Tag Archives: contracts

Louisiana State University Files Suit Against Elsevier; Elsevier Has Not Accepted Service

On February 27, 2017, Louisiana State University (LSU) filed a lawsuit against international science publisher Elsevier after the publisher breached its contract and refused to allow LSU’s veterinarian school faculty and students to access Elsevier content licensed by LSU’s Libraries. ARL’s press release is available here.

Background

LSU currently holds a license with Elsevier to cover its entire Baton Rouge campus. LSU’s veterinary school, which is located on main campus of LSU in Baton Rouge, Louisiana, previously held its own license with Elsevier. Upon the expiration of the veterinary school’s license with Elsevier, the veterinary school users continued resources licensed by LSU Libraries. The LSU Libraries’ license (attached as an exhibit to the end of the complaint) unequivocally covers its entire Baton Rouge campus, including the veterinary school.

Despite the fact that LSU Libraries license covers IP ranges specifically covering the veterinary school, Elsevier blocked access to users at the veterinary school. Upon discovery, LSU contacted Elsevier on October 11, 2016 to request reactivation of the IP ranges for the veterinary school. Elsevier unblocked those IP addresses, but then in January again blocked access for users at the veterinary school. Elsevier refused to respond to LSU’s written requests to reactivate these IP addresses.

Additionally, when LSU Libraries made a request to license 19 additional veterinary titles from Elsevier, the publisher initially responded that it would cost an additional $35,000 to add these titles. LSU Libraries accepted this price and requested an invoice only to then find Elsevier refusing to sell these titles to them.

Although LSU requested Elsevier to restore access to the veterinary school, Elsevier failed to respond until nearly six weeks later and only after LSU filed a lawsuit for breach of contract. Ultimately, Elsevier has refused to restore access for those in the veterinary school. Additionally, Elsevier has not accepted service of the lawsuit, which was filed in the Nineteenth Judicial District Court, Parish of East Baton Rouge, Louisiana, and for which service of process was attempted at Elsevier’s New York headquarters. As a result, LSU is now attempting to effect service of process at Elsevier’s headquarters in Amsterdam through the Hague Service Convention.

On April 22, 2017 Elsevier proposed that LSU “add a minimum of $170,000 of additional 2017 subscriptions to their existing contract” and “increase the price of Freedom Collection by $30,000 for the 2017 subscription period.” This amount represents an incredible increase in cost to LSU, and would not even cover the full 2017 calendar year.

Here’s my breakdown and analysis of what’s happened so far.

Elsevier’s Actions Prevent LSU from Exercising Sound Financial Stewardship of Scarce Public Resources

In essence, in an effort to exercise sound financial stewardship of public resources, LSU has been punished through Elsevier’s refusal to honor its contract. Elsevier’s actions in this case, from its blocking the IP ranges for the veterinary school to its failure to accept service at its New York office of the lawsuit to its outrageous demands that LSU Libraries pay an additional $200,000, demonstrate the publisher’s bad faith.

As a result of this dispute, Elsevier apparently wants LSU to add $170,000 of journals that the university does not need or want, a complete waste of scarce state dollars. Elsevier is holding hostage access to the veterinary school community in an effort to extort more money from a state institution. Keep in mind that LSU is already paying $1.5 million (and rising) to Elsevier.

All LSU is trying to do in the present case is ensure that it is not unnecessarily duplicating subscriptions for its campus and using state resources in a responsible manner. It is disappointing that Elsevier would respond to its own breach of contract by demanding more money from a public institution.

As summarized in LSU’s complaint:

Elsevier is well aware that LSU, like other universities, is heavily reliant upon the various types of research and educational content for which Elsevier enjoys monopolistic market powers and Elsevier is unfairly abusing its leverage to coerce LSU into paying additional and unnecessary subscription fees for research and educational content that LSU has already contracted for.

Elsevier Refuses to Honor The Plain Language of Its Existing Contract with LSU

The most obvious harm in the case comes from Elsevier’s refusal to honor its contract with LSU by blocking access to the veterinary school. Although the faculty, staff and students of the veterinary school had previously been able to access content licensed by LSU Libraries and such access was expressly covered under the IP ranges contracted for, Elsevier has denied access to these users.

Once again, Elsevier is using its monopoly power—LSU can only get the titles owned by Elsevier from Elsevier itself—to try to extract more money out of LSU. Elsevier is hoping that by refusing to honor its contract, it will be able to pressure LSU to renegotiate its current contract and pay even more money—more than the $1.5 million dollars the university pays each year to the publisher.

Elsevier Reneges on Its Contract with LSU for Additional Titles

While the major portion of the complaint involves Elsevier’s blocking of the IP ranges for the veterinary school and thus breaching its existing contract with LSU, the publisher also refused to honor the negotiations with respect to nineteen additional titles. When LSU inquired about these additional titles, Elsevier provided a quote. LSU confirmed acceptance of these terms and requested an invoice. Elsevier then replied “Thank you for these new title additions.” However, Elsevier subsequently refused to honor this agreement.

Every first-year law student takes contract law and the very first lesson is that an offer plus acceptance of that offer (plus consideration, such as money, to differentiate it from a gift) results in a valid contract. Here, Elsevier made an offer to add the requested titles in exchange for payment by LSU of $35,000. LSU expressly accepted. Elsevier even acknowledged receipt of acceptance. However, like its current contract with LSU, Elsevier has breached its own contract by now reneging and refusing to invoice the institution and provide the promised content.

Offer + acceptance (and consideration) = valid contract. Except, apparently, when you’re Elsevier. 

Elsevier’s Fails to Accept Service of the Lawsuit

Perhaps the craziest part of the entire story—though there are many deeply troubling actions by Elsevier—is the fact that Elsevier has not accepted service of the lawsuit. More than two months after the lawsuit was filed (during which time, LSU and its faculty, staff and students continue to be harmed by Elsevier’s refusal to honor its contract), Elsevier appears to be playing games with this public university. While it would be understandable for Elsevier to try to aggressively defend itself against the claims (even in a case where the facts clearly favor LSU), here Elsevier is essentially pretending that the lawsuit doesn’t even exist. This is not a standard delay tactic in litigation.

Elsevier does substantial business in the United States. The publisher charges millions of dollars each year to hundreds of universities and institutions in the United States. It has fourteen corporate headquarters and branch offices located in the United States. It is a member of the Association of American Publishers. According to OpenSecrets, last year Elsevier (under RELX) spent $1.72 million dollars lobbying in the United States (and lest you think RELX’s lobbying dollars are going to be substantially different from Elsevier, the 2014 filings show that while the company was still going by the name Reed Elsevier it paid $1.6 million dollars to its lobbyists). It has lobbied substantially on issues related to copyright and against open access. The publisher’s global litigation counsel was a witness in the House of Representatives Judiciary Committee copyright review hearing on Section 512. Elsevier has taken advantage of its rights to sue as a plaintiff in United States courts on multiple occasions in cases involving everything from breach of contract to copyright infringement to exemptions from sunshine laws. Clearly, Elsevier enjoys the benefits of its business in the United States and invests substantial resources into shaping the laws in this country.

While Elsevier enjoys all the advantages of doing business in the United States when it benefits the corporation, it conveniently decides that it’s a Dutch company when it is being sued. That LSU is being forced to chase Elsevier down in Amsterdam through the Hague Service Convention is an incredible outcome of the dispute.

Concluding Thoughts

Elsevier’s actions in the present case, including its refusal to acknowledge or respond to LSU’s requests for the publisher to abide by the terms of its own contract until after a lawsuit was filed, demonstrate its corporate culture. LSU’s complaint perfectly sums up Elsevier’s abuse of its monopoly power:

Elsevier’s total disregard for LSU’s serious concerns and amicable efforts to resolve this dispute reflects the monopolistic market power and arrogance that comes with Elsevier’s posturing as a “world-leading provider of information solutions that enhance the performance of science, health and technology professionals.”

Through its continuing breach of its contractual obligations to LSU under the Agreement, Elsevier has caused, and continues to cause, irreparable injury and significant damages to LSU and has significantly damaged, impaired and restrained the university’s ability to conduct research and educate its students, thereby improperly restricting and interfering with LSU’s primary purpose and constitutional mandate under the Louisiana Constitution.

In a time where states are facing enormous budget deficits public universities must ensure financial responsibility of scarce public resources. LSU is attempting to exercise sound judgment and stewardship of limited resources, but its only reward has been Elsevier blocking access to faculty, researchers and students at the university.

Fair Use Gaining Popularity: Australian Law Reform Commission Proposes Fair Use, Prohibition Against Contracting Out of Specific Copyright Exceptions for Libraries

On February 13, 2014, the Australian Law Reform Commission (ALRC) issued a 478 page report on “Copyright and the Digital Economy” which made a number of positive recommendations for copyright reform in Australia. A significant portion of the report focused on limitations and exceptions including a recommendation that Australia adopt fair use (or, failing that, to revise its current fair dealing provision), noting the benefits of a flexible standard. In addition to its numerous other recommendations, the ALRC report also examined the practice of using contracts to prohibit or hinder the use of particular limitations and exceptions and recommended an express prohibition against contractual provisions that would restrict specific libraries and archives exceptions.

Below are some highlights from the ALRC report on these two issues.

Fair Use

The ALRC report expressly recommended inclusion of a fair use exception largely modeled after the United States’ statutory provision on fair use, including a non-exhaustive list of factors—essentially mirroring the four fair use factors in the United States Copyright Law—and a non-exhaustive list of illustrative uses or purposes that may qualify as fair use. This recommended list of illustrative purposes includes all of the uses contained in the chapeau to 17 U.S.C. 107, while also recommending the additions of parody or satire; professional advice; quotation; non-commercial private use; incidental or technical use; library or archive use; and access for people with disabilities. Of course, although the United States’ provision does not contain these exact phrases within the statutory language of the fair use provision, courts have often upheld fair use in the context of such purposes.

Arguments for Fair Use

The ALRC report summarized the arguments made in favor of introducing a fair use provision into Australian Law, including that fair use is flexible and technology-neutral; promotes public interest and transformative uses; assists innovation; aligns with reasonable consumer expectations; helps protect right holders’ markets; is sufficiently certain and predictable; and is compatible with moral rights and international law.

ALRC emphasized the benefits of fair use in adapting to evolving technology:

Fair use differs from most current exceptions to copyright in that it is a broad standard that incorporates principles, rather than a detailed prescriptive rule. Law that incorporates principles or standards is generally more flexible than prescriptive rules, and can adapt to new technologies and services. A fair use exception would not need to be amended to account for the fact that consumers now use tablets and store purchased copies of copyright material in personal digital lockers in the cloud.

As a flexible standard, capable of adapting to changing environments, particularly in the digital age, legislatures need not respond to each new circumstance with a new specific limitation or exception. Thus, the ALRC report noted that “Almost 30 existing exceptions could be repealed, if fair use were enacted. In time, others might also be repealed. Replacing so many exceptions with a single fairness exception will make the Copyright Act considerably more clear, coherent and principled.”

In addition, the ALRC report made several references to the benefits of fair use in the educational context. It noted, for example, that the Google Books decision “demonstrates the potential of fair use to advance education and learning and to benefit authors and content owners.” Additionally, pointing to the flaws of the currently enacted fair dealing provision under Australian Law, the ALRC report noted that universities

were in a “worse position” than large commercial enterprises in terms of being able to use third party copyright material for socially beneficial purposes. Commercial news organisations can rely on the fair dealing exception for news reporting, but there is no equivalent specific exception for universities for fair use for educational purposes. Universities Australia submitted that, from a policy perspective, ‘”this makes little sense.”

In addition to the general public benefits to a flexible fair use provision, the ALRC report suggested that adopting fair use will actually increase respect for copyright. It pointed out that the independent UK Hargreaves Review found that growing disagreement over what is permitted under copyright and reasonable consumer expectations undermined the copyright system. The ALRC agreed with Hargreaves’ assessment and noted, “The public is more likely to understand fair use than the existing collection of complex specific exceptions; the exception will seem more reasonable; and this may even increase respect for and compliance with copyright laws more broadly.”

Predictability of Fair Use

The report also addressed criticisms that a flexible fair use standard resulted in too much uncertainty and concluded that fair use is actually quite predictable. The report pointed to Professor Pamela Samuelson’s 2009 article, Unbundling Fair Uses which found that “fair use is both more coherent and more predictable than many commentators have perceived once one recognizes that fair use cases tend to fall into common patterns.”

Furthermore, the ALRC noted that inclusion of a fair use provision in Australian Copyright Law would not introduce a “novel or untested” concept:

Fair use builds on Australia’s fair dealing exceptions, it has been applied in US courts for decades, and it is built on common law copyright principles that date back to the eighteenth century. If fair use is uncertain, this does not seem to have greatly inhibited the creation of films, music, books and other material in the world’s largest exporter of cultural goods, the United States.

Finding that fair use is predictable and “no less certain than Australia’s current copyright exceptions,” the ALRC report went on to point out that fair use determinations can be “guided by the fairness factors, the list of illustrative purposes, existing Australian case law [on fair dealing], other relevant jurisdictions’ case law, and any industry guidelines and coeds of practice that are developed.”

Furthermore, in concluding that adoption of a fair use provision would be beneficial, the ALRC report found that, “Although standards are generally less clear in scope than detailed rules, a clear principled standard is more certain than an unclear complex rule. The Report recommends replacing many complex prescriptive exceptions with one clear and more certain standard—fair use.”

Contracting Out

Another significant recommendation of the ALRC report would prohibit contractual provisions that limit or prohibit libraries and archives from exercising the specific limitations and exceptions from which they benefit. The report concedes that while freedom of contract is an important principle, specific contractual provision may lead to significant problems:

contracting out has the potential to render exceptions under the Copyright Act inoperative. Contractual terms excluding or limiting copyright exceptions are commonly used. While contracts may create clarity and provide copyright users with permission to use materials in ways that would otherwise be an infringement, some contractual terms can also erode “socially and economically important uses of copyright works.” Further, copyright users are often unable to negotiate the terms on which copyright materials are licensed, particularly where contracts are entered into online.

The report concluded that allowing such contracts “puts at risk the public benefit that copyright exceptions are intended to provide.” In particular, ALRC found this issue to be particularly relevant to libraries and archives, noting that the beneficiaries of specific exceptions and limitations for libraries and archives are “users of the libraries” and “The fact that users of libraries and archives benefit from these exceptions, but are not parties to the licensing arrangements entered into by libraries and archives, makes it easier to argue that these exceptions should not be able to be removed by contract.” Thus, the ALRC report expressly recommended that:

Recommendation 20–1 The Copyright Act should provide that any term of an agreement that restricts or prevents the doing of an act, which would otherwise be permitted by specific libraries and archives exceptions, is unenforceable.