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Saturday, 19th September 2009

Press Review+: U.S. Department of Justice Would Like to See Changes to Google Book Settlement

Last Updated: 9/22

Official News Release from US Department of Justice

"Given the parties’ express commitment to ongoing discussions to address concerns already raised and the possibility that such discussions could lead to a settlement agreement that could legally be approved by the Court, the public interest would best be served by direction from the Court encouraging the continuation of those discussions between the parties and, if the Court so chooses, by some direction as to those aspects of the Proposed Settlement that need to be improved. Because a properly structured settlement agreement in this case offers the potential for important societal benefits, the United States does not want the opportunity or momentum to be lost."

In its filing, the Department proposed that the parties consider a number of changes to the agreement that may help address the United States’ concerns, including imposing limitations on the most open-ended provisions for future licensing, eliminating potential conflicts among class members, providing additional protections for unknown rights holders, addressing the concerns of foreign authors and publishers, eliminating the joint-pricing mechanisms among publishers and authors, and, whatever the settlement’s ultimate scope, providing some mechanism by which Google’s competitors can gain comparable access.

Access the Full Text of the DOJ Filing (9/18/2009 via Justia)

From Search Engine Land
Danny Sullivan has a page by page review of the filing.

From The Laboratorium
Law professor James Grimmelmann offers a complete document review.

From Reuters

The U.S. Justice Department urged a New York court on Friday to reject Google's controversial deal with authors and publishers that would allow the search engine giant to create a massive online digital library. The Justice Department said in a filing that the court "should reject the proposed settlement in its current form and encourage the parties to continue negotiations to modify it so as to comply with ... copyright and antitrust laws."

From Dow Jones Newswires/WSJ

Among its recommendations, the department said the parties should limit broad settlement provisions on future licensing that would allow Google to offer new products derived from its digital books platform.

Highlighting a number of antitrust concerns, the department said the current settlement could preclude other digital distributors from competing with Google and could allow book publishers to restrict price competition.

The department also questioned whether the settlement could impose certain copyright policy changes, and it said the agreement needed better protections for unknown copyright holders and foreign authors and publishers.

From CNN

Despite the perceived problems, the federal government in its first public comments in the case, said it believes the necessary changes could be made, and urged continued negotiations.

From Washington Post:

The Justice Department statement, posted late Friday night, did acknowledge that a "properly structured settlement agreement in this case offers the potential for important societal benefits."

An official at Justice, who spoke on the condition of anonymity because the investigation is ongoing, said talks this week with parties involved in the agreement were "very constructive. They are motivated to come up with modifications that might address concerns we raised."

Specifically, the Justice Department suggested limitations on the provisions for future licensing, a part of the settlement that some critics said would give Google dominant power over the licensing of digital titles. The agency also recommended adding more protections for the holders of rights to little-known books and eliminating the joint-pricing deal between publishers and authors.

Justice said that "whatever the settlement's ultimate scope," it should "provide some mechanism by which Google's competitors can gain comparable access."

From the AP

In its current form, the settlement would entrust Google with a digital database containing millions of copyright-protected books, including volumes no longer being published. The Internet search leader would act as the sales agent for the authors and publishers, giving 63 percent of the revenue to the copyright holders. Authors and publishers could either set their own prices for their books, or rely on a formula drawn up by Google — a provision that has raised fears of the partnership turning into a price-gouging cartel.

The Justice Department sided with those arguments, saying the settlement could lessen competition among U.S. publishers. The agency also expressed concern that Google would gain a monopoly on so-called "orphan works" — out-of-print books that are still protected by copyright but whose writers' whereabouts are unknown.

[Our emphasis] The arrangement "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."

From New York Times

“As presently drafted the proposed settlement does not meet the legal standards this court must apply,” the department wrote in a 32-page legal filing. “This court should reject the proposed settlement and encourage the parties to continue negotiations to comply with Rule 23 and the copyright and antitrust laws.” Rule 23 governs procedures for class-action lawsuits.


The Justice Department is not a party to the case but legal experts say the judge reviewing the settlement is likely to give serious consideration to its arguments.

From Financial Times

The justice department had been expected to oppose the settlement, and its statement to the court appeared to be more of a qualified endorsement. It said it would continue to work with all sides if asked.

”The proposed settlement has the potential to breathe life into millions of works that are now effectively off limits to the public,” government lawyers wrote. But they cautioned: “The end result should be a marketplace in which consumers can be assured that they are paying competitive prices for the benefit they receive – in a marketplace in which they have multiple outlets from which to obtain access to works.”

From PC Magazine

DOJ made several suggestions for how to improve the settlement. Google should consider making the inclusion of out-of-print books opt-in rather than opt-out, just as it does for in-print books.

"This would put the out-of-print rights holders and in-print rights holders in the same situation and respond to a significant concern expressed by foreign rights holders," DOJ said.

DOJ also urged Google to extend the amount of time rights holders had for opting out of the class and for claiming escrowed profits for orphan works. Instead of going to Google and registered rights holders, DOJ suggested the funds should be used to search for right holders. If the search was totally fruitless, Google could petition the court for permission to take the money. Another option would be to appoint a guardian of orphan works owners, DOJ said.

From the Los Angeles Times

"The brief is urging the judge against approving it outright or rejecting it outright," said James Grimmelmann, a professor at New York Law School. "The overall message from Justice is that there are a lot of good things in this settlement. It doesn't work in its current form, but it's fixable."

From Bloomberg

The U.S. Justice Department told a federal judge overseeing a settlement between Google Inc. and groups of authors and publishers that it is still negotiating with the parties and needs more time to reach an agreement.

From News.com

"The Proposed Settlement is one of the most far-reaching class action settlements of which the United States is aware; it should not be a surprise that the parties did not anticipate all of the difficult legal issues such an ambitious undertaking might raise," the DOJ wrote in its filing.


But in its filing, it also raised objections over the settlement's compliance with Rule 23 of the Federal Rule of Civil Procedure as well as copyright law in general. "In the view of the United States, each category of objection is serious in isolation, and, taken together, raise cause for concern."


"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," the DOJ wrote.

From IDG News Service

In fact, the DOJ's Antitrust Division continues investigating the settlement, the DOJ said in Friday's filing, which nonetheless contains "a preliminary explanation" of the agency's antitrust concerns.

UPDATE 9/21: From the Huffington Post: DOJ Says No to Google Book Settlement

Among the most significant recommendations DOJ made for modifying the Proposed Settlement is one to ameliorate the risk of market foreclosure as to institutional subscriptions. DOJ suggests the parties should find a way to "provide some mechanism by which Google's competitors could gain comparable access to orphan works." That is, DOJ is recommending that Google, the Authors Guild and the publishers find a way to let firms such as Amazon.com and Microsoft get comparable licenses to out-of-print books, particularly to orphans. Google has previously denied that it was possible to include competitors in any license granted through the settlement. It will be interesting to see if the litigants want the settlement badly enough to conjure up a way to extend the license to firms other than Google.

Another significant modification proposed by DOJ concerns the "sweeping forward-looking licensing" provisions that allow Google and the BRR to commercialize out-of-print books for "unspecified future uses..., essentially authorizing...open-ended exploitation of the works of all of those who did not opt out." DOJ has several problems with the future use provisions.

UPDATE 9/21: From the NY Times: Google Working to Revise Digital Books Settlement

Laying out a path forward, the department said some of its antitrust concerns could be mitigated by “some mechanism by which Google’s competitors’ could gain comparable access to orphan works.” And it said that concerns about the fair representation of some authors could be addressed if some rights for Google to profit from out-of-print books were granted only if their authors agreed, rather than by default.

Legal experts suggest that proposal could prove to be a sticking point, as it would not allow Google to offer a comprehensive library. But even the Justice Department suggested there could be other solutions.


Judge Denny Chin of the United States District Court for the Southern District of New York has given the parties until Oct. 2 to respond to the objections and has scheduled a hearing on the case for Oct. 7.

But some experts say the case is likely to be delayed well beyond that, as changes to the settlement are likely to require members of the class to be notified, a process that could take months. And even after that, a resolution may not be immediate.

UPDATE 9/21 Editorial from Library Journal: The Google Wars
Note: The editorial below, scheduled to be published in the October 1, 2009 print Library Journal, was written before the Department of Justice filed its "Statement of Interest" with the federal court on the Google settlement. We're pleased that the DoJ has expressed its concerns about the settlement.

We call on Judge Chin (and, as [ U.S. register of copyrights Marybeth] Peters does, on Congress) to throw out the settlement—or at the very least modify and supervise its most pernicious sections—to ensure that the future of digital books, many scanned from libraries that purchased them at significant cost, not be put in the exclusive hands of Google.

Pamela Samuelson is mentioned in the LJ editorial. You can access the three articles that she wrote for the Huffington Post about the settlement here.

Comments from Organizations

From Google, Authors Guild, and AAP (via Reuters, see above)

In a statement, Google, the Authors Guild and the Association of American Publishers said the Department of Justice filing "recognizes the value the settlement can provide by unlocking access to millions of books" in the United States."

From Google (via Washington Post, see above)

"We are considering the points raised by the Department and look forward to addressing them as the court proceedings continue."

From Google (via Dow Jones)

A Google spokesman declined to comment on whether the parties were considering making changes.

From Open Book Alliance

The Open Book Alliance is pleased with the action taken today by the Department of Justice, which we believe will help to protect the public interest and preserve competition and innovation. Despite Google’s vigorous efforts to convince them otherwise, the Department of Justice recognizes that there are significant problems with terms of the proposed settlement, which is consistent with the concerns voiced with the Court by hundreds and hundreds of other parties.

“The members of the Open Book Alliance recognize the tremendous value that the mass digitization of books can bring to consumers, libraries, scholars and students...The current settlement proposal would stifle innovation and competition in favor of a monopoly over the access, distribution, and pricing of the largest collection of digital books in the world, and would reinforce an already dominant position in search and search advertising.

UPDATE 9/21 From The Authors Guild

Beating their midnight deadline by about 90 minutes, the Justice Department on Friday filed a brief calling for modifications to the Authors Guild's class-action settlement with Google over Google's scanning of millions of library books without permission. The Justice Department said the parties to the settlement should modify the settlement to address certain copyright, antitrust, and class-action concerns. While it opposes the settlement agreement as it now stands, the Justice Department "strongly supports" the settlement's goals of creating new markets for out-of-print works and committed itself to working constructively with the parties on a revised settlement.

UPDATE: 9/22: From Open Book Alliance

Now that we’ve had a chance to review the Justice Department’s filing in more detail, we recognize that one thing is certain – the proposed Google Book Settlement, as it’s currently written, will not go through. Even Google seems to agree with this — after months of fighting against any change to the settlement, they acknowledge that the settlement must be profoundly altered. That’s good news for anyone who wants to protect innovation, competition, and the public interest as we evolve the world of books to the digital age.


The Justice Department acknowledges that this case effects the public interest. It’s broader than a typical class action settlement between private parties, and the process going forward must include more voices. Open Book Alliance looks forward to being an active voice among the many stakeholders in future discussions.

From Consumer Watchdog

Consumer Watchdog praised the U.S. Justice Department for objecting to the proposed Google Books settlement in a brief the department filed in U.S. District Court tonight.


Consumer Watchdog stressed that even if Google, The Authors Guild and the Association of American Publishers agree to change their deal to overcome Justice's antitrust objections, the settlement still should not be implemented.

"Solving the antitrust problem is only piece of the problem," said Simpson. "Another deal-breaker should be the complete lack of privacy guarantees. Google, under pressure from the Federal Trade Commission, released a so-called 'privacy policy', but what's to stop them from changing it the day after a settlement is approved on a corporate whim.

From the U.S. Department of Justice (via Dow Jones, see above)

A Justice Department official, speaking on the condition of anonymity, said it was "too early to tell" whether the types of changes the government recommended would require the parties to again notify all members of the plaintiff class about the terms of the settlement.

At End of Act II: Are We Being Played for Fools OR Building an Enlightened Digital World? (via Open Content Alliance Blog)
Brewster Kahle writes:

With the Justice Department objection, we are just where the Google+TradeLawyers may have hoped we would be. The question now is: do we play the concluding Act III of this saga according to their script or do we build a competitive and rich digital world? Please grant me a moment to explain.


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