Chegg shares dropped a total of 4.2% on Monday and Tuesday.
According to the suit filed in federal court in New Jersey, Chegg violated copyright law by selling answer sets to Pearson textbooks through its “Chegg Study” website. The site claims it has answers to questions in 9,000 textbooks. Pearson accused Chegg of earning most of its income from selling answers.
“By using and copying Pearson’s original creative content to make answer sets based on that content, Chegg infringes Pearson’s exclusive rights as a copyright holder, including the rights of reproduction, preparation of derivative works, and distribution,” Pearson said in the complaint. “If, when, and how Pearson provides answer sets to its textbook questions is a right owned by Pearson that Chegg usurped for itself.”
But Chegg said Tuesday that it had a longstanding relationship with Pearson that ended on May 31. It said less than 10% of its new subscriptions related to selling textbook answers and that only a fraction of those related to Pearson content.
“Chegg will fight Pearson’s allegations vigorously and we believe we are in full compliance with copyright law,” Chegg spokeswoman Devonya Batiste said in a statement.
Pearson is seeking an order stopping Chegg’s alleged copyright infringement and unspecified damages.
The case is Pearson Education Inc. v. Chegg Inc., 21 cv 16866, U.S. District Court, District of New Jersey (Newark).