Version 1.0 of the proposed Google Book Search (GBS) Settlement is history, pushed into the dustbin by hundreds of submissions urging Judge Denny Chin to reject it, none more devastating than the one filed by the U.S. Department of Justice (DOJ) just last Friday.
On the second day after the DOJ came out against the settlement, Michael Boni and Bruce Keller, the lead lawyers for the author and publisher plaintiffs, asked Judge Chin for an indefinite postponement of the scheduled October 7 fairness hearing.
So instead of getting ready to pop the champagne corks--approval of the settlement on October 7 would have given Boni and Keller $45.5 million dollars in legal fees, and Google a de facto monopoly on "orphan books" whose copyright holders can't be found--the parties are now going back to the drawing board to negotiate an amended settlement agreement.
A memorandum submitted in support of the postponement optimistically observes that the DOJ had recognized that "a properly structured settlement agreement in this case offers the potential for important societal benefits" and that DOJ was committed to "working with the parties constructively to address concerns raised by the United States." It thus appears that DOJ will be actively participating in negotiations for a new settlement.
This is, however, pollyannish view of the situation. The GBS deal can't be fixed by tweaking a few details. Reading through even a sampling of the hundreds of objections to the proposed settlement, one sees an amazingly diverse configuration of opponents and a vast array of problems that cannot be remedied by minor fixes.
Although Google didn't join the Boni-Keller motion, neither did it oppose the request. The judge will very likely grant the requested postponement, for it makes little sense to hold a hearing about a settlement that the parties have, in essence, abandoned.
In the course of renegotiations, Google may be willing to give up the "most favored nation" clause, which, in essence, would prevent competitors from negotiating more favorable terms with the Book Rights Registry (BRR) in the first ten years of the agreement. DOJ has characterized this clause as a potentially anti-competitive provision. Google doesn't really need the most favored nation clause to make GBS a success, so a smart firm would abandon it.
Other DOJ priorities for revision of the GBS settlement agreement will likely meet with more resistance. DOJ has suggested that the litigants should find a way to "provide some mechanism by which Google's competitors could gain comparable access to orphan works." (The problem arises because the settling class will, in effect, be giving Google a license to commercialize all out-of-print books, not just those registered with the BRR. Google's competitors could not get an equivalent license to the orphan books because BRR cannot license books not in its registry.)
Google may argue till it is blue in the face that this can't be done because its competitors are not litigants in the lawsuit, but DOJ will likely press for the parties to find a creative way to achieve this objective.
A second significant change to version 1.0 of the GBS settlement may well be a narrowing of the class with which Google would be settling. Under the GBS settlement 1.0, the class was defined as all persons owning a U.S. copyright interest in one or more books. As my earlier post on the audacity of the GBS settlement pointed out, this class includes virtually every owner of a copyright interest throughout the world, owing to U.S. treaty obligations.
With objections to GBS settlement lodged by the governments of France and Germany, as well as by publisher and author groups from other countries, and with DOJ having validated the legitimate concerns raised by these objectors, the sensible response would be to narrow the class to exclude non-U.S. rights holders. Simply putting a few non-U.S. rights holders on the BRR's board of directors, as Google recently proposed, will not satisfy their concerns.
A third significant change recommended by DOJ is a narrowing of the range of uses, especially commercial ones, that Google can make of out-of-print books. DOJ has no objection to a settlement that would allow Google to make snippets of books available, given that this is the use that the Authors Guild initially sued to enjoin. DOJ expressed strong skepticism, however, about the "sweeping forward-looking" future use licensing provisions in GBS settlement 1.0. It is obvious why Google wants clearance to all future revenue models, since the settling class will not be available to give it a license to future revenue models once the settlement is approved.
But as DOJ points out, this reaches far beyond the bounds of the issues that were before the court in the litigated case (which only involved whether scanning books to index them was fair use or infringement). DOJ has yet to say whether institutional subscriptions or sales of individual books are within ken. But perhaps this is possible if the settlement changes the default rule from one in which Google automatically gets to commercialize out-of-print books unless right holders say no to a default that requires Google to get rights holders' permission for such uses.
Google and the author/publisher plaintiffs will clearly try to satisfy the DOJ in any GBS settlement 2.0. It is, as yet, unclear whether the parties will undertake a meaningful effort to address the many concerns raised by other objectors to the settlement, such as those pertaining to a lack of meaningful constraints on price hikes, fees that libraries will have to pay BRR for printing out even a few pages from GBS books, user privacy concerns, and restrictions on non-consumptive research, to name a few. One can only hope that Judge Chin will urge the litigants to pay attention to all of the objections, not just to those raised by the DOJ.
Pamela Samuelson is the Richard M. Sherman Distinguished Professor of Law, University of California, Berkeley. She can be reached at pam@law.berkeley.edu.