Fordham Law

Opinion: A report from Fordham on Google Books and the rule of law

Denny Chin (alumni) in The Wire Report, May 06, 2011

Media Source

by Howard Knopf

NEW YORK—On April 28, 2011, I spoke at the 19th annual Fordham Intellectual Property Conference in New York on a panel about the Google Books settlement and its recent historic rejection on March 22, 2011 by Judge Denny Chin of the Southern District Court of New York.

Judge Chin, himself a Fordham law grad, was at the conference, and said a few words about the case on another panel.

Other participants on the Google panel were Marybeth Peters, former U.S. register of copyrights; Paul Aiken, director of the Authors’ Guild; Michelle Woods of the U.S. Copyright Office; Daphne Keller, legal director of copyright and products at Google; and Tom Rubin, chief counsel for intellectual property strategy at Microsoft.  The moderator was Daniel Gervais, a Canadian now teaching in the U.S.

My focus was on international legal concerns.

The Google Books project has frequently been likened to a reincarnation of the Library of Alexandria in a digital, fireproof format—because it could include virtually all the world’s important books in an instantly accessible database.

However, what has been shown to be technically achievable and widely praised is far from clearly legally viable. There is considerable concern from those who care about core values in copyright and international law, and indeed the rule of law itself. Nobody is above the law—not even Google. Class actions were never intended to usurp legislation and treaties.

Nobody pretends that Google’s motivations were purely altruistic and scholarly in this case. The amount of money that Google would have had to pay, namely about $125 million, represents about 1.5 days of its revenues.

For that tiny investment by Google standards, the company would have acquired a remarkable and likely insurmountable lead in the digitization and control of a database of all the world’s useful knowledge in book form, and a virtual monopoly on dealings with orphan works.

It would have been relieved of potential liability that Pam Samuelson estimates to be in the trillions of dollars, based upon the statutory minimum damages of which some American copyright owners are so enamoured.

There were serious antitrust concerns raised by some, including Microsoft, based on concern that the proposed settlement would give Google a virtual monopoly in search technology and perhaps much more.

This would also have been an excellent deal for the lawyers representing the author and publisher sub-classes, who stood to be paid $45.5 million, slightly more than the $45 million minimum payable to the copyright owners whose books had been scanned without permission.

Individual copyright owners who did not opt out would have received as little as $60 and not more than $300 for an entire book for their involuntary inclusion in Google’s invaluable database.

The litigation was about the reproduction of what now comprises about 15 million books, a large proportion of which are still protected by copyright. The project morphed way beyond its initial incarnation as a searchable database that allowed for the display of only short “snippets.”

Moreover, the proposed settlement, based upon the amended settlement agreement (ASA), goes well beyond the pleadings in the litigation.

Indeed, Judge Chin found that: “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.”

The original proposed settlement applied to vast number of books published virtually anywhere. After much protest, mainly from Europe, including from Germany’s President Angela Merkel, the ASA narrowed the scope of coverage for foreign books.

In the language of Judge Chin, “The ASA narrowed the definition so that any non-‘United States work,’ see 17 U.S.C. § 101, is covered only if the copyright was affirmatively registered in Washington, D.C. or if the Book was published in Canada, the United Kingdom, or Australia, on or before January 5, 2009 (ASA § 1.19).”

These three countries were likely chosen because common law jurisdictions are much more tolerant of fair use and dealing than “civil law” jurisdictions and, more importantly, these countries would sweep in every important English and many important French books (published in Quebec), regardless of where the author lives, that are still protected by copyright and published prior to Jan. 5, 2009.

Still, the ASA cuts an enormous foreign swath. Many foreign rightsholders remain concerned.

Unlike Germany, the Canadian government has to date maintained radio silence concerning this litigation. Ironically, Canadian authors and any books published in Canada would have been absorbed into the great Google database.

But Canadian consumers and even scholars would have had very limited access to the result—because the settlement would not have “legalized” the activity in Canada. I will not publicly speculate at this time about the potential viability and fate of a class action based in Canada.

Although the U.S. case was reasonably strong, the plaintiffs were clearly eager to settle. The plaintiffs’ lawyers have presumably been working on a contingency fee basis and thus may not yet have been paid for about six years’ worth of work and counting.

Forty-five and a half million dollars now rather than potentially nothing five or 10 years from now must seem quite tempting. It is not clear who bore the brunt of drafting the very weighty settlement documentation, but one suspects that it was mostly done by Google and its counsel.

Very briefly, the international law problems that I and others see in the rejected settlement include the possibility that, if the amended agreement was approved, the United States could be in violation of  the Berne and WTO TRIPs treaties as follows:

First and foremost, there is an issue with “formalities,” which are prohibited by the Berne Convention. Requiring millions of authors and copyright owners from around the world, who had every right to assume automatic protection, to digest hundreds of pages of dense documents and then formally “opt out” in order to preserve what they thought of as their automatic “exclusive rights” is clearly much more than a “procedural step” in a “private dispute,” as Sam Ricketson, a leading expert retained by Google, suggests.
There may be issues related to the “national treatment” provision of Berne and the somewhat related issue of the most-favoured nation requirements of the WTO TRIPS agreements.
There is an obvious potential issue involving what was thought to be an “exclusive” reproduction right and whether the mass scanning of entire books without permission—even if for an arguably fair use purpose—can pass muster under the “three-step test.”
If none of the above applies literally and there is no direct breach, there is the possibility of a “non-violation” contravention—which entails nullification or impairment of expected benefits of a treaty.
Last but not least, the proposed settlement, if approved by the court, arguably would have had a profound and “expressly extraterritorial” effect. Google argued that the amended settlement agreement dealt only with U.S. copyright interests. However, as Judge Chin found, “This argument, however, ignores the impact the ASA would have on foreign rightsholders.”
Many of those present at Fordham—including Google itself—were apparently trying to steer the great Google Books project toward extended collective licensing, which empowers a potentially small though “substantial” (whatever that means) number of rights owners to act collectively for all owners of similar rights.
This is very popular in the Nordic countries, where it originated. However, in my opinion, and that of many others, it is a very socialist and intrusive principle that may not travel well outside of those small countries.

Moreover, it is prone to abuse, inefficiency and excessive administrative expense.

We have seen it creep into Canada without any formal announcement via changes in the Copyright Act that effectively preclude the recovery of significant damages by non-members of certain collectives in some important circumstances. 

Moreover, the Copyright Board’s rulings to date concerning Access Copyright have reinforced this development without any apparent protest by those who one might have expected to be concerned. 

I expect that extended collective licensing will be very controversial in Canada and the U.S. if fully understood. Indeed, J. K. Rowling took high profile legal steps to stop the application of ECL to her work in Sweden. Less successful authors—that is to say virtually everyone else—may share her sentiments but lack her resources.

There was much speculation about next steps in New York, but nobody would tip their hand. The next hearing date, where some indication may emerge of what’s next, is on June 1, 2011.

Earlier in the day, Judge Chin made a few judicious comments about the Google case, although his presence had been planned long before his decision was released and he was there for another purpose.

He indicated that any appeal from his decision, since it was interlocutory, would require him to certify it, and he obviously would not say how he would rule. What he did say by way of an interesting conclusion about the case is that, “It’s about fair use.”

His comments, given in an academic context, were much appreciated.

It is important to understand that Judge Chin’s decision is not “final” and does not rule on the merits. It was a decision about whether the proposed settlement should be approved.

Of course, it does contain some very explicit indications of his view as to how the case might play out at trial. Few expect that anyone will appeal Judge Chin’s decision.

In my personal opinion, his landmark judgment would be bulletproof on any appeal. He has clearly invited the parties to come back with an “opt in” arrangement, but previous positions taken by Google and the entire basis of its apparent business model suggest that this is highly unlikely.

My view of the school of legal realism suggests that Google cannot readily be stopped at this point by any ordinary authors or publishers. Indeed, it has not shown any indication that it intends to stop the project of its own volition.

It is highly unlikely that a mass injunction would be issued to stop this project in the U.S. after seven years have gone by. Google has enormous resources to deal with any future damage claims, should any ever be awarded to individual claimants, even with multiple copyright claims.

The class action lawyers, who presumably have not yet been paid, may be unwilling to carry on for many more years with the risk of ending up with relatively little or nothing, especially if there is intervening legislation.

Few if any individuals would fight Google—even for statutory minimum damages of $150,000 per work, since Google can probably wear down any such plaintiffs over time. Many large publishers are already Google “partners” in this project.

If Google morphs from a so-called “so, sue me” to a “so, stop me” strategy, it runs the risk of being seen as something of a copyright scofflaw of unprecedented magnitude--albeit one with a still-glowing and mostly intact halo. How this would serve the copyright system or even Google itself in the long run, however, remains to be seen.

The best solutions as I see them are as follows.

In the short term, there should be an attenuation or elimination of statutory damages where it can be shown that there was appropriate due diligence to find an unlocatable owner, along the lines of previously proposed American litigation and Ariel Katz’s proposed “remedy tweaking.”

In the longer term, WIPO should work toward a protocol to the Berne Convention or, indeed, a new multilateral instrument, that would clarify the meaning of the Berne three-step test.

This would require a sufficient consensus that mass digitisation of entire works for purposes of fair use, fair dealing or equivalent exceptions where available in civil law countries falls within the test criteria.

Such an agreement, if achievable, would avoid the apparently impossible task of revising the Berne Convention, which contains an effective poison pill requirement of unanimity for revisions.

The Google Books project is a wonderful idea that is up and running, though under a large legal cloud. With some significant modifications, it could be much appreciated by virtually everyone.

But the rule of law is even more fundamental, important and indispensable. Whether or not Google yields to the rule of law, the project has shown the world that copyright law needs to evolve in a way that clearly permits appropriate access, fairness and protection of rights for all concerned to take full advantage of digital possibilities.