Can the unpublished discount price of a DVD player for next week's big sale at Wal-Mart be copyrighted?
That's the question at the heart of a legal dispute involving several big retailers and FatWallet, a popular website that caters to bargain shoppers.
After receiving legal threats from Best Buy, Staples, Target and Wal-Mart, FatWallet removed several user postings in its Hot Deals section.
Scooping sales circulars by several days, the postings, apparently from site users who had access to proprietary sales information, included lists of products, along with reduced prices, that will go on sale Nov. 29 -- the day known as "Black Friday" for U.S. retailers because it kicks off the holiday buying season.
According to FatWallet owner Tim Storm, the retailers all cited the 1998 Digital Millennium Copyright Act as the legal basis for serving FatWallet with "takedown" notices.
"We don't think sales prices can be copyrighted, or that the DMCA was meant for this type of thing," said Storm. "But it would cost us a heck of a lot of money to be right." He added that he decided to comply with the retailers' requests "as a business decision."
Like the DMCA (PDF) itself, the FatWallet case has divided legal experts. According to Cindy Cohn, legal director for the Electronic Frontier Foundation, the incident is a "clear misuse" of the law.
"You can't copyright facts. How much something costs is not expression," said Cohn. "The DMCA is the wrong process to use here."
But retailers apparently believe their use of the controversial copyright law is justified.
Wal-Mart spokesman Tom Williams said its sales circulars consist of a "compilation of prices" and that the data contained therein "is very much copyrightable."
Wal-Mart is still investigating the source of its sales circular data leak, Williams said.
Representatives of the other three retailers did not respond to interview requests.
Allan Adler, vice president of legal affairs for the Association of American Publishers, said copyright law gives authors the right not to have their work distributed. Under that provision, "there is a clear copyright interest at issue in the case," Adler said.
Since retailers give away sales circulars for free and even pay to have the glossy ads stuffed into newspapers, why are they so upset that a website is distributing the same information? Timing appears to be everything.
The day after Thanksgiving marks the start of the holiday shopping season -- one of the biggest buying days of the year.
Storm said merchants apparently aren't worried about savvy shoppers discovering sales in advance. Retailers' main fear is that FatWallet will show their hand to competitors, which could adjust prices in reaction.
"Wal-Mart specifically told me 25 cents on a Furby can translate into a million dollars," said Storm.
Bargain hunters, on the other hand, hope to parlay their advance notice of upcoming sales "so they can use the information to get the best price," Storm said.
Despite the "takedown" action, Black Friday circulars are still being leaked at FatWallet. Posts that have appeared on the site in recent days include unpublished sales data from Sears, OfficeMax, Kmart and Jo-Ann Fabrics.
Storm said he had no clue as to the source of the sales data leaks and noted that it could take place at any point in the circular publication process.
"It could be anyone from an employee inside the merchant to the paperboy who delivers the ads," he said.
