Sunday, February 21, 2010

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. 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
The Copyright Registry at

(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.)

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