The IP Law Blog Focusing on legal trends in data security, cloud computing, data privacy, and anything E

Google Books Settlement Rejected By Court

Posted in Copyright Law

By Zachary Wadlé

When Google was initially formed in 1998, it announced ambitious plans to digitally scan all of the world’s existing books and make them accessible to users of Google’s internet search engine.  By 2004, Google announced that it had partnered with several large research libraries around the world to scan their collections.  Google’s plan was predictably attacked in a lawsuit by the Authors Guild and other publishers in 2005 who said that Google was infringing their copyrights.  The Author’s Guild’s case was then certified as a class-action lawsuit, meaning that the millions of authors who have published a book worldwide would be part of the class represented and would be bound by the result of the case.  Given the class-action certification, any settlement reached by the litigating parties had to be thoroughly vetted and approved in court.  The case has been pending for several years before Second Circuit Court Judge Denny Chin under Authors Guild v. Google Inc., 05-CV-08136, U.S. District Court, Southern District of New York (Manhattan).  

An initial settlement was reached by some parties in 2008, but objections were raised by other various interested parties, and the settlement agreement was reworked. A final proposed settlement was ultimately reached, and presented to Judge Chin for approval last year. The settlement, among other things, blessed Google’s scanning efforts and also potentially allowed for ads to be shown on the book pages presented online. Google further agreed to pay $125 million to establish a registry to allow authors and publishers to register their works and get paid when their titles are viewed online. The proposed agreement also allowed copyright owners to “opt-out” from the arrangement, thereby prohibiting Google from scanning their works. Otherwise, the agreement presumptively covered all copyrighted works. In sum, the settlement largely gave Google’s book project immunity from copyright laws, allowing the company to distribute millions of books on the internet in exchange for sharing revenue with authors.

The proposed settlement, however, was not without its detractors. Amazon.com, Microsoft, and Yahoo! said the agreement would give Google unfair control over digitized works and improperly expand its power in the search engine market. The United States Department of Justice argued that the settlement would allow Google to unfairly take advantage of millions of "orphaned" works whose copyright owners haven’t been identified, or in cases where the copyright ownership is debated. Privacy concerns were also raised by objectors who said it would give Google information about what people read and how they read it, and the data could be used by Google to improve search results and sell advertising.

Ultimately, Judge Chin agreed with the detractors primarily because the agreement ran afoul of traditional copyright protections. The expansive nature of the settlement, calling for copyright owners to opt out or be automatically included, “would simply go too far,” said Judge Chin in a decision issued this past March. He suggested the settlement would have a better chance at approval were it revised to cover only those who opt into the agreement, instead of catching all copyright owners except those who affirmatively opted out.   As written now, the settlement “would grant Google significant rights to exploit entire books, without permission of copyright owners,” Chin wrote. It “would give Google a significant advantage over competitors, rewarding it for engaging in wholesale copying of copyrighted works without permission, while releasing claims well beyond those presented in the case.”

For Google it is back to the drawing board for now. “Like many others, we believe this agreement has the potential to open up access to millions of books that are currently hard to find in the U.S. today,” Hilary Ware, Google’s managing counsel, stated. “Regardless of the outcome, we’ll continue to work to make more of the world’s books discoverable online through Google Books and Google eBooks.” The settlement rejected by Judge Chin was reached with the groups including the Author’s Guild, Pearson Plc Penguin and Education units, McGraw-Hill Cos., John Wiley & Sons Inc., CBS Corp., and MacMillan Publishers. The head of Macmillan Publishers said the publishers are willing to enter into a more narrow settlement using Chin’s ruling as guidance and “we hope the other parties will do so as well.”

Aside from copyright issues, Google’s potential settlement is part of a larger fight over the future of online digital books. Sales of electronic titles almost tripled last year to $441.3 million, according to estimates by the Association of American Publishers in New York. Should Google’s vision prevail, the public could conceivably access many works online at no cost to them, thereby cutting sharply into online book retailer profits and better positioning Google in the overall internet market. This more than anything is probably driving the settlement objections by entities such as Amazon.com, Microsoft, and Yahoo! who could have much to lose if Google can offer free online public access to books and thereby enhance its already dominant position in internet traffic, searching, and marketing.