January 12, 2011
Initial Thoughts on a Plan to Restore FTC Oversight of Publisher Trade Practices
Bryan Carson has recently made a compelling case to reinstate a contemporary version of former FTC Guides for the Law Book Industry [Download Text of FTC Guidelines]. In fact, he suggests expanding reinstated guides to cover publishers in "medical and other fields that need current information." Expanded guides would therefore concern unfair business practices of publishers of legal, scientific, medical, and technical (LSMT) literature. Because such guides would not address excessive price increases for subscriptions and new purchases, Bryan also suggests that library associations seek an antitrust exemption. The exemption would allow them to leverage threats of boycotts against specific LSMT publishers that continue to gouge prices. While I favor all of these proposals, I will limit my comments to how "we" - a coalition of AALL, other library associations, and allied organizations - might engage the FTC to end unfair business practices of LSMT publishers.
How can interested parties form a coalition of library associations and organizations whose members buy LSMT publications and services? Obstacles abound. AALL and its Chapters require ethical and other reforms to more effectively protect consumers of legal publication, and so may other library associations to protect consumers of LSMT publication. Perhaps these internal reforms can wait, as activist members of the respective associations enlist sufficient support to form a coalition, with the reforms to follow as a consequence. At any rate, librarians and their allies can build a coalition, no matter how formidable the obstacles. So while I defer the question of coalition-building, I aim to prompt further discussion of all our options, not just the three that I am about to identify. Moreover, any library association can independently pursue one (or more) of the options, even if a coalition would raise the odds of success.
First, we can take actions independently of the FTC to prompt its own initiation of an investigation. The FTC may investigate industries (16 CFR §2.1), and individual businesses and persons (15 U.S.C. § 46(a)), for alleged violations of laws under its jurisdiction, including the prohibition of "unfair or deceptive acts or practices." (15 U.S.C. § 45(a)(1)) It may undertake these investigations to develop guides or rules, or to decide whether it has justification to pursue enforcement proceedings. The FTC initiated its own investigation of legal publishers as result of widely publicized findings of their unfair and deceptive practices. Prompted by Raymond Taylor's article, Law Book Consumers Need Protection, 55 A.B.A.J. 553 (1969), the FTC launched an investigation of legal publishers in 1969. (See Peter M.Kempel, New Guides for the Law Book Industry, 54 Mich. B.J. 938 (1975), cited by Kendall F. Svengalis, Legal Information Buyer's Guide & Reference Manual, 2008 ed., at 22, n.6.) The ABA, two state bar associations, and AALL also pursued investigations or made recommendations. The FTC then proposed "Guides for the Law Book Publishing Industry" (38 Fed. Reg. 5351 (1973)), and adopted the Guides two years later (40 Fed. Reg. 33436, as corrected, 40 Fed. Reg 36116 (1975)). [Download Text of FTC Guidelines] We could try to expand the precedent of Taylor and his supporters. We could pursue our own investigations of anti-consumer practices by LSMT publishers, using or creating consumer advocacy committees to review past complaints, receive new ones, and hold hearings. We could focus on practices common to the entire LSMT publishing industry, and report our findings in professional publications, blogs, and news outlets. We could even run a "rapid response" operation if LSMT publishers spread disinformation. We could thus create grounds for the FTC to initiate an investigation.
Second, under 16 CFR §2.1 and §2.2, we have a right to petition the FTC for an investigation. Under 16 CFR §2.1, we may also engage sympathetic members of Congress to request investigation on our behalf, at least if (at this stage) we do not also allege antitrust violations. (Either the House or the Senate may direct the FTC to investigate antitrust violations. See 15 U.S.C. § 46(d).) Our petition should specify the unfair and deceptive business practices common to LSMT publishers, and include a robust record of evidence. As Bryan and Greg Lambert (here) point out, an obvious example involves the requirement of non-disclosure clauses in our subscription contracts. Evidence would include an affidavit by James Tonna, Reed Elsevier's Vice President for Marketing and Sales in the Americas. He states that
"Elsevier representatives apply pricing formulae and methods which are not generally known (to our competitors or potential customers), which proprietary information reflects Elsevier's pricing/business methods and constitutes data unique to its products and services." (Affidavit, Elsevier Inc v. Washington State University, Case No. 09-2-00137-3 (Wash. Whitman County Super. Ct. Jun,. 11, 2009))
Third, to protect ourselves from unfair or deceptive acts or practices by LSMT publishers, we may petition the FTC for guides (16 CFR § 1.6) or trade practice rules (16 CFR § 1.9). A petition for guides must convince the agency that legal guidance on particular practices "would be beneficial in the public interest and would serve to bring about more widespread and equitable observance of laws administered by the Commission." Trade practice rules would give the FTC authority to regulate LSMT publishers in advertising, billing, shipping, selling, and producing their publications and services. We could ask the FTC to adopt a contemporary successor to the "Trade Practice Rules for the Subscription and Mail Order Book Publishing Industry," (rescinded, among 41 sets of trade practice rules, at 43 Fed. Reg. 44483 (1978)). A petition for such regulation would presumably have to show that guides would not suffice to achieve the protection consumers need. That standard raises a high bar, especially under present political circumstances. The FTC would face a powerful deterrent - the likely prospect of a Congress ready to impose a moratorium on such rulemaking, or to ban the rule altogether.
Of course, all of these options carry risks of failure. The first option strikes me as the least risky, and the third as riskiest. If we fail, we may embolden LSMT publishers to continue practices that have been so costly to their customers. But if we do not try, they will continue these practices anyhow.
Librarians have a proud tradition of defending their values. We have opposed censorship and surveillance provisions of the PATRIOT Act, supported openness and transparency in government, and promoted the availability and preservation of government documents. But we have not done enough, as consumer advocates, to confront challenges to other of our defining values. For we also value the widest public access to copyrighted publication, consistent with copyright compliance and costs related to publishers' competitive, and fair, business conduct. And we value the highest editorial standards of accuracy and currency. As Bryan has said, anti-consumer practices by legal publishers cost "lawyers, firms, and libraries hundreds of thousands of dollars every year," and the same may be said of similar practices by SMT publishers. In aggregate, such costs may annually reach millions of dollars, and over time they exact a heavy cumulative toll on public access. Consumers of LSMT publication also depend on rigorous editorial standards. Profit-driven departures from these standards, if widespread, cause them significant harm from reliance on defective products. By championing consumer advocacy, we champion our core values, whatever the risks of failure.
Guest post by Michael Ginsborg. Michael Ginsborg (firstname.lastname@example.org) has been a law librarian and AALL member since 1989.
January 12, 2011 in Academic Law Libraries, Administration, Collection Development, Current Affairs, Firm & Corporate Law Libraries, Government & Public Law Libraries, Library Associations, Publishing Industry | Permalink
One thing, however, about the current political climate is a strong belief in the free market. Just as the remedy for unpleasant speech is more speech, perhaps the remedy for competition is more competition. We may be able to leverage this belief into an antitrust exemption for libraries and library associations.
Posted by: Bryan Carson | Jan 14, 2011 5:48:30 PM
All this is well and good. It may actually benefit law libraries if the original FTC guidelines were followed by the publishing industry. The three possible scenarios even seem to be reasonable courses of action. But this does seem a little like Don Quixote and the windmill. The political climate we're in today really seems like the more important burden to overcome. And that comes best illustrated by a comment in the FTC's final rule eliminating the part 256 industry guidelines: "First, the guides are overly regulatory in that they include significantly more detail regarding suggested disclosures and other practices than the Commission would promulgate today." That was the FTC's position in the 1999 regulatory climate. Just how much less likely would it be that the FTC would reinstate the regulatory framework that chapter 256 set out? I'm much too skeptical that this suggestion will ever fly in Washington today. It would seem that there will serious resistance both from the publishing industry and from the political power and political philosophy to be found in Washington today.
Posted by: Jerry E. Stephens | Jan 12, 2011 8:59:22 AM