Legal Arguments At Google Book Settlement Fairness Hearing

Tete-a-tete and point-to-point, the battle continued in a New York courtroom February 18th for the heart and mind of U.S. District Judge Denny Chin, who is to decide the outcome of the $125 million Google Book Settlement.

Microsoft’s Tom Rubin scored early in the match by pointing out that 173 of 174 million books affected by the settlement will be controlled by Google until their owners come forward to claim them (the so called “orphaned” books). To which Judge Chin said “Good point”, the only time he commented positively about a legal point during the day-long hearings. The Book Rights Registry, which would be empowered by the settlement to relicense the scanned books, would not have the right to monetize the orphaned books. That would leave Google solely capable of making money from these orphaned works because Google could display advertisements (Google Adwords) along side snippets of book text.

Ms. Daralyn Durie, who spoke on behalf of Google near the end of the day, countered that 174 million is the approximate quantity of all the books in the world. 42 million of those books are in U.S. libraries. 10 million books are affected by the Google Book Settlement. And, 5 million of those are “out of print”. So, one is really discussing 5 million books, not every book in the world, Google argued.

(The Google Book Settlement is a complicated class action law suit that is complicated further by the legal arguments of each of the numerous parties with an interest in the outcome … translation: they’re fighting over who gets the control, money and benefits. How to understand the Google Book Settlement? This summary of the February 18th Fairness Hearing attempts to make sense of the major points, which were consolidated in the proceedings from years of legal briefs, court filings and public wrangling.)

Benefits Of The Settlement

In essence, Google supporters believe the greater good to society is served by making this wealth of book knowledge accessible to the many, and that this societal benefit outweighs other legal and business considerations. And, they argue that Google is doing nothing wrong anyway since displaying snippets of text is a “fair use” exception that does not violate copyright law, adding that other companies could scan all the books if they wanted to, but choose not to. So, supporters believe that Google should not be penalized for providing a service that everyone agrees would be beneficial, but that others don’t want to provide or can’t provide, mainly because of economic constraints (because it’s expensive to scan millions of books).

The Google Book Settlement broadens readership of over 10 million books beyond those who have proximity to a major library, which would benefit everyone, including the economically disadvantaged. For example, it lets blind people read more books. And, it would help to preserve the knowledge and heritage that might otherwise be lost eventually because those words are now stored on acid-based paper that deteriorates with time.

Wait just one second, the opposition decries. There is a long list of problems with this business model that must be considered, they argue.

Department of Justice Objections

The most powerful voice on the subject is the U.S. Department of Justice (DOJ), which formally represents the The United States of America on things like this. DOJ is focused primarily on anti-trust and anti-competition aspects. It argues the court’s approval of the settlement would legitimize forward-looking business commitments without the explicit authorization of each copyright holder. DOJ says you really can’t unilaterally assign FUTURE rights and revenues of unknowing rights holders as a way of settling PAST copyright infringements. As DOJ’s William Cavanaugh put it, one “cannot use procedural rules to modify rights”. If the court grants this future immunity from prosecution for copyright infringement, Google would be gaining an unfair advantage in the marketplace, allowing it to make money from “orphaned works” that other companies could not if they adhere to copyright laws. (Unrelated to the settlement, it’s noteworthy that copyright laws concerning orphaned works will likely be dramatically loosened when the Digital Ecommerce Bill becomes law in England in a few weeks and when the USA’s Orphan Works Act passes this year or next).

Foreign Treaty Conflict

Business and government representative came from the Federal Republic of Germany and other countries to express concerns that the settlement would harm U.S. relations with its trading partners, saying the settlement likely violates international treaties, such as WTO-TRIPS (Trade-Related Aspects of Intellectual Property Rights, which is part of the World Trade Organization). Because the United States required governmental registration of copyright prior to 1978, many foreign works are registered with the U.S. Copyright Office, which includes them by default in the settlement. Therefore, foreign books can be monetized and licensed without the knowledge or permission of their foreign author who, perhaps, has exclusive business contracts that are compromised by such unauthorized use.

Additionally, the German representatives argued, Google has different rights under the settlement depending on whether a book is “commercially available” or not. But the interpretation of what is commercial availability (i.e., a printed copy being publicly available for sale) only applies to the USA and Canada. So, a book might be actively sold in Europe, but not sold in the USA, which would allow Google (via the Book Rights Registry) to license the book in conflict with foreign sales efforts. Foreigners feel they’ve been left out of the settlement and abused by its conclusions.

Privacy Rights

While most of the legal arguments revolved around the merits of the class action law suit, some focused on what was missing from the settlement. Most notably, there are concerns about protecting one’s right to privacy. This was best conveyed by Marc Rotenberg of the Electronic Privacy Information Center who argued that it’s impossible to cure the privacy issues within the settlement because the obligation to protect privacy is “un-tethered” from state privacy laws and the obligations of libraries that have traditionally been tasked with safeguarding the confidentiality of access to information. In America, anyone can read a book without fear of persecution, whether by the government or others (i.e., the extreme example portrayed in the book/movie “1984”). Google would have a significant capability to abuse privacy without limitation and without the traditional requirements to protect privacy, detractors argue. Judge Chin seemed interested in this aspect and asked related questions of those speaking before the bar.

Exercising the imagination, it’s easy to see the concern. Google can track almost every search one makes, which creates a very personal snapshot of the interests and concerns of everyone who searches online. It can then merge that personal information with data acquired from 3rd parties, such as credit card or store records of what you buy, as well as when and where you buy it. Google can increasingly determine where you are, physically, when you access the Internet from a phone enabled with GPS (Global Positioning Satellite). Ultimately when this data is all merged, Google’s DoubleClick division, which they bought for $3.1 billion, is uniquely enabled to get the right (relevant) ad in front of the right (interested) people at the right time (when they are ready to buy). The dollar value of this centralized, commercial use of private information will be significant. (None of this was pointed out in the court hearings, however, and is a theoretical embodiment of the concern over privacy that was expressed).

Unclear Scope

The true scope (empowerments and limitations) of the Google Book Settlement are also being questioned. Mr. Rubin of Microsoft emphasized the question of scope, pointing out that the majority of the settlement language refers to “snippets” or portions of book text, not the original purpose of the law suit against Google, which was about the unauthorized scanning of entire books.

Concerns were raised by others present at the hearings about the undefined term “non-display use” in the settlement, which seems to authorize Google to do a broad range of undisclosed future business models that could be in conflict with the interests of rights holders. One example given was the phrase “Pay It Forward”, which is a trademarked phrase, the name of a not-for-profit association, the title of both a successful movie and a book, and also a commonly used metaphor. Would “non-display use”, for example, include using the phrase as a keyword that displays Adwords in a way that benefits one user over another, which could compromise trademarks? Or, looking further into the future, the court was asked rhetorically if “non-display use” would include the direct implanting or imaging of information to the brain without requiring the five senses to consume the data.

Though not necessarily a legal point of case law, the vagueness of some aspects of the Google Book Settlement and the undisclosed future uses that are possible disturb some who oppose the settlement.

Where’s The Money?

Some companies also weighed in with opinions. Sony supports the settlement, believing that a rights registry will reduce the quantity of orphaned works, and that the use of the Open Book Format for the content would extend use to more devices. (It was noted that Sony is in the business of selling devices, competing with 25 other e-reader manufacturers). AT&T expressed their concern that the settlement would confer an unjustified monopoly on Google. The Commonwealth of Pennsylvania wanted to control revenues from orphaned works that are set aside, making them “unclaimed property” according to state law.

Amazon.com was also present. David Nimmer said the court is being asked to usurp the fundamental right of copyright holders to “make and sell” copies of their creative works, pointing to a 2006 Supreme Court decision that confirmed that rights holders may opt to simply withhold the grant of usage rights, regardless of any other consideration. DOJ echoed this opinion when Mr. Cavanaugh said, “It is the right to control one’s work that serves as the incentive to create it.” (Amazon’s Kindle competes in the e-reader market).

Opt-In, Opt-Out, Snippets & Whole Books

Several parties suggested the most difficult parts of the settlement could get a quick fix if the logic of user participation by rights holders were simply changed from “opt-out” to “opt-in”. But, Ms. Durie of Google stressed that without the opt-out approach, “there is no other way to create a market for out-of-print works”. Google has scanned 2 million public domain works, she said, and made them available for free online, but, hundreds of thousands of those have never been searched for or viewed. The transaction cost to find rights holders is too prohibitive for low-demand books, Ms. Durie explained.

Mr. Michael Boni, who was speaking on behalf of the authors and publishers who brought the case against Google that lead to the settlement, agreed. He said if opt-out were reversed, “we wouldn’t have a settlement”. It seemed that by the time Mr. Boni came to the microphone, the authors and publishers were feeling more like defendants than plaintiffs. Mr. Boni, a Philadelphian, said he felt like Rocky Balboa. He went on to amply stress that, despite all the talk about snippets, their original attempt at injunctive relief five years ago was to get a court order to stop the unauthorized scanning of entire books by Google.

What Is Evil?

During the hearings, one evolution of thought equated class actions about discrimination to this settlement about copyright. It was suggested that discrimination is “evil”. Perhaps because it is the mission statement of Google to avoid doing evil, a conversation between the court and Google occurred on the subject. Judge Chin asked whether or not “the dissemination of copyrighted works is evil”. To which Ms. Durie responded, “Copyright infringement is evil to the extent that it is not compensated”.

Judge Chin’s forthcoming decision as to the acceptability of the Google Book Settlement will influence, if not decide, how rights holders of content that is scanned and monetized without authorization will be compensated in the digital age.

Randy Taylor
www.RandyTaylor.com
The Copyright Registry at C-Registry.us

(This is part two of a two-part series by Randy Taylor who attended the Google Book Settlement Fairness Hearing February 18, 2010. Part one is Fairness Of Google Book Settlement Has Its Day In Court.)

Fairness Of Google Book Settlement Has Its Day In Court

Two-dozen blind people squeezed in line with lawyers, professors and journalists outside Judge Chin’s courtroom on February 18th, eager to attend the final Fairness Hearing on the Google Book Settlement. One man still had the store’s size tag stuck to his collar. For the blind, accessing more books is such an important cause that this gentleman had bought a new white shirt to look his best at the hearings. Once the courtroom filled, the remainder gathered their jackets, brief cases, white canes and guide dogs and navigated down 12 floors to the overflow courtroom until that space also filled to capacity.

Nearly 400 people marched past the AP photographer and Bloomberg TV crew who documented arrivals outside New York’s Federal Courthouse. Cell phones, laptops and cameras were not allowed inside. It was an exceptionally large crowd, the bailiff said with a sigh. “It’s like a class reunion of copyright geeks,” one professor added, describing the scene as the rock stars of the Copyright Bar mingled with their former and future teachers, students and colleagues.

As if decided by coin toss, supporters of the settlement lead the verbal presentations, making their case … at times, too fast for the court recorder to keep up with each rapid-fire soliloquy that was compressed to fit strict time limits. The opposition followed next with their own salient points. The crowd listened intently to every word.

Judge Chin set the tone of the hearings, at times with a sense of humor, which was welcomed by all amidst the heartfelt debates on legalities, such as whether the “identical factual predicate doctrine” is more applicable to the case than the “fireman’s test”. When the Commonwealth of Pennsylvania argued that royalties for orphaned works should be treated as “unclaimed property” and controlled be each state, he pointed out that BMI and ASCAP both comply with state laws in this way. Judge Chin quickly quipped, “They probably comply with U.S. copyright laws too,” and laughter rolled through the courtroom.

Judge Chin was in control and kept the ball moving briskly forward, even accidentally skipping the statement by Amazon.com before backtracking to include it. Judge Chin at times chastised speakers for their self-aggrandizing statements or redundant oratory, insisting that people stay on subject and clearly state their case for or against the Google Book Settlement, which all agreed could radically change how book content will be monetized and consumed in digital form in the future.

If there were a main event, it would have to be the presentation by the Department of Justice, which represents the official opinion of the United States of America in such proceedings. Mr. Cavanaugh stated firmly that it is inappropriate to include forward-looking business models in settling class action damages for past infringements. Google’s attorney stated the opposite with equal gusto.

Judge Chin will make his ruling in the coming days after considering all points of view. He will include a supporting opinion that explains his ultimate decision, which could accept or reject the settlement, or send it back to the parties for revision.

(This is part one of a two-part series by Randy Taylor of The Copyright Registry at C-Registry.us, who attended the Google Book Settlement Fairness Hearing on February 18, 2010. Part two is Legal Arguments At Google Book Settlement Fairness Hearing.)

Supreme Court To Decide Copyright’s Fate For Online Monetization

The U.S. Supreme Court will soon make its most momentous decision affecting photographers, stock photo agencies and other creators. It will soon decide whether creative works must be registered with the U.S. Copyright Office before they can be included in a class action law suit concerning copyright infringement. What’s at stake is the future of revenue for most of the Internet uses of creative works.

The USA is one of the countries that require governmental registration to enforce one’s copyright in court. At issue is whether or not this formal registration of copyright should be required to participate in a class action law suit that is copyright related.

It’s a plausible argument. If registration is required for individuals to sue for copyright infringement in U.S. Federal Court, a larger “class” that includes many individuals could also require registration to collectively sue on behalf of those individuals.

On the surface, this might seem like a boring legal technicality. In practical terms, though, this Supreme Court decision could ultimately determine each creator’s ability to make money in the digital age.

Some estimates say there are 20 unauthorized copies for every licensed song online and 100 stolen versions for every authorized image. There are about 3 trillion images online and billions of new images uploaded every month. The problem of unauthorized use is increasing almost exponentially as each new web use exposes that copyrighted work to still more unauthorized copying. Surveys indicate that half to three-quarters of people think it should be OK to take the images of others for personal use on a web site. For rights holders, it’s practically impossible today to get paid for small Internet infringements. Despite all the mircostock shops, it could be argued that a failure of the marketplace has already occurred at the low-end of the market for images online.

The class action law suit is currently the best method for individual creators to get paid for vast quantities of tiny digital infringements. (Other solutions, like Veripixel™, are on the way). A class action can leverage the ability of each individual photographer to monetize their copyright. Without class actions, enforcing low-value, online infringements is virtually impossible because the cost of governmental registration and pursuing a Federal law suit far exceed the potential reward from each minor, individual infringement.

The importance of copyright is paramount in the digital age. Copyright piracy costs the U.S. economy 373,375 jobs and $58 billion in annual output, Senator Hatch tells us. We should have great respect for the framers of the U.S. Constitution who had such clairvoyant foresight in understanding the value of creativity. Copyright was so important to the founding fathers of America that they included it in the Constitution. (Later “after thoughts” added Freedom of Speech, the Right to Bear Arms, Trial by Jury, and the Abolition of Slavery).

So, will the highest court in the land agree with the legal premise that what applies to the one must also apply to the many? Or, will it side with the greater good to society that copyright provides creators and content consumers, which was more in the spirit of the Constitution? The answer is very close and could come as early as the week of February 22nd when the Supreme Court resumes from its current hiatus. In any event, it will be decided before the court adjourns this coming June.

While we wait for the court’s momentous decision, the great copyright debate is increasingly entering the awareness of main stream America. We are all observing the tug-of-war that is evolving between corporate giants and individual creators over who will control the revenues of creative works online. Against this “backdrop”, which is deciding the value of online image use, the importance of copyright education must be emphasized. It’s important that photographers, illustrators, song writers and other individual creators be well informed on the topic and proactively engage in the efforts that represent their collective best interest. One good opportunity to do both is ASMP’s one-day symposium entitled “Copyright and the New Economy: Issues & Trends Facing Visual Artists” on April 21st in New York.

Randy Taylor
Co-founder of The Copyright Registry at www.C-Registry.us

Digital Economy Bill Amendments

Sarah Saunders, who has been keeping an eye on the evolution of the Digital Economy Bill in Britain, points out that amendments have been proposed. These changes seem to bring the bill more in line with other Orphan Works legislation that is progressing in the EU and various countries. Sarah's post with links to the bill and its amendments:

Digital Economy Bill amendments to be discussed

I commented to Sarah's blog as follows:

The requirements mentioned exactly describe the services of the patent-pending ownership identification process of The Copyright Registry at C-Registry.us. It's time for pro-creator British and American counterparts (who support copyright and creators being paid for their work) to join together and actively promote a solution for Orphan Works legislation that is advancing world-wide.