Boundless, the free textbook startup, settles lawsuit with publishers

By Erin Griffith , written on December 18, 2013

From The News Desk

Since before it even launched, textbook startup Boundless has been dealing with controversy. The company, backed by just under $10 million in venture funding, offers free versions of expensive textbooks to college students, compiled using open educational resources that are already available to the public. At the time, I called the idea "amazing, slightly insane, and totally doomed."

Textbook publishers did not think it was so amazing.

Last spring, Pearson Education, Cengage Learning, and Macmillan sued the company for copyright infringement, unfair competition, and false advertising. They argued that since Boundless allows students to download an "equivalent" of the book they created, it is in violation of their copyright. Boundless countered the charges, arguing that the content in the Boundless' free textbooks is not protected by copyright, since it is public domain material. Boundless further accused the textbook publishers of a copyright monopoly, saying their right to claim ownership of the OER material is barred by “their own unclean hands and inequitable conduct.”

A trial never had to take place, where Boundless would get to play the role of the revolutionary startup bringing knowledge to the masses, under attack from the money-grubbing Big Textbook.

The textbook companies and Boundless have settled up. Boundless issued the following statement:

The resolution allows the parties to move forward and focus on their mutually shared goal of helping students learn. Boundless now has a clear path for building and marketing its OER-driven textbook alternatives without treading upon the Plaintiffs’ rights, and it is confident that it is in compliance and will not have further legal issues with the Plaintiff publishers. In turn, Plaintiffs have reinforced the strong protection they have in and to their copyrighted works and the related goodwill that they and their authors have established, and look forward to Boundless operating its business within the agreed upon framework.
Cengage issued the following statement:
We are very pleased to reach a resolution regarding our case with Boundless.  We will continue to safeguard the rights of our authors and take action against the misappropriation of our content by any and all parties.
No terms were disclosed in the settlement.

A lawsuit early in the life of startup can be a death sentence, but Boundless has not waited around while the suit played out. The company has spent the last two years building out its product, reaching 3 million students and educators.

Boundless' premise is to bring knowledge to people for free, which is a fairly radical idea. It's hard to argue that information should be owned and contained by corporations. But the company also has to figure out a way to make money. That $10 million in venture backing wasn't charity funding. Part of that involves a transition toward selling digital textbooks over its platform.

Other companies have struggled with the same issue. A year ago, a Boundless predecessor called Flat World Knowledge had to give up on its own lofty goals of making textbook information free to the world. The company gave away high quality textbooks for free, and its 115 titles were adopted by 2000 colleges. But after five years, Flat World had to drop its radical free option because it was losing too much money. So the company began charging $19.99 for a “Study Pass." It was still cheaper than a new textbook, but the revolutionary promise of free information was dead.

In August, Boundless took a similar tact. The company announced a premium product which costs $19.99. Textbooks are still available for free, but students who subscribe get access to study tools called Boundless Learning Technology, as well as the ability to align Boundless content to their assigned textbook. There is also a $19.99 fee for access to "Boundless branded books" that the company has built itself. That fee also gives users access to books which educators adopt and customize through a newly launched teaching platform.

Boundless CEO Ariel Diaz would not elaborate on how many students and teachers have opted for the premium products, except to say it has "exceeded expectations and is resonating with students."

Three years in, Boundless has resolved the biggest roadblock it is likely to face. Now it just has to figure out how to take its noble goal of democratizing information and make it into a business. Diaz wrote in his blog post announcing the resolution today:

The transition to a digital educational content foundation has been slowed by a conservative industry, a search for new business models, and a lack of great products. Thankfully, we’re finally on the verge of solving this.
[Illustration by Hallie Bateman for PandoDaily]