten day before the Clerk's office 
received the document. I could expect the document within two weeks.
    I understand that if I made any knowingly false statements that 
I am subject to punishment.
Allyson E. Manson.

State of Virginia, County of Arlington

    I, Allyson E. Manson, upon my oath state;
    (1) I am a law student at the University of Virginia. In July 
and August of 1996 I am working part-time as a legal intern for the 
American Association of Legal Publishers.
    (2) On Thursday, August 8, 1996 at approximately 4:00 p.m. I 
called (503) 326-5412, the Clerk's office for the U.S. District 
Court of Oregon. I spoke with Kathy Wright.
    (3) I asked Ms. Wright how I would go about getting a copy of 
two judicial opinions rendered in her District, one in 1968 and one 
in 1978. She responded that it would be difficult to locate the case 
without a case number. To locate a case number one must go through a 
list of them on microfilm to

[[Page 53449]]

ensure that the number matches a particular case. Case files more 
than two years old are moved to the Federal Archive in Seattle, 
Washington. Ms. Wright explained that I would need to fill out a 
form at the courthouse to request the record.
    (4) Ms. Wright stated that she believed that judicial decisions 
are destroyed after twenty years.
    (5) To retrieve a file, the clerk's office charges $25. Copying 
is an additional fifty cents a page or fifteen cents a page if the 
customer copies it herself.
    (6) I then called the number Ms. Wright had given me for the 
Federal Archive, which actually turned out to be the number for the 
Federal Records Center. I spoke with a Mr. Rick Hall. Mr. Hall said 
that if I requested documents from the Records Center, they could be 
retrieved within one hour. However, there would be a retrieval fee 
of $35.
    (7) I then asked Mr. Hall how long Federal District Court 
decisions were kept at the Records Center or the Archive. He 
responded that there is a national publication entitled Schedule for 
the Disposition of U.S. District Court Documents. I asked him if I 
could get a copy of pages from the book concerning the disposition 
of Federal District Court opinions. He talked for a while about the 
distinction between criminal and civil opinions and opinions of 
historical and non-historical value. He then explained that it is 
not his job to send out copies of those documents, and he explained 
that all District Court clerk's offices should have this volume, and 
I could obtain copies from them.
    I understand that if I made any knowingly false statements that 
I am subject to punishment.
Allyson E. Manson.

State of Virginia, County of Arlington

    I, Allyson E. Manson, upon my oath state;
    (1) I am a law student at the University of Virginia. In July 
and August of 1996, I am working part-time as a legal intern for the 
American Association of Legal Publishers.
    (2) On Thursday, August 8, 1996 at about 2:10 p.m. I called 
(303) 844-3433, the Clerk's Office of the U.S. District Court of 
Colorado. I spoke with Cathy Hasjord.
    (3) I told Ms. Hasjord I wanted to get a copy of two judicial 
opinions, one rendered in 1978 and the other rendered in 1968 in 
Colorado's district court. She responded that if they are still in 
existence they are not in the Clerks' Office. Ms. Hasjord stated 
there are two ways to get a copy of these opinions:
    A. She indicated that the Clerk's Office could get it for 
$25.00. She indicated that I could look on the docket sheet and 
determine what portions I wanted. Each page would cost fifty cents 
to copy. I asked if this could be done by mail. She said that it 
could with several mailings. She indicated it would be better to 
review the case by showing up at the office.
    B. Ms. Hasjord indicated that I could also call the Federal 
Records Center directly.
    I understand that if I made any knowingly false statements, I am 
subject to punishment.
Allyson E. Manson.

State of Virginia, County of Arlington

    I, Allyson E. Manson, upon my oath state:
    (1) I am a law student at the University of Virginia. In July 
and August of 1996, I am working as a legal intern for the American 
Association of Legal Publishers.
    (2) On Thursday, August 8, 1996 at approximately 2:20 p.m., I 
called (208) 334-1361, the Clerk's office of the U.S. District Court 
of Idaho. I spoke with the Clerk's assistant.
    (3) I told her I wanted to get a copy of original judicial 
decisions rendered in 1968 and 1978 in Idaho's Federal District 
Court. She responded that I would need to come to the office and go 
through the card index to determine the location of those files.
    (4) She told me that it would cost $25 to review the file. 
Copying would cost an additional twenty-five cents a page.
    (5) I asked her if we could do this by mail. She told me that I 
could send a letter to the clerk's office with my request. Upon 
receipt of my request, the clerk's office would need 7 to 10 days to 
retrieve the document.
    I understand that if I made any knowingly false statements that 
I am subject to punishment.
Allyson E. Manson.

State of Virginia, County of Arlington

    I, Allyson E. Manson, upon my oath state;
    (1) I am a law student at the University of Virginia. In July 
and August of 1996 I am working part-time as a legal intern for the 
American Association of Legal Publishers.
    (2) On Thursday, August 8, 1996 at about 1:00 p.m. I called 
(602) 514-7100, the Clerk's Office of the U.S. District Court of 
Arizona. I spoke with Cathy Gerchar.
    (3) I told her I wanted to get a copy of two judicial opinions, 
one rendered in 1978 and the other rendered in 1968 in Arizona's 
district court. She asked me for the case number. I told her that I 
did not have a case number; I was trying to find out the procedures 
my supervisor would follow to locate an original file and 
specifically a judicial decision from the Arizona district court. 
She explained that the clerk's office only keeps decisions for three 
years. Earlier decisions:
    A. Decisions between three and 1969 are kept at the records 
center. To get something from the Records Center, one would have to 
come to clerk's office to fill out a copy request. The Clerk's 
office would then get the file from the Federal Records Center, and 
I could obtain a copy from them.
    B. Ms. Gerchar indicated that if the decision was rendered prior 
to 1969, the decision had probably been moved from the Records 
Center to the Federal Archive.
    (4) I asked how much it would cost to retrieve this file. Ms. 
Gerchar explained that there is a $25 file fee, which covers 
expenses related to file retrieval.
    (5) I asked Ms. Gerchar how long it would take to get a judicial 
opinion from the clerk's office if it was rendered in 1978. She 
responded that it would take between two and seven working days, 
depending on whether it was located in the Records Center or the 
Federal Archive.
    (6) I requested the number of the Record Centers and the Federal 
Archive. Ms. Gerchar gave me both numbers: (714) 360-2631 for the 
Records Center, and (714) 360-2641 for the National Archive.
    (7) I called the number Ms. Gerchar had given me for the 
National Archive at approximately 1:15 p.m. and found that it had 
been disconnected.
    (8) Next, I called the Federal Records Center at approximately 
1:15 p.m. on August 8, 1996 and spoke with Mr. Mike Kretch. I asked 
him how I could retrieve records directly from his office. Mr. 
Kretch suggested that I call in to request a file. He also said that 
to retrieve the file, I had to provide him with the:
Accession number, box number, location number, file number.
    Mr. Kretch indicated that I needed to make a trip to look at the 
file and decide what portions I needed copied. The Center is located 
in Laguna Niguel, California. It costs fifty cents a page to copy 
the document.
    I understand that if I made any knowingly false statements that 
I am subject to punishment.
Allyson E. Manson.

State of Virginia, County of Arlington

    I, Allyson E. Manson, upon my oath state;
    (1) I am a law student at the University of Virginia. In July 
and August of 1996 I am working part-time as a legal intern for the 
American Association of Legal Publishers.
    (2) On Thursday, August 8, 1996 at approximately 3:30 p.m. I 
called the Clerk's office of the U.S. District Court for the Eastern 
District of California at (916) 498-5415. I spoke with Ms. Dung 
Duong.
    (3) I asked Ms. Duong how I would go about obtaining opinions 
rendered in 1968 and 1978 in her district. She responded that I 
needed a case number, and that I would be required to pay a $25 
retrieval fee.
    (4) Ms. Duong added that I could either pay a fifty cent per 
page copying fee or pay an independent contractor to copy the 
material.
    (5) Ms. Duong said that it would take ten mailing days for the 
documents to reach me.
    (6) I called the independent contractor for a price comparison 
and I talked to a Kendall Allbright. He said that it would cost 
thirty-two cents a page to copy any documents I requested.
    I understand that if I made any knowingly false statements that 
I am subject to punishment.
Allyson E. Manson.

State of Virginia, County of Arlington

    I, Allyson E. Manson, upon my oath state;
    (1) I am a law student at the University of Virginia. In July 
and August of 1996 I am working part-time as a legal intern for the 
American Association of Legal Publishers.
    (2) On Thursday, August 8 at approximately 5:00 p.m. I called 
(415) 522-2000, the Clerk's office for the U.S. District Court for 
the Northern District of California. I spoke with Christee 
Scqueilia.
    (3) I asked Ms. Scqueilia how I could obtain opinions rendered 
in 1968 and 1978 in her district. She responded that I would need to 
provide her with a case number and the judge's initials.
    (4) She also said that it would cost $25 to retrieve an opinion. 
Opinions cannot be copied at the courthouse, but may be copied 
through an independent contractor. Ms. Scqueilia said that there was 
no way I could

[[Page 53450]]

get an opinion mailed to me from the courthouse.
    (5) Mr. Scqueilia added that early opinions could be obtained 
through the Federal Archives in San Bruno, California.
    (6) It would take three to four days for the clerk's office to 
get a document retrieved from San Bruno.
Allyson E. Manson.
    This letter could not be reprinted in the Federal Register, 
however, they may be inspected in Suite 215, U.S. Department of 
Justice, Legal Procedures Unit, 325 7th St., N.W., Washington, D.C. at 
(202) 514-2481 and at the Office of the Clerk of the United States 
District Court for the District of Columbia.

Atty. Craig W. Conrath, Chief, Merger Task Force,
U.S.D.O.J., Antitrust Division, 1401 H. Street, Suite 4000 N.W., 
Washington, D.C.

    Dear Mr. Conrath: I am a retired lawyer. I write this letter in 
regard to the proposed Thomson-West merger solely on my own behalf 
as a consumer and citizen.
    I do not think the merger agreement should be approved. The 
Department's conditions are insufficient to protect competition.
    My objections are these:

1. Failure To Create Viable Competition

    Legal publishing has a synergy when a publisher produces law for 
multiple jurisdictions. Publishers attempt to address the market by 
creating ``systems'' that are consistent and easy to use for 
consumers, and allow the same methods to be used to find law from a 
variety of sources. In addition there are substantial economies of 
scale in the editing and production processes.
    The consent decree envisions selling some of the products of 
Lawyer's Cooperative, but not the ``system'', and not the key 
products, AmJur and ALR that allow the creation of a system. The 
result is a series of isolated products that will not compete 
effectively with West's system and are of questionable viability in 
the marketplace.

2. Ineffective Remedies for Citations

    The proposed license agreements has a price for use of West's 
citations that would foreclose its use by any small or new 
competitors. The only competitor who could afford the flat pricing 
would be a large one. But the merger eliminates the only large 
competitor who does not already license West's system. In effect, 
nothing is accomplished.
    Though the prohibition against challenging the validity of 
West's dubious copyright claims are frequently found in licensing 
agreements, it traduces the purpose of the merger conditions and is 
inconsistent with the Department's stated position on copyright of 
citations.

3. Ineffective Remedies for Markets that Become Monopolies

    Wisconsin currently has two competitive official reporters of 
Wisconsin case law, West and Lawyer's Cooperative. After the merger 
it will have one--there will be no competition. The consent decree's 
remedy is to allow the Wisconsin Supreme Court to renegotiate its 
contract. Since West will be the only serious publisher available in 
the market why would renegotiating the contract do anything? A cynic 
might comment that it would give West an earlier opportunity to 
exercise its monopoly power.
    Indeed, the situation in Wisconsin is somewhat more acute. 
Lawyer's Cooperative has taken the position that its cites are 
public domain as is the text of the decisions. West takes a contrary 
opinion. So with the loss of Lawyer's Cooperative, we lose access to 
public domain law in Wisconsin for small peripheral publishers.
    Finally, I must point out that West is a well known 
``politically connected'' company. Its CEO was a key early supporter 
of Pres. Clinton's first campaign in Minnesota and recently 
Treasurer for Sen. Feinstein's reelection campaign. West has made 
many contributions to political campaigns.
    The Department certainly should not treat differently a 
politically connected company--West has an absolute right to 
participate in politics. However, in such a case it is important 
that the Department explain fully and adequately its reasoning so 
that the Department's decisions can be understood to be free of 
political taint. This the Department has not done in this case. It 
fails to reveal or address the degree of concentration left after 
its proposed conditions. It fails to reveal its reasoning or motives 
for the conditions, It fails to reveal the course of negotiations.
    On the face of it, this is a merger between major competitors in 
a highly concentrated industry. In appearance it is not a merger 
that should be approved. Failure to adequately address why the 
Department is approving it, and why the conditions adequately 
protect competition leaves the Department open to criticism.
      Yours Sincerely,
John Lederer.
August 30, 1996.
Mr. Craig Conrath, Chief, Merger Task Force
U.S. Department of Justice, Antitrust Division, Merger Task Force, 
1401 H Street NW, Suite 4000, Washington, DC 20530.
    Dear Mr. Conrath: I write in response to the proposed Final 
Judgment And Competitive Impact Statement issued by the Justice 
Department in the case of United States of America vs. The Thomson 
Corporation and West Publishing Company.
    The proposed Final Judgment is deficient on numerous counts and 
fails to provide any meaningful relief to consumers of legal 
information in the United States. In support of this contention, I 
wish to raise the following points:
    (1) Divestiture of the fifty-one titles which comprise the major 
portion of this tentative agreement will have no appreciable or 
measurable impact upon the competitiveness of the legal publishing 
industry as a whole. At least thirty-five of the fifty-one titles 
are of little significance in the broader marketplace. Many of these 
titles are small, state specific titles with only local appeal. In 
fact, the presence of these thirty-five titles in the list leads one 
to suspect that they are Thomson-West cast-offs, jettisoned to make 
the list and its impact appear larger than it really is. Titles such 
as Kentucky Probate PSL and Louisiana Successions, for example, are 
insignificant even in their local markets, let alone when viewed 
from a national perspective. The cumulative impact of Thomson-West 
divesting thirty-five such titles will do virtually nothing to 
enhance the competitiveness of the market for legal information in 
the United States.
    (2) The proposed Final Judgment also requires the divestiture of 
several major primary law or finding aids for those states in which 
Thomson-West would control all such existing titles. While one would 
expect any agreement to prevent these obvious examples of total 
market domination, it should be observed that the major impact of 
these divestitures will be limited to these particular states and 
those major law libraries with national collections of such primary 
law or finding aids. In addition, price inflation in both the 
initial and supplementation costs for these titles have been far 
less egregious than the price inflation which has characterized 
secondary materials. Viewed from the perspective of the average 
consumer of legal information, these titles will have little impact 
on the market as whole. For the New York attorney, for example, the 
proposed final judgment will impact only the market for enhanced 
statutory law and one minor title, New York Wills and Trusts. Once 
these titles have been acquired, the attorney will face a market 
largely dominated by Thomson-West (or what has now been named the 
West Legal Publishing Group).
    (3) The agreement also forces the divestiture of several major 
primary law products, the most significant of which are the United 
States Code Service, U.S. Reports, L. Ed., and the U.S. Digest, L. 
Ed. Collectively, these titles have previously comprised major 
components of Lawyers Cooperative's Total Client-Service Library 
System, the only significant alternative to West's Key Number System 
of legal research. Divestiture of these titles will preserve 
virtually intact Thomson-West's future control of both systems of 
legal research. The Total-Client Service Library system will simply 
substitute the United States Code Annotated, West's Supreme Court 
Reporter and West's Supreme Court Digest in place of the three 
former Lawyer's Cooperative products.
    Moreover, divorced from the system of which they were an 
integral part, the three Lawyers Cooperative titles will fade in 
importance, both as tools of legal research and in market position. 
The legal publishers who may consider buying these titles must be 
cognizant of the risks involved in purchasing titles whose 
subscriber lists will inevitably shrink when they become independent 
publications. While one could anticipate a potential publisher 
incorporating citations to these titles in its secondary law 
publications, this will still not result in the creation of a third 
legal research system to challenge the domination of Thomson-West. 
The only way to break this total domination of legal research 
systems would be to force Thomson-West to divest itself of Lawyers 
Cooperative Publishing Company in total.
    (4) The proposed final judgment makes no serious attempt to 
address the impending

[[Page 53451]]

domination of the market in secondary law materials by Thomson-West. 
As a result of its steady stream of acquisitions over the past 17 
years, the Thomson Corporation will control slightly more than 50% 
of the leading secondary law titles published in the United States. 
This statement is based on an analysis of the titles used for twenty 
years by Bettie Scott in her Price Index for Legal Publications, 
published, until recently, in the Law Library Journal, and an 
analysis of the 533 treatises included in my own Legal Information 
Buyer's Guide and Reference Manual 1996 (I should add, 
parenthetically, that the titles selected for inclusion in my book 
were made on their individual merits between March and July of 1995, 
prior to the announcement by West that it was putting itself up for 
sale). The percentage of secondary law titles to be controlled by 
Thomson-West will constitute approximately 51% of the titles in 
Scott's list and approximately 53% of the titles included in my 
list.
    Only seven national secondary titles of any significance are 
included among those titles to be divested by Thomson-West, and only 
two of these are larger sets which command a significant market 
presence (Corbin on Contracts and Appleman, Insurance Law). These 
seven titles represent only 1.3% of the 533 treatises titles 
reviewed in my book, hardly enough to cause even a ripple in the 
overall control which Thomson-West will exercise over the secondary 
law marketplace.
    A recent examination of the budget of our own Rhode Island State 
Law Library revealed that 47% of our current expenditures are 
earmarked for Thomson-West publications. However, because standing 
orders to approximately 75% of the secondary law materials published 
by Thomson have been suspended due to steeply rising supplementation 
costs (and now updated sporadically), this figure could easily 
exceed 65% of our budget were all titles on standing order.
    The proposed Final Judgment leaves only six publishers of 
secondary law materials to challenge Thomson-West's hegemony: 
Anderson Publishing, Aspen Law & Business, Matthew Bender, Little 
Brown, Michie, and Wiley Law Publications; however, the revenues of 
Matthew Bender, the leading publisher in this group, probably exceed 
those of the remaining five publishers. Matthew Bender has increased 
prices so significantly in the past eight years that many attorneys 
in small law offices have sought alternative publications, most of 
which are published by Thomson or West. In other words, given that 
fact that most attorneys will seek to avoid the extraordinarily high 
costs associated with Matthew Bender treatises, Thomson-West's 
control of the market will be even greater than the 51-53% included 
in the above cited publications.
    According to the Justice Department's Competitive Impact 
Statement, Section B. 2.:
    Thomson and West compete vigorously on the basis of price for 
both enhanced primary law products and secondary law products. 
Thomson and West look almost exclusively to each other in making 
pricing decisions and promoting both their enhanced primary and 
secondary law products in the relevant markets, and consumers have 
benefited from this competition. Thomson and West also compete 
directly on the basis of quality. The quality of Thomson's and 
West's enhanced primary and secondary law products has improved as a 
result of such competition. Unless restrained, the proposed 
acquisition would allow the combined entity unilaterally to raise 
prices without the threat of a new entry into these markets by a 
third party (emphasis mine).
    These statements notwithstanding, this proposed Final Judgment 
does little to restrain a merger which will almost certainly result 
in a unilateral raising of prices, particularly for secondary law 
materials. There are, quite simply, too few major national titles on 
the divestiture list to have any appreciable impact on this 
eventuality. I predict that, within 3-5 years, we will witness a 
significant increase in the supplementation cost of West's secondary 
law publications as they are increased to the level of the competing 
Thomson titles. When the effects of these price increases are felt 
throughout the law library community, we will witness even greater 
shrinkage of collections as library budgets are more completely 
consumed by supplementation costs of a smaller number of titles. 
West, which was the one major safe haven for those law libraries and 
other customers anxious to avoid the more aggressive pricing of 
Matthew Bender and the Thomson Companies will then have nowhere to 
turn. The past history of Thomson prices increases provides ample 
evidence to substantiate this belief (see Appendices to the American 
Association of Law Libraries letter from Patrick Kehoe previously 
submitted to your Division).
    (5) The proposed Final Judgment also permits, but does not 
require, states to reopen bidding of the three state contracts to 
publish official state reporters. While this requirement is a 
necessary one, it is my view that such rebidding for the reports of 
only three states will have only marginal effect upon the market. 
Pricing of official reports has not been a significant problem for 
consumers of legal information in the past and it is unlikely that 
it will be in the future, particularly in light of the fact that 
these reports constitute only a small percentage of the average 
lawyer's expenditures for legal information. Consumers should be 
more concerned about future price increases for enhanced primary law 
or secondary law materials.
    (6) Finally, the proposed Final Judgment also requires Thomson 
to license the use of star pagination in the National Reporter 
System to other legal publishers. In the absence of the ultimate 
resolution of the claim which West asserts over star pagination, 
this proposed Final Judgment cannot be said to provide any 
meaningful relief to consumers of legal information. The licensing 
fees are simply too high to permit any but the most well-financed 
publishers to use West star pagination.
    Robert Oakley, Director of the Georgetown University Law 
Library, conducted preliminary calculations of the cost of licensing 
star pagination from the West Publishing Company. Based on the cost 
of $.09 per 1000 characters, he calculated that it would cost a 
potential licensee approximately $541.00 annually for each volume of 
the Federal Supplement, or approximately $495,000.00 annually for 
the entire Federal Supplement. New entrants who might arise to 
challenge Thomson-West by developing value-added secondary materials 
to either print or CD-ROM will simply find the entry costs too 
onerous. And existing publishers, such as Matthew Bender, will be 
forced to pay the high licensing fees to use star pagination in its 
own secondary materials or run the risk of litigation for copyright 
infringement. In the current environment, Thomson-West is not only 
well positioned in the print field, but is in a superior position to 
develop enhanced CD-ROM products which combine expert analysis with 
the relevant primary law cases and statutes. This agreement provides 
no relief in this regard.
    In light of the above, I believe that the court can do no less 
than find that this proposed Final Judgment is not ``within the 
reaches of the public interest.'' In my view the Justice Department 
has failed to provide consumers with any meaningful relief in this 
proposed merger and leaves them little better off than if it had 
taken no action at all. Many of the titles on the divestiture list 
are obvious Thomson-West cast-offs and of little significance. 
Furthermore, Thomson-West have it within their power to negate the 
loss of the only three major national titles on the list (U.S.C., 
L.Ed. and U.S. Digest, L.Ed.) by incorporating its competing titles 
(U.S.C.A., S. Ct. Reporter, and U.S. Supreme Digest) into the Total 
Client-Service Library System. In my view, the divestiture of 
Lawyers Cooperative, in total, is the minimum acceptable solution 
``within the reaches of the public interest.'' This would at least 
ensure that the only two major legal research systems remain in 
separate hands.
    Thomson-West have agreed to this proposed Final Judgment because 
it leaves the fruits of their merger virtually intact and grants 
them dominant control of the marketplace. Consent decrees which do 
not protect the public interest, cannot, by definition, be effective 
tools of antitrust enforcement. I urge the court to reject this 
proposed Final Judgment.

      Sincerely,
Kendall F. Svengalis,
State Law Librarian.

Inner City Press--Community on the Move

August 30, 1996.
U.S. Department of Justice,
Antitrust Division, Attn: Mr. Craig W. Conrath, Chief, Merger Task 
Force, 1401 H Street, N.W., Suite 4000, Washington, D.C. 20150

Re: Comments Opposing the Currently Proposed Final Judgment in 
United States v. The Thomson Corporation and West Publishing Company

    Dear Mr. Craig W. Conrath and others: On behalf of Inner City 
Press/Community on the Move and its affiliates and members, 
including myself (collectively ``ICP''), I am submitting these 
comments in opposition to the currently Proposed Final Judgment in 
United States of America v. The Thomson

[[Page 53452]]

Corporation and West Publishing Company. The Proposed Final Judgment 
was published in the Federal Register of July 5, 1996 (61 FR 35250), 
along with a statement, pursuant to 15 U.S.C. Sec. 16(b)-(h), that 
public comments received within sixty days will be considered, both 
by the Department of Justice (``DOJ'') and by the District Court 
Judge, before any final determination. These comments are timely.
    There are serious questions of antitrust law here at stake, 
questions that go beyond the stunningly elevated Herfindahl-
Hirschman Indices (``HHIs'') for numerous product markets, and the 
requirements that Thomson-West license their page citation system to 
competitors. The more fundamental issue, given that the 
anticompetitive effects (and effects that would fly in the face of 
the purpose(s) of the antitrust laws, see infra) that would clearly 
result from this merger, is why the Department appears to have 
accepted as a given that it must allow this combination, and has 
only, in ICP's view, played around the edges in securing relatively 
minimal divestiture and other purportedly mitigating actions, as a 
condition for settlement. The Proposed Final Judgment states, at XV, 
that its ``[e]ntry * * * is in the public interest.'' ICP dispute 
this, for the reasons set forth below.
    Section 7 of the Clayton Act, 15 U.S.C. Sec. 18, prohibits 
mergers where ``the effect may be to substantially lessen 
competition.'' The market for legal and legal-economic information 
and research resources is already hyper-concentrated and 
anticompetitive. ICP is submitting these comments from its 
perspective/position as a small scale not-for-profit ``consumer'' of 
legal and legal-economic information and research resources, a 
grassroots community and civil rights group with far from unlimited 
resources, which needs access to legal and legal-economic 
information in order to pursue its public interest mission of 
combatting redlining and other discriminatory practices by banks and 
other financial institutions. Of most concern to ICP is what the 
Proposed Final Judgment refers to as the ``comprehensive online 
legal research services'' (hereinafter, the ``COLRS'') product 
market.\1\ West already monopolizes this product market, as well as 
a number of other product markets. There is simply no doubt that a 
combination of Thomson, which is a producer/compiler of much of the 
content of the (only two) ``comprehensive online legal research 
service'' providers, would substantially (further) lessen 
competition in this product market. Absent meaningful and sufficient 
mitigation, the proposed combination runs afoul of Section 7, and 
cannot be allowed.
---------------------------------------------------------------------------

    \1\ The Department's definition/delineation of the COLRS product 
market appears arbitrary. It is called the ``comprehensive online 
legal research services'' product market, and yet the primary 
mitigation proposed involves a option for Lexis-Nexis to extend its 
licenses for three ``non-legal'' data bases: Investext, ASAP and 
Predicasts. As further explained infra, WESTLAW and Lexis-Nexis have 
a duopoly for the provision of a number of not specifically 
``legal'' resources, which are necessary for consumers/public 
interest groups to advocate. Requiring only that Thomson extend 
licenses on three data bases, and only to one competitor does not 
mitigate the foreseeable harm, even as described in the Department's 
own presentation. The current Proposed Final Judgment should be 
rejected.
---------------------------------------------------------------------------

    The Competitive Impact Statement (the ``Statement'') appears to 
acknowledge that there are only two competitors in this product 
market: West and Lexis-Nexis. The Statement, 61 FR at 35262, recites 
some, but not all, of the harm that would result from this 
combination. What is most lacking in the Department's discussion 
(and perhaps analysis) is a recognition of how over-concentrated and 
anticompetitive this product market already is.\2\ The Statement 
implies that if the Department and Thomson-West merely seek to 
``maintain the level of competition that existed between WESTLAW and 
Lexis-Nexis before the acquisition.'' the minimally modified 
proposal can legitimately be said to be ``in the public interest.''
---------------------------------------------------------------------------

    \2\ Interestingly, the Statement does not set forth the HHI for 
this comprehensive online legal research services product market. 
Exhibit C of the Statement provides HHIs for nine primary law 
product markets, all of which exceed, often by a power of five or 
more, the DOJ's own definition of an over-concentrated market. The 
HHI for the COLRS product market is even higher; ICP questions is 
that is not among the reasons for the omission of this HHI from the 
Statement. The HHI for the COLRS product market, as the DOJ defines 
it, must be entered into the record before the Court.
---------------------------------------------------------------------------

    As a general matter, mitigation efforts such as these are, at 
best, only partially successful. Where even the goal of the 
mitigation effort is only to ``maintain the level of competition 
that existed * * * before the acquisition'' (see supra), and that 
level of competition was already insufficient, and the market 
already over-concentrated--the mitigation effort would not 
vindicate, or be consistent with, the pubic interest.
    All that the Department proposes, to purportedly ``maintain the 
level of competition that existed * * * before the acquisition,'' is 
that Thomson ``divest itself of Auto-Cite and extend the terms of 
existing licences of [the] Investext. ASAP and Predicasts databases 
to Lexis-Nexis.'' 61 FR at 35263. This proposed mitigation is 
entirely insufficient. For example, it formalizes (or ensures) 
oligopoly in the COLRS product market. Whereas the Department has 
implied that the Consent Decree would give competitors alternative 
means of entry into the market, the proposed requirement that 
Thomson license only three databases, and only to Lexis-Nexis, would 
ensure anticompetitive duopoly deep into the 21st century. 
Additionally, the number of databases required to be licensed is 
absurdly low. Furthermore, the duration \3\ of the option to extend 
is too short; nowhere is it explained why the Department apparently 
believes that there will be more than the current two competitors in 
the COLRS product market in five years time (in fact, the proposed 
Final Judgment makes continuing duopoly more likely).
---------------------------------------------------------------------------

    \3\ See 15 U.S.C. Sec. 16(e)(1).
---------------------------------------------------------------------------

    Accepting, rejecting, or modifying this Proposal Final Judgment 
involves basic choices about the goal(s) of antitrust law. The 
Department's focus here, in the COLRS product market, appears to be 
on the rights of WESTLAW's (one) competitor, rather than on the 
interests of consumers of COLRS products. The interest of the public 
(said alternately, the public interest) must take precedence. 
Although protection and fostering of competition is a goal of 
antitrust law, this goal is a means to the wider objective of 
promoting (and protecting) the interests of the consuming public. 
See, e.g., United States v. Western Electric Co., 578 F. Supp. 668 
(D.D.C. 1983).
    This Proposed Final Judgment reflects a trend in which the 
Department \4\ appears to begin with the presumption that any 
merger, no matter how presumptively anticompetitive, can or must be 
approved, as long as a few concessions are obtained and can be 
announced. Many of the original goals of the Sherman and Clayton 
Acts, and of the 1950 Cellar-Kefauver Amendments, goals which are 
still vital and needed, appear to have been forgotten. Perhaps a 
combined Thomson-West would be more efficient \5\--but what showing 
(or requirement) is there that these efficiencies will be passed 
along to consumers? This is unlikely, given that, for example, in 
the COLRS product market, WESTLAW has only one competitor, and the 
Proposal Final Judgment would only more deeply imbed this 
anticompetitive duopoly. Madisonian concerns about the dangers of 
concentration of power are also particularly relevant here, given 
that the concentration would be not in some strictly consumer 
product, but in access to information, the lifeblood and 
prerequisite be to participatory democracy.\6\
---------------------------------------------------------------------------

    \4\ And other agencies with antitrust jurisdiction, including, 
for example, the Federal Reserve Board as to bank holding company 
mergers, See infra.
    \5\ Emphasis on ``[p]erhaps''--see generally, Robert Lande, 
Wealth Transfers as the Original and Primary Concern of Antitrust: 
The Efficiency Interpretation Challenged, 34 Hastings L.J. 65 
(1982).
    \6\ ICP stands ready to brief these wider issues, in connection 
with the Section 16(f) proceedings it is urging the court to begin. 
Given the unique ``products'' this proposed merger and consent 
decree involve--the law, and information necessary for effective 
public participation--full consideration of the Proposed Final 
Judgment should involve more than mere technocratic (e.g. HHI) 
battle of the numbers. See infra.
---------------------------------------------------------------------------

    As noted above, ICP is a non-profit consumers' and civil rights 
advocacy organization, which needs access to legal research 
services, including online, to perform its mission. Our society has 
become increasingly technological and fast-paced. Citizens groups 
such as ICP, which, under various statutory schemes, provide a 
counter-balance to the economic and political powers that 
increasingly dominate the policy making process, cannot meaningfully 
perform their functions without rapid access to legal precedent, 
scholarly and news articles, etc. Where the market for these is 
allowed to become ever more concentrated, driving prices to levels 
entirely unaffordable to any but the largest corporate litigants/
lobbyists, the adverse effects extends beyond even those that flow 
from anticompetitive pricing in other consumer markets. Allowing a 
monopoly in toothpaste, or in pharmacies, may be one thing: such 
concentration may diminish both allocative efficiency and

[[Page 53453]]

consumer welfare. But the effect is limited in the first case, to a 
single personal hygiene product, and in the second, to a set of 
these. Where access to the law, and to the background sources which 
alone allow citizens groups to advance their (and the public's) 
interest, becomes monopolized and anticompetitive, the adverse 
effects reach even those who do not use these COLRS services, or are 
not even aware of them.
    The Statement, at 7, argues that the Court must almost 
automatically accept this proposed Final Judgment, as long as it is 
``within the range of acceptability or is within the reaches of 
public interest.'' 61 FR at 35264, citing United States v. American 
Tel. and Tel. Co., 552 F. Supp. 131, 150 (D.D.C. 1982), affd sub 
nom. Maryland v. United States, 460 U.S. 1001 (1983), If that is the 
standard of review that the Court here adopts,\7\ ICP formalizes its 
contention that this Proposed Final Judgment is beyond the range of 
acceptability, and is not within the reaches of the public interest. 
Not only would this Proposed Final Judgment allow and legitimize the 
current overconcentration and anticompetitive behavior in the COLRS 
product market--it would make such concentration worse, and thereby 
injure the public interest. This product market unique impinges on 
and directly affects the ``public interest,'' even the way(s) in 
which the ``public interest'' is determined.
---------------------------------------------------------------------------

    \7\ In terms of the proper standard of review, ICP refers the 
court to, e.g., Esco Corp. v. United States, 340 F.2d 1000, 1965 CCH 
Trade Cases para. 71365 (9th Cir. 1965), providing that proposed 
consent degrees must be scrutinized carefully and approved, both as 
to form and content, by the court before entry.
---------------------------------------------------------------------------

    The Antitrust Procedures and Penalties Act (the ``APPA'') 15 
U.S.C. Sec. 16(b)-(h), provides a convenient example of the way in 
which Congress defers or assigns many policy debates within our 
society to proceedings, subject to public notice and comment, in 
which consumers can assert their interests, and confront the 
arguments of large corporations which seek to maximize returns by 
(virtually) any means necessary. To illustrate the harms created by 
the current overconcentration in the COLRS product market, which 
overconcentration this Proposal Final Judgment would not only not 
address, but would make worse, consider the following:
    As the Department's Statement notes, APPA authorizes the use of 
procedures beyond a mere review of the Statement and (written) 
Response to Comments to make the required ``public interest'' 
determination. See 61 FR at 35264, and 15 U.S.C. Sec. 16(f). Imagine 
a citizens/consumers' group such as ICP seeking to participate in 
such proceedings, without access to COLRS (that is, without access 
to WESTLAW or Lexis-Nexis). Both Thomson-West, and the Department, 
have instantaneous access to online legal research; a single 
database search using key words will produce (most) all relevant 
precedents, and other supporting information. One might assume that 
the staff or members of the consumers group, priced out of the 
monopolized COLRS market, could simply visit a law library and 
conduct their research in books, by hand, using Shepards volumes, 
indices of law reviews, perhaps searching hard copy newspapers on 
microfilm. On personal knowledge, such a process is exceedingly time 
consuming, and is not realistic in connection with proceedings under 
the federal Community Reinvestment Act, Bank Merger Act, Clean Air 
Act (or APPA). The citizens/consumers group, priced out of the 
anticompetitive COLRS market, would not realistically be able to 
effectively present its view of the ``public interest;'' in all 
likelihood, the corporation's (and, surprisingly, the Department's) 
competing view of the public interest would prevail, and become a 
new precedent for applicants for further anticompetitive mergers. 
This ``incremental corp-ocracy'' prediction might seem too extreme--
if it were not precisely what is happening in our society.
    ICP urges the court, in order to make its determination under 
Section 16(e), to use the procedure(s) specified in Section 16(f), 
particularly those in Section 16(f)(3). ICP and its members, 
including its executive director, are ``interested persons or 
agencies;'' their participation would serve the public interest. ICP 
is aware that Judge Richey on July 31, 1996 denied a motion by Tax 
Analysts to participate in the proceedings, even as an amicus 
curiae. West's counsel stated that ``Tax Analysts is disingenuous to 
say they're intervening to protect the public interest. They're 
intervening because they lost the lawsuit, and now they're trying to 
get what they lost in the lawsuit through another means.'' \8\ ICP 
wishes to emphasize that it is not a competitor with West or Lexis-
Nexis, that it is in fact not even a for-profit entity. ICP has had 
experience in the COLRS product market, in the use of these products 
in order to advocate in public proceedings, and has had experience 
with the Department's antitrust reviews of proposed mergers beyond 
this one (see infra this letter). Summary disposition on this 
Proposed Final Judgment, considering only the Complaint, the 
Statement, comments thereon, Response to Comments and the (perhaps 
revised) Proposed Final Judgment--would be inappropriate, given the 
issues raised by this proposed transaction,\9\ and the Proposed 
Final Judgment.
---------------------------------------------------------------------------

    \8\ Connecticut Law Tribune, August 5, 1996.
    \9\ See, e.g., editorial in the New Jersey Law Journal of August 
5, 1996, at 26: ``The antitrust implications of such an arrangement 
are so obvious that one might have wondered what courageous attorney 
gave the first opinion that the DOJ would permit the transaction.''
---------------------------------------------------------------------------

* * * * *
    ICP wrote to the Department, attention Assistant Attorney 
General Bingaman, on June 3, 1996, setting forth its opposition to 
the proposed Thomson-West acquisition, and stating, inter alia, that
    [I]n seeking * * * to advocate for the public interest, and for 
the interest of the predominantly low income and minority residents 
of the South Bronx and Harlem, ICP has become aware of the harmful 
effects of West's and Thomson's current oligopoly control of the 
market for legal and legal-economic information.
    Thomson at present owns, inter alia, the American Banker, the 
Regulatory Compliance Newsletter, Lawyers' Cooperative Publishing, 
Sheshunoff Information Services, etc.; West, of course, is the 
``proprietary'' publisher of most relevant case law, and owns the 
Westlaw data base, containing not only case law, but an extensive 
business and legal news date base, including the Dow Jones and 
Associated Press wire services. It is virtually impossible to 
effectively advocate without access to these resources; however, due 
to the hyper-concentration of this market, the price for such 
products is inordinately high. This proposed acquisition would 
further concentrate this already anticompetitive market. The adverse 
effect would not only be to further raise prices--the acquisition, 
without mitigation or divestiture, would effectively exclude such 
consumers as ICP from the market, and thus would serve to protect, 
preserve and exacerbate other injustices and anticompetitive 
behavior in the society.
    ICP is a public interest advocate not only in the field of fair 
lending and civil rights, but also in the antitrust field. For 
example, ICP extensively documented the prospective anticompetitive 
effects of the ongoing Chase-Chemical merger, for consumers in the 
New York area, particularly in Bronx County. Such advocacy, 
including antitrust advocacy, by those most injured by the many 
mergers proposed these days--that is to say, small small business 
associations, community and consumers' groups--is virtually 
impossible without access to the legal and legal-economic 
information which West and Thomson control. Any further 
concentration in this market, any further raising of prices, would 
silence more voices in society, and thus set off a chain of adverse 
consequences.
    For your information, I recently contacted West Publishing, [on 
behalf of ICP and of the New York State Reinvestment Alliance, to 
which ICP belongs], in order to inquire whether West has any program 
or provision for granting access to Westlaw and other West resources 
to non-profits, particularly grassroots civil rights and consumers' 
groups, at reduced or waived fees. I was told that West does not 
have any such program or provision; nor does West intend to 
implement such a program or provision. I attempted to explain why 
such a program would be both productive and in a sense incumbent 
upon West, both because of its central position in the legal field, 
and in view of its proposed acquisition and merger with one of its 
few competitors, Thomson. I was told that the idea would be ``passed 
along,'' but not to expect any changes, in the near future if at 
all, because West does not change anything without much study. This 
deliberativeness does not, however, appear to extend to pricing 
decisions.
    With all due respect, I must also say that ICP is troubled by 
the DOJ's long standing inter-relation with West, particularly the 
selection of West as the DOJ'S legal-materials supplier after, 
largely due to West's anticompetitive behavior, the DOJ abandoned 
its ``Juris'' project.\10\ See generally, Thomas

[[Page 53454]]

Scheffey, ``Too Close for Comfort? States Study West-Thomson Merger, 
'' Texas Lawyer, April 1, 1996.
---------------------------------------------------------------------------

    \10\ August 30 note: ICP is aware that on August 5, 1996, the 
Department sought to intervene in the case of Matthew Bender & Co. 
Inc and HyperLaw Inc. v. West Publishing Co., in the U.S. District 
Court for the Southern District, apparently to argue against West's 
claim that its page citation system is protected by copyright law. 
See Connecticut Law Tribune, August 12, 1996. This is laudable, but 
does not resolve the issues in the COLRS product market discussed in 
this comment.
---------------------------------------------------------------------------

    ICP regrets submitting these comments (presumably) late in the 
DOJ's review of the the Thomson-West proposal. I telephoned a DOJ 
Antitrust staffer I have come to know in the course of ICP's bank 
merger advocacy work; after several days, this staffer informed me 
that the Thomson-West proposal was being review not by his unit, but 
by the ``Merger Task Force.'' Soon thereafter, I attempted to call, 
and did in fact leave a message for, the Merger Task Force lawyer to 
whom the staffer had referred me. I did not receive any response for 
more than a week. I left a second message, in response to which the 
lawyer informed me that he was not at liberty to tell me the status 
of the Department's review, but that we could submit our comments by 
mail to 1401 H Street (which we are hereby doing). While I 
understand that the DOJ's review is not as formalized as, for 
example, the reviews conducted by the Federal Reserve System in 
connection with bank or bank holding company proposed mergers, 
nevertheless I believe the DOJ should attempt to better inform the 
affected public, especially the ``retail'' and low and moderate 
income segment thereof, of pending DOJ merger reviews, such that the 
DOJ can receive, and consider, comments from those who stand to be 
most affected--not only to pay a higher price, but to be effectively 
priced OUT of the market.
    Thomson's West proposal is particularly troubling, because of 
the ripple-effect a price raise / further concentration in the 
relevant product markets can have. It is one thing for the ``lower'' 
end of the consumer market for baby wipes, diapers, toothpaste, etc. 
to be affected by paying higher prices--and it is an entirely 
different thing for whole segments of our society to be further 
excluded from legal and legal-economic information, with which alone 
these segments of society can attempt to participate in public 
processes and advocate for their interests. This is a particularly 
important product market, because it involves the raw material which 
citizens need in order to participate in a Constitutional democracy.
    For the Court's information, the Department did call ICP on the 
day the Proposed Final Judgment was released, and faxed ICP a copy 
of its six page June 19, 1996 press release. The difficulty of many 
of those affected by proposal that the DOJ must review in providing 
information to the DOJ does not appear to spring from any lack of 
civility on the part of DOJ staff--it is the result of the DOJ 
current implementation of APPA and other provisions, or perhaps of 
the drafting of these provisions themselves. With all due respect, 
however, ICP has noted, in connection with its advocacy efforts 
during bank merger applications proceedings, that corporate 
applicants are invariably represented by counsel who appear to have 
a high degree of familiarity with regulatory staff (including, for 
example, addressing their letters to DOJ staff on a first name 
basis, which leaves the public, with less ``access,'' with the sense 
that approval, perhaps with relatively minor mitigation, is a 
foregone conclusion). ICP has not been privy to Thomson's 
communications with the DOJ; \11\ these observations are drawn from 
other DOJ antitrust reviews, including the recent review (which 
resulted in a finding of no likely anticompetitive effect) of the 
Chase Manhattan-Chemical merger. However, as I hope this comment has 
made clear, concentration on the legal research services product 
market threatens to have not only anticompetitive, but also anti-
participatory and frankly undemocratic ramification, much more so 
than other consumer products industry mergers the Courts may review.
---------------------------------------------------------------------------

    \11\ Nor has ICP seen the defendants' filings required by 15 
U.S.C. Sec. 16(g).
---------------------------------------------------------------------------

    The Proposed Final Judgment is inadequate; despite the 
mitigation proposed, the combination of Thomson and West is not in 
the public interest. ICP urges the Court to use the procedures 
authorized in 15 U.S.C. Sec. 16(f), and to conduct at least a 
hearing, and perhaps a full trial, on the Complaint filed by the 
Department on June 19, 1996, and the foreseeable effects of this 
proposed merger more generally.
    If there are any questions about this comment, or any need for 
follow up (including further participation in this proceeding), 
please do not hesitate to contact the undersigned, by telephone at 
(718) 716-3540, by fax at (718) 716-3161, or by mail at 1919 
Washington Avenue, Bronx, New York 10457.
    Thank you for your attention.
Matthew Lee,
Executive Director.

September 3, 1996.
Craig S. Conrath, Esq.,
Chief, Merger Task Force, U.S. Department of Justice, Antitrust 
Division, 1401 H Street, Suite 4000, N.W., Washington, DC 20530

Via fax 202-307-5802

Re: United States v. The Thomson Corporation and West Publishing 
Company Case No. 1:96CV01415 (U.S. District Court for the District 
of Columbia)

    Dear Mr. Conrath: This letter presents the comments of the 
Consumer Project on Technology (CPT) on the Proposed Final Judgment 
in the above referenced case. CPT is a project of the Center for 
Study of Responsive Law. CPT was created by Ralph Nader in 1995. We 
maintain a page of the World Wide Web which describes our 
activities, at: http://www.essential.org/cpt.
    When the Proposed Final Judgment (PFJ) was first made public, 
CPT made comments to several news organizations expressing 
satisfaction with the proposed divestitures, while expressing 
reservations about the economic terms of the compulsory license 
agreement. After having the opportunity to more closely examine the 
PFJ, we reiterate our concerns about the onerous economic terms of 
the compulsory license, and we express our additional concerns about 
the proposed divestitures. It is our opinion that the PFJ does not 
adequately protect the public interest, and that the proposed merger 
should not be permitted.

Proposed Divestitures

    CPT was pleased see that the divestiture would include the U.S. 
Code Service (USC), the U.S. Reports, Lawyers Edition (L.Ed.), and 
Auto-Cite, three important Thomson valued-added services which 
compete with products currently offered by West Publishing. However, 
legal publishers and law librarians have expressed persuasive 
concerns about omissions in the list of divested products, and 
raised questions about the viability of USC and L.Ed., if Thomson 
does not also divest its American Law Reports (ALRs) and American 
Jurisprudence 2d (Am Jur).
    At the heart of the problems over the enhanced legal products 
that will be divested are the issues of economies of scope in 
publishing and the inter-related nature of the various value-added 
products. The USC, L.Ed., and Auto-Cite products rely upon access to 
research and analysis from ALRs in a fundamental way, and to exclude 
the ALRs from the products to be divested will greatly diminish the 
value of the products which are divested.
    The economies of scope issue is also important. Other legal 
publishers do not believe that USC and L.ED. are economically 
viable, if they are spun off without the ALRs and Am Jur products, 
because of the lower cost of producing the products jointly, as 
compared to the stand alone cost of producing enhanced case 
analysis. These publishers believe the PFJ will create a set of 
``product fragments'' which cannot succeed economically on their 
own.
    CPT did not fully appreciate the importance of the ALRs and Am 
Jur publications at the time the PFJ was announced, and we would 
like the record to reflect our views after having the opportunity to 
more closely examine the agreement.
    A third area of concern is the implementation of the 
divestitures. Reed-Elsevier, the owner of Lexis-Nexis, has held 
discussions with Thomson to determine what assets will actually be 
sold. While we do not have access to the confidential documents that 
have been shown to Reed-Elsevier, we do know that Reed-Elsevier 
believes that Thomson intends to retain the Auto-Cite trained staff 
and database, along with the exclusive rights to integrate Auto-Cite 
with the ALRs and other Thomson products. It is one thing to divest 
a trademark plus copies of the database and software, and yet 
another to divest a product as a going concern. If Thomson 
effectively guts the product and sells the service in name only, the 
purpose of the divestiture will be undermined. Potential bidders on 
these products have apparently raised these issues with DOJ.

The Compulsory License

    In a June 19, 1996 press release, the DOJ emphasized the fact 
the PFJ would require Thomson to ``openly license'' West's page 
numbering system under a system of

[[Page 53455]]

``capped'' fees. In fact, the proposed compulsory licensing system 
seems to permit very little new entry into the market for primary 
source case law with the use of the West citation. Basically, 
publishers who seek licenses must agree to purchase the right to use 
the citation for each and every case that is cited, in each and 
every product that is published, in each and every year the product 
is sold. A publisher who licenses the citation to a single case for 
use in CD-ROM and online products would have to pay twice for the 
citation, and renew the payment year after year, with fees 
increasing each year. The costs for those licenses are very high.
    According to publishers, typical federal circuit court opinions 
run from 20 to 40 thousand characters, and U.S. Supreme Court cases 
often exceed 150 thousand characters. The PFJ requires publishers to 
pay 9 cents per thousand characters in the first year, increasing to 
13 cents after two years, with annual increases for inflation. Thus, 
for a 30 thousand character opinion, Thomson will receive $3.90, for 
each product where the opinion is published, in every year the 
product is sold. This is a very high price to pay simply to publish 
the law of the land.
    These ``capped fees'' are also likely to be the minimum fees. 
This particular fee structure sets very high hurdles for entry into 
the market. The fee structure is strongly biased in favor of the 
largest competitors to Thomson, and strongly prejudiced against 
small businesses. Of course, the most important competitor to a 
foreign owned Thomson/West is foreign owned Lexis-Nexis. Lexis-Nexis 
will surely license the citations. But the proposed compulsory 
licensing system makes it nearly impossible for many of the 
innovative American small technology firms who are seeking entry 
into this market to obtain the citations and become effective 
competitors. This is a kind of reverse industrial policy that will 
hurt consumers and American small businesses.
    These fees must be paid by anyone, including not-for-profit 
institutions. The license agreement is written in such a way that 
the subscribers must agree to the terms of the license, and Thomson 
must approve the license, making it extremely unlikely that the 
citations will ever be available for browsing on the Internet.
    We are concerned that the compulsory license agreement will have 
the perverse effect of adding credibility to West's assertions of 
copyright to the text and citations of federal court opinions, 
without providing the public with any real improvements in access to 
legal information.
    For these reasons, we urge DOJ and the court to reject the PFJ, 
and we urge the DOJ to bring and antitrust case against West 
Publishing which addresses the serious anticompetitive problems in 
the market for legal information.

        Sincerely,
James P. Love,
Director, Consumer Project on Technology.
    This letter could not be reprinted in the Federal Register, 
however, they may be inspected in Suite 215, U.S. Department of 
Justice, Legal Procedures Unit, 325 7th St., N.W., Washington, D.C. 
at (202) 514-2481 and at the Office of the Clerk of the United 
States District Court for the District of Columbia.
Bartlett F. Cole
September 3, 1996.
Ms. Janet Reno,
Attorney General of the United States of America, 10th and 
Constitution Avenue N.W., Washington, D.C.

Re: Attention to Monopoly in Legal Publishing

    Dear Ms. Reno: The undersigned has been in private practice of 
Civil law since 1940 (except for overseas duty in the Navy in WW 
II). Law books have been a substantial part of my overhead. 
Currently I maintain in my office a complete set of CJS and Wests 
Oregon Digest Second. When I need additional information I go to the 
Multnomah County law library here in Portland Oregon. Ms. Jacque 
Jurkins, the Librarian there has written in the Oregon State Bar 
Bulletin that Thomson will control 100% of law encyclopedias and 
100% of State Digests. She also writes that this will lead to 
increased prices. I enclose a copy of her article.
    Please give serious consideration to blocking this monopoly.
    I would say that the President of Thomson has tipped his hand in 
his letter of June 28, 1996. He says: ``Nothing will change in the 
near term''.
    Over the years West has spent millions of dollars on art shows, 
and artists, and in sending annual calendars to its customers. Since 
my Federal income tax, my State income tax, and my Portland Oregon 
business tax all go to support art, artists, and art shows I don't 
think we need to have to pay more for our law books so West can 
support whom it feels like.
    A few years back Multnomah County opened a brand new building 
with jail space and additional court rooms. West saw fit to send 
many of its original paintings to decorate the first and second 
floor with paintings which it had acquired. One of these paintings 
bore the title ``A Mugging''. The painting was in fact a murder 
going on by one individual with a sharp knife in which another 
individual was shown cut and bleeding. In my humble opinion a very 
poor subject for a building of Justice.
    West does not have a very good reputation for accuracy. A few 
years back they came out with a paperback index to CJS. This was 
supposed to be put out on an annual basis so they could have 
reference to the pocket parts. I found a subject completely omitted 
and wrote to them about it. I also wrote to them about the extremely 
poor printing on the pages because ink from one side ran through the 
paper to the other side. They admitted the mistake in writing but 
brushed me off.
    Please let me know if you are willing to block this monopoly or 
not, At this time we have a First Lady in the White House who has 
been a practicing lawyer also. If you are not going to do anything, 
I need to write to her.
    The Bible is the inspired word of God. I enclose for your 
personal use a pamphlet entitled ``King of Kings'' which has helped 
me understand the Bible.

        Sincerely,
Bartlett F. Cole,
Attorney at Law.

Bartlett F. Cole

September 3, 1996.
West Publishing Corporation,
Attn: Mr. Brian H. Hall, President, PO Box 64779, St. Paul MN 55164

Re: West Annual Calendar

    Dear Mr. Hall: I have your form letter dated June 28, 1996 
promising no change in the near term. Jacque Jurkins, librarian 
where I go when my office library is insufficient, predicts that you 
are likely to increase prices. I enclose a copy of her editorial 
published in a recent issue of the Oregon State Bar Bulletin.
    If you think it is presumptive of me, a sole practitioner way 
out here in Portland Oregon, to write to you about your annual 
calendar please recall what scripture says:

Rebuke a wise man, and he will love thee * * *
Teach a just man, and he will increase in learning.
Proverbs 9:8,9

Eliminate Nonessentials

    Mr. Hall, one of the ways you could keep costs down is to 
eliminate your support of art, artists, art shows, and forever 
cancel your annual West calendar. I have written to your Mr. Orell 
G. Piper and frankly told him that I have never seen--in my over 
fifty years of law practice--a West art calendar hanging in any 
lawyers office. Frankly, Mr. Hall, I am required to support art, 
artists, and art shows by my income tax to the Federal, State and 
local governments. I really don't need to support every time I pay 
for one of your books.
    The Bible is the inspired word of God. I enclose for your 
personal use a pamphlet entitled ``King of Kings'' which has helped 
me understand the Bible.
        Sincerely,
Bartlett F. Cole,
Attorney at Law.

Where Have All the Publishers Gone?

By Jacque Jurkins

    On February 26, 1996, we saw the end of a legendary, 124-year 
old U.S. publishing institution, with the news release, ``West 
Publishing to Join Thomson in $3.425 Billion Transaction.'' This 
sale, marked the latest and perhaps the greatest acquisition of an 
American legal publisher by Thomson Professional Publishing, a 
Canadian-British corporation. It is something akin to Ford and 
General Motors merging.
    The Thomson Corporation consists of three major business units: 
travel companies in the UK; 140 newspapers in the United States and 
Canada; and an international publishing group. The latter in turn is 
split into six divisions, most notably the Thomson Professional 
Publishing Group, to whom the assorted American law book companies 
report.
    Since 1979 Thomson has acquired at least 10 American legal 
publishers in addition to West, including: Callaghan & Company

[[Page 53456]]

(1979); Clark Boardman (1980); Warren, Gorham & Lamont (1980); 
Lawyers Cooperative (1989); Bancroft-Whitney (1989); Research 
Institute of America (1989); Maxwell Macmillian, formerly Prentice-
Hall, (1991); Counterpoint Publishing (1994); Information Access 
(1994); Barclays (1995); and Shepard's/McGraw-Hill, treatises only 
(1995).
    These acquisitions and the subsequent reorganization of 
traditional product lines have created no end of confusion for law 
book consumers as they struggle to keep up with the new lineup of 
publishers and products. Publications once received from Lawyers 
Cooperative Publishing (Lawyers Coop) may now come from Clark 
Boardman Callaghan (CBC) or any one of the publishers owned by 
Thomson; publications received from Shepard's have been transferred 
to Lawyers Coop or CBC.
    If the sale is approved by the Department of Justice--and at 
this point in time no one believes it will not be approved--Thomson 
will control: 100 percent of the national legal encyclopedias (CJS 
and Am.Jur.2d); 100 percent of the annotated federal codes (USCA and 
USCS); 100 percent of the commercial U.S. Supreme reporters (Supreme 
Court Reporter and Lawyers Edition); 100 percent of the U.S. Supreme 
Court digests; 80 percent of the national legal forms sets (West 
Legal Forms, Am.Jur.Forms and Nichols Cyclopedia of Legal Forms); 76 
percent of the state legal encyclopedias; 50 percent of the major 
American legal treatises and student case books; the entire National 
Reporter System; 100 percent of West state, regional, Decennial and 
topical case digests; 25 annotated state codes; and WESTLAW LawDesk 
and numerous CD-ROM products.
    Prior to the sale, there was significant overlap in the 
publications of West and the Thomson Group, giving the customers a 
choice of titles from which to choose. The merger of the two 
companies will almost certainly reduce competition through the 
elimination of overlapping publications. Will the consumer have a 
choice of either CJS or Am.Jur.2d., USCA or USCS, Supreme Court 
Reporter or Law Edition? Doubtful.
    The reduced competition is likely to lead to increased prices. 
Based upon the history of prior Thomson acquisitions, consumers of 
legal publications should be prepared for significant price 
adjustments to former West publications. The cost of the annual 
supplementation to Am.Jur.2d rose from $584 in 1987 to nearly $1,500 
in 1994 following Thomson's acquisition of Lawyer's Coop in 1989. 
Shortly after Thomson created the new entity, Clark Boardman 
Callaghan in 1992, the supplementation frequency doubled for Couch 
on Insurance and Costs rose from $133 in 1992 to $695 in 1995. West 
charged $256 for the 1995 annual pocket parts to West's Legal Forms, 
while CBC charged $842 for the 1995 supplementation to Nichols 
Cyclopedia of Legal Forms, comparable form set. One can only 
speculate as to what the annual supplementation to West's Legal 
Forms is likely to cost in the future, particularly since it is well 
recognized in the publishing industry that Thomson paid as much as 
three times the going rate for its acquisitions and will need to 
recoup its investment.
    The reduced competition also has resulted in less local customer 
services and fewer local sales representatives. (Perhaps some 
customers will not find this a loss.) No longer can one deal with a 
sales rep. No longer can one lean on the sales rep to straighten out 
a confused billing or take back an unwanted publication. Instead, 
there are the telemarket callers.
    Lawyers, judges and law students cannot perform legal research 
or study law without reference to one or more of these publishers' 
research sources either on line or in hard copy format. Yet very few 
lawyers are aware of the Thomson acquisitions and even fewer have 
any understanding of the ramifications and profound effect they will 
have on everyone in the legal community.

West Publishing Corporation

July 18, 1996.
Mr. Bartlett F. Cole,
1201 S.W. 12th Avenue, Rm. 305, Portland, Oregon 97205-1705

    Dear Mr. Cole: Mr. Hall wanted me to thank you for your 
greeting, and also asked me to respond to your letter of July 1 
regarding the 1995 West Calendar.
    Over the last twenty years West has encouraged the participation 
of American artists by supporting one of the nations major 
invitational art shows. Through ``WEST ART & THE LAW'' West has 
received much recognition, and was even presented the National 
Business in the Arts Award. The artwork which you enclosed was 
highlighted and selected by a panel of nationally recognized 
individuals from the arts community.
    We recognize in art, as well as other subjects, taste, 
judgments, perceptions vary with each individual. We did receive 
several letters, such as yours, expressing displeasure with that 
particular picture. Our intentions were not to offend any group of 
individuals by this particular selection, but to support art. The 
artwork for our 1997 West Calendar is called ``City Hall''. It's 
more related to the legal profession, and I hope you won't mind if 
we send you one as it becomes available.
    I also wanted to thank you for the literature you enclosed. I 
personally believe the Bible is the inspired word of God, but I had 
never seen or read it in the comic book format. It was interesting.
    Thank you again for interest.

        Sincerely,
Orell G. Pieper,
Marketing Department.

West Publishing

June 28, 1996.
    Dear Customer: I'm very pleased to announce that The Thomson 
Corporation has acquired West Publishing. As a result of this 
acquisition, we have combined two Thomson companies, Thomson Legal 
Publishing, and West Publishing to form a new company, West 
Information Publishing Group. This merger has successfully passed 
review by the Department of Justice.
    The new company is now unquestionably the preeminent provider in 
legal publishing and will offer great benefits to the industry. We 
now have the potential to provide more integrated products and 
services--products that will be easier to use, more timely, and will 
incorporate cutting-edge technologies. In addition, our licensing of 
Star Pagination to third parties will provide greater public access 
to primary case law by broadening the number of vendors who utilize 
the product.
    In terms of the sales support, customer service, product 
enhancements, billings, and other services you expect from West 
Publishing Company, nothing will change in the near term. All 
operational details will remain the same for the remainder of 1996. 
If you have any questions, please don't hesitate to call your 
customer service representative.
    You are a valued customer, and your satisfaction is at the top 
of our priority list. I look forward to our enhanced ability to 
serve you in the future.

        Respectfully,
Brian H. Hall,
President, West Information Publishing Group.
[FR Doc. 96-25030 Filed 10-10-96; 8:45 am]
BILLING CODE 4410-01-M