RoyaltyShare’s Kohn Submits Comic Strip Opposing Justice E-book Settlement

The comic strip starts by noting U.S. District Judge Denise Cote’s prior limitation of five pages on any brief submitted by Kohn. It shows him typing on his computer -- one sentence per window -- Kohn’s argument that Justice deserves no deference from Cote because its conclusions are “unreasonable” and the settlement violates the agency’s “own IP Guidelines,” which is accompanied by a thought bubble: “What were they thinking?” Kohn refers to shorthand for legal precedents in some windows.

A female figure enters the strip asking Kohn what he’s doing, and he proceeds to lay out his argument that “supply & demand does not operate normally on pricing of e-books.” Asked to explain, Kohn continues the conversation on a park bench the next day, with his female companion agreeing that the settlement sounds like a “major screw-up.” “My challenge is to explain all this in five pages,” Kohn tells the woman.

The Supreme Court has blessed “horizontal price fixing” -- the alleged collusive conduct between the publishers to circumvent Amazon’s lock on pricing -- if it will “create efficiencies in the operation of a market,” such as “countervailing Amazon’s monopsony power” or “predatory pricing,” Kohn says. Such pricing is “presumed illegal” by the 2nd U.S. Circuit Court of Appeals, he says, citing the 1981 telecom pricing case Northeastern v. AT&T. Justice “got the law of predatory pricing wrong” in its “'investigation'” -- Kohn uses quote marks around the word -- of Amazon’s pricing practices, and it makes Justice’s factual foundations “suspect” if not unreasonable, Kohn tells the woman. That would require either that Justice turn over investigation of Amazon to the court, Kohn says, and the woman finishes, “or the Court must find that Amazon engaged in predatory pricing.” Cote can force Justice to turn over its investigation documents, Kohn says.

Since Amazon priced e-books below marginal cost, raising the prices back to that cost can’t harm consumers, and thus undermines Justice’s case against the publishers, the woman concludes. Kohn says he was “gobsmacked” when a Justice lawyer -- portrayed almost as a vampire in the strip -- told Cote that “low prices” are a “principal” goal of antitrust law, when in fact the goal is “efficient” prices. The publishers did a “one-time event” -- concurrently demanding Amazon switch to the agency model of pricing, where they control the retail price -- to fix a market failure, in contrast to ASCAP and BMI, “who each spend over $150m a year to maintain their price fixing activity” in the form of rate hearings and government oversight, Kohn says. He identifies the woman at the end only as a “novelist,” who explains she’s not a lawyer because “it’s impossible to tell a complex story in only five pages!”

Kohn told us by email he decided on a comic strip because there was no easier way of “condensing 93 pages of complex legal argument” -- his comment letter, original proposed brief and appendix -- into five pages. Cote’s “normal” rules limit non-parties to 25-page memorandums, Kohn said, so he was surprised by the limitation. He asked his daughter Katie, a Ph.D. film student, for help, and she tasked an artist friend with drawing a “graphic novel” in line with Kohn’s “script” for the brief. It took four days of emailing back and forth with the artist to finish the strip, he said.

"I am hopeful that the Court will take this in the spirit of its order, which was simply a request for a very concise version of my points, arguments and authorities,” and appreciate that the strip format is “consistent with the intent of the Tunney Act proceeding” to welcome public participation, Kohn said. “The last thing the DOJ seems to want is the public understanding this case -- because when it is properly explained to them, consumers should be horrified that the government bought this case to begin with,” he said. The woman in the strip is daughter Katie, “an aspiring novelist,” he added.