Thursday, September 17, 2009

U.S. Copyright Office Speaks On Google Book Settlement

In what is likely the most significant factor since the Google Book Settlement was reached in October, 2008, Marybeth Peters, the Register of Copyrights of the U.S. Copyright Office, became the first government official with relevant knowledge, credibility and departmental interest to express serious concern about key aspects of the Settlement. Ms. Peters spoke on September 9, 2009 before the House of Representative's "Hearing on Competition and Commerce in Digital Books: The Proposed Google Book Settlement".

This is significant in so many ways. Most importantly, the U.S. Department Of Justice will submit its opinion on the possible anti-trust/monopoly implications of the Settlement on September 18th to Judge Chin, whose approval is required to finalize the Settlement. This DOJ statement will likely embody or reflect the position of other government agencies, including the informed opinion of the U.S. Copyright Office.

Additionally, published news reports indicate that Google has made some concessions and communicated directly with the Department of Justice in an effort to influence a positive decision for the Settlement, which will be reviewed by Judge Chin in a public hearing on October 7th, 2009.

Ms. Peters observations could be summarized by her statement: "We are greatly concerned by the parties’ end run around legislative process and prerogatives, and we submit that this Committee should be equally concerned."

In her prepared statement, Ms. Peters advised the committee, "… the so-called settlement would create mechanisms by which Google could continue to scan with impunity, well into the future, and to our great surprise, create yet additional commercial products without the prior consent of rights holders. For example, the settlement allows Google to reproduce, display and distribute the books of copyright owners without prior consent, provided Google and the plaintiffs deem the works to be "out-of-print" through a definition negotiated by them for purposes of the settlement documents. Although Google is a commercial entity, acting for a primary purpose of commercial gain, the settlement absolves Google of the need to search for the rights holders or obtain their prior consent and provides a complete release from liability. In contrast to the scanning and snippets originally at issue, none of these new acts could be reasonably alleged to be fair use."

Ms. Peters conveyed three primary concerns, summarized here with citations from her statement before the Congressional committee on the Judiciary:

1. Judicial Compulsory License - Allowing Google to continue to scan millions of books into the future, on a rolling schedule with no deadline, is tantamount to creating a private compulsory license through the judiciary (Courts) instead of via legislature (Congress). Ms. Peters said:

"As defined, the class would allow Google to continue to scan entire libraries, for commercial gain, into the indefinite future. The settlement would bind authors, publishers, their heirs and successors to these rules, even though Google has not yet scanned, and may never scan, their works."

"As a practical matter, this means that the settlement would create for Google a private structure that is very similar to a compulsory license, allowing it to continuously scan copyrighted books and 'inserts'."

"Compulsory licenses in the context of copyright law have traditionally been the domain of Congress. They are scrutinized very strictly because by their nature they impinge upon the exclusive rights of copyright holders."

"As a matter of copyright policy, courts should be reluctant to create or endorse settlements that come so close to encroaching on the legislative function. Congress generally adopts compulsory licenses only reluctantly in the face of a failure of the marketplace, after open and public deliberations that involve all affected stakeholders, and after ensuring that they are appropriately tailored. Here, no factors have been demonstrated that would justify creating a system akin to a compulsory license for Google – and only Google – to digitize books for an indefinite period of time."

2. The Sale of Copyrighted Books without Consent of Rights Holders - Certain provisions of the proposed settlement dramatically compromise the legal rights of authors, publishers and other persons who own out-of-print books. Ms. Peters said:

"The Copyright Office strongly objects to the treatment of out-of-print works under the proposed settlement. The question of whether a work is in-print (generally, in circulation commercially) or out-of-print (generally, no longer commercially available) is completely inconsequential as to whether the work is entitled to copyright protection under the law."

"... the out-of-print default rules would allow Google to operate under reverse principles of copyright law, and enjoy immunity from lawsuits, statutory damages, and actual damages."

"We do not believe that even Google has asserted that, in the absence of this class action settlement, it would be fair use to undertake the new activities that Google would enjoy risk-free as a result of the settlement. In essence, the proposed settlement would give Google a license to infringe first and ask questions later, under the imprimatur of the court."

"A class action settlement that permits new activities for years to come, and removes the judicial remedies of millions of authors and publishers that are otherwise afforded by the Copyright Act, seems to us to be an excessive exercise of judicial power."

"Apart from its interest in ensuring the proper application of law and policy, Congress should be particularly concerned about the settlement since it would interfere with the longstanding efforts of Congress and many other parties to address the issue of orphan works. The broad scope of the out-of-print provisions and the large class of copyright owners they would affect will dramatically impinge on the exclusive rights of authors, publishers, their heirs and successors. Such alteration should be undertaken by Congress if it is undertaken at all."

"Indeed, this Committee has already invested significant time in evaluating the orphan works problem and weighing possible solutions. That process is not over. The Google Book Settlement would frustrate the Committee’s efforts and make it exceedingly difficult for Congress to move forward. A much more productive path would be for Google to engage with this Committee and with other stakeholders to discuss whether and to what degree a diligent search for the rights holder should be a precondition of a user receiving the benefits of orphan works legislation, or whether a solution that is more like a compulsory license may make sense for those engaged in mass scanning."

"Until there is a legislative solution, it is our strong view that Google should conduct itself according to the same options available to other users of copyrighted works: secure permission; forego the use; use the work subject to risk of liability; or use the work in accordance with fair use or another limitation or exception."

3. International Concerns - The settlement, in its present form, presents a possibility that the United States will be subjected to diplomatic stress because foreign rights holders and foreign governments have raised concerns about the potential impact of the proposed settlement on their exclusive rights and national, digitization projects. Ms. Peters said:

"As a matter of policy, foreign rights holders should not be swept into a class action settlement unknowingly, and they should retain exclusive control of their U.S. markets."

"We know that some foreign governments have suggested that the settlement could implicate certain international obligations of the United States."

"Some foreign governments have raised questions about the compatibility of the proposed settlement with Article 5 of the Berne convention, which requires that copyright be made available to foreign authors on a no less favorable basis than to domestic authors, and that the ‘enjoyment and exercise of these rights shall not be subject to any formality’. For example, the Federal Republic of Germany has asserted that '[T]he proposed settlement is contrary to both the Berne Convention and WCT.'"

"For purposes of this hearing, we are not suggesting that international obligations of the United States are at issue or necessarily would be compromised. However, it is a cause for concern when foreign governments and other foreign stakeholders make these types of assertions."

"To summarize, it is our view that the proposed settlement inappropriately creates something similar to a compulsory license for works, unfairly alters the property interests of millions of rights holders of out-of-print works without any Congressional oversight, and has the capacity to create diplomatic stress for the United States."

There has been much press coverage in the U.S. and abroad in recent weeks relating the Google Book Settlement. Over 400 statements have been filed by interested parties with the Federal Court. The Congressional testimony of Ms. Peters and the anticipated statement of the Department Of Justice (to be announced tomorrow, as of this writing) are critical crossroads in a legal and political saga that began four years ago this week. Substantial opposition to the Settlement is solidifying. Judge Chin could very possibly ask the parties to the Settlement to renegotiate some key aspects. And, as noted in Opposition Growing Against Google Book Settlement, this ongoing process on The Google Book Settlement will also influence actions and results in Orphan Works legislation worldwide.

Click here for the complete statement by Marybeth Peters in the Hearing on Competition and Commerce in Digital Books: The Proposed Google Book Settlement

Randy Taylor

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