McGraw-Hill, Inc. v. Worth Publishers, Inc.

• Decision Date: 15 December 1971
• Docket Number: No. 71-Civ. 3975.,71-Civ. 3975.
• Citation: 335 F. Supp. 415
• Parties: McGRAW-HILL, INC., et al., Plaintiffs, v. WORTH PUBLISHERS, INC., et al., Defendants.
• Court: U.S. District Court — Southern District of New York

335 F. Supp. 415

McGRAW-HILL, INC., et al., Plaintiffs, v. WORTH PUBLISHERS, INC., et al., Defendants.

No. 71-Civ. 3975.

United States District Court, S. D. New York.

December 15, 1971.

Schwab & Goldberg, New York City, for plaintiffs by Morton David Goldberg and Richard Dannay, New York City, of counsel.

Greenbaum, Wolff & Ernst, New York City, for Worth Publishers, Inc. by Harriet F. Pilpel, Roger Bryant Hunting, Robert D. Croog, Barron M. Tenney, and Milbank Tweed, Hadley & McCloy, New York City, of counsel.

CROAKE, District Judge.

MEMORANDUM

This is a motion for a preliminary injunction in an action seeking an injunction and damages for alleged infringement of statutory copyright. Plaintiffs are the publishers and authors of an economics textbook ("McConnell text") and related works.¹ Defendants are the publisher, its president, and the authors of another textbook ("Spencer text") and related materials.² Both plaintiffs' and defendants' texts are designed to appeal to professors and students involved in introductory college-level economics courses.

The action was commenced on Friday, September 3, 1971, the day before the Labor Day weekend, at which time plaintiffs sought an order to show cause why the present motion should not be granted, as well as a temporary restraining order prohibiting the printing, selling, distributing, advertising, and marketing of defendants' books, pending the determination of the motion at issue. That motion was denied by Judge Inzer B. Wyatt with leave to renew on September 7, 1971, the original return day of this motion. On that date the renewed motion for temporary relief was referred to Judge Edward Weinfeld by the judge then sitting, who had disqualified himself on the ground of a holding of convertible debentures in the plaintiff corporation. Judge Weinfeld heard arguments, considered the parties' affidavits and exhibits and plaintiffs' memorandum, and denied the motion by a memorandum opinion dated September 8, 1971. During the course of argument the present motion for preliminary relief was made returnable on September 13; by stipulation upon defendants' request, it was further adjourned to September 20, when it was heard by the undersigned.

The parameters of this decision have been amply developed by extensive prior case law in this circuit and elsewhere, since the present factual situation is not uncommon. The precedents, however, place prime significance upon the facts of each case, and characterize analogizing as relatively unprofitable. Peter Pan Fabrics v. Martin Weiner Corp., 274 F.2d 487, 489 (2d Cir. 1960).

Substantial factual development is therefore warranted. The parties, whose briefs indicate their familiarity with the relevant law, have assisted the Court in this regard by submitting, on the present motion, seventeen factual affidavits totalling 145 pages, plus documentary exhibits the volume of which is measurable only in terms of cubic feet. The following factual description is based upon the Court's analysis of all these materials.

I

Probably the most significant occurrence in the modern history of economics pedagogy was the publication in the late 1940's of Professor Paul Samuelson's Economics textbook. This book, continuously published by plaintiff McGrawHill, effected a fundamental reorganization of the methodology of teaching introductory economics courses in colleges, and has set the standard for all competing texts. Approximately 240,000 copies were sold in the first year of the most recent edition, sales being somewhat less in subsequent edition-years because of competition from used-book vendors.

This is not to say that Professor Samuelson lacks substantial competition. Indeed, there are about 65 competing books currently in print, foremost among which is the McConnell text, first published in 1960, with successive editions in 1963, 1966, and the present in 1969. Another edition, the fifth, has now been delivered to the publisher, and is in preparation for publication in the spring of 1972. Sales of this text have steadily risen both absolutely and in proportion to the Samuelson text, to the present point at which both texts are equally popular, and between them supply 65 percent of the annual market.

Nevertheless, there are continual attempts by other authors and publishers to obtain a portion of the lucrative 750,000-book annual market, and approximately five new or revised books are published each year. One of the seven new competitors in 1971 was the allegedly infringing Spencer text.

Defendant Spencer, a professor with twenty years' classroom experience and the author of 50 publications, including books, monographs and articles, first began work on the allegedly infringing text in 1968. Since that time his class hours have been reduced to practically nothing, thereby allowing three years of almost uninterrupted writing. Altogether, he claims to have spent about 6000 hours in the preparation of the manuscript. (Plaintiff McConnell estimates his first edition took 5000 hours to write.)

After Professor Spencer completed his labors, defendant Worth Publishers, Inc. expended $9,120 to obtain 90 reviews of the book by 60 different reviewers. In addition, a Mr. Roger Beardwood was retained to read and comment upon the work, to contribute a series of essays for inclusion therein, and eventually to edit the complete opus.

Preparation of the Spencer text was eventually completed, with the first printing of 6774 copies on April 12, 1971, the date of publication. A second printing of 28,683 copies occurred on June 4, 1971, and a third of 57,256 copies on August 12, 1971. Sales promotion was immediately begun, as was distribution of complimentary copies: 5,151 copies were sent to professors in April of 1971, with 1,607 more sent through August.

The publication of the Spencer text, as of most such texts, was so timed as to make the book available for the beginning of the fall college semester. Fall classes generally begin in September, but publishers' wholesale sales to bookstores peak about two months earlier; publishers' September sales are usually "rush" orders designed to compensate for previously underestimated course enrollments. Consequently, sales of the Spencer text were as follows: 273 volumes were sold in April; 480 in May; 10,159 in June; 35,324 in July; 19,496 in August; and approximately 5,000 in the first week of September, for a total of roughly 70,000 volumes sold at the initiation of this lawsuit.

Plaintiffs have been aware for the last several years that defendant Spencer was writing his book (See generally affidavits of Thomas Kothman and Christopher Benz); they were no doubt aware of the efforts of other potential competitors as well. More detailed information regarding defendants' activities was received beginning in the winter of 1970-1971. (See affidavit of Campbell McConnell. ¶¶ 8-10, pp. 4-5.) Plaintiffs notified defendants of their claimed copyright infringement late in May of 1971; defense counsel disputed the validity of this charge on June 8, 1971. Some inconclusive conferences between the attorneys took place in June, and defendants received word from their salesmen that plaintiffs' salesmen were claiming that defendants were being sued; nevertheless, no direct action was taken by plaintiffs from June 29 to September 3, when this suit was instituted, as noted above.

The complaint states a general cause of action for infringement of the McConnell text as a whole by the Spencer text as a whole. On this motion, however, plaintiffs have assembled schedules specifying the offensive portions of the Spencer text; they total 7,375 words, or 1.74 percent of Spencer's total 424,000 words, excluding art. It might be noted that 40 percent of the Spencer text actually deals with novel material, or at least material on subjects not appearing in the McConnell text.

One other fact should be noted at this time. The normal life of a college textbook is three years, and is determined by competition not so much from other textbooks as from the used book market for the same text. Thus, for a new edition of an established text, sales generally peak in the first year, subside in the second year, and plummet in the third, as more and more students elect to save money by purchasing used rather than new books. There are, naturally, exceptions; changes in preference by instructors at a given college, based on their own personal tastes or mandated by departmental decisions, or because of advances in the discipline rendering the older editions outmoded, can result in the partial or complete substitution of one text for another before the three-year cycle has run its course.

The McConnell text is currently in its third year of the fourth edition; the fifth will appear in time for next fall, as noted above. Thus, in so far as the Spencer text has supplanted the McConnell text this year, the used book dealers more than the plaintiffs have suffered monetarily.

In this regard defendant Worth estimates that, of the 70,000 volumes of the Spencer text sold for use in 300 colleges and universities during the 1971-1972 school year, 20,000 of the volumes are replacing McConnell texts previously utilized. However, 10,000 volumes would probably have been replaced by other new books in any event; and of the remainder, seven to eight thousand would have been acquired secondhand by the students. Worth estimates, therefore, that the maximum diversion for the current school year is approximately 2,500 volumes.

Plaintiffs do not dispute these figures, at least at the present time. While they obviously dislike any diversion, they appear particularly concerned, not about this year, but about the next. For sales of a new book, such as the Spencer text, do not follow the same cycle as sales of a new edition of an established text. In the first year many professors and schools are cautious, and wait to see the reaction of the educational...