Cengage, MHE and Pearson Sue Follett over Counterfeit Book Sales

June 23, 2017 | Volume 48, Number 13

The periodically uneasy relationship between college publishers and bookstore operators that has percolated for years boiled over in June with the three largest college publishers suing the largest college store retailer over sales of counterfeit books.

Cengage (Boston), McGraw-Hill Education (New York) and Pearson (London/New York) on June 21 filed a lawsuit in U.S. District Court for the Southern District of New York against Follett (Westchester, IL)—including its Valore subsidiary—alleging the company distributed and sold counterfeit textbooks.

The lawsuit against the industry-leading distributor of college textbooks is a significant escalation of the publishers’ anti-piracy efforts. Past lawsuits were aimed largely at online-based operators selling lower-cost foreign editions of textbooks in the U.S. But, U.S. publishers consistently have pursued counterfeit-textbook distributors and sellers since at least 2007, Matt Oppenheim of Oppenheim + Zebrak, who is representing the publishers, told EM. “Lawsuits have been filed with some frequency over the last two to three years,” he said.

According to the lawsuit, the publishers in the past four months have been able to buy counterfeit copies of “at least 46 textbook titles” from physical stores and online sites that Follett owns or operates. In one example included in the lawsuit, a McGraw-Hill representative in May purchased the 20 copies of one of the textbooks MHE publishes, Elements of Moral Philosophy, that a Follett-operated bookstore, the LIM College Bookstore in New York, had on its shelves. All of the textbooks were counterfeit.

"As the largest textbook customer of these publishers, Follett has been actively working for decades to identify and remove counterfeit books from inventory," Follett president and CEO Ray Griffith said in a statement on the company’s website. “Counterfeits hurt everyone in the industry, and the solution requires a collaborative industry response. It's unfortunate these publishers don't agree with that approach."

Publishers several months ago reached agreement with Chegg (Santa Clara, CA) and Ingram Content Group (Nashville, TN) regarding best practices in handling the counterfeit problem.

"There are companies like Chegg and Ingram that are working hard to play by the rules, and they should be able to play on a level playing field,” Oppenheim said.

While estimating loss is difficult, Cengage has attributed lost revenue in the $70 million to $100 million range to the distribution and sale of counterfeit textbooks.

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