Google and Publishers Reach Settlement Over Google Books Lawsuit

On October 4, 2012, Google and the Association of American Publishers (AAP) announced that the publisher plaintiffs and Google have reached a settlement of their dispute over Google’s mass copying and uploading of books (whether in the public domain or still protected by copyright) to which it had obtained access through agreements with several large libraries. These digitized books were then made available for searching and sometimes downloading (in whole or in part) through Google’s Library project. (The docket for the publisher’s lawsuit was The McGraw-Hill Companies, Inc. v. Google Inc., 05 Civ. 8881 (JES) (SDNY).)

(Details about the 2005 lawsuit and a proposed settlement that was rejected by the Court can be found in earlier posts.)

According to AAP, Google and the publishers agreed that “U.S. publishers can choose to make available or choose to remove their books and journals digitized by Google for its Library Project. Those deciding not to remove their works will have the option to receive a digital copy for their use.” Andi Sporkin, Association of American Publishers, Press Release (Oct. 4, 2012). Notwithstanding this agreement, U.S. publishers can continue to “make individual agreements with Google for use of their other digitally-scanned works.” Id.

The AFP reports that “publishers will have the option to allow Google to display portions or the entire book content, or to sell the work through Google Play.” Rob Lever, “Google, publishers end long-running copyright case,” AFP (Oct. 4, 2012). Users of the service, then, have the ability to browse up to 20% of books, and then purchase a digital copy through Google Play. Id.; Sorkin, Press Release

The remaining terms of the settlement remain confidential, but it appears that the ongoing litigation between Google and the Authors’s Guild (Authors Guild et al. v. Google Inc., No. 05-08136 (SDNY) (trial court); No. 12-2402 (2d Cir.) (on appeal)) is unaffected by this settlement. “‘The publishers’ private settlement, whatever its terms, does not resolve the authors’ copyright infringement claims against Google,’ the Authors Guild said in a statement Thursday. ‘Google continues to profit from its use of millions of copyright-protected books without regard to authors’ rights, and our class-action lawsuit on behalf of U.S. authors continues.'” Michael Liedtke (AP Technology Writer), “Google, publishers shelve book-scanning suit,” AP (Oct. 4, 2012). That lawsuit remains suspended, pending appeal by Google of the Court’s grant of class certification for the authors whose claims were raised in the complaint. Grant McCool, “Authors Guild v. Google Lawsuit In U.S. Suspended Pending Appeal,” Reuters (Sept. 17, 2012).

Google’s Request to Appeal Class Certification was Granted

On August 14, 2012, the Second Circuit Court of Appeals granted Google’s request for permission to appeal the Southern District of New York’s certification of two classes of plaintiffs in the Authors Guild v. Google case. (For prior blog posts about this case, click here.)

Pursuant to Rule 23(f), an appeal of class certification does not result in an automatic stay of the underlying case. Instead, either the order granting the appeal must specifically impose a stay (which this one does not) or the district court must affirmatively order a stay. As of this writing, the district court has not entered such an order.

The Second Circuit’s order granting the appeal was entered as Docket No. 1057 on the district court’s docket. (But, it does not yet appear in the Justia report – check Justia later, as it will probably be posted in due course.)

Court Certifies Certain Authors as a Class in Google Books Dispute

On May 31, 2012, Circuit Judge Denny Chin (now sitting on the Second Circuit Court of Appeals) entered an order certifying a class of authors to proceed in the case as a class. The Authors Guild et al. v. Google, Inc., No. 05 Civ. 8136, slip op. (May 31, 2012). In that case, two motions were decided: the first was Google’s motion to dismiss the association plaintiffs (i.e., The Authors Guild) alleging that they lacked standing to sue. The second was a motion for class certification filed by three representatives (individual members of the association) so that the case could proceed as a class, and that individual class plaintiffs did not need to prove their cases individually. 

In both cases, Google’s argument was the same: that individualized analysis of its “fair use” defense was required, thus rendering the Authors Guild unable to participate, and the individual class members unable to proceed as a group, sharing common interests. In both respects, the court was unpersuaded by Google’s arguments, and ruled against Google.

Motion to Dismiss Authors Guild Claims, Arguing Lack of Standing

In the context of its motion to dismiss, the Court found that “the associations’ claims of copyright infringement and requests for injunctive relief will not require the participation of each individual association member.” Id. at 11. Indeed, the Guild asserted copyright claims on behalf of its members, alleging very broadly that “Google engaged, and continues to engage, in the wholesale copying of books (including an images contained therein) without the consent of the copyright holders, many of whom are association members.” Id. at 12. The Authors Guild only sought injunctive relief (in other words, stop the copying and republishing) and declaratory relief (in other words, for a “declaration” that Google’s activities were unlawful). It is not seeking monetary damages. Notably, “Google does not deny that it copied millions of books – original works – without the permission of the copyright holders. Furthermore, it has displayed snippets of text from these books as well as images contained in the books, without the copyright holders’ permission.”
Id. at 13 (emphasis added).

When it argued that individual participation by association members would be required to respond to Google’s fair use analysis, Google focused on the requirement to prove “the nature of the copyrighted work” and “the effect of the use upon the potential market for or value of the copyrighted work.” Id. at 15. Specifically, Google argued that the difference for fair use purposes between a non-fictional and a fictional work was critical, thus requiring individual proof of market impact. Id. The court was unpersuaded, concluding that it was possible to address these issues by grouping similar works together, thus creating subgroups. Id.

Importantly, the court noted that Google only objected to the Authors Guild’s participation in this case (which it originated seven years ago), was when it became apparent in 2011 that no settlement would be reached. Id. at 17.

The court’s most telling conclusion in this opinion is the following:

. . . [G]iven the sweeping and undiscriminating nature of Google’s unauthorized copying, it would be unjust to require that each affected association member litigate his claim individually. When Google copied works, it did not conduct an inquiry into the copyright ownership of each work; nor did it conduct an individualized evaluation as to whether posting “snippets” of a particular work would constitute “fair use.” It copied and made search results available en masse. Google cannot now turn the tables and ask the Court to require each copyright holder to come forward individually and assert rights in a separate action. Because Google treated the copyright holders as a group, the copyright holders should be able to litigate on a group basis.

Id. at 18 (emphasis added).

Motion for Class Certification

In similar fashion, the court discounted Google’s opposition to the motion for class certification filed by Authors Guild members seeking to participate in this case as representatives of a class. Id. at 18-25 (discussion of applicable precedent), 25-31 (application of precedent to the case at hand). Again Google argued that its fair use argument had to be considered as to each plaintiff, on an individual basis. It argued that “most [ ] class members perceive [Google’s copying of their work] as benefit.” Id. at 27. It also submitted the results of a survey it conducted in support of its argument that factual disputes among putative class members would make the class action process “not adequate” to handle this dispute, and therefore argued that class certification should be denied. Id.

This survey revealed that 58% of the authors surveyed (i.e., 500 authors) “approved” of Google’s scanning of their works for search purposes, and about 19% of those surveyed (about 170 authors) “feel that they benefit financially, or would benefit financially, from Google scanning their books and making snippets available in search.” Id.

The court did not discuss the basis for the survey, how the participants were selected, its statistical significance or what percentage of the total putative class was surveyed. Elsewhere in the opinion, however, the court reported the undisputed fact that Google has already scanned more than 12 million books. Id. at 2 (emphasis added). Leaving aside that many of these may be in the public domain, the court also noted that “millions of the books scanned by Google were still under copyright.”  Id. at 3 (emphasis added). Even if you assume that half of these books were written by authors who had written more than one book, 500 authors seems to be a very low sample on which to rely for a survey. (More details about the survey are likely continued in the declaration that Google submitted with the survey evidence, but I have not accessed it.)

Regardless, the court remained unpersuaded by Google’s survey evidence, calling it “without merit.” Pointedly, the court noted that Google had not identified any conflicts between the class members and the rest of the class and concluded that the fact that “some class members may prefer to leave the alleged violation of their rights unremedied is not as basis for finding the lead plaintiffs inadequate.” Id. 28. Indeed, any class member who feels that he or she does not want to participate in the class action may voluntarily exclude themselves by opting out.

Google’s final argument – that some of the publishing contracts which some of these authors may have signed create varying degrees and types of ownership – was similarly rejected. The court found that while these differences might exist, they did not predominate over the common issues shared by the putative class members. Id. at 31. In response to Google’s argument that the display of snippets of the copyrighted works were promotional use (a beneficial interest held by the publisher, not the author) would facilitate sales, the court noted the absence of any proof that such display actually facilitated sales and admonished, “while these authors may have authorized a publisher to promote their works, they have not authorized Google to do so.” Id.

Recommended Reading 

Upcoming Senate Judiciary Committee Hearing on Google

The Senate Judiciary Committee’s Subcommittee on Antitrust, Competition Policy and Consumer Rights will hold a public hearing on September 21, 2011 at 2:00pm (Eastern) in the Dirksen Senate Office Building, Room 226. The hearing is entitled, “The Power of Google: Serving Consumers or Threatening Competition?” The witness list has not yet been posted.

It appears the hearing will be simulcast over the web, through a link provided in the notice.

District Court Rejects Proposed GoogleBooks Settlement

On March 22, 2011, the U.S. District Court for the Southern District of New York issued its long-awaited opinion on whether to approve the settlement tentatively entered into between the Authors’ Guild and Google regarding its GoogleBooks program. In short, the Court rejected the settlement.

Reviewing the docket confirms that this case has indeed been relatively quiet since the February 18, 2010 hearing on the proposed settlement. Shortly thereafter, some modifications were made to the cash payment system terms, but otherwise, the Court did not issue any final ruling to approve or reject the proposed settlement.

In its Opinion, the Court announced, “The question presented is whether the ASA [Amended Settlement Agreement] is fair, adequate, and reasonable. I conclude that it is not.” Opinion at 1. The Court explained,

“While the digitization of books and the creation of a universal digital library would benefit many, the ASA would simply go too far. It would permit this class action . . . to implement a forward-looking business arrangement that would grant Google significant rights to exploit entire books, without permission of the copyright owners. Indeed, the ASA would give Google a significant advantage over competitors, rewarding it for engaging in wholesale copying of copyrighted works without permission, while releasing claims well beyond those presented in the case.

Id. at 1-2 (emphasis added).

In its analysis, the Court outlined seven categories of objections to the ASA: 1) adequacy of class notice; 2) adequacy of class representation; 3) scope of relief under Rule 23; 4) copyright concerns; 5) antitrust concerns; 6) privacy concerns; and 7) international law concerns. Id. at 10-13. It handled each category in turn.

Adequacy of Representation
As to adequacy of representation, Judge Chen pointed out repeatedly (Opinion at 10, 19) that over 6800 class members have opted out to date from participation in the proposed settlement, an “extremely high number.” He concluded that “there is a substantial question as to the existence of antagonistic interests between named plaintiffs and certain members of the class,” a prong in the analysis that must be met in order to comply with Rule 23 of the Federal Rules of Civil Procedure. He agreed that counsel was sufficiently qualified to represent the class, but concluded that the differences between the various competing interests within the class was “troubling.” Id. at 21.

ASA Exceeded Scope of Rule 23 Remedy
As to whether the settlement exceeds “the scope of what the Court may permit under Rule 23,” Judge Chen concluded that it would. The exact language of the Opinion is worth reciting in explanation here:

“This case was brought to challenge Google’s use of ‘snippets,’ as plaintiffs alleged that Google’s scanning of books and display of snippets for online searching constituted copyright infringement. Google defended by arguing that it was permitted by the fair use doctrine to make available small portions of such works in response to search requests. There was no allegation that Google was making full books available online, and the case was not about full access to copyrighted works. The case was about the use of an indexing and searching tool, not the sale of complete copyrighted work.”

Id. at 24-25 (emphasis added).

The Opinion explains further, “Google did not scan the books to make them available for purchase, and, indeed, Google would have no colorable defense to a claim of infringement based on the unauthorized copyright and selling or other exploitation of entire copyrighted books.” Id. at 26. Thus, the ASA, which created a structure by which revenues from sales of full copies of copyrighted works would be shared with the appropriate rightsholders, goes far beyond what the parties litigated and the scope of relief that the Court has the ability to approve.

The Court did not leave the parties without a remedy. Instead, it merely concluded that a Court-approved settlement between these two parties (to cover this broad set of class members) was not the proper vehicle to address this kind of forward-looking relationship; Congress is. Id. at 22-24. For instance, “[t]he questions of who should be entrusted with guardianship over orphan books, under what terms, and with what safeguards are matters more appropriately decided by Congress than through an agreement among private, self-interested parties.” Id. at 23.

The Court criticized Google’s method of reaching the costly investment that it has clearly made in this process, and concluding that it need not countenance Google’s activities:

“Yet, the ASA would grant Google the right to sell full access to copyrighted works that it otherwise would have no right to exploit. . . . The ASA would grant Google control over the digital commercialization of millions of books, including orphan books and other unclaimed works. . . . And it would do so even though Google engaged in wholesale, blatant copying, without first obtaining copyright permissions. While its competitors went through the ‘painstaking’ and ‘costly’ process of obtaining permissions before scanning copyrighted books, Google by comparison took a shortcut by copying anything and everything regardless of copyright status. . . . As one objector put it: ‘Google pursued its copyright project in calculated disregard of authors’ rights. Its business plan was: “So sue me”.’ “

Id. at 26-27 (citations omitted to statements made in various submissions filed with the Court) (emphasis added).

Settlement Applies to Future Rights
The Court also concluded that while it is common for certain class members to opt out of participating in a settlement, this case is unique in that not only does the settlement release claims against Google for past behavior, class members here “would be giving up certain property rights in their creative works, and they would be deemed – by their silence – to have granted Google a license to future use of their copyrighted works.” Id. at 30. Such a mandated transfer of exclusive copyright rights is unwarranted.

Opt-Out Structure Unsound
In various places in the opinion, the Court pointed out that “opting out” is not the right structure for an agreement with such a broad application. “[I]t is incongruous with the purpose of the copyright laws to place the onus on copyright owners to come forward to protect their rights when Google copied their works without first seeking their permission.” Id. at 35 (footnote omitted).

ASA Raises Antitrust Problems
Judge Chen concluded that the ASA would indeed grant Google a monopoly over unclaimed works, and agreed with the argument made by counsel for the Internet Archive: “the ASA would give Google a right, which no one else in the world would have, . . . to digitize works with impunity, without any risk of statutory liability, for something like 150 years.” Id. at 36-37. The Opinion gives other examples of potential anti-competitive benefits that Google would obtain if this settlement were to have been approved.

Privacy Concerns
While the Court acknowledged that the privacy concerns outlined by various objectors to the settlement were “real,” Judge Chen concluded that they were not a sufficient basis on their own to reject the proposed settlement. Id. at 39. As a result, the objections are not summarized here.

International Objections
The Opinion also discusses the objections raised by various international stakeholders, such as authors, publishers, foreign governments, and other associations, and concludes that these objections highlight precisely why creating such a forward-thinking framework should be left for Congress. Id. at 45. For example, Germany argued, “Courts and class action settlements are not the proper province for creating a cutting edge copyright . . . framework to bind future generations of digital libraries.” Id. at 44 (ECF No. 852 at 11).

This blog post only discusses certain highlights from the Court’s opinion, but the importance and complexity of this debate cannot be understated. Various competing interests are triggered that belie any “easy” or “all encompassing” solution, such as:

  • The interests of the public in having full access to as much information as possible in our digital world;
  • The interests of academic authors who want to “maximize access to knowledge” (Opinion at 28-29)
  • The interests of authors of older works still protected by copyright law, who may want to see a resurgence of interest in their works, but print copies may be off the market or the publisher can no longer be located to negotiate additional distribution rights;
  • The rights of authors and publishers of newer works to control how their works are distributed; and
  • Google’s interest in recovering some part of its massive investment in enabling digital access to contents of the world’s libraries.

Also critical to understand is the fact that this ASA, whether it ever obtains approval or not, does not affect the public’s access to works that are already in the public domain, such as by Mark Twain or Charles Dickens, or works that are subject to specific agreements between Google and the rightsholders (i.e., when the rightsholders opted in to Google’s efforts to scan works).

While ultimately rejecting the ASA as “not fair, adequate and reasonable,” Judge Chen suggested that as many “objectors have noted, many of the concerns raised in the objections would be ameliorated if the ASA were converted from an ‘opt-out’ settlement to an ‘opt-in’ settlement. . . . I urge the parties to consider revising the ASA accordingly.” Id. at 46.
An opt-in structure may have its own problems, however, as highlighted by the initial comments posted only to the March 23 Wall Street Journal article on the rejection of the settlement. Efrati, Amir and Jeffrey A. Trachtenberg, Judge Rejects Google Books Settlement, Wall Street Journal, March 23, 2011 (this may only be available to paid subscribers). Note that the article contains a survey to solicit views of whether an “opt-in” or “opt-out” structure should be used. Once you vote, you can see the results. There’s also a video explaining some of the concerns, which suggests that this opinion has dealt a “blow” to Google and that it remains to be seen what a future settlement agreement might look like.
Prior posts about the Google Book Settlement can be found here.