Extras - Lois Sues National Law Library Over Use of DataBy T.R. Halvorson, Published on May 15, 2000
T. R. Halvorson is a lawyer in sole practice in Sidney, MT, President of Pastel Programming Co., a division of Synoptic Text Information Services, Inc., and author of Law of the Super Searchers: the Online Secrets of Top Legal Researchers, How to Avoid Liability: The Information Professional's Guide to Negligence and Warranty Risks, and Legal Liability Problems in Cyberspace: Craters in the Information Highway.
In a previous article ("National Law Library:A View through the Southern California Online Users Group Rating Scale Lenses," LLRX.com™, May 1, 2000), I reported on the eruption of content on National Law Library (www.itislaw.com). NLL is a subsidiary of Internet Law Library, Inc. (www.interlawlibrary.com) formed in November 1998. Internet Law Library and National Law Library are closely affiliated with IT/IS, Inc. (www.itisinc.com). NLL began commercial operations in January 1999 and announced its official launch on June 10, 1999. By January 2000, NLL completed databases of all 50 states and released them on February 23, 2000 upon completion of its conversion to the Unix operating system. By March 21, 2000 NLL's coverage of federal case law included the Supreme Court and the 1st, 2nd, 3rd, 4th, 5th, 6th, 7th, 8th, 9th, 10th, 11th, DC, and Federal Circuits.
Current methods and business structures might allow databases to be created more rapidly than is done by the lumbering structures of large, established firms like West and Lexis. Still, the eruption of content on NLL is a marvel and enough of a marvel to raise curiosity. When writing review articles, I typically search listserv archives to see what people have been saying and what questions they have about a legal information service. In a message posted to privatelawlib-l on March 26, 2000, Donna Tuke Heroy, President of Alert Publications, Inc., Publisher and Editor-in-Chief of Legal Information Alert, said:
I've talked to these folks a few times. The one thing that bothers me is that they won't say where they get their info from. Maybe from someone like LoisLaw? They are slightly more expensive than LoisLaw and this may explain why.
NLL has its headquarters in Houston, Texas. Houston is in Harris County. The state district courts in Harris County, Texas provide a docket inquiry page at its website. I found the following docket record in the District Court of Harris County, Texas, 11th Judicial District:
11TH CIVIL DISTRICT COURT Case Number 199945563 Post Judgment Number ALL Style LOISLAW.COM INC VS. ITIS INC C INJUNCTION Status READY DOCKET
Date PJN PJ Status Description 11/03/1999 N/A N/A MOTION TO DESIGNATE TRIAL READY GRANTED
Internet Law Library, Inc. is a publicly traded company required to file various disclosures under the securities laws, including contingent liabilities stemming from litigation. Its Annual Report, Form 10-K for the fiscal year ended June 30, 1999 filed October 13, 1999 says, on page 10, Item 3:
ITEM 3. LEGAL PROCEEDINGS
On September 9, 1999, Loislaw.com, Inc. ("Lois") commenced legal proceedings in the District Court of Harris County, Texas, 11th Judicial District (Case No. 1999-45563), against Internet Law, National Law and IT/IS. Lois, a competitor of Internet Law, alleged that IT/IS breached an agreement between Lois and IT/IS by allegedly providing certain materials to National Law for use on National Law's web site. The suit seeks, among other things, to enjoin National Law from utilizing such material, actual damages equal to the value of its market position prior to defendants' alleged tortious interference with the contract, and actual damages for alleged lost profits. Management and counsel for the Company consider the suit without merit, and management intends to vigorously defend the case.
The cases mentioned in the docket entry and the 10-K match on court, case number, plaintiff, time frame, and one of the defendants, IT/IS, Inc. LOIS' pleading includes claims of conversion, misuse of and interference with confidential information, tortious interference, breach of contract, misappropriation, and unjust enrichment.
IT/IS is wholly owned by Hunter M. A. Carr. Carr contributed to National Law Library his rights in retrieval and database software valued at $934,000 and database content valued at $1,096,000 in exchange for 15,152,500 shares of common stock of National Law Library.1 IT/IS has a Continuing Service Agreement to provide NLL with data files containing case law and statutes.2 Given the corporate structure and contractual relations between Internet Law Library, Inc., National Law Library, Inc., and IT/IS, Inc., it is possible that Hunter M. A. Carr is the only person who knew the source, whatever the source may be, of the data he transferred to National Law Library, Inc. for stock. If the data indeed was the same data covered by an agreement with LOIS and was not to be provided to a party such as National Law Library, Inc., the other officers and directors of National Law Library, Inc. and Internet Law Library, Inc. might not have known.
In the lawsuit filed by LOIS, each of the defendant corporations has independent attorneys. I have contacted the attorneys for LOIS and each of the defendants for information on its pleadings, motions, and briefs.
For data acquired by NLL after the stock transaction, Paragraph 7(A) of the Continuing Service Agreement says "NLL shall supply Raw Materials to IT/IS prior to the start of each new project and IT/IS shall provide NLL an inventory of Raw Materials received within seven days of receipt of Raw Materials," Paragraph 17 says, "Acquisition and delivery of Raw Materials to IT/IS shall be the responsibility of NLL." Internet Law Library, Inc.'s Annual Report, Form 10-K for the fiscal year ended June 30, 1999 filed October 13, 1999 says;
Case law and statutes are public information that is not protectable by copyright. Many vendors of these historical records sell these products. National Law purchases content for its databases from IT/IS who also formats and uploads the content to National Law's web site. New content, including recently decided case law and new or pending legislation, is purchased directly from the respective courts and legislatures.
- Internet Law Library, Inc.'s Annual Report, Form 10-K for the fiscal year ended June 30, 1999 filed October 13, 1999 says, "Following its formation, National Law's then sole stockholder, and the current President, Chief Executive Officer and Chairman of Internet Law, contributed to National Law all of his rights and interests in certain retrieval and database software and database content valued at $934,000 and $1,096,000, respectively, in exchange for 15,152,500 shares of common stock of National Law." Internet Law Library, Inc.'s Annual Report, Form 10-K for the fiscal year ended June 30, 1999 filed October 13, 1999. <back to text>
- The following is an excerpt from Internet Law Library, Inc.'s Annual Report, Form 10-K for the fiscal year ended June 30, 1999 filed October 13, 1999:
AGREEMENTS WITH IT/IS, INC.
The databases provided by Internet Law can be accessed and searched through a software retrieval engine known as Litidex(R). Litidex(R) was developed by IT/IS, Inc. ("IT/IS"), a Texas corporation wholly owned by Hunter M.A. Carr, Internet Law's President, Chief Executive Officer and Chairman. National Law is a party to certain agreements with IT/IS, the material terms of which are described below.
Under a Continuing Services Agreement, effective December 1, 1998, between National Law and IT/IS (the "Services Agreement"), IT/IS agreed to provide National Law with data files containing case law and statutes as are in the public domain, together with coding and proprietary editing services covering these data files. National Law is charged $0.65 per 1,000 characters for those data files that satisfy certain prescribed quality control requirements. Pursuant to the Services Agreement, National Law agreed for a three-year period to provide IT/IS with minimum orders for data files containing an aggregate of 750 million characters per month. National Law has the right, however, to select another vendor if IT/IS' prices cease to be competitive given market prices for comparable work.
Under a Management and Financial Services Agreement, effective March 1, 1999, between National Law and IT/IS (the "Management Agreement"), IT/IS provides accounting, staffing and procurement services and office space to National Law. National Law pays IT/IS a monthly management fee of $3,600, plus $85 per hour for accounting services, 125% of the cost of staffing services, 120% of the cost of office supplies, equipment and telephone services and 115% of the cost of office space rental.
Under an agreement effective March 23, 1999, between National Law and IT/IS, IT/IS agreed to provide National Law with software development and consulting services for National Law's databases and retrieval. As of June 30 1999, no services had been provided under this agreement.
Under a personal service contract, effective December 1, 1998, between National Law and Mr. Carr, effective in November 1998, Mr. Carr provided executive management and marketing services to National Law. This agreement was terminated effective July 1, 1999, the date that Mr. Carr became a salaried officer of Internet Law.
Case law and statutes are public information that is not protectable by copyright. Many vendors of these historical records sell these products. National Law purchases content for its databases from IT/IS who also formats and uploads the content to National Law's web site. New content, including recently decided case law and new or pending legislation, is purchased directly from the respective courts and legislatures. <back to text>