[co-author: Chelsea S. Chun]

Facing potential insolvency by 2026, the State Bar of California is exploring various cost-saving measures, including remote administration and the use of small vendor-owned test centers for its exams. As part of this process, the Bar issued a Request for Information back in January 2024 to find a vendor capable of developing multiple-choice questions equivalent to the current Multistate Bar Examination (MBE)—with Kaplan North America, LLC (Kaplan) being proposed as a potential new vendor for next year’s February 2025 exam. However, the Bar’s Board of Trustees subsequently pulled the proposal from discussion at a May 16, 2024, meeting following a warning letter from the National Conference of Bar Examiners (NCBE) to Kaplan, in which the NCBE set forth its position that the MBE materials licensed to Kaplan, which include hundreds of actual, retired MBE questions, should not be used to create new multiple-choice questions for any jurisdiction.

Key points from the NCBE’s letter include:

• Kaplan’s license agreement allows the reproduction and use of NCBE materials solely for Kaplan’s bar preparation programs.
• None of the NCBE’s copyrighted materials should be used, in whole or part, to create multiple-choice questions for any jurisdiction. Any such use would be considered by the NCBE to be a violation of the license agreement and NCBE’s intellectual property rights.

Given the points raised by the NCBE, Kaplan finds itself in a position where it must delicately balance the needs of two parties: the Bar on one hand, which does not want to substantially modify the MBE format in order to maintain exam consistency, and the NCBE on the other, which has asserted IP rights in the current (and past) MBE questions. This balancing act involves weighing several common options that parties often consider when addressing potential copyright issues.

First, Kaplan could obtain permission from NCBE and expand the scope of its current license to address any perceived infringement. This would be the most direct way to address the issue, but could also potentially be the most costly in terms of licensing and attorney fees—thus, making the deal’s viability uncertain as the Bar is seeking a cost-saving solution from its potential new vendors.

Second, Kaplan could create original content by developing its own MBE questions. NCBE’s copyrights cover the specific phrasing, structure and format of its MBE questions. However, the legal principles, case law and statutes at the heart of the MBE questions are public domain materials and not copyrightable. However, this approach has its own challenges both in terms of effort, cost and the historical relationship between Kaplan and the NCBE. In particular, since 2009, Kaplan has licensed copyrighted MBE test preparation materials from NCBE, including hundreds of actual, retired MBE questions. As such, if Kaplan were to start developing new MBE questions from scratch, there is a likelihood that such questions would be significantly different in format and content from prior test years. However, such changes could run afoul of California Business and Professions Code § 6046.6, which requires a two-year notice period after a change that results in a substantial modification of the training or preparation required to pass the exam:

“The examining committee shall not alter the bar examination in a manner that requires the substantial modification of the training or preparation required for passage of the examination, except after giving two years’ notice of that change. This requirement does not apply to a change in the bar examination that is applicable only at the option of the applicant.” (emphasis added)

Based on the language of § 6046.6, the State Bar’s original plan to replace the vendor for the February 2025 exam could conflict with the timeline requirements, as substantial modification would require at least two years notice, if a new vendor cannot offer questions that are similar to prior years in form and content. This suggests that implementing a new vendor may need to be delayed in order to comply with the statutory notice period.

Despite these concerns, Bar’s Board of Trustees has authorized negotiations for a five-year contract with Kaplan worth up to $8.25 million at its recent meeting on July 18, 2024. Bridget Gramme, special counsel at the Bar, stated that there have been negotiations with Kaplan and that the Bar “believe[s] that the copyright concerns have been addressed.” The NCBE has yet to make an announcement regarding the terms of the proposed agreement or that the concerns regarding Kaplan-developed exam questions have been resolved.

While California’s shift to conducting its bar exam either fully remote or hybrid is expected to result in substantial cost savings and modernize the administration of the bar exam, hurdles still remain in the State Bar’s path to avoid future insolvency. And the uncertainty regarding whether a new vendor will step in with new questions looms over law schools, anxious law students, and MBE prep course companies.

[View source.]