By Brian D. Flagler1
Flagler Law Group LLC
Late last year, Google and representatives for U.S. authors and book publishers agreed to settle a dispute regarding Google’s “Library Project,” a massive effort to scan millions of library books into an enormous content database (over seven million books as of late 2008, and rapidly growing).2,3 Some have labeled this proposed class action settlement the largest structured arrangement of copyright interests in history.4 This article reflects a publishing lawyer’s thoughts as to what this settlement may mean for the U.S. book publishing industry.
The basic terms of the settlement are as follows: Google will continue to scan in-copyright books into its database.5 Google will make payments totaling $125 million: $34.5 million to be used to establish a Book Rights Registry to track rights information regarding books covered by U.S. copyright, $45 million to compensate publishers and authors for works digitized without permission, and the rest to the plaintiffs’ lawyers. Google also agrees to pay rights holders 63% of revenue generated from Google’s display of the digital content. It should be noted that the settlement is, at this point, merely proposed by the parties. The U.S. District Court for the Southern District of New York will hold a fairness hearing on Oct. 7 of this year to consider whether the settlement is fair and reasonable. This article will discuss the results of the settlement if approved in its current form.
As should be expected of an arrangement of this magnitude, response to the settlement has been varied and, from some camps, heated. Many in the content user community view Google’s “caving” to rights holders as unfortunate; these groups expected Google to pursue the litigation all the way to a final determination, in which they hoped for a formal expansion of the fair use doctrine to encompass digitization of content for the benefit of the public.6 Others would have preferred a legislative solution that incorporated input from all interested parties.7 These onlookers are concerned that the future of copyright as applied to digital content has been defined through negotiations between three commercial organizations without the input of the public.8 Members of the library community, most notably Harvard University, have rejected the settlement on the grounds that it allows Google to charge an undefined fee for too little access to what they view as a public resource.9 Even the publishing community has its concerns with the precedent set by turning the world of digital book permissions from “opt in” to “opt out.” Regardless of personal perspective, most agree that this settlement will bring significant change to the book publishing industry if it is approved.
The core of this dispute turns on application of the fair use doctrine to the digitization and online distribution of content. According to the authors and publishers, the issue is simple: copyright law requires Google to secure a license from the copyright holder prior to creating a digital copy of a book and storing it in a searchable database. Once Google has such a license, it may very well be able to justify posting short snippets of text from the book in response to search queries. But, in their view, taking the print product into the digital realm necessitates license negotiations on a book by book basis, and the rights holder may decline the license or may charge a negotiated fee for the use of content in this way.
Google contends that this limited interpretation of fair use incorrectly impairs the public’s access to book content. Indexing snippets of book content, in Google’s view, is no different than the well-established practice of indexing thumbnail images of copyrighted photographs.10 One can search for bound books in the library and flip through them. Google is merely creating an infinitely more efficient way to find book content.
The settlement agreement specifically avoids answering the fair use question.11 Google continues to maintain that its operation of the Library Project falls within fair use, and the authors and publishers continue to contend that it does not. However, in this author’s opinion, Google’s decision to cut a $125 million check (including a $65 fee for each book digitized without permission) and pay 63% of revenue to rights holders serves as a de facto acknowledgment that the current state of the fair use doctrine does not allow Google to digitize copyrighted works without some form of permission.
If approved, what would change in the world of book publishing?
- Millions of in-copyright but out-of-print books would become available for search and review online. This is the most significant practical effect of the settlement for consumers.
- A non-profit Books Rights Registry would be formed to track rights to millions of works. The Registry will be governed by a board comprised of publisher and author representatives; Google will not own or control the Registry. The resulting database of rights holders and works would significantly ease the administrative challenge of securing permission to use text from these books.
- Google will develop new commercial uses of book content. Google has been mum so far regarding the possibilities.
- Revenue from online display of book content will flow to authors and publishers. Many publishers have already licensed in-print books to Google under “Partner Agreements.” Therefore, the most significant revenue flowing from the settlement itself will likely come from out-of-print books.
- Commentators have noted the value to Google of securing access to an enormous quantity of content for Google’s search engine to scour.12 Google’s data-hungry search engine needs more data to improve its search algorithms, and book content was imagined as a part of the search engine from the very beginning. According to Google chief legal officer, David Drummond, Google co-founders Sergey Brin and Larry Page imagined the concept of the book search program even before founding the company.13
Although the scope of the settlement is massive, it is expressly limited to a defined category of works. What does the settlement exclude?
- Works not published and registered with the Copyright Office by January 5, 2009 are expressly excluded from the settlement. As a result, the agreement does not cover any books being released from this point forward. Mr. Drummond stated in March that Google would like to seamlessly incorporate new books into the program, but it is not yet clear whether Google intends to negotiate inclusion of these works through Partner Agreements with publishers or some other mechanism.
- Works that are not subject to a U.S. copyright. Note, however, that books published in foreign countries that are members of the Berne Convention may be subject to U.S. copyright and therefore included in the settlement.
- Public domain works are not subject to the settlement, but will be digitized and made accessible by Google free of charge.
- Periodicals (newspapers, magazines, journals, etc.), sheet music, and works of visual art (photographs, maps, illustrations, etc.) are not included in the settlement, except where the book’s author holds copyright to these visual works. However, illustrations in children’s books are specifically included in the settlement.
The settlement’s scope and coverage reveal that the settlement is really about digitizing out-of-print books, and the terms of the agreement reflect a well-reasoned balance between increased access for these older works that are of limited economic value to publishers and authors and maintaining the publishers’ and authors’ control over in-print works.
Google estimates that approximately sixty percent of all published books are out-of-print but still under copyright.14 The settlement would free Google to display out-of-print books unless the author removes the book from the program. Given that these books are in most cases generating zero income to authors in print form, most authors are expected to allow Google to make these works available. As such, the settlement will potentially free Google to display many millions of out-of-print titles that are currently very difficult to find. This development has obvious implications for on-line research.
Google estimates that less than twenty percent of all published books are currently in-print.15 Google agrees not to make any display uses of an in-print, in-copyright book without approval of both the publisher and the author. This arrangement is more restrictive than the approach used by Google before the settlement; Google will no longer post snippets of in-print books without this approval. As a result, the settlement itself does not expand the in-print works that will be made available unless publisher and author grant approval. However, the Registry should make the approval process more efficient and the 63% revenue sharing arrangement is a persuasive reason for rights holders to approve these uses.
Google commits to make the book content it gains through the settlement available in a variety of ways. The full text of public domain works will be available free of charge on the Google Books site. Up to 20% of each out-of-print work will be available for free, as will bibliographic information for all books in the database. Full-text institutional subscriptions will be available to educational, government and corporate organizations and consumers may purchase full-text access to content, in each case limited to the display rights chosen for each work by publishers and authors. Google will install “public access terminals” in libraries which will allow free access to view the content and allow printing for a per-page charge. The agreement also allows the Registry to approve other commercial uses of the book content.
As a class action settlement, all class members (authors and publishers) have the opportunity to opt out of the settle- ment. Judge Chin recently extended the deadline for opting out to September 4, 2009.16 Those that intend to stay in the settlement but would like to object to its terms may do so by the opt-out deadline and may, if they choose, appear at a hearing October 7 in New York. Those that stay in the settlement may remove individual books from the program by filing a request with Google by April 5, 2011.
For those interested in tracking the progress of the settlement, the full terms of the settlement and other information are available at http://books.google.com/booksrightsholders.
1 Brian D. Flagler advises publishers and other media organiza- tions in a variety of legal matters, including intellectual property protection and enforcement, the purchase and sale of publishing assets, and complex intellectual property disputes. This article
is not intended to serve as legal advice. The author may be reached at email@example.com or (541) 549-8401.
2 See Authors Guild, v. Google, No. 05 CV 8136 (S.D.N.Y. filed Sept. 20, 2005); McGraw-Hill v. Google, No. 05 CV 8881 (S.D.N.Y. filed Oct. 19, 2005).
3 Miguel Helft & Makoto Rich, Google Settles Suit Over Book-Scanning, 158 N.Y. Times B1 ¶ 6 (Oct. 29, 2008) (available at http://www.nytimes.com/2008/10/29/technology/ internet/29google.html?_r=1)
4 I am indebted to Jule Sigall, Senior Policy Counsel at Microsoft and previously with the Copyright Office, for providing excel- lent historical context for the settlement during a presentation we gave to the Northwest Chapter of the Copyright Society in January of this year.
5 Settlement Agreement between the Authors Guild, Inc., and Google, Inc. p. 1 (available at http://www.googlebooksettle- ment.com/intl/en/Settlement-Agreement.pdf).
6 See Mike Masnick, TechDirt.com, Short Term Profits Over Long Term Principles; Google’s Caving on Book Scanning is Bad News, http://www.techdirt.com/articles/20081028/1218012674. shtml,(Oct. 28, 2008).
7 See Open Content Alliance, It’s All About the Orphans, http:// www.opencontentalliance.org/2009/02/23/its-all-about-the- orphans/ (Feb. 23, 2009).
8 See Lynn Chu, Wall Street Journal Opinion Journal, Google’s Book Settlement Is a Ripoff for Authors, http://online.wsj.com/ article/SB123819841868261921.html (March 28, 2009).
9 See Jennifer Howard, The Chronicle of Higher Education News Blog, Harvard Says No Thanks to Google Deal for Scanning
In-Copyright Works, http://chronicle.com/news/article/5417/
harvard-says-no-thanks-to-google-deal-for-scanning-in-copyright-works (Oct. 30, 2008).
10 See, e.g., Kelly v. Arriba Soft Corp., 336 F.3d 811 (9th Cir. 2003); Perfect 10, Inc. v. Google, Inc., 508 F. 3d 1146 (9th Cir. 2007).
11 Settlement Agreement, supra n. 5 at 1.
12 See Frank Pasquale, Balkinization, Beyond Competition: Preparing for a Google Book Search Monopoly, http://balkin. blogspot.com/2009/02/beyond-competition-preparing-for- google.html (Feb. 4, 2009); Juan Carlos Perez, PC World Business Center News, In Google Book Settlement, Business Trumps Ideals, http://www.pcworld.com/businesscenter/article/153085/in_google_book_ settlement_business_trumps_ ideals.html (Oct. 30, 2008).
13 Lane R. Ellis, Search Engine World, Google Turns Another Page In Book Scanning Program With $125 Million Settlement ¶ 12, http://www.searchengineworld.com/google-search/3458755. htm (Oct. 28, 2008).
14 Eric Schmidt, Wall Street Journal Opinion Journal, Books of Revelation ¶ 5, http://online.wsj.com/article/SB112958982689471238 .html?mod=opinion_main_commen- taries (Oct. 18, 2005).
16 Google Book Settlement FAQs, Question 1: Have the dates for the Opt-Out/Objection Deadline and Fairness Hearing changed? (available at http://www.googlebooksettlement.com/help/bin/ answer.py?answer=118704&hl=en)