by Lee Gesmer | Aug 5, 2008 | Copyright
In January 2007 I wrote:
Bill Patry, Senior Copyright Counsel at Google (how’s that for a great job), emailed me and asked me to mention the publication of his new copyright treatise, Patry on Copyright.
I like the fact that Mr. Patry said this about his 5,800-plus page, $1500 treatise: “ The book is also chock full of wikipedia references, anecdotes, riffs on logic, congitive linguistics, etc. It is many books in one.”
Although I haven’t seen this treatise yet, I hope that it is a change from Nimmer on Copyright, which is so densely academic as to often be unusable by practitioners. Somehow, I doubt that we’ll ever see Nimmer referencing Wikipedia.
On Friday, August 1, 2008, Bill Patry wrote as follows. I excerpt from the full post, here –
I have decided to end the blog, and I owe readers an explanation. There are two reasons.
1. The Inability or Refusal to Accept the Blog for What it is: A Personal Blog
. . . While in private practice I never had the experience of people attributing my views to my firm or to my clients. I moved from private practice to Google I put a disclaimer to the effect that the views in the blog (as in the past) were strictly mine. . . .
For the first year after joining Google, . . . people honored the personal nature of the blog, but no longer. . . . The inevitable opening sentence now is: “William Patry, Google’s Senior Copyright Counsel said,” . . . There is nothing I can do to stop this false implication that I am speaking on Google’s behalf. . .
In the end, I concluded that it is no longer possible for me to have a blog that will be respected for what it is, a personal blog. . . .
2. The Current State of Copyright Law is too depressing
This leads me to my final reason for closing the blog which is independent of the first reason: my fear that the blog was becoming too negative in tone. I regard myself as a centrist. I believe very much that in proper doses copyright is essential for certain classes of works, especially commercial movies, commercial sound recordings, and commercial books, the core copyright industries. I accept that the level of proper doses will vary from person to person and that my recommended dose may be lower (or higher) than others. But in my view, . . . we are well past the healthy dose stage and into the serious illness stage. . . . Copyright law has abandoned its reason for being: to encourage learning and the creation of new works. Instead, its principal functions now are to preserve existing failed business models, to suppress new business models and technologies, and to obtain, if possible, enormous windfall profits . . .
So between the inability or refusal of some people to accept the blog for what it is — a personal blog — and my inability to continue to be Cassandra, I decided it was time to pull the plug. . . . I intend to spend my free time figuring out a constructive way to talk about the difficult issues we face and how to advance toward their solution.
I have read and enjoyed this blog religiously for the last 18 months, and I am saddened. Oh, and p.s.: our firm does subscribe to Patry’s treatise now, and although Nimmer is still on the shelves, we are no longer purchasing updates.
by Lee Gesmer | Aug 4, 2008 | Antitrust
“[Wild Oats] is the only existing company that has the brand and number of stores to be a meaningful springboard for another player to get into this space. Eliminating them means eliminating this threat forever, or almost forever.”
– John P. Mackey, co-founder and chief executive of Whole Foods, in 2007 email to Whole Foods Board Member. Mr. Mackey also posted on Internet message boards under the pseudonym Rahodeb for seven years, ending in 2006
Every man is his own greatest enemy, and as it were his own executioner.
– Sir Thomas Browne, Religio Medici
My wife loves Whole Paycheck. Even though the nearest Paycheck is a 20 minute drive from our home outside of Boston, and the really good (huge) Paycheck is 30 minutes away, she is reluctant to buy fruit or meat anywhere else. Shaws, which is right around the corner? forget it. Roche Bros., the next nearest supermarket? Boxed cereal, if they’re lucky. In fact, half the time my wife calls Paycheck “Bread & Circus,” the name of the original chain which Paycheck acquired in 1992. My soon-to-be 90 year old mother, who lives quite near a Paycheck that began as a Bread & Circus, won’t call it anything else.
When I go to Whole Paycheck, I assume that the minimum charge will be $100. For some reason, it’s almost impossible to get out of Paycheck for less than that. It’s like some obscure law of nature, or a function of consumer brain-washing, or both. At Shaws or Roche Bros., it’s actually an effort to break thirty bucks. But Paycheck, ahhh … The food is so exotic. It’s so beautifully displayed. That $40/pound goat cheese they are taste-sampling is so delicious, and after all, you only live once. For foodies, shopping at Paycheck is almost a religious experience. And by the way, I ain’t no foodie.
The only competition to Paycheck in the greater Boston area that I can think of is Trader Joe’s (which has around 300 stores nationwide), but frankly Paycheck is in a completely different class than Joe’s. In fact, the more I think about it, the more I’m inclined to say that Joe’s competes with Paycheck only when it comes to “dry grocery items” (chips and snacks) and frozen foods, and not in the key areas of meat, fish, bakery goods, fruits and vegetables.
Wild Oats Market? Never shopped there, and never heard of it before its merger with Paycheck last year. According to this site, which maps all Wild Oats locations, the closest Wild Oats stores are in Saugus and Medford, way outside of my family’s travel zone.
Now to antitrust.
Paycheck has a voracious appetite. Since its single-store start in Austin, Texas in 1980, it has swallowed up 15 other natural foods grocery chains, and by early 2007 it operated almost 200 stores nation-wide. Wild Oats operated over 100 stores, and was the U.S.’s second largest “natural foods” chain. In February 2007 Paycheck announced that it would acquire Wild Oats for $65 million, resulting in a natural food store behemoth 300 stores strong. (If you think I’m being facetious, you’re right).
The proposed merger triggered a Hart-Scott-Rodino filing, which gives the Federal Trade Commission the authority to investigate certain mergers and challenge them under Section 7 of the Clayton Act, which prohibits mergers or acquisitions where the effect “may be substantially to lessen competition, or to tend to create a monopoly.”
The FTC did challenge this merger. It’s position, summarized by the D.C. Court of Appeals, was –
. . . Whole Foods and Wild Oats are the two largest operators of . . . premium, natural, and organic supermarkets (“PNOS”). Such stores “focus on high quality perishables, specialty and natural organic produce, prepared foods, meat, fish and bakery goods; generally have high levels of customer services; generally target affluent and well educated customers [and] . . . are mission driven with an emphasis on social and environmental responsibility.” . . . In eighteen cities . . . the merger would create monopolies because Whole Foods and Wild Oats are the only PNOS.
The FTC attempted to block the acquisition pending its proceedings, but the U.S. District Court denied the FTC’s request for a preliminary injunction barring the merger. The D.C. Circuit denied an emergency motion requesting the injunction, pending appeal. With no legal obstacles, the merger was consummated in August 2007.
On July 29, 2008 the U.S. Court of Appeals for the D.C. Circuit issued a 40 page 2-1 decision (including the concurrance) reversing and remanding the case to the District Court.
The critical question on appeal was whether the economic impact of the acquisition should be measured against Paycheck’s core customers, and whether the District Court judge erred by failing to recognize this group as a relevant sub-market worthy of antitrust protection. I prefer to call the Paycheck core customers latte-drinking, Volvo-driving, NPR-listening, Birkenstock-wearing, New York Times-reading, natural/organic food-eating liberals, or “tofu-niks” for short. The District Court judge over-focused on Paycheck’s marginal customers. I prefer to call these customers McDonald’s-eating, Dunkin Donuts Coffee-drinkin, beef-loving, conservatives, or “beef-niks” for short. The tofu-niks shop at Paycheck religiously, and consider Paycheck to be only a step removed from their church or temple; the beef-niks go there to grab a gallon of milk or some apples only when a trip to Star Market is inconvenient. They mumble their response when the cashier gives them the standard Paycheck full eye-contact friendly greeting. 
When it comes to mergers, as in many areas of antitrust law, how you define the market is everything. If Paycheck’s product market was grocery stores that catered mostly to beef-niks, in other words it was basically a conventional supermarket, it didn’t have a large market share and it’s acquisition of Wild Oats was not likely to negatively impact competition. However, if Paycheck and Wild Oats comprised a distinct market that catered to a sub-market of tofu-niks, competition in that “core” market might be threatened by the acquisition, at least in the 18 cities identified by the FTC, and the FTC may have the right to bar the acquisition.
The district court defined the product market broadly to include both groups, and therefore allowed the merger to proceed. The D.C. Circuit disagreed, and held that there is a core group of customers (the tofu-niks), and when this group is considered the market can be defined narrowly. Therefore, the merger was properly challenged by the FTC, and should have been preliminarily enjoined to allow the FTC to conduct a full administrative hearing. To reach this decision the D.C. Circuit’s opinion is filled with the opinions of competing economists, and enough economic jargon to set the average Paycheck customer’s head spinning – “small but significant non-transitory increases in price” or SSNIP, “critical loss analysis” and so forth. And, of course, any opinion by an economist is subject to scathing criticism by another economist, so the decision and dissent are filling with polite academic cross-invectives.
Where does the case go from here, given that the merger was completed almost a year ago? The cage-free hen-hatched, antibiotic-free, hormone-free, omega-3 enriched organic eggs have, so to speak, have been scrambled. (sorry …)
The FTC could, after further administrative proceedings, attempt to force Paycheck to divest itself of the stores where competition was the most affected (some or all of the 18 markets it had identified when it chose to challenge the acquisition) and re-establish competition in those areas. According to the decision, there were a limited number of markets where competition was most affected. However, one wonders how that would be implemented given that the operations of the two companies have been combined, and it may not be possible for Wild Oats to reestablish itself. I suspect that lawyers at both the FTC and at Paychecks’ law firms are scratching their heads in puzzlement. And after all, the FTC doesn’t want to actually hurt former Wild Oats tofu-niks who have converted to Paycheck, does it?
Oh yes, as mentioned, one of the three appellate court judges dissented, arguing that there really isn’t a core market for Paycheck’s customers, and that for purposes of merger analysis the market definition should be all supermarkets, not just “organic” supermarkets. He argued that the economic evidence supported the conclusion that “organic” and “conventional” supermarkets compete for the same customers, and therefore the district court judge’s decision should be affirmed.
Obviously, he doesn’t shop at Whole Paycheck.
Stay hungry.
by Lee Gesmer | Aug 1, 2008 | Readings and Novelties
In November 2005 I wrote an article about Google Book Search and the legal efforts of copyright owners to stop Google from achieving its goal of digitizing the world’s books and making them searchable on Google. The lawsuit filed by the Author’s Guild described there has dragged on with little visible activity and no apparent end in sight, but in the meantime Google has been digitizing books like nobody’s business. Although Google won’t disclose how many books it has scanned (why is this a secret? certainly not because of the lawsuit – the answer would easily be discoverable), word on the street is that as of a year ago Google had scanned a million books. If true, and if they are going full steam, they may be approaching a million and a half by now. Probably more than both you and I could read in a lifetime.
Searching and browsing this collection is awkward, but interesting to a book lover. While Google only displays “snippets” of copyrighted works, there is a vast collection of books whose copyright has expired. Presumably, these unprotected works are constantly expanding in number, as copyrights expire with the passage of time. Absent some truly extraordinary action by Congress, which can’t be ruled out entirely, it’s only a matter of time before every book is free of copyright rights.
Google displays uncopyrighted books in “full view.” You (the user) can create your own “collection” of books (basically bookmarks maintained on Google Book Search), see information about the book (publisher, publication date, and so forth), view the book either in its original format or in plain text, and search the full text.
You can also embed snippets on other web pages, as I’ve done below. Here are a few notable or interesting books that I dug up, both beginning and ending with what some claim to be the most published book in human history. You can “click through” to get the full work on Google Book Search.
The Federalist Papers, published in 1864:
The Federalist A Commentary on the Constitution of the United States : a Collection of Essays By Alexander Hamilton, John Jay, James Madison, John Church Hamilton
Personal Narrative of a Pilgrimage to Al-Madinah & Meccah, by British explorer and polymath Sir Francis Richard Burton. published in 1906:
Personal Narrative of a Pilgrimage to Al-Madinah & Meccah By Richard Francis Burton, Isabel Burton, Stanley Lane-Poole
And lastly, the Old Testament in Hebrew (“Bible Hebrea”), or what fragments are left of it, published in 1280 and from the collection at the Complutense University of Madrid, which itself traces its history back to 1293.
Biblia hebrea
Of course, you may have digital images of millions of books, but you still don’t have everything. I’ll bet Google is anxious to get its hands on the Codex Sinaiticus (image below).
by Lee Gesmer | Jul 29, 2008 | Procedure
One of the things that drives people crazy is how easy it is to file a lawsuit, and conversely how difficult it is to persuade a judge to dismiss a lawsuit before the defendant incurs the costs of discovery and summary judgment. It has long been the law in Massachusetts that a complaint should not be dismissed “unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.” Nader v. Citron, 372 Mass. 96 (1977). This is a very difficult (some would say metaphysical) standard. Under it dismissal has been limited to black and white situations where the plaintiff has failed to allege the basic elements of a cause of action, or where (for example) a statute of limitations defense is apparent on the face of the complaint.
No more. Last year the U.S. Supreme Court rejected this standard in the federal court (Bell Atlantic Corp. v. Twombly), holding that a complaint (the document that initiates a lawsuit) must assert a claim to relief that is “plausible on its face.” The complaint must allege facts plausibly suggesting a right to relief. Vague assertions intended to satisfy the “no set of facts” standard will no longer suffice.
The Massachusetts state courts often follow the federal courts when it comes to matters of procedure, and in June the Supreme Judicial Court expressly adopted the Twombly standard in Iannachino v. Ford Motor Company (“we take the opportunity to adopt the refinement of that standard that was recently articulated by the United States Supreme Court in . . . Twombly“).
Of course, the devil is in the details when it comes to how specific, detailed and complete a set of facts must be to plausibly suggest a particular plaintiff’s right to relief. The lower federal courts are struggling to apply the Twombly standard in various contexts, and I expect a similar process to take place in the state courts in the coming years. One thing is certain, however – filing a complaint in state court has just gotten more difficult, and the chances of obtaining early dismissal has improved for defendants.
