Jurisline.com Suit Could Shift the Underpinnings of the Online Legal Marketplace and Beyond
Posted On February 9, 2000
Copyright and licensing form part of the underpinnings of the information industry. In the profitable sectors of the industry, acquisition and concentration of ownership are becoming structural as well. A new company, Jurisline.com, LLC (http://www.jurisline.com), is shifting these tectonics in the profitable legal sector of the marketplace by the service it has recently created and by legal challenges it has just initiated against established player Reed Elsevier, Inc.
Jurisline.com has created a stunning new Web-based resource for legal research. The service is in final public beta testing now, but already provides a single integrated and intuitive search engine interface to an impressive array of legal data. It is well on its way to providing comprehensive federal and state case law, and it has made a start on statutory law. [For a review of Jurisline, as well as an examination of its origins, more coverage on the litigation discussed below, plus supporting press releases and complaint filings, see my series of articles for the LLRX Webzine (http://www.llrx.com): "Jurisline: What You See ...What You Don't See," "Jurisline.com: Update, January 24, 2000," and "Jurisline.com: Update, February 3, 2000—Jurisline.com Speaks, In and Out of Court."]
The service is free. The founders, Lee Eichen and Kendrick Chow, told me in a telephone interview that they believe their business model of financing the service by advertising can work if they can maintain traffic to the site.
Jurisline.com is adding coverage and backfiles of state and federal court opinions at a rapid pace. Where do they get the data? In part from the Lexis Law On Disc CD-ROMs. Jurisline.com used the core text from the LEXIS CD-ROMs after removing all editorial enhancements made by LEXIS, other than de minimus and non-creative enhancements such as attorney and date information. Lee Eichen and Kendrick Chow both openly acknowledged that to me, and the company also acknowledges this in a lawsuit it has filed against Reed Elsevier, Inc. (http://www.reed-elsevier.com) on December 8, 1999.
In the suit [Jurisline.com, LLC v. Reed Elsevier, Inc.] filed December 8, 1999 in the U.S. District Court for the Southern District of New York, Jurisline.com claims that:
- the core data provided on the Lexis Law On Disc CD-ROMs is in the public domain and was created by the government at taxpayer expense
- the restrictions on use of that data imposed by licenses are unenforceable, because federal copyright law preempts the state law of contracts
- LEXIS and Westlaw have combined or conspired in monopolizing the market for comprehensive computer-assisted legal research services in the U.S.
Jurisline.com claims that LEXIS and West have used monopoly power to artificially restrict supply in that market and that LEXIS has artificially inflated fees for its services. It seeks declaratory relief that there is no protectible copyright in the core data, that Jurisline.com, LLC has not violated copyright nor the Lanham Act, and that Reed Elsevier not be allowed to enforce specified provisions of its license agreement. It also asks for treble damages under the antitrust laws. Henry Horbaczewski, general counsel of Reed Elsevier, Inc., said in a press release issued by Reed on January 31, 2000, "Jurisline's claims are groundless and we will vigorously defend against them."
On January 28, 2000, Matthew Bender & Co., Inc. (http://www.bender.com), a subsidiary of Reed Elsevier, PLC and the current owner of Lexis Law On Disc filed suit against Jurisline.com, LLC and Lee Eichen in the Supreme Court of New York, County of New York. Matthew Bender claims that Jurisline.com, LLC and Eichen:
- committed fraud when they subscribed to Lexis Law On Disc representing that Eichen was purchasing the service as a sole legal practitioner, that no other attorneys would have access to the data, that the data would not be available on a network, and that they would abide by the terms of the license
- breached the contract governing the use of Lexis Law On Disc
Into the Issues
Jurisline.com was formed in 1998. Lee Eichen signed subscription agreements for the LEXIS CD-ROMs on March 24 and March 30, 1999. Just below Section 8, in the space for "Holder's Names," the name "Lee Eichen" is handwritten, and next to that in the space for "Holder's Title/Position" the title or position "sole practitioner" is handwritten.
Michael Jacobs, general counsel of Matthew Bender, stated in the press release issued by Reed Elsevier on January 31, 2000, "We believe that Jurisline made material misrepresentations to our company in order to obtain access to our Law On Disc information service and has also breached numerous provisions of our subscriber agreements. We strongly believe that our agreements are valid and enforceable, notwithstanding claims by Jurisline that the contracts are preempted by copyright law. Any other view is contrary to law, the express intent of the U.S. Congress, and business practices universal throughout the information industry."
The first issue in Jurisline.com's copyright claim would seem to have been settled already in Matthew Bender and Hyperlaw v. Westlaw [S.D.N.Y., May 19, 1997; http://www.nylj.com/links/hyperlaw.html]. That case basically holds that data that begins life in the public domain continues to live in the public domain no matter where you find it. The Jurisline.com suit attempts to extend the principle of the Hyperlaw case by combining it with a claim of federal preemption, i.e., the claim that federal copyright law preempts the state law of licenses, which is key to this suit. If successful, its federal preemption claim would invalidate, insofar as public domain data such as court opinions or SEC EDGAR reports or government statistics are concerned, license provisions that underpin business relationships throughout the information industry.
At first glance, one might doubt whether Jurisline.com stood much of a chance in this litigation battle. Matthew Bender is represented by formidable legal advocates in Proskauer Rose, LLP, particularly Charles S. Sims, Stephen Rackow Kaye, Jon A. Baumgarten, and Michael T. Mervis. But Jurisline.com, LLC is represented by Boies & Schiller, LLP, particularly David Boies, Robert Silver, and Ted Normand. Boies was the Justice Department's lead attorney in the Microsoft antitrust case.
While Jurisline.com's vulnerability in this case might stem from representations Lee Eichen made in the subscription agreement, Reed Elsevier and Matthew Bender's vulnerability may arise from claims previously made in other lawsuits. Matthew Bender was a plaintiff with Hyperlaw against Westlaw in the case that decided the public domain status of the core data. How will Matthew Bender explain why the principle established in its case against West does not benefit Jurisline.com?
In addition, Mead Data Central, Inc. (MDC), a prior owner of the LEXIS CD-ROMs, made claims in an antitrust suit filed against West Publishing Co. in 1987 that could affect the current owner. [The case was settled, so there is no decision on the merits of that claim. There is, however, a decision denying a motion West made to move the case from Ohio to Minnesota. Mead Data Central, Inc. v. West Publishing Company, 679 F. Supp. 1455 (S.D.Ohio 1987), 10 Fed. R. Serv. 3d (Callaghan) 1179, 5 U.S.P.Q.2D (BNA) 1796, Copy. L. Rep. (CCH) P26,277, 1988-2 Trade Cas. (CCH) P68,146. Within that decision, the court described the specifics of Mead's antitrust claim.] Mead claimed that West controlled an "essential facility," namely, the core text of public case law opinions, the great bulk of which were available only from West. The court summarized Mead's claims:
MDC further asserts that West has consolidated its monopoly power and position by means of various restrictive and anti-competitive practices, including: refusals to deal, exclusive contracts, manipulation of copyright claims, and suppression of competition in the secondary market for legal materials. West has allegedly sought to insulate itself from competition by refusing competitors access to its publications. [679 F.Supp. at 1460.]
West and LEXIS settled that case in an unpublished agreement. LEXIS came out of the lawsuit with access to the core data. The two of them now share core data which LEXIS claimed West had monopolized. [West had a separate suit in Minnesota pending against Mead for copyright infringement. They settled both cases in unpublished agreements. Hyperlaw publishes what it purports to be the docket entry for the settlement in the Minnesota court. That rendition of the docket recites the titles of the agreements as "Confidential Settlement and Caselaw License Agreement and Confidential Statutes License Agreement." (http://www.hyperlaw.com/dok88.htm)]
The current antitrust claim of Jurisline.com strongly echoes the old Mead Data Central antitrust suit. Jurisline.com claims that West and LEXIS have acted together in a monopoly. [Their complaint alleges that "Although the terms of these agreements have never been made public ..., LEXIS and Westlaw have publicly conceded that pursuant to the agreements West ... licenses to LEXIS its database of opinions and statutes." (Amended Complaint, page 46, paragraph 203.)] Even ignoring whatever might be in that agreement, Reed and Matthew Bender may find it difficult to explain why the antitrust claim that gave LEXIS access to the public domain data should not give Jurisline.com access to it. Jurisline.com complains that since approximately 1988, LEXIS and West have engaged in "parallel conduct ... refusing to allow potential competitors to use the essential facility." (Amended Complaint, page 48, paragraph 212.) Jurisline contends that equity requires that LEXIS cannot enjoin or punish Jurisline for undertaking the same activity that LEXIS undertook, i.e., to obtain public documents from the only reasonably available source of all of those documents to compete in the market. (Amended Complaint, page 45, paragraph 199.)
Jurisline.com claims federal preemption of state law, and so has filed its suit in federal court, the United States District Court for the Southern District of New York. Matthew Bender, seeking to uphold its licenses under state law, filed its suit in state court, the Supreme Court of New York, County of New York. There is potential for conflict and inconsistency between the two proceedings and the two courts.
Who Will Prevail?
Should Jurisline.com prevail in its claim that federal copyright law preempts the state law of licensing, the effects could be far-reaching. Services like LOIS (http://www.pita.com) and Versuslaw (http://www.versuslaw.com) already target a market of smaller law firms, public defenders, and non-profit organizations. In those settings, their fee structures can be more economic than prices charged by Westlaw and LEXIS, but their fees are no match for a free service like Jurisline.com. That might seem threatening to LOIS and Versuslaw, but on the other hand, the principle Jurisline.com would have established ought to give them and many other players—both "Net Newbies" and aggressive traditional information industry firms—the same right to acquire core data. The possibilities for new services that provide either comprehensive legal materials or niche market selections would be legion. The lawsuits between Jurisline.com and Reed Elsevier's Matthew Bender are ones to watch.