What Right Do You Have Over Your Pricing Information?

from the questions-to-ponder dept

Wed, May 10th 2006 11:20am — Mike Masnick

One of the more interesting questions when it comes to intellectual property is how much ownership people or companies have over things. Companies tend to claim they have control over a lot more than they really do. We've seen way too many cases of companies claiming a copyright over factual information -- which cannot be covered by copyright. One area that has come up a few times is pricing information. Does a company own the right to its own pricing info? A few years ago, Wal-Mart sued an online deals site for publishing their Thanksgiving deals prices a few days early. While Wal-Mart eventually backed down, other retailers have done the same thing. In that situation, the deal site is simply posting factual information -- which isn't subject to copyright. However, what if it's a case where a price list is considered a trade secret? Medical device firm Guidant is now suing a watchdog group that is publishing some of its prices. In this case, the situation is a bit different. The watchdog group got the prices when hundreds of hospitals volunteered the info on the prices they paid for equipment. Guidant claims that the info is confidential and needs to be deleted. The counter argument that there's a "national interest" in publishing this information seems weak, but it's still not clear if the watchdog group has done anything wrong. After all, the hospitals voluntarily gave them the factual information about what they paid. Should Guidant still retain control over such information? It's possible that Guidant's contract terms require the hospital to keep that info confidential -- but then the dispute should be between Guidant and the hospitals who breached the contract, not the watchdog group. All the group has done is published factual information that was voluntarily given to it -- and that should be out of Guidant's control.

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33 Comments

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Anonymous Bum, 10 May 2006 @ 11:49am

Pricing
I am in the medical/dental equipment and supply business. I sell the same product to different people for different prices all the time. Reasons can include; special contracts for volume purchasing, local laws and ordinaces or even shipping logistics that joe schmoe could never fathom.

For what ever reason it may be, IT IS MY BUSINESS! Watchdog groups should let the market work or move to a communist country. But then they would probably be shot for complaining.
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Daniel, 10 May 2006 @ 11:56am

duh
Of course Guidant isn't going to go after the hospitals, imho, unless it was a poignant, shockingly flagrant and undeniably major breach of contract that they volunteered such infomation; that is, if the hospital's nondisclosure silence was mandated by such a contract. Put it this way: Guidant's not going to bite the hand thta feeds them. They probably would want to sue the hospitals, but then the hospitals could say "screw you, we're going with *competitor*." Then Guidant is a**-out. So it's doing the next best thing: Commencing litigation with the entity that has published the information.
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Mr. Schmoe, 10 May 2006 @ 11:59am

what i can fathom
you presumptuous arse... I cannot fathom that you screw me because you can? I understand pricing structures as well as any, try me. You just don't want the info out for the same reason a car dealer will never tell you the price of car. And with the same amount of scruples behind it, i would think.

PS...i don't have to move to a communist country (and there are damned few anymore) because you don't like how i think. so.. FUCK YOU, TOWEL HEAD.
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Justin, 10 May 2006 @ 11:59am

AKA: "We don't want you to know how bad you're get
lovely
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Justin, 10 May 2006 @ 12:01pm

whoops
AKA: "We don't want you to now how bad we're ripping you off so it's copyrighted information"
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Topher3105, 10 May 2006 @ 12:03pm

Well.
If someone releases a product price before the company releases that price, then I can agree that this is grounds for a lawsuit. Retail is highly competitive, and if your constantly being undercut because your competitors are getting prices before your customers and so they take business away from you, this is anti-competitive.

Once your prices are public knowledge, then its public knowledge, period. I believe anybody as a right to post WalMart prices on their website if this is the publicly advertised price. If a company wants you to know they are selling something cheaper then WalMart, then they have full rights to post WalMarts current advertised price along with their own price.

You can't trademark or copyright a price if its public knowledge, and I don't think there is any merit even if the number is being used in derogatory or negative marketing.

In the case where pricing ISN"T public knowledge, as in the medical equipment or any industry in which your supposed to contact a sales representative, then I agree that the pricing is a "trade secret". Unless your company advertises a price, there is is no reason to believe that another person or website can publish their prices.
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Tad, 10 May 2006 @ 12:09pm

Re: Pricing
If your pricing scheme is legitimate, you shouldn't be worried about people knowing it. Your statement regarding Communism really shows a clear lack of understanding of the difference between an economic philosophy and a form of government. Trying to use "red scare" tactics, this long after the cold war ended, is rather pathetic.
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anonymous coward, 10 May 2006 @ 12:10pm

I invented pricing items at $xx.95 and I want to get paid! You'll all be getting a letter from my attorney.
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erinol0, 10 May 2006 @ 12:16pm

Re: Pricing
I'm not saying that what you are doing is illegal, but no matter how you slice it, it's price discrimination, and not very nice.

Also, if you're forcing your prospective and current clients to work with imperfect information (i.e. not knowing what others are paying for the same product), that's not right. That's why insider trading is illegal (information imbalance). If I was buying, I wouldn't want to buy from you....
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Anonymous Coward, 10 May 2006 @ 12:21pm

Communism
"Your statement regarding Communism really shows a clear lack of understanding of the difference between an economic philosophy and a form of government."

Even the Wikipedia crowd can't agree on that subject.
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Watchdog, 10 May 2006 @ 12:25pm

Re: Pricing
Watchdog groups should let the market work or move to a communist country.
Market forces work BOTH WAYS dumbass. If your pricing structure can't stand up to a little scrutiny, then maybe YOU need to move to a communist country where there is only one supplier for each product and you can charge whatever you want.
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Bob, 10 May 2006 @ 12:32pm

Secrets
The two cases in the article above are clearly different. When I worked for a Music Retail Store long ago. We would receive product a week before its Street Date, so we could prepare for displaying it, but were prohibited FROM selling it before the Street Date. If we were caught selling it before that, we'd get in trouble with the record company. At worst, my company could lose the privilege of selling that artist or any products from that record company.

If the medical product supplier has contractually bound the buyers from divulging special pricing terms, then the seller/manufacturer should have a recourse through that contract. if I'm a watchdog and call a hospital and ask, "Hey how much to you pay for your DX-9928-G5 machines and how many do you own?" and the respondent says, "We have 52 of them in our 7 hospitals and they cost us $12, 362.73 per unit," and I publish that info along with similar info from different hospitals, I don't see how I have violated anything--especially since I was not notified that the info should not be published.

The seller should enforce it's contract to keep buyers in compliance with the contract and should spell out in such contract the penalty for breaking the confidentiality agreement in the contract. Maybe they won't sell to you anymore or maybe the buyer loses preferred pricing.

It's like saying, "Becuase of your purchasing volume, I'll sell you this item for 20% less than regular pricing, but you can't tell anyone you get this price or you'll have to start paying full price." Now, if they break the agreement and get slapped, the buyer COULD say screw you we'll buy from a competitor. But that may be screwing the buyer more than the seller, especially if the product is a thing that no competitor has or that no competitor has at a competitive price. Now the cocky buyer has to find a comparable replacement at potentially higher cost. Screw Me? Screw You!

Guidant should have the upper hand if it's stated in a contract, if not, they haven't a leg to stand on in this case--public info is public. If their products are the best at a price, then buyers will know it and seek to protect that relationship. If not, then Guidant's leverage is low and they should see to make their products better, to the point that they can corner the market on DX-9928-G5 machines (to use my example).
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Scott, 10 May 2006 @ 12:34pm

The Market does Work
This is yet another example of how the market DOES work...and how existing applecarts are being upset by the information revolution. Companies are used to being able to keep secrets from their existing customers and the potential buying public.

The legal view of the information regarding pricing is that it belongs to the person/company that put the energy and work into developing it i.e. the watchdog group. They collected it and published it. The device company can't possess a fact any more than it can possess a customer. (Information wants to be free!)
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Andrew Schmitt, 10 May 2006 @ 12:35pm

It's Wrong
You've picked a very interesting subject.

In this case, I'd like to think the watchdog group is in the clear. Unfortunately I don't think they are.

The Hospitals violated an NDA. If the watchdog group knew this they were willingly partners in violating the law. If they were 'unaware' the information was protected by NDA, they still need to 'give it back'. Consider the example of a guy driving by in a van, offering you used stereo equipment at a rock bottom price. If the police later recover the merchandise, you must give it back. If you knew it was stolen, you technically are an accomplice.

Nothing prevents the hospitals from working together to become a more powerful buyer, which is what economics dictates will happen when their is a single monopolistic supplier.

What we would like to be true, and what is true, are frequently divergent.
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SPR, 10 May 2006 @ 1:06pm

Re: Pricing
Knowing the price IS part of letting the market work. Trying to control publication of prices is FASCISM just as trying to control the press.You should be the one to move to a communist country, you anti-capitalist pig!!
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Michael, 10 May 2006 @ 1:23pm

First, a quick review of the Red Herring article would remind us that the watchdog group is suing Guidant, not the other way around. It might be somewhat moot, since Guidant was probably threatening to sue (since that's usually a prerequisite to bringing a declaratory judgment action), but the facts is the facts ma'am.

Second, the trade secret laws in most (all?) of the states allow one whose secret has been misappropriated to sue either the one who disclosed improperly OR the one who receives and uses the improperly disclosed information -- the catch is that the receiver must 'know or have reason to know' that the secret information was disclosed without authority. There are obviously any number of facts in that loaded statement that aren't proven with what little we know about the case, but I disagree that it's an impossible case to be made. http://nsi.org/Library/Espionage/usta.htm

As for whether it's righteous or not to keep one's prices secret, I leave that for others to decide...
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Anonymous Coward, 10 May 2006 @ 1:31pm

Re: Pricing
see, the free market works best when both sides have perfect information. you are trying to force you customers into a less informed position.
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Anonymous Coward, 10 May 2006 @ 1:38pm

Re: Re: Pricing
A free market that forces people to reveal information they don't want to reveal isn't exactly free, is it?
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Anonymous Coward, 10 May 2006 @ 1:43pm

Pricing is strategic
How a company sells its goods and services can be very strategic to its business and is covered under an NDA in most cotnracts in these circumstances. I have no idea what Guidant's contracts look like but in my LOB - software sales- we always have that language.
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anonymous coward, 10 May 2006 @ 1:46pm

My guess is that Guidant made some very sketchy quarter-end or year-end sales deals to hit some projections and they don't want that pricing to be known by investment community, SEC and future customers.

If these kinds of financial improrieties became known, it could really hurt them in a class-action lawsuit or SEC investigation. Oh, darn, too late!

I want that 75% off "make the YTD sales target so the CEO and CFO don't end up in jail" deal...
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Nick, 10 May 2006 @ 1:54pm

Re: Re: Re: Pricing
You obviously don't understand the concept of a free market.
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Robert Martin, 10 May 2006 @ 1:54pm

Re: Pricing
So you are saying purchasers have no right to communicate among themselves? The prices they pay is their business, is it not? Maybe it's you that should seek a country with fewer freedoms.
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Sean's Mom, 10 May 2006 @ 2:02pm

Econ
Bum,

Perhaps we should do an econ lesson here. This is the market at work, this is an increase in competition based on the above average profit gained by sales to (some) firms.

Only in this case you now have to compete with yourself as well.

Imagine if you couldnt swindle people like the used car dealer down the street, you might not be sitting on all those fat commission checks.
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Anonymous Coward, 10 May 2006 @ 2:15pm

simple
Look. You give me that receipt? I use it in my accounting and maybe for taxes?

Yeah. That paper's mine. You don't own the info on it, except for maybe your company address and the copyright on the drand name of the equipment potentially detailed therein.

You don't own my company name, nor do you own the factual information contained in the amount which I've paid you. If you don't want that info leaked, you better have me under NDA; otherwise, please fuck off.

And it's that simple.
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Anonymous Coward, 10 May 2006 @ 2:15pm

Akin to receiving stolen property?
For the sake of discussion, let's assume that Guidant's contract with the hospitals prohibit divulging details such as price. (Guildant is free to do business as they like, hospitals free to shop elsewhere).

If the 'watchdog group' has been shown that the information was improperly divulged, should they not remove that information?

As an analogy, if you receive stolen property (e.g. a stereo), but did not know it was stolen, do you get to keep it? No, I don't think so.
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Anonymous Coward, 10 May 2006 @ 2:21pm

Re: Akin to receiving stolen property?
You have to presume that Guidant's general contracting practices are provably well-known within the industry. So, presuming they do have all of their customers under NDA then it would be hard for the watchdog to argue that it didn't know or have reason to know. Thus, the stolen property analogy seems apt to me.
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Anonymous Coward, 10 May 2006 @ 2:24pm

Re: Re: Pricing
Yes, a free market allows sellers to price their product according to what the market will bear, which may be different from one time, place and customer to another.

A free market allows sellers to require buyers to sign a contract of confidentiality. It also allows buyers to refuse and buy elsewhere.

The watchdog, by publishing only the price paid, without any of the other factors that determined the price (which, granted, only the seller knows), does not give the other buyers a correct perspective.
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Anonymous Coward, 10 May 2006 @ 2:27pm

Re: Re: Pricing
So you are saying purchasers have no right to communicate among themselves

Not if they signed an agreement of confidentiality, no.
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XAXAXA, 10 May 2006 @ 2:35pm

READ THE ARTICLE
Mike. Have you read the article. I just skeemed through it and it seem that the watchdog group is suing the Guidant for them to release prices not the other way around.
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Mike (profile), 10 May 2006 @ 6:53pm

Re: READ THE ARTICLE
Mike. Have you read the article. I just skeemed through it and it seem that the watchdog group is suing the Guidant for them to release prices not the other way around.

Well, it's the group suing Guidant after Guidant demanded they take down the prices. It's not them suing to make Guidant *release* the prices.
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Anonymous Coward, 10 May 2006 @ 8:01pm

What about states that require payment of sales tax. Once the sale is made, isn't the information necessarily public?

Similarly, what about public funding for hospitals or other health care providers? Can the state/federal government classify prices - and short of classification, isn't such information necessarily public, or open to public review?

If a vendor wants its prices kept secret, they had better make this part of the contract with the buyer, and if the buyer violates the contract, there should be a contractual penalty - otherwise, the information should be public and rightly so.

After all, one of the tenets of the free-market theorists is usually that information about the markets is available, otherwise, the market will generally not work well.
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Wizard Prang, 11 May 2006 @ 9:18am

Sounds like a car dealer
Why do we hate them?
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Michael, 11 May 2006 @ 12:37pm

What about states that require payment of sales tax. Once the sale is made, isn't the information necessarily public?

No. Those are not public record, just like your tax return is not public record.
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