College Bookstores Upset Over Company Offering Price Comparison Tool [e138]

January 14, 2015

Nasir and Matt discuss the company in danger of being sued for having a Chrome plugin that allows students to compare prices of college textbooks from all sources.

Full Podcast Transcript

NASIR: All right. Welcome to our podcast where we cover business legal news and my name is Nasir Pasha.

MATT: And I’m Matt Staub.

NASIR: This is our second episode for our new format where you can also send in your ideas and some questions to ask@legallysoundsmartbusiness.com.

MATT: That is correct.

NASIR: That is correctamundo.

MATT: Our theme this week – well, it wasn’t intentional, I don’t think, maybe it was – basically, things that are created to make consumers’ lives cheaper and then bigger companies getting upset and then coming after the people that created the ideas.

NASIR: It’s a pretty common theme. I think people have covered it many times before.

MATT: Yeah, it’s a common thing.

NASIR: Very specific, but…

MATT: Yeah, on Monday, we talked about the guy who started the site that will basically get you cheaper flights. Today, we’re going to talk about – it’s not even a site – it’s a…

NASIR: Chrome extension.

MATT: An extension, yes. An extension on Chrome that you can download that will basically get you cheaper textbooks and I know that, the last couple of years, it’s been a really huge deal with, like, the price of textbooks. I mean, even when we were in school, I know it was outrageously expensive to buy books, especially if you’re going to use it for… I mean, did you ever do the thing where you would buy a book, like, a new book, and then you would go return it to the bookstore at the end of the year and just sell it back and it was two percent of what you bought it for?

NASIR: Oh, yeah, it was ridiculous. I think the first year, I just lost, it was like half the tuition I was paying, basically. It was crazy how much I spent on books. And then, you realize, of course, the professors don’t even use all the books or what-have-you, or the book itself is written by the professor.

MATT: That’s the worst.

NASIR: Yeah, you know. But then, I think it was, like, towards the second or third year, I think by this time they already had these book comparison sites. I think I used, I think it was AbeBooks. On our campus too, there was a couple of bookstores. There was one on campus but then also off-campus that basically it was called KB Books for all you San Diegan natives there. And they sold basically all the same textbooks with a little bit of a cheaper price. It was still pretty expensive but at least it was an alternative so it kept the prices a little competitive.

MATT: There are all these sites out there that do comparison tools.

NASIR: Yeah.

MATT: Especially now with the ebooks being more prevalent that those popped up. I can never get into those just because I like to read on actual paper. Anyways, before I get too off-track with my history, like I said, there’s all these different sites that do price comparison tools for textbooks. There’s a whole bunch of them, way more than I realized, but these people, these two guys created this extension for Chrome called Occupy the Bookstore. So, you can download it, let’s say you’re searching for a book, you hit the book and this thing will pop up and run a search of every book and then, if you were on the university’s website and you’re like, “Oh, I can actually get this book for much cheaper,” it’ll direct you to that. So, you can see why some of these places are pretty upset. I think the biggest site, Follett?

NASIR: Yeah, I think they’re a publisher. Well, okay, they service college bookstores. So, they’re either a publisher or some kind of distributor company or whatever. I’m sure they represent many different authors or publishing companies, I would assume. They’re apparently a $2.7 billion company according to this Chrome extension developer.

MATT: Yeah. So, just like on Monday, we had some tortious interference with contract. I think it’s probably going to be a similar claim to…

NASIR: Yeah, some kind of unfair business practice but, like you mentioned, there’s no real contract between a student and the book buyer, and this Chrome plug-in developer probably doesn’t have any contract or agreement with this company either. So, in order to have an unfair business practice lawsuit, it can’t just be like, “Hey, that’s unfair!” That’s not how it works. You have to have what’s called an underlying statute or violation of some regulation or to derive that violation into an unfair business practice. By the way, right now, there’s no lawsuit. It’s just a threat of a lawsuit.

MATT: Right.

NASIR: I’m looking at some of the responses on how to deal with this because he kind of went to Reddit saying, “Okay, this is what happened, what do you guys think?” and some people say, “Don’t answer them. Let the lawyers settle.” What would you say? How would you deal with this?

MATT: I know there hasn’t been a lawsuit. I assume they’ve sent some sort of demand letter to them – I would think.

NASIR: No, they did. I’m trying to actually find it.

MATT: For now, just find a lawyer to write something – a letter back to them – for a fairly reasonable price. Maybe that’s the way to go. Unlike the issue on Monday with the flights, I think these guys have a better argument in terms of whether they’re going to be ultimately liable for this whole thing just because it’s a little bit different. I guess the thing pops up, the plug-in pops up, and I can’t remember if it directs you then to whatever site is the one you choose.

NASIR: No, that’s a good point because we even mentioned on Monday, we talked about how, in Skiplagged’s example, they were actually redirecting the user to United or Orbitz and entering in the information for them producing a result for them to purchase the ticket. With this Google Chrome extension, they work like other extensions and – by the way, this is not the only price comparison tool – it actually overlays your search. Let’s say you go to your school’s website and pull up the book, it’ll overlay the search to give you options of other sites that have it at a cheaper price. From a technical perspective, it’s not affecting their servers. It’s not going to their servers in any way. It has no affiliation. In fact, it’s just literally the same thing as me going to Best Buy or Target or whatever and looking up on my phone comparison prices which I think most people, if they’re making any heavy purchase, do that anyway. So, where is the liability here? I don’t know. I think this lawsuit threat is a little… I think it’s a little funny and, as a law firm, we get requests from clients or what-have-you, or our clients receive these demand letters or we get a request to send out a demand letter and you have to really think what your end game is. Sometimes, in this case, it looks like it kind of backfired a little bit because – like you mentioned with the Monday episode which we keep relating to – this actually gave even more publicity to this guy’s company.

MATT: Yeah.

NASIR: And actually backfired, I would say.

MATT: So, in the example they had posted, they had a little GIF there that shows you how it’s actually done but it stops right before… So, the person selects, like, the cheapest one and then it stops so I don’t know what actually happens. But this is actually, they say it’s a side project for the company – or at least the site – Texts.com which is actually, that’s a great URL. I don’t know how they got that.

NASIR: Oh, yeah, you’re right.

MATT: I think the URL alone there is worth a ton of money if they wanted to ever sell that. But I assume these people are an actual corporation or at least something.

NASIR: I hope so. I’m looking at it now. So, it looks like they have a CEO and CTO so that could mean that they have their officers. But, sometimes, people just call themselves that without any kind of company organization. So, I’m looking…

MATT: Texts.com LLC.

NASIR: That’s original. But, yeah, at least they have the basic protections and I think this is great. I think they handled it in the best way. Instead of just responding to the demand letter, they took their technological innovation and took it to Reddit, took it to the public, and got publicity for it. And so, I think that’s the best way to do it. You’re going to make more money that way anyway.

MATT: I’m trying to find a textbook so I can use their… Well, I didn’t install the plug-in but I’m trying to just use their normal site and just see how it works.

NASIR: On the bottom, they specify clearly – and they could have put this on the terms of service but – they specify clearly on the footer of every one of their web pages that Texts.com is “not affiliated with any college, university, or any other institution of higher learning.” And that just basically has to do with trademark infringement and other affiliations that are inaccurate. And so, they just want to make it very clear even though I think everyone realizes that but, in order to protect themselves from liability, it’s a good move.

MATT: So, their site, their normal site – because, like I said, this Occupy the Bookstore is a side project is how they described it – the site’s the exact same thing, just not a plug-in.

NASIR: It’s just not a plug-in?

MATT: Yeah.

NASIR: Exactly.

MATT: So…

NASIR: Yeah, I don’t know why they call it a side project. It would seem like this is part and parcel to your main company.

MATT: This changes things to me because, I mean, this site seems perfectly fine. I guess it’s the overlay that pops up. Yeah, I think I’m with you on this. This is going to be a tough route for these companies that are trying to sue.

NASIR: How many price comparison tools are there out there that does the exact same thing? It reminds me too that, you know, even a side project like a Chrome extension with my understanding, from a coding perspective, a Chrome extension can be pretty basic as far as the technical difficulty of it. And so, it can be put out pretty quickly and yet could still expose you to liability. So, something to think about because the last thing these guys want, I hope they don’t actually get sued, and I think cooler heads will prevail and I don’t think anything will happen from it; another prediction on my part.

MATT: I mean, their site is – like I said – the exact same. So, it’s not changing the prices or the prices. It’s the exact same as it would be now. It’s just more readily available, I guess, to the end user.

NASIR: Yeah.

MATT: I’m on their side, for sure, on this one, especially since, as we discussed, textbook prices are… like, so I just typed in a financial accounting book, some random financial accounting book, I mean, some of them this one’s $266. It just doesn’t make any sense for use for one semester and then you sell it back to the bookstore for two dollars or whatever it is.

NASIR: No, I agree – 100 percent. In fact, I just looked up a book, it was the Best Books of Puns. I mean, it’s like, $13.00 through Amazon Marketplace. I mean, that’s ridiculous for just one semester.

MATT: What class is that – Puns 101?

NASIR: Didn’t you take a puns class?

MATT: I did not, no.

NASIR: You seem to be very good at it so I assumed you did.

MATT: I tested out of it.

NASIR: Actually, I was trying to find the same one you found and I just put “financial book” and that was one of the first ones that came up so I don’t know why that happened.

MATT: Law school books were terrible, too.

NASIR: Those were even worse because they had basically a collection of cases that you could find other places anyway. They were basically case books.

MATT: The problem is it was all, like, it depended on the professor but it was all, like, the little notes after the cases and then, you know, like, “Oh, discuss these things,” and, if you didn’t have the book, you’re just out of luck.

NASIR: I think most of my professors didn’t even, it was just about the cases and the footnotes which were in the actual published cases anyway. But it’s the order of things and – I don’t know – they were very expensive, though. I think much more than the regular textbooks in undergrad, for sure.

MATT: Oh, yeah, without a doubt. So, if I had to create a worry meter or concern meter from zero to ten – ten being they really need to worry and zero don’t worry about it all – I’d put this at, like, a three – three or four.

NASIR: I would even say two – at least I would tell them that. I would say two and, like, “Just let your lawyer handle it. It’s not even a concern.” The problem is they still have to retain an attorney.

MATT: That’s why I put it at a three or four because they’ve been threatened and I think someone might actually go through with a lawsuit but there might be some money damage. Like, worst case scenario, they have to take their plug-in off or out, but their site still exists and now people know about it. So, it’s a win at the end of the day in my opinion.

NASIR: Yeah, but I think it’s not far they’d probably go after the website, too.

MATT: Isn’t Amazon like a price comparison? Don’t they have all the…? Kind of?

NASIR: I think the difference is that they have actual deals with those particular companies that they show prices of so they put other competitors. But I still think they have, like, an affiliate deal with them. So, that would be the difference there. But it goes back to the same situation. Like, I think all these links to these other sites are probably affiliate links to, like, Amazon and AbeBooks which is very common, by the way, to have these kind of price aggregators. So, basically, this publisher would be going after the whole industry which that’s just not going to happen – not going to happen.
All right. Well, let’s end our episode. That was a good one.

MATT: I think so.

NASIR: Thanks for joining us, everyone.

MATT: Yeah, keep it sound, keep it smart.

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Legally Sound Smart Business

A business podcast with a legal twist

Legally Sound Smart Business is a podcast by Pasha Law PC covering different topics in business advice and news with a legal twist with attorneys Nasir Pasha and Matt Staub.

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