Jul 31, 2017

Textbook Publishers Sue Follett Over Counterfeit Textbooks

Cengage Learning v. Follett, 17-cv-04672 (S.D.N.Y.)
By Daniel Shen

Education publishers Cengage, McGraw-Hill, and Pearson jointly filed a complaint against Follett and its subsidiaries on June 21, 2017, alleging that Follett distributed counterfeit versions of the publishers’ textbooks. Follett is an Illinois-based company that provides education products and services, and operates university campus stores that also sell textbooks. Follett also recently acquired Valore, which is another named defendant in this suit and which operates ValoreBooks.com.

According to the complaint, Follett previously claimed that it inspects its textbook inventory to ensure that it does not have any counterfeits. However, the publishers allegedly purchased several copies of counterfeit textbooks from Follett, thus demonstrating that “[Follett’s] processes for inspecting textbooks upon receipt are porous and flawed.”

The complaint also outlines previous interactions between the publishers and Follett where the publishers “have repeatedly advised Defendants that their practice of buying textbooks from anonymous and unreliable sources encourages and results in the acquisition of counterfeits. Yet Defendants continue to source large quantities of textbooks from faceless Internet sellers, among others.”

Another one of the “risky business practices” outlined by the publishers in the complaint includes Follett’s textbook buyback system. These buyback systems, used across the college textbook industry, are there to allow students to sell back their textbooks after they have finished using them. The complaint states that Follett supposedly limited the number of textbooks it would buy back from any individual seller, but that this limitation was easily bypassed. The publishers state that “[a] basic verification process… could easily detect and prevent much of the laundering of counterfeits by unscrupulous sellers through Defendants’ buyback systems. But Defendants do not take those simple verification steps.”

Other areas outlined in the complaint to show that “Defendants do not take basic steps necessary to root out counterfeits” include Follett’s recordkeeping practices as well as its inventory management. The publishers raised concerns about Follett’s limited record retention period and the difficulty such limitations cause in identifying suppliers of counterfeit textbooks. Also, Follett’s inventory may have counterfeit versions of textbooks commingled with legitimate ones.

The complaint asserts that the textbook publishers have repeatedly warned Follett that the above practices and shortcomings “facilitate and lead to” the distribution of counterfeit textbooks. In the end, the publishers claim,”Defendants have made the deliberate decision to continue these practices. Defendants know or should know that they are purchasing and then distributing [counterfeit textbooks].”

The publishers are asking the court for an order requiring Follett to deliver up all counterfeit textbooks in its inventory and to pay damages.