[Infowarrior] - Legal Take on the Google Booksearch Settlement

[Richard Forno]

Legally Speaking: The Dead Souls of the Google Booksearch Settlement
by Pamela Samuelson

http://radar.oreilly.com/2009/04/legally-speaking-the-dead-soul.html

Guest blogger Pamela Samuelson is the Richard M. Sherman Distinguished  
Professor of Law and Information at the University of California,  
Berkeley, as well as a Director of the Berkeley Center for Law &  
Technology and an advisor to the Samuelson High Technology Law &  
Public Policy Clinic at Boalt Hall. She has written and spoken  
extensively about the challenges that new information technologies  
pose for traditional legal regimes, especially for intellectual  
property law.

This piece will appear in the July 2009 issue of Communications of the  
ACM. Readers may also be interested in the slides from Pam's recent  
presentation, "Reflections on the Google Book Search Settlement."

Google has scanned the texts of more than seven million books from  
major university research libraries for its Book Search initiative and  
processed the digitized copies to index their contents. Google allows  
users to download the entirety of these books if they are in the  
public domain (about 1 million of them are), but at this point makes  
available only “snippets” of relevant texts when the books are still  
in copyright unless the copyright owner has agreed to allow more to be  
displayed.

In the fall of 2005, the Authors Guild, which then had about 8000  
members, and five publishers sued Google for copyright infringement.  
Google argued that its scanning, indexing, and snippet-providing was a  
fair and non-infringing use because it promoted wider public access to  
books and because Google would take out of the Book Search corpus any  
digitized books whose rights holders objected to their inclusion. Many  
copyright professionals expected the Authors Guild v. Google case to  
be the most important fair use case of the 21st century.

This column argues that the proposed settlement of this lawsuit is a  
privately negotiated compulsory license primarily designed to monetize  
millions of orphan works. It will benefit Google and certain authors  
and publishers, but it is questionable whether the authors of most  
books in the corpus (the “dead souls” to which the title refers) would  
agree that the settling authors and publishers will truly represent  
their interests when setting terms for access to the Book Search corpus.
Orphan Works

An estimated 70 per cent of the books in the Book Search repository  
are in-copyright, but out of print. Most of them are, for all  
practical purposes, “orphan works,” that is, works for which it is  
virtually impossible to locate the appropriate rights holders to ask  
for permission to digitize them.

A broad consensus exists about the desirability of making orphan works  
more widely available. Yet, without a safe harbor against possible  
infringement lawsuits, digitization projects pose significant  
copyright risks. Congress is considering legislation to lessen the  
risks of using orphan works, but it has yet to pass.

The proposed Book Search settlement agreement will solve the orphan  
works problem for books—at least for Google. Under this agreement,  
which must be approved by a federal court judge to become final,  
Google would get, among other things, a license to display up to 20  
per cent of the contents of in-copyright out-of-print books, to run  
ads alongside these displays, and to sell access to the full texts of  
these books to institutional subscribers and to individual purchasers.
The Book Rights Registry

Approval of this settlement would establish a new collecting society,  
the Book Rights Registry (BRR), initially funded by Google with $34.5  
million. The BRR will be responsible for allocating $45 million in  
settlement funds that Google is providing to compensate copyright  
owners for past uses of their books.

More important is Google’s commitment to pay the BRR 63 per cent of  
the revenues it makes from Book Search that are subject to sharing  
provisions. The revenue streams will come from ads appearing next to  
displays of in-copyright books in response to user queries and from  
individual purchases of and institutional subscriptions to some or all  
of the books in the corpus. Google and the BRR may also develop new  
business models over time that will be subject to similar sharing.

One of the main jobs of the BRR will be to distribute the settlement  
revenues. The money will go, less BRR’s costs, to authors and  
publishers who have registered their copyright claims with BRR.  
Although the settlement agreement extends only to books published  
prior to January 5, 2009, BRR is expected to attract authors and  
publishers of later-published books to participate in the revenue  
sharing arrangement that Google has negotiated with BRR.
Class Action Settlement

By now, readers may be a bit puzzled. How can Google be getting a  
license to make millions of in-copyright books available through Book  
Search just by settling a lawsuit brought by a small fraction of  
authors and publishers?

U.S. law allows the filing of “class action” lawsuits whose named  
plaintiffs claim they represent a class of persons who have suffered  
the same kind of harm from the defendant’s wrongful conduct as long as  
there are common issues of fact and law that make it desirable to  
adjudicate the claims in one lawsuit instead of many.

The Authors Guild and three of its members sued Google, claiming to  
represent a class of similarly situated authors whose books Google was  
scanning and whose copyrights Google was violating. By bringing a  
class action, the Authors Guild put considerable financial pressure on  
Google because the winner of a class action lawsuit is entitled to  
compensation that equals all of the monies owed to the class, which  
may be exponentially higher than awards to individual plaintiffs.

In the absence of the proposed settlement, Google would almost  
certainly have vigorously fought against certification of the class in  
the Authors Guild case. After all, the guild has only a few thousand  
members and most of them do not write the kinds of scholarly works  
that are typically found in major university research libraries. Many  
scholars would want their books to be scanned by the Book Search  
project so they would be more accessible to potential readers.

The publisher lawsuit did not start out as a class action, perhaps in  
part because McGraw-Hill, et al., recognized how difficult it would be  
for them to prove they adequately represented a class of all book  
publishers whose books Google had scanned.

However, the settlement agreement that Google has negotiated with the  
Authors Guild and the Association of American Publishers would, if  
approved, be settled as a class action on behalf of all book authors  
and publishers, with the Guild and AAP claiming to represent their  
entire respective classes. By acceding to the certification of these  
classes through this settlement, Google will get a license from all  
authors and publishers of books covered by the agreement (which is to  
say nearly every in-copyright book ever published in the U.S.) so that  
it can commercialize them though Book Search.
Google's New Monopoly

The proposed settlement agreement would give Google a monopoly on the  
largest digital library of books in the world. It and BRR, which will  
also be a monopoly, will have considerable freedom to set prices and  
terms and conditions for Book Search’s commercial services. BRR is  
unlikely to complain that the price is too high, the digital rights  
management technology is too restrictive, or the terms are too onerous.

Google will also be the only service lawfully able to sell orphan  
books and monetize them through subscriptions. BRR will get 63 per  
cent of these revenues which it will pay out to authors and publishers  
registered with it, even as to books in which they hold no rights.  
(Some unclaimed orphan book funds may go to charities that promote  
literacy.) No author whose books are in the corpus can get paid by the  
BRR unless he/she has registered with it.

Virtually the only way that Amazon.com, Microsoft, Yahoo!, or the Open  
Content Alliance could get a comparably broad license as the  
settlement would give Google would be by starting its own project to  
scan books. The scanner might then be sued for copyright infringement,  
as Google was. It would be very costly and very risky to litigate a  
fair use claim to final judgment given how high copyright damages can  
be (up to $150,000 per infringed work). Chances are also slim that the  
plaintiffs in such a lawsuit would be willing or able to settle on  
equivalent or even similar terms.
Dead Souls

The Book Search settlement brings to mind Nikolai Gogol’s story, Dead  
Souls. Chichikov, its main character, travels around the Russian  
countryside to buy “dead souls” so that he can become a wealthy and  
influential man. In the early 19th century, you see, Russian  
landowners had to pay annual taxes on the number of serfs (counted as  
“souls”) they owned as of the last census.

Chichikov offered to buy “dead souls” (i.e., serfs who had died since  
the last census) from the landowners. His plan was to acquire enough  
of these souls so that he could take out a large loan secured by his  
portfolio, and thereby to become a wealthy man.

In Gogol’s story, Chichikov’s scheme falls apart. Rumors fly that the  
souls he owns are all dead and he flees the town in disgrace.

However, Google’s “dead souls” scheme may pay off handsomely, as the  
settlement would, in effect, give Google the exclusive right to  
commercially exploit millions of orphan books.
Representativeness?

As galling as it is to realize that the BRR and its registered authors  
and publishers will derive income from millions of books they didn’t  
write or publish, it is even more galling that copyright maximalists  
will almost certain dominate the BRR governing board.

(The Authors Guild president, for example, recently complained about  
the “read aloud” feature of Kindle, denoting it a “swindle,” and a  
copyright infringement. The AAP is supporting legislation to forbid  
the National Institutes of Health from promoting “open access”  
policies for articles written under NIH grants. And of course, the  
Authors Guild and AAP characterized Google as a thief for scanning  
books from research libraries.)

If asked, the authors of orphan books in major research libraries  
might well prefer for their books to be available under Creative  
Commons licenses or put in the public domain so that fellow  
researchers could have greater access to them. The BRR will have an  
institutional bias against encouraging this or considering what terms  
of access most authors of books in the corpus would want.

In reviewing the settlement, the judge who is supposed to consider  
whether the settlement is “fair” to the classes on whose behalf the  
lawsuits were brought. He may assume the settlement is fair because  
money will flow to authors and publishers. But importantly absent from  
the courtroom will be the orphan book authors who might have qualms  
about the Authors Guild and AAP as their representatives.
Conclusion

In the short run, the Google Book Search settlement will  
unquestionably bring about greater access to books collected by major  
research libraries over the years. But it is very worrisome that this  
agreement, which was negotiated in secret by Google and a few lawyers  
working for the Authors Guild and AAP (who will, by the way, get up to  
$45.5 million in fees for their work on the settlement—more than all  
of the authors combined!), will create two complementary monopolies  
with exclusive rights over a research corpus of this magnitude.  
Monopolies are prone to engage in many abuses.

The Book Search agreement is not really a settlement of a dispute over  
whether scanning books to index them is fair use. It is a major  
restructuring of the book industry’s future without meaningful  
government oversight. The market for digitized orphan books could be  
competitive, but will not be if this settlement is approved as is.