“Not by the hair of my chinny chin chin!”
On March 22, Judge Denny Chin rejected the Google Book Settlement, finding that it was not “fair, adequate and reasonable”, thereby failing one of the tests of settlement of a class action in the US. Central to his decision was the fact that the settlement proposed a remuneration scheme that would require right holders to opt-out, or be included.
The decision is an important one in European terms. Google’s unauthorised digitisation of many millions of books that are still in copyright, if it could be legitimised, would give Google an overwhelming advantage in the online market for the material. It would disadvantage European competition seeking to operate within the confines of copyright law, expending time and resources to clear the rights to use the material. This is particularly relevant to the substantial reserve of “orphan” or “unclaimed” works – where the author is either unknown or cannot be located. The Google solution encompassed this material, bypassing the US legislature, which has been unable thus far to find a satisfactory solution to the problem. In Europe, partly because of the heat that Google has injected into the drive for access to this material, the race has been on to find an appropriate solution, with a Proposal for a Directive expected imminently. The rejection of the settlement validates this approach, at the same time delivering a healthy message about enforcement.
Here are the facts:
The proposed settlement
Under the proposed settlement, authors’ and publishers’ representatives agreed to release claims arising from the mass digitisation and publication of extracts from many millions of books by Google, without the permission of the right holders. Google could continue to digitise; could sell subscriptions to an electronic books database; could sell online access to individual books; sell advertising on pages from books, and make certain other uses of the books. Google would pay a flat fee to authors to remunerate the act of digitisation. It would fund the establishment of a Books Registry, overseen by authors and publishers, which would receive and distribute to right holders 70% of the net revenues from sales. It would also create an independent Unclaimed Works Fiduciary to assume responsibility for decisions relating to “unclaimed works”.
Right holders could opt out of the scheme, but would otherwise be included. The Books Registry would be obliged to make “commercially realistic” efforts to find right holders who did not voluntarily register with it. Funds unclaimed after five years could be used in part to cover the expense of locating owners of unclaimed works. After ten years, these funds could be distributed to literary-based charities.
The decision
Judge Chin visited a number of traditional legal cornerstones in explaining how he arrived at his decision. His arguments included these:
A matter for the legislature
The question of who should be entrusted with guardianship over orphan books, under what terms, and with what safeguards, are matters more appropriately decided by Congress then through an agreement among private self-interested parties.
The copyright owner’s exclusive right
As the settlement involved an “opt-out” system, in which authors’ works would be included unless they opted out, it would have given Google the effective right to expropriate the rights of copyright owners who had not agreed to transfer those rights. Copyright is a property right, and compulsory licensing is, of necessity, undertaken sparingly. Judge Chin said “[T]he notion that a court-approved settlement agreement can release the copyright interests of individual owners who have not voluntarily consented to transfer is a troubling one”
Competition concerns
Only Google has engaged in the copying of books en masse without copyright permission. At least as to orphan works, this gives Google a de facto monopoly, and creates the possibility that only Google would be able to market a comprehensive digital-book subscription. The seller of an incomplete database – which did not include the millions of orphan works – would be unable to compete. This would further entrench Google’s market power in the online search market.
International law
While the availability of the books included in the settlement scheme was to be confined to US users, the settlement would have covered foreign books registered with the US Copyright Office. Books published in Canada, the UK or Australia before January 5, 2009 were also included (the date limitation being a way of excluding works “commercially available”). Judge Chin did not attempt to decide whether the settlement would infringe relevant international agreements including the Berne Convention and TRIPs, but was satisfied that the fact there was a strong international representation to this effect was “another reason why the matter is best left to Congress”.
What next?
Judge Chin encouraged the parties to seek a revised agreement based on opt-in, rather than opt-out by right holders. This of course would be something completely different, with huge logistical challenges. The matter is back in court for a status conference on April 25th.
It looks as though Judge Chin’s house is made of bricks, but we’ll see…………
Note – the Status Conference has been postponed to 1st June.
Note – the Status Conference has been postponed again, to July 19th.
