Months after finally reaching a settlement with individual authors, the Association of American Publishers, and the Authors Guild over copyright issues, Google Book Search is again faced with another potential setback, this time from the Department of Justice. The Department launched an inquiry this month to examine potential antitrust implications of the proposed settlement, stemming from provisions many argue give the company favorable treatment and could inhibit competition in the digital book industry. The issues are both new and old, as the antitrust concerns stem in part from controversial copyright provisions of the agreement, and are best explained by first discussing the project's challenges leading up to the proposed settlement.
Google Book Search
Google's initial Book Search, launched in 2004, consisted of a program which would scan and index books from libraries of major universities. The program allowed users to search the text of the books by entering queries into its book search engine. The search engine would then lists results showing "snippets" from each copyrighted book that fit the query, and, most often, the entirety of those in the public domain. The program, accessible to U.S. residents only, made no effort to ascertain the owners of the copyrights to the books, or to obtain permission from the copyright owners. Moreover, it provided no mechanism for copyright owners to exclude their books from the index.
Copyright Issues
In September 2005, The Authors Guild and three individual authors filed a class-action lawsuit against Google alleging that the company's book search amounted to massive copyright infringement. At first, Google responded by arguing that its program was protected by the fair use doctrine of copyright law. The fair use doctrine outlines certain circumstances under which copyrighted materials may be used without permission from the copyright owner based on the purpose of the intended use, the nature of the copyrighted work, the amount of the work used, and the effect the use would have on the market value for the work. Google argued that its use of the copyrighted books was permitted under the fair use doctrine because search results only showed users a brief "snippet" of text from the books where the search term appeared, rather than large chunks or the whole book, and because the program would encourage sales of the books. Opponents argued, however, that this argument overlooked the fact that Google was copying the text of the entire books into its system, stating that it was not so much concern over what is delivered to the user, but the fact that the program copies the entire works in the first place without permission from the copyright owner.
Settlement
In October 2008, after two years of negotiation, Google reached a Settlement, dubbed "the biggest book deal in U.S. publishing history" with the individual authors, the Association of American Publishers, and the Authors Guild, under which Google is to pay $125 million for the rights to display 20% of any copyrighted book covered by the agreement (not just a "snippet"). Although the parties never reached agreement as to the actual copyright infringement concerns at issue, it was mutually decided that finding a middle ground would benefit all concerned. By granting Google the rights to display chunks, rather than snippets, it was argued, hard-to-find books would be more accessible to the public.
Under the deal, Google is also permitted to sell access to individual texts and online subscriptions to individual users and institutions giving access to its entire collection of books. Thirty-seven percent of the profits gathered from the subscriptions, books sales, and advertising revenue are to be kept by Google, and the remaining sixty-three percent are to be collected by a non-profit entity created under the Settlement called the Book Rights Registry, and are to be contributed to a royalty system designed to compensate the authors and publishers involved for access to their works. The Book Rights Registry would also be responsible for making efforts to locate and register copyright owners so that they have a chance to agree or not agree to have their works included in the program. Remaining profits are to go towards settling claims by copyright owners and other legal fees.
Antitrust and Other Concerns
The Settlement has not been met lightly by others in the industry, however. Competitors and critics, including Internet Archive and Consumer Watchdog, are concerned that the Settlement essentially gives Google a monopoly over the digital book industry. In particular, there are concerns over the Settlement's "most favored nation" clause and "orphan works" provision.
A "most favored nation" clause is a contract clause in which a seller agrees to give the buyer the best terms it makes available to any other buyer. The inclusion of this clause in the Settlement means that the Book Rights Registry would be prevented from offering better terms to Google's competitors. While this may not sounds too bad on paper, critics worry that more advantageous terms will be necessary for smaller competitors such as Yahoo! or Microsoft to have a chance to enter the digital book market. Critics argue that the provision's restriction on the Registry's ability to do so, even if it believes it is necessary to enable fair competition, violates antitrust laws and should thus be removed.
Another concern stems from the Settlement's "orphan works" provision. Under the Settlement, authors and publishers are effectively opted into the agreement unless they expressly opt out of having their works included in the program. This is of special concern for those copyrighted works dubbed "orphan works". Orphan works are written materials still under copyright but for which the copyright owner cannot be found, and thus permission cannot be obtained. Millions of books fall into this category. Under normal circumstances, companies are discouraged from using these works for fear that the rights holder will eventually emerge and file suit for substantial copyright damages. Because this Settlement was negotiated as a result of a Class Action lawsuit, however, if passed, Google would not have this worry because it would not be required to seek consent from these authors. Once the class, including all copyright owners potentially affected, was certified by the Court, the representatives of the Class were given the ability to negotiate on behalf of the entire class, including authors of orphan works. Many fear the provision goes too far by essentially granting Google blanket and exclusive license to potentially millions of works. They argue that because the provision shields Google from liability for using these works, while providing no such protection to any other competitors, it is in essence a barrier for other competitors seeking to enter the market. If this rings true, Google would have free reign to raise prices for access to the collection. Thus, critics argue that the provision should instead be extended to cover all who digitize books.
Critics also argue that that Settlement goes too far from a societal-standards perspective. With Google as the sole decider which works would or would not be offered to the public, some fear it will essentially become a primary designator of what is appropriate or not for public viewing. Moreover, the actual authors of works covered by the Settlement could potentially be prohibited from offering their works elsewhere.
Conclusion
These developments have prompted the Judge overseeing the Settlement to postpone the deadline for authors to opt out of the Settlement by four months, per the request of many authors and heirs of authors desiring more time to review the deal. Although the Court must have found reason to certify the parties who brought the lawsuit as fair representatives of the entire Class, the Settlement is still subject to Court approval, providing another chance for the Court to consider whether the representatives have fairly negotiated on behalf of the orphan works authors.
In the meantime, Google appears to be moving ahead, albeit at a slower pace, with development of the online book search. Google has faced antitrust allegations in the past and it has always been willing to take a step back. While the D.O.J.'s inquiries show that it believes there is something to the concerns raised by critics, it does not necessarily mean it will oppose the Settlement, or that the Settlement will be approved in the first place.
Vol. 53, June 2010