REFLECTIONS ON THE GOOGLE BOOK SEARCH SETTLEMENT Pamela Samuelson, UC Berkeley OCLC/Kilgour Lecture, UNC April 14, 2009

OVERVIEW Why was G sued over the Book Search project? And how good was its fair use defense? What motivated settlement of the lawsuits? What benefits will the settlement bring about? What are risks, disadvantages, or problems with the settlement? What can the judge do? What else could happen that might “fix” problems the settlement may cause?

Why was G sued over the Book Search project? And how good was its fair use defense?

What motivated settlement of the lawsuits?

What benefits will the settlement bring about?

What are risks, disadvantages, or problems with the settlement?

What can the judge do?

What else could happen that might “fix” problems the settlement may cause?

BOOK SEARCH PROJECT G began Book Search in 2004 G made arrangements with some university research libraries to scan books in their collections libraries to get back a digital library of its collection only G would have the corpus of all books @ 7M books now available in BS G aiming for 15M

G began Book Search in 2004

G made arrangements with some university research libraries to scan books in their collections

libraries to get back a digital library of its collection

only G would have the corpus of all books

@ 7M books now available in BS

G aiming for 15M

GBS ACCESS TERMS For books in the public domain, G makes whole book available As to books in ©, G now makes “snippets” available, but has not run ads vs. the snippets, has provided links so users could buy relevant books G also willing to take book out of GBS repository if © owner objects Partner program allows © owners to make special arrangements with G about how much of their books to make available; revenue-sharing arrangements

For books in the public domain, G makes whole book available

As to books in ©, G now makes “snippets” available, but has not run ads vs. the snippets, has provided links so users could buy relevant books

G also willing to take book out of GBS repository if © owner objects

Partner program allows © owners to make special arrangements with G about how much of their books to make available; revenue-sharing arrangements

AUTHORS GUILD v. GOOGLE In 2005, AG + a few of its authors sued G for © infringement for scanning books, storing and processing the scanned books, & displaying snippets AG claimed this was a class action lawsuit brought on behalf of all authors whose books were scanned G claimed fair use, but also disputed AG as fair representative of the class 5 publishers brought similar suit vs. G; not initially a class action

In 2005, AG + a few of its authors sued G for © infringement for scanning books, storing and processing the scanned books, & displaying snippets

AG claimed this was a class action lawsuit brought on behalf of all authors whose books were scanned

G claimed fair use, but also disputed AG as fair representative of the class

5 publishers brought similar suit vs. G; not initially a class action

FAIR USE re BOOK SEARCH? Publishers/authors: Commercial purpose; non-transformative use Systematic copying of © works of all genres, creative works Whole thing copied, systematic, stored permanently Presume harm; harm because lack of control, risk of loss; we want to license such uses Google: + transformative; promoting public access to information + necessary to copy to index, make snippets available; orphan books opened up + whole thing, but only snippets available unless au/pubr agrees to more thru partner program + transactions costs problems with clearing rights = market failure; GBS enhances market for many books (we’ll link to where you can buy them)

Publishers/authors:

Commercial purpose; non-transformative use

Systematic copying of © works of all genres, creative works

Whole thing copied, systematic, stored permanently

Presume harm; harm because lack of control, risk of loss; we want to license such uses

Google:

+ transformative; promoting public access to information

+ necessary to copy to index, make snippets available; orphan books opened up

+ whole thing, but only snippets available unless au/pubr agrees to more thru partner program

+ transactions costs problems with clearing rights = market failure; GBS enhances market for many books (we’ll link to where you can buy them)

MOTIVATIONS TO SETTLE Litigation is expensive, would take many years to resolve definitively Outcome in doubt because close fair use case Unclear whether class of authors would be certified; if class not certified, G would take objecting authors’ books out of the repository; not much left to collect G facing very big damage exposure, injunction to destroy its scans of in-© works possible Settlement created an opportunity for a “win-win” if G willing to share revenue streams with AAP, AG G had better technology & ideas about how to create new markets for books in digital environment than AAP, AG

Litigation is expensive, would take many years to resolve definitively

Outcome in doubt because close fair use case

Unclear whether class of authors would be certified; if class not certified, G would take objecting authors’ books out of the repository; not much left to collect

G facing very big damage exposure, injunction to destroy its scans of in-© works possible

Settlement created an opportunity for a “win-win” if G willing to share revenue streams with AAP, AG

G had better technology & ideas about how to create new markets for books in digital environment than AAP, AG

RISKS FOR GOOGLE Although G could rely on several fair use search engine cases, none was 2d Cir case; Ps brought case in SDNY where UMG v. MP3.com and AGU v. Texaco rulings were made UMG v. MP3.com: unauthorized “ripping” of music from CDs to make database of music to provide new service to owners of that music = infringement; ready to order $118M in SD AGU v. Texaco: scientist’s copying of 7 research articles for archival purposes = unfair use 6M books in © out of 7M in GBS x $750 = $4.5B Whole lot more if up to $150K per work! G also defendant in Viacom v. YouTube case; facing substantial exposure in that case too Risks also for libraries as to digital copies from G

Although G could rely on several fair use search engine cases, none was 2d Cir case; Ps brought case in SDNY where UMG v. MP3.com and AGU v. Texaco rulings were made

UMG v. MP3.com: unauthorized “ripping” of music from CDs to make database of music to provide new service to owners of that music = infringement; ready to order $118M in SD

AGU v. Texaco: scientist’s copying of 7 research articles for archival purposes = unfair use

6M books in © out of 7M in GBS x $750 = $4.5B

Whole lot more if up to $150K per work!

G also defendant in Viacom v. YouTube case; facing substantial exposure in that case too

Risks also for libraries as to digital copies from G

CORE OF SETTLEMENT G to provide $45M to compensate © owners as to books it has scanned G to fund creation of a new collecting society, the Book Rights Registry, for $34.5M Authors and publishers can sign up with BRR to get payments from that $45M + share in any new revenues BRR collects that are subject to the revenue split (BRR gets 67%) 3 initial services: display parts of books in response to user queries (ads run vs. queries) sale of books to individuals (accessible only in the cloud) sale of subscriptions to institutions G will continue to scan books, up to @ 15M

G to provide $45M to compensate © owners as to books it has scanned

G to fund creation of a new collecting society, the Book Rights Registry, for $34.5M

Authors and publishers can sign up with BRR to get payments from that $45M + share in any new revenues BRR collects that are subject to the revenue split (BRR gets 67%)

3 initial services:

display parts of books in response to user queries (ads run vs. queries)

sale of books to individuals (accessible only in the cloud)

sale of subscriptions to institutions

G will continue to scan books, up to @ 15M

WHAT ABOUT LIBRARIES? Those who have contributed books to corpus will get back from G a digital copy of those books The settlement means they will no longer be risking liability for having contributed books to G or taking back digital copy Public libraries will be given 1 terminal each for accessing the corpus, but can’t print out or copy Many research libraries will be institutional subscribers to GBS, able to view whole works in the corpus, able to print out small # of pages But no special deal for public school libraries, gov’t libraries, other libraries

Those who have contributed books to corpus will get back from G a digital copy of those books

The settlement means they will no longer be risking liability for having contributed books to G or taking back digital copy

Public libraries will be given 1 terminal each for accessing the corpus, but can’t print out or copy

Many research libraries will be institutional subscribers to GBS, able to view whole works in the corpus, able to print out small # of pages

But no special deal for public school libraries, gov’t libraries, other libraries

BENEFITS Removes a dark cloud of liability from the heads of G and cooperating libraries More public access to more books than if G had not undertaken to make GBS at all or if G restricted GBS to public domain books Likely to show that “orphan” books have real value Revenues will flow to authors and publishers who register with the BRR Those authors and publishers who do not want their books in GBS can ask for removal New business models, choices for consumers

Removes a dark cloud of liability from the heads of G and cooperating libraries

More public access to more books than if G had not undertaken to make GBS at all or if G restricted GBS to public domain books

Likely to show that “orphan” books have real value

Revenues will flow to authors and publishers who register with the BRR

Those authors and publishers who do not want their books in GBS can ask for removal

New business models, choices for consumers

SO WHAT’S NOT TO LIKE? G getting exclusive rights as to orphan books Other mass digitization projects may be imperiled Settlement creates 2 complementary monopolies—GBS & BRR—with power to set prices and other terms for access to books BRR will have interests different from authors whose books make up most of the repository No privacy guarantees Excessive fees to class action lawyers

G getting exclusive rights as to orphan books

Other mass digitization projects may be imperiled

Settlement creates 2 complementary monopolies—GBS & BRR—with power to set prices and other terms for access to books

BRR will have interests different from authors whose books make up most of the repository

No privacy guarantees

Excessive fees to class action lawyers

ORPHAN WORKS Google will have a monopoly on making available “orphan books” Estimated 75% of books in corpus G able to monetize this as well through individual sales, subscriptions, ads next to displays BRR cannot license others to scan orphan books because it can only license uses of books whose © owners have registered with it It is only because of the settlement of the class action that G can get this exclusive license G would almost certainly have objected to the class certification otherwise

Google will have a monopoly on making available “orphan books”

Estimated 75% of books in corpus

G able to monetize this as well through individual sales, subscriptions, ads next to displays

BRR cannot license others to scan orphan books because it can only license uses of books whose © owners have registered with it

It is only because of the settlement of the class action that G can get this exclusive license

G would almost certainly have objected to the class certification otherwise

IMPLICATIONS FOR OTHERS No one else (e.g., Amazon) can get an equivalent license to G’s without scanning books like G and hoping for a similar class action lawsuit vs. it, and then a settlement on the same terms! Would this be too risky? Will G’s settlement of the lawsuit undercut fair use argument that later scanners might make for mass digitization? Some say yes; G says no Settlement may also take some wind out of legislative push for “orphan works” legislation

No one else (e.g., Amazon) can get an equivalent license to G’s without scanning books like G and hoping for a similar class action lawsuit vs. it, and then a settlement on the same terms!

Would this be too risky?

Will G’s settlement of the lawsuit undercut fair use argument that later scanners might make for mass digitization?

Some say yes; G says no

Settlement may also take some wind out of legislative push for “orphan works” legislation

TERMS & CONDITIONS BRR and G will set prices, other terms & conditions for books, subscriptions, new business models G says that it will price to promote broad access, but if it attains the monopoly that is consistent with the logic of the settlement, will it do so? BRR will have institutional bias vs. allowing or alerting authors to possibility of public domain, CC licenses for books in registry BRR unlikely to complain that prices are too high or DRM & license restrictions too severe If no competition as to orphan works, terms won’t get better, other innovations may not happen Researchers will have to get permission in advance from G to do research over the whole corpus

BRR and G will set prices, other terms & conditions for books, subscriptions, new business models

G says that it will price to promote broad access, but if it attains the monopoly that is consistent with the logic of the settlement, will it do so?

BRR will have institutional bias vs. allowing or alerting authors to possibility of public domain, CC licenses for books in registry

BRR unlikely to complain that prices are too high or DRM & license restrictions too severe

If no competition as to orphan works, terms won’t get better, other innovations may not happen

Researchers will have to get permission in advance from G to do research over the whole corpus

BRR BRR can license others (e.g., Amazon) to scan and make books available as to authors and publishers that have registered with it, but will BRR be willing to license them if this competes with the sweet deal it has with G? BRR will get 63% of the revenues from use of in-© books, even as to books written by authors who are not registered with the BRR! BRR will have board of half AG, half AAP representatives (who are copyright maximalists!) Neither AG nor AAP share the research values of the majority of authors whose works are in the corpus Collecting societies historically have engaged in anticompetitive acts, spend $$ on themselves, not distribute substantial sums to actual rights holders

BRR can license others (e.g., Amazon) to scan and make books available as to authors and publishers that have registered with it, but will BRR be willing to license them if this competes with the sweet deal it has with G?

BRR will get 63% of the revenues from use of in-© books, even as to books written by authors who are not registered with the BRR!

BRR will have board of half AG, half AAP representatives (who are copyright maximalists!)

Neither AG nor AAP share the research values of the majority of authors whose works are in the corpus

Collecting societies historically have engaged in anticompetitive acts, spend $$ on themselves, not distribute substantial sums to actual rights holders

LAWYER FEES 2 law firms involved, 1 for AAP, 1 for AG Settlement will make $45.5M available to compensate the class action lawyers THAT’S MORE THAN ALL THE AUTHORS WHOSE BOOKS ARE BEING SCANNED COMBINED! They didn’t work THAT hard Is this an abuse of the class action process? G would have fought class certification if litigation went forward

2 law firms involved, 1 for AAP, 1 for AG

Settlement will make $45.5M available to compensate the class action lawyers

THAT’S MORE THAN ALL THE AUTHORS WHOSE BOOKS ARE BEING SCANNED COMBINED!

They didn’t work THAT hard

Is this an abuse of the class action process?

G would have fought class certification if litigation went forward

PRIVACY Libraries who supplied the books to G have longstanding policies of respecting patron privacy as to books Many librarians would take a bullet (metaphorically) before violating user privacy Nothing in the settlement agreement speaks about privacy interests of users G will be “selling” books to individuals that can only be read in the cloud G will be able to monitor what users are reading, etc. Institutional subscribers may also care about privacy G has thus far been unwilling to make commitments about respecting GBS user privacy (even though willing to do so with other services, e.g., Google Health)

Libraries who supplied the books to G have longstanding policies of respecting patron privacy as to books

Many librarians would take a bullet (metaphorically) before violating user privacy

Nothing in the settlement agreement speaks about privacy interests of users

G will be “selling” books to individuals that can only be read in the cloud

G will be able to monitor what users are reading, etc.

Institutional subscribers may also care about privacy

G has thus far been unwilling to make commitments about respecting GBS user privacy (even though willing to do so with other services, e.g., Google Health)

WHAT CAN THE JUDGE DO? Litigants cannot settle class action lawsuits without a judge approving the settlement The main ? before the court is whether the settlement is fair to the class NOT whether the settlement is in the public interest Possible some members of the class will object to the settlement (e.g., scholars who object to AG, AAP as representative of the class) Also possible for members of the class to opt out Some likelihood of interventions My firm will be affected by the settlement, even though it is not a party to the lawsuit (maybe Amazon, MS, or Yahoo) But judge has no power to change the settlement

Litigants cannot settle class action lawsuits without a judge approving the settlement

The main ? before the court is whether the settlement is fair to the class

NOT whether the settlement is in the public interest

Possible some members of the class will object to the settlement (e.g., scholars who object to AG, AAP as representative of the class)

Also possible for members of the class to opt out

Some likelihood of interventions

My firm will be affected by the settlement, even though it is not a party to the lawsuit (maybe Amazon, MS, or Yahoo)

But judge has no power to change the settlement

OTHER OPTIONS If the settlement is approved, antitrust oversight may be needed because the logic of the settlement makes likely that GBS/BRR may ultimately engage in monopolistic abuses Antitrust authorities could require G to give a license to others to scan orphan books Congress could pass legislation to allow other mass digitization to happen or to insist on privacy protections for users The judge could say no, in which case Google would have to defend the fair use claim, challenge class certification

If the settlement is approved, antitrust oversight may be needed because the logic of the settlement makes likely that GBS/BRR may ultimately engage in monopolistic abuses

Antitrust authorities could require G to give a license to others to scan orphan books

Congress could pass legislation to allow other mass digitization to happen or to insist on privacy protections for users

The judge could say no, in which case Google would have to defend the fair use claim, challenge class certification

CONCLUSION If it were up to me, I would not approve the settlement AG does not represent the interests of the scholars who wrote books that constitute the overwhelming majority of works in the corpus Libraries may rue the day that AG v. G settled Think about the complaints vs. journal publishers This settlement is a privately negotiated compulsory license to orphan books, and a major restructuring of the future of the book industry w/o meaningful government oversight It is, however, so complicated that it’s not getting the attention in the scholarly communities that it should have Judge may approve unless well-crafted objections soon

If it were up to me, I would not approve the settlement

AG does not represent the interests of the scholars who wrote books that constitute the overwhelming majority of works in the corpus

Libraries may rue the day that AG v. G settled

Think about the complaints vs. journal publishers

This settlement is a privately negotiated compulsory license to orphan books, and a major restructuring of the future of the book industry w/o meaningful government oversight

It is, however, so complicated that it’s not getting the attention in the scholarly communities that it should have

Judge may approve unless well-crafted objections soon