Orphan Works and the Google Book Settlement / Part I

We’ve been asked for news about the Orphan Works bill. Last June Intellectual Property Watch warned that it would be back during the summer. And on June 11th, Senator Orrin Hatch confirmed his intent to reintroduce the bill. We immediately put out a notice to artists. But summer’s over and we’ve had no further news. So far, so good.

Of course Congress has had other priorities: the ongoing financial mess, the health care debate and – on the copyright front – the Google book search controversy. For those who haven’t followed the news about this Google assault on copyright, we’ll try to summarize it.

The World’s Largest Library (Or is it Bookstore?)
In 2004, Google announced its intent to digitize all of the world’s 80-100 million books – and to make most of them commercially available as orphaned works. The plan has been controversial since its inception.

Google began with the cooperation of several major libraries. The libraries gave Google access to their holdings. The problem is that libraries are libraries; they don’t own the copyrights to the books they hold. In short, they gave Google the rights to other people’s work. So far, Google has scanned over 10 million books.

In 2004, the Authors Guild and Association of American Publishers sued Google for copyright infringement. Last October the parties settled. The resulting agreement is 141 pages long, with 15 appendices of 179 pages. The implications for copyright holders are not clear, but what the litigants would get is breathtaking. As Lynn Chu, a principal at Writers Representatives LLC, wrote in the Wall Street Journal, March 28, 2009:

“[I]f approved by the federal court, [it would] permit Google to post out-of-print books for reading, sales, institutional licensing, ad sales, and other publishing exploitations, by Google, online. The settlement gives the class-action attorneys $30 million; a new, quasi-judicial bureaucracy called the Book Rights Registry $35 million...and $45 million for owners infringed up to now -- about $60 a title.” http://online.wsj.com/article/SB123819841868261921.html

Google would keep just over a third of the profits generated by selling these books online. The rest would go to the Book Rights Registry run by publishers’ and authors’ representatives. In other words, 63% would go to the parties that sued Google. In theory, the Registry would attempt to locate the authors of orphaned works and pay them royalties. But as Ms. Chu points out, the parties that sued Google – and would therefore benefit from Google’s infringement – have themselves traded away other people’s rights in the bargain:

“No one elected these ‘class representatives’ to represent America's tens of thousands of authors and publishers to convey their digital rights to Google. Nor are the interests of this so-called class identical.”

The US Department of Justice apparently agrees. Last Friday, it filed an objection to the settlement and advised the court to reject the settlement as written. On page 9 of their brief, the DOJ attorneys write:

“The structure of the Proposed Settlement itself, therefore, pits the interests of one part of the class (known rightsholders) against the interests of another part of the class (orphan works rightsholders). Google’s commercial use of orphan works will generate revenues, which will be deposited with the Registry. Any unclaimed revenues, however, will inure to the benefit of the Registry and its registered rightsholders. Thus, the Registry and its registered rightsholders will benefit at the expense of every rightsholder who fails to come forward to claim profits from Google’s commercial use of his or her work...

“The greater the economic exploitation of the works of unknown rightsholders by Google and the Registry, the stronger the incentive for known rightsholders to retain the unclaimed revenues for themselves.” [Emphasis added]

The Department of Justice also warns that the settlement fails to comply with copyright, antitrust laws and the rules of class action litigation. http://www.usdoj.gov/opa/pr/2009/September/09-opa-1001.html

The US federal court was scheduled to hold a fairness hearing October 7. But over 400 objections from around the world have been filed by rightsholders, competitors to Google and (in addition to the US government) the governments of France and Germany. Yesterday we received news that the fairness hearing has been delayed.

The Google settlement has also been condemned by Marybeth Peters, Register of the US Copyright Office. Testifying before the House Judiciary Committee last Wednesday, Ms. Peters stated that it would allow Google to “operate under reverse principles of copyright law,” adding “it could affect the exclusive rights of millions of copyright owners, in the United States and abroad, with respect to their abilities to control new products and new markets, for years and years to come.” http://www.copyright.gov/docs/regstat091009.html

We haven’t had much to say about this agreement because, with the notable exception of childrens’ book illustrations (which for purposes of the settlement are considered part of the text) the agreement doesn’t include visual art. Yet like the Orphan Works bill itself, the Google Book Settlement would be a radical change to copyright law.

Tomorrow we’ll examine some of the ways in which this settlement parallels the Orphan Works bill.