The basics: Google and groups of authors and publishers announced in October 2008 a settlement ("GBS 1.0") of their copyright litigation involving the scanning of books and delivery of snippets.  The proposal encountered a wide range of concerns, including sharp challenges from the U.S. Copyright Office.  Severe criticism from the U.S. Department of Justice, particularly on antitrust grounds, sent the parties back to negotiations.  Despite numerous problems with the settlement, many libraries and researchers were frankly excited about the ability to access online tens of millions of books from around the world.  Many rightsholders had deep concerns, but others supported the new opportunities for publishing and revenue.  Critics and boosters were easy to find.  Still, the settlement needed repairs.

On November 13 the parties delivered to the court, right on schedule, the revised agreement.  The differences between GBS 1.0 and GBS 2.0 are outlined now in many places.  Some concerns were punted.  Agreement 2.0 unfortunately does nothing meaningful about privacy rights of readers.  Google will still know who you are and what you are reading.  Other changes were easily within reach.  For example in 1.0, any revenues from unclaimed books (orphan works) would eventually be distributed to the claimants of all other books.  The money now would largely go to charitable causes.  Some clunky mechanics in the agreement, but a welcome change.

Money aside, Google will still hold an effective monopoly over scanning and marketing of orphan books.  GBS 2.0 provides for appointment of an “Unclaimed Works Fiduciary” who will have some authority to supervise the licensing of orphans.  The UWF plan looks good on paper, but James Grimmelmann has scrutinized the language and discerned that the fiduciary’s powers are either illusory (my word) or merely a continuation of the exclusive control of orphans that was part of GBS 1.0 and led to many of the antitrust challenges.

The most obvious change in the settlement, however, is its scope.  GBS 1.0 encompassed books from throughout the world.  Libraries and researchers were eagerly anticipating access to ten, twenty, even thirty million books in all languages and from all countries as part of the “Institutional Subscription Database.”  It would surely be costly, but it would also be a treasure trove.  That anticipation quieted many concerns from libraries.  In fact, it no doubt motivated many libraries to become a Google partner and to ship their collections for scanning.

GBS 2.0 is a double whammy for libraries.  First, the ISD’s scope is slashed.  No longer “worldwide,” the settlement is now only about books registered with the U.S. Copyright Office (which will be dominantly U.S. books), and books originating from the United Kingdom, Canada, and Australia.  Gone are all other books from Europe, Asia, Africa, South America, and other regions.  Because the settlement is now tightly limited, so will be the ISD.  The big and (probably) expensive database is no longer so exciting.  Many of the books under GSB 2.0 are likely already available to many libraries.

The second whammy is legal.  Because the settlement does not cover all books, liabilities surrounding some large portion of the books already shipped by libraries and scanned by Google are not released.  Copyright owners from France, Argentina, New Zealand, and China retain the right to commence yet another lawsuit against Google, conceivably drawing libraries into the melee.  Why the libraries?  Rightsholders could claim that libraries are “contributory infringers” by making the books available.  Moreover, many libraries and Hathi Trust, continue to hold book scans received from Google that are now outside the settlement.

Is such a lawsuit against Google or libraries likely?  The likelihood is probably minuscule or none.  Nevertheless, the narrower settlement leaves concerns on the table and leaves libraries to evaluate their activities and to make a legal decision.  Time to check in with counsel.  More thoughts to be posted soon.

Kenneth Crews
November 17, 2009

What to expect on November 9?    If you need a good refresher about the issues, pro and con, take a look at these newly posted essays:

Paul N. Courant, University Librarian at the U of Michigan writes in support of the settlement.

Pamela Samuelson, Professor of Law and Information at the U of California, Berkeley, outlines many of the problems with the settlement.

What will I be watching for on November 9?  These issues:

Privacy:  Because the settlement provides almost exclusively for online access of books, the Google database will be able to track individual reader habits.  This has been a leading concern expressed by libraries and consumer groups.  My expectations are low.  So far, Google and the publishers have been punting, telling us that privacy is a policy issue for someone else (e.g., Congress) to solve.

Orphan Works:  This issue demands reconsideration, but no way that the parties will agree to not scan and deliver orphan works.  One of my concerns has been the distribution of revenues from orphan works to all other claimants (such as to me, a claimant of a variety of materials).  I don’t deserve that money.  I have called the plan “grotesque.”  I expect to see that money redirected under the new agreement, but I can’t guess where.  We should also be worried if the funds are “reinvested” in the GBS system.  Unclaimed monies have a tendency to be consumed by administration or paid to lawyers to sue people.

Foreign Works:  The parties will likely give them some slack, maybe easing their way to opt out (or even be allowed to opt in).  Foreign rights holders have additional reasons to be concerned about the settlement, and I think those concerns have the attention of the DOJ.  The downside?  If many foreign books are not made a part of the settlement and are not in the database, libraries and other purchasers of the database will be much less enthusiastic.

Deadlines:  The “opt out” deadline of September 4 is past, and January 5, 2010 was deadline for rightsholders to claim the initial payment from the settlement.  The parties have agreed to extend that deadline to June 5.  In fairness, the opt out deadline should also be extended to give rightsholders a chance to decide their role under the new terms.

Hearing:  The parties and the judge seemed eager to have a “fairness” hearing for possible approval of the new settlement in late December or early January.  That date seems unrealistically soon.  The court could do that date, but it does not seem to give a fair chance for the public to read, learn, explore, and file comments about the new terms.  When lawyers schedule important events during holidays, you can usually expect that they are hoping the complainers will be out of town.  Everyone should demand more time.

Now we wait for November 9.  I will post my thoughts as soon as I can figure them out.

Thank you,

Kenneth Crews

When we were greeted personally on the 6th floor by Judge Chin himself, we knew security sent us the wrong direction.  The judge cheerfully directed us to the 11th floor, but behind the door were several serious lawyers preparing for an important day.  We were crashing the confidential meeting, and happy to step away gracefully.

The 11th floor was also calm.  Slowly others gathered in the hall.  I chatted with a few familiar colleagues and a reporter from Japan.  At 9:45 the doors to the courtroom opened.  We had waited a long time, darn it, so we grabbed the front row.  Within minutes every seat was taken.

“All rise!”  It was about 10:10, and court was in session.  If you have to struggle with the law, federal court is the place.  Shiny new building.  Splendid dark paneling.  Judge Chin opened by stating the purpose of the conference was to “see where we are” and to “talk about” the direction of the case.  He looked to the lawyers for all parties, and they confirmed his statement that the currently proposed settlement is “off the table.”

The first attorney to speak was Michael Boni, representing the “subclass” of authors, but he spoke for all parties.  They have “worked assiduously” with each other and with the Department of Justice.  They have “gone a long way toward identifying and negotiating” a revised settlement agreement.  Then real news: The parties are “targeting early November” to present an amended settlement.  The parties would also propose a program for a “supplemental notice” to authors, publishers, and other rightholders in the class action.  However, he anticipated that the time period for the notice would not be as long as the time allowed for the original notice (about four months).  Why?  Because the new notice would emphasize the “benefits to the class.”

What does that mean?  It signals that the revised settlement agreement will generally be more favorable to rightsholders than is the current proposal.  Hence, if the class already has been notified, and if the new terms are better for the class, then perhaps another full-blown notice is unnecessary.

Mr. Boni continued: He painted what he called a “best-case scenario.”  If the parties submit a revised agreement in early November, he anticipates a fairness hearing in late December or early January.  He admitted that the schedule is “ambitious.”

More real news from Mr. Boni: The current proposal pegs January 5, 2010 as the deadline for rightsholders to make their claims for the lump sum payments covering past scanning and use of books.  The parties will be proposing an extension of that deadline to June 5, 2010.

The U.S. Attorney’s office spoke briefly, but deferred to the U.S. Justice Department.  The DOJ attorney confirmed “ongoing discussions” with the parties, but he has “not seen the proposed amendment” to the settlement.  The government asked the court to allow the DOJ one week, after the close of time for public comments, to review all comments and submit its conclusions.

Judge Chin then reflected:  He likes the suggested schedule and the plan for an abbreviated supplemental notice.  He said that he already has a “large body” of comments from interested persons, and that postponing the case for “many months” would not be acceptable.  In a light moment was the judge lamented that too many comments arrived in paper form, and his staff has been burdened for days scanning the materials for uploading.  “In this case of all cases!” he noted with irony, drawing a good laugh from the crowd.

He prodded the parties: Where are we if the settlement talks fail?  The lawyer for Google politely dismissed the notion, calling any talk of failure “premature.”

Judge Chin then made his decision for the day: He set the deadline of Monday, November 9, for the parties to submit to the court the revised settlement agreement, with a motion for preliminary approval of it, along with the plan for a supplemental notice.

The court adjourned at 10:25.  The sun was shining outside, and the conversations were again calm.  But lawyers headed into meeting rooms to plan the next steps.  I took my student to lunch.  On the subway back to the university, a man was reading a Chinese-language newspaper—with a picture of Judge Chin on the front page.

The calm will become frenzied review and analysis on November 9.

The filing is remarkable for its lucid dissection of select issues.  It is diplomatic, and it holds out repeated hope for the continued talks among the parties to the case.  But clearly the DOJ does not like what it sees.  In my reading of the filing, I found my attention drawn to several excerpts that I find especially compelling.  Here are a few clips from the document, with my accompanying reflections.

“As a threshold matter, the central difficulty that the Proposed Settlement seeks to overcome – the inaccessibility of many works due to the lack of clarity about copyright ownership and copyright status – is a matter of public, not merely private, concern.  A global disposition of the rights to millions of copyrighted works is typically the kind of policy change implemented through legislation, not through a private judicial settlement.  If such a significant (and potentially beneficial) policy change is to be made through the mechanism of a class action settlement (as opposed to legislation), the United

States respectfully submits that this Court should undertake a particularly searching analysis to ensure that the requirements of Federal Rule of Civil Procedure 23 (“Rule 23”) are met and that the settlement is consistent with copyright law and antitrust law.  As presently drafted, the Proposed Settlement does not meet the legal standards this Court must apply.”

This statement is powerful and diplomatically loaded.  It states directly that the proposed settlement has not passed the “searching analysis” that ought to be applied.  (“Rule 23” is from the Code of Civil Procedure, and it imposes the requirement of fairness in a settlement of a class action lawsuit.)  The statement is also a strong hint to the court that it could reject the settlement outright on the policy grounds that Congress should have the lead.  In turn, the statement is a signal to Congress that it should not retreat from its role in addressing some of the issues involved in this case.

“Moreover, the most sweeping forward-looking licensing provisions of the current Proposed Settlement (which give open-ended control to the Registry and Google for the exploitation of the rights of absent class members unless those class members opt out of those provisions) both exacerbate potential conflicts between the interests of the class representatives and those of absent class members – especially rightsholders of out-of-print works and foreign rightsholders – and are difficult to square with the requirements of Rule 23.”

Translation: The proposed settlement is more than a resolution of legal claims; it is the creation of business plan that authorizes the parties to move forward with rights cleared by the court.  Because of the relatively sweeping nature of rights that Google and the Registry would have, the gulf between the interests of Google and the absent rightsholders is too wide to deem “fair” and thus is inappropriate for the court to approve.

“And, because the owners of orphan works are an incredibly diverse group that includes not only living authors or active publishers, but heirs, assignees, creditors, and others who acquire the property interest by contract or operation of law, these rightsholders are difficult or impossible to locate, and thus difficult to notify.  Moreover, no amount of notice is likely to protect those orphan rightsholders who are unaware of their rights or unclear how or whether they want to exploit them.  Yet, if an out-of-print copyright owner does not come forward within five years, profits from the commercial use of the out-of-print work are distributed to pay the expenses of the Registry and then to the Registry’s registered rightsholders. . . .  Thus, the Registry and its registered rightsholders will benefit at the expense of every rightsholder who fails to come forward to claim profits from Google’s commercial use of his or her work.”

This is, to me, one of the most troublesome details in the agreement.  The claimants who show up to claim anything actually share in the unclaimed proceeds.  I am a claimant.  I stand to make money from other people’s copyrights.  It is grotesque, not to mention unfair.  Later in the statement, the government turns to the issue of pricing of orphan works, noting that the Registry will have much to say about the prices, and the Registry will be dominated by the large publishers.  As a result, the Registry would be setting prices for its own competition.  I would add that the Registry would also be setting a price to maximize revenues that will flow principally to those larger publishers.  In an uncomfortable twist, that problematic distribution of funds was the final clincher, nudging me ultimately to make my claims and not opt out.  I felt a duty to show up and absorb some of the money that would otherwise go to the larger players.  If this provision is dropped from a renegotiated settlement, I wonder if I will regret my decision.  I have to wait and see the details.  Later in the document, the DOJ offers an alternative for distribution of the funds:

“Instead, unclaimed profits could be devoted entirely to the search for rightsholders of orphan works, and the Registry could be authorized to petition the court for an alternative distribution based on a showing that search efforts had been fully exhausted.  Another possibility would be to appoint persons to the Registry to serve as guardian representatives of orphan works owners.”

Amen!  Another proposal I have heard: Dedicate all of the unclaimed funds to research and projects undertaken by nonprofit groups.  A portion of the money is already so earmarked in the agreement.  Just put all of it there.  However, these monies are distributed only after they are used for the expenses and functions of the Registry.  Does anyone else have concerns that the Registry will grow just enough to absorb that money?  Another proposal is simply to “free the orphans” and to make them equally available to everyone.  After all, why should anyone be collecting money in the first place from works they do not own? 

“A settlement that simply authorized Google to engage in scanning and snippet displays in the future would limit the profits that others could potentially derive from out-of-print works whose owners fail to learn of their right to claim those profits.”

Yes!  The DOJ document repeatedly mentions that the parties are already negotiating revisions, and the DOJ is encouraging the additional work.  The DOJ is also dropping hints about possible solutions.  That is great news.  First, it might actually be successful.  We could get a better agreement and the valuable services of the Google Books database.  Second, a simpler settlement along the lines of the above-quoted statement may be the best alternative for the future of the deal.  I will gather my thoughts in another posting.

“For these reasons, the United States cannot now state with certainty whether the Proposed Settlement violates the antitrust laws in any respect. . . .  As will be shown, absent modification by the parties, there is a significant possibility that the Department will conclude that those terms violate the federal antitrust laws.

The DOJ is not finished with its analysis.  The DOJ had deadline of September 18, imposed by the judge, so it needed to speak that day.  But the DOJ is also not finished because the issues are tremendously complicated, and the parties to the settlement are still negotiating further changes.  Nevertheless, I doubt that the DOJ would make a tentative conclusion with such a firm voice if it did not believe that additional analysis would lead to the same conclusion.  To make such a statement is to drive dozens or hundreds of talented and expensive professionals back to work.  To make such a statement is, in the extreme, a warning that the parties may be about to break the law—a law that has criminal possibilities.  This stuff is not to be taken lightly.

“This de facto exclusivity (at least as to orphan works) appears to create a dangerous probability that only Google would have the ability to market to libraries and other institutions a comprehensive digital-book subscription.  The seller of an incomplete database – i.e., one that does not include the millions of orphan works – cannot compete effectively with the seller of a comprehensive product.  Foreclosure of newcomers is precisely the kind of competitive effect the Sherman Act is designed to address.”

This is a tacit warning to libraries and educational institutions to beware of the arrangements in this settlement.  We are likely to see various proposals to continue some aspects of the settlement, including the institutional subscription database.  But on these terms?  The DOJ is offering institutions a clue that the terms of the settlement as currently proposed are not likely to be fair.  I am a library and university official.  I am excited about the possibility of the subscription database, but we have to press for first principles first.

My two last comments.  I hardly dare outsmart the DOJ on these issues, and I have not adequately extended my compliments to the government for such as smart and clear brief.  But I would urge discussion of two additional general issues that could have fit the flow of this brief:

1.       The Indefinite Duration of the Settlement.  Although the class of books subject to the proposal is large, it is also circumscribed.  Only books with a copyright interest as of January 5, 2009 are subject to the settlement.  But once they are in, they remain in the corpus and subject to the terms of the agreement until the last copyright in the pool expires.  How long is that?  Until the death of the last copyright owner, plus 70 more years.  This is an agreement for the ages.  It needs safety valves.  Rightsholders and readers alike need to know that they are protected if Google fails, or if copyright law changes fundamentally, or if new technologies render the arcana of the settlement effectively obsolete.  Where does the vast corpus of millions of books reside?  Who gets to rewrite the rules in the future?  Protecting the corpus is an important means for establishing the nonexclusivity that is critical to the antitrust concerns.

2.      The Rights of Future Owners.  Even if the agreement is deemed fair to current rightsholders, copyright ownership is a fluid and dynamic concept.  Is a decision today fair to the inevitable changing interests of new copyright owners?  A simple sale or transfer of a copyright may not raise serious problems, because the transferee is voluntarily taking the copyright subject to outstanding obligations.  However, many people become copyright owners through inheritance or through “termination of transfers” that were made decades before.  These legal processes are often intended to protect copyright owners and their families.  The settlement apparently undercuts these provisions.  The copyrights may indeed change hands in accord with the law, but the owners apparently would take them subject to the court-sanctioned obligations of the settlement.  Like the first of my two items, this issue is raising a need to protect copyright owners from in advertently becoming subject to an agreement that unwaveringly commits them for life, plus an extra seven decades.  An opportunity for such later owners to affirm or alter their participation in the settlement should be part of the agreement.

These are my initial thoughts.  They are mine only, and not my employer’s.  I reserve the right to change my mind.  We are all still learning.

Kenneth Crews

September 21, 2009

I keep weighing the arguments.  I am pulled one way and then the other.  September 4 is upon us.  I have a decision: I am in.  I will not opt out by September 4, and this week I am busily reviewing my past publication agreements and starting to file my claims.  What pushed me one final direction?  Answer: Money.  Not the simple 60 bucks of initial payout, nor the trickle of money that might come from future uses.  No, I am focusing on one especially annoying provision of the settlement agreement.  Section 6.3(a) of the agreement establishes the allocation of unclaimed funds.  The Registry is destined to receive payments for the use of Books for which no Rightsholder has come forward.  These are classic “orphan works.”  If those funds remain unclaimed for five years, they are then distributed.  First, they are used to defray expenses of the Registry.  Second, 70% of the remaining funds are distributed to the “Registered Rightsholders.”  The last 30% goes to nonprofit causes.  Some funds received from Books in the public domain are also distributed to the Rightsholders under Section 6.3(b).

I did not opt out.  I am now a Registered Rightsholder.  I am entitled to a sliver of that 70%.  Am I in it for the money?  Well, yes and no.  I’m OK with money, but receiving it is not my motivation in this case.  Instead, I am interested in spreading it.  If individual claimants (like me) do not stay in the settlement, all the money will go to the big players—the major publishers that have accumulated rights in multitudes of Books.  I would prefer that all the unclaimed funds went to other causes, but if the agreement is approved without change, I feel compelled to take a slice that would otherwise go to someone else at least as undeserving as I.  I like to share the wealth, or at least share the trickle.

This is my opinion, and not my employer’s.  It is also not my opinion about the rest of the settlement.  That is a continuing subject.  Thanks for reading.

The first opportunity for rightsholders is the ability to “opt out” of the settlement in full by September 4, 2009.  It is clean and fairly easy, but you need to act quickly.  Even after that deadline is gone, Section 3.5(a) establishes a second opportunity.  It allows a rightsholder at any time to “remove” a book from many Google services.  I am not necessarily advocating removal of books, but I do like choices.

However, “removal” under the settlement is severely limited.  If I want my book “removed,” I have that power only during a period of 27 months from and after January 5, 2009.  In less than two years from now, my choice is gone.  I can no longer take my book and go home.  In fact, I really can never go home again.  The power of “removal” is not a disengagement from Google.  My book may not be available for sale or in the research database, but it remains in Google’s back up storage, and it could be available for many ancillary services.  Thus, whether or not I remove my book, the settlement would lock me into a relationship with Google for many decades into the future—until the sun sets on copyrights or on Google Books Search.

Consider these realistic possibilities:

The Enlightened Author.  The full implications of the Google settlement and the meaning of its arcane language are a continuing experience of discovery and learning.  As we live with the settlement in the years ahead, we are all going to learn together what it really means.  An author may years from now find that the Google settlement is not for her.  She may want out.  She may have no choice.

The Revitalized Author.  Authors frequently assign copyrights to publishers, and the publisher may have been happy to join the Google settlement.  However, some publishing agreements allow authors to reclaim their rights in the future.  The author may become the new rightsholder and not share the publisher’s sanguine view of the settlement, but the deadline is past.  The publisher’s early decision locks out the author’s later choice.

The Supportive Family.  Copyrights last for many decades, but Congress carefully included in the law a safeguard to protect authors and their families.  If the author transfers the copyright in a book to a publisher “for the full term of protection,” the law effectively says “not quite.”  The author has the right to reclaim the copyright, usually 35 years after the date of the transfer.  If the author is deceased, the family can reclaim the rights.  Congress was deliberately and wisely acting to protect against giving away a copyright in full.  The contract with the publisher cannot waive that right.  What about the contract with Google?  Assume I am the author who transferred the copyright to a publisher.  The publisher happily included my book in the Google database.  Meanwhile, I pass on, and my family steps up as the new copyright owner, but they have a different view about Google.  Their power to remove is long lapsed.  They may be entitled to the stream of revenue associated with my book, but the publisher’s early decision commits them as a participant in Google Books for years to come.

The agreement does relieve some tension through the concept of “excluding” a book.  This is the last chance for rightsholders to show some independence.  Rightsholders would, at any time, have the right to “exclude” a book from being made available for some or all of the services of the Google Books project.  The author may notify Google to cease allowing consumer sales or to exclude the book from subscription services.  Nevertheless, the book remains in the database, and the rightsholders (the current and future owners) remain entrenched with Google.  Indeed, “excluding” certain services will never lead to deleting the book from the research database, where Google and other authorized users may continue to access it for various research and administrative uses.

What is the concern, you might ask?  I am a proponent of choice, and I generally like the fundamental equation of copyright law.  I like that authors can negotiate deals, and that authors and families may reclaim some copyrights.  The settlement undercuts that bargain to Google’s advantage.  Rightsholders may indeed receive revenue from many Google uses.  Choosing to exclude the book from some uses may voluntarily waive income possibilities, but the book remains in the database for many other possible Google services, ranging from information retrieval to tracking trends in research and publication.  Keeping the book in the database also positions Google with a competitive advantage to offer that book anew once the copyright expires or when yet another rightsholder with a different perspective enters the picture.

The constrained options for authors and rightsholders defy the traditional contours of copyright.  Rightsholders may have rights to revenue, and they may “exclude” some uses of the books, but the choice to shake free to the Google settlement is a rapidly waning option.  The Google settlement is in some ways a trump card, outplaying traditions of contract and of rights carefully established by Congress.

The panel included Google and publisher execs, two successful authors, the attorney representing leading library associations, and the director of NYPL.  Rarely did the discussion become impassioned or even enthusiastic.  I did my best to stir the larger issues, but the panelists would not share my sense of the importance of the settlement.

I have a litany of detailed questions and concerns about the proposed settlement, but for right now, let me press one pesky point: I have seen or been part of a few panels with “insiders” to the settlement.  Their approach seems to be strangely nonchalant.  The discussion at NYPL was often about minor issues, and any attempt to characterize the settlement as a big deal for readers, publishers, and authors was simply shot down. 

Sorry, but whether you like the settlement or not, its terms will become a powerful force in shaping the future of publishing, reading, and writing.  When I had my turn at the microphone, I was the one who wondered if we wanted to enter the “big brave new world of the Jetsons” on these terms.  We need a loud and provocative conversation, and not merely a gentle explanation.