Lecture given at U North Carolina Law School on the Google Book Search Settlement

1. REFLECTIONS ON THE
GOOGLE BOOK SEARCH
SETTLEMENT
Pamela Samuelson, UC Berkeley
OCLC/Kilgour Lecture, UNC
April 14, 2009

2. OVERVIEW
• Why was G sued over the Book Search project?
And how good was its fair use defense?
• What motivated settlement of the lawsuits?
• What benefits will the settlement bring about?
• What are risks, disadvantages, or problems with
the settlement?
• What can the judge do?
• What else could happen that might “fix”
problems the settlement may cause?
April 14, 2009 OCLC/Kilgour Lecture 2

3. BOOK SEARCH PROJECT
• G began Book Search in 2004
• G made arrangements with some
university research libraries to scan books
in their collections
– libraries to get back a digital library of its
collection
– only G would have the corpus of all books
– @ 7M books now available in BS
• G aiming for 15M
April 14, 2009 OCLC/Kilgour Lecture 3

4. GBS ACCESS TERMS
• For books in the public domain, G makes whole
book available
• As to books in ©, G now makes “snippets”
available, but has not run ads vs. the snippets,
has provided links so users could buy relevant
books
• G also willing to take book out of GBS repository
if © owner objects
• Partner program allows © owners to make
special arrangements with G about how much of
their books to make available; revenue-sharing
arrangements
April 14, 2009 OCLC/Kilgour Lecture 4

5. AUTHORS GUILD v. GOOGLE
• In 2005, AG + a few of its authors sued G for ©
infringement for scanning books, storing and
processing the scanned books, & displaying
snippets
• AG claimed this was a class action lawsuit
brought on behalf of all authors whose books
were scanned
• G claimed fair use, but also disputed AG as fair
representative of the class
• 5 publishers brought similar suit vs. G; not
initially a class action
April 14, 2009 OCLC/Kilgour Lecture 5

6. FAIR USE re BOOK SEARCH?
Publishers/authors: Google:
- Commercial purpose; non- + transformative; promoting public
transformative use access to information
- Systematic copying of © works + necessary to copy to index,
of all genres, creative works make snippets available;
- Whole thing copied, orphan books opened up
systematic, stored + whole thing, but only snippets
permanently available unless au/pubr
- Presume harm; harm because agrees to more thru partner
lack of control, risk of loss; we program
want to license such uses + transactions costs problems
with clearing rights = market
failure; GBS enhances market
for many books (we’ll link to
where you can buy them)
April 14, 2009 OCLC/Kilgour Lecture 6

7. MOTIVATIONS TO SETTLE
• Litigation is expensive, would take many years to resolve
definitively
• Outcome in doubt because close fair use case
• Unclear whether class of authors would be certified; if
class not certified, G would take objecting authors’ books
out of the repository; not much left to collect
• G facing very big damage exposure, injunction to destroy
its scans of in-© works possible
• Settlement created an opportunity for a “win-win” if G
willing to share revenue streams with AAP, AG
• G had better technology & ideas about how to create
new markets for books in digital environment than AAP,
AG
April 14, 2009 OCLC/Kilgour Lecture 7

8. RISKS FOR GOOGLE
• Although G could rely on several fair use search engine
cases, none was 2d Cir case; Ps brought case in SDNY
where UMG v. MP3.com and AGU v. Texaco rulings
were made
– UMG v. MP3.com: unauthorized “ripping” of music from CDs to
make database of music to provide new service to owners of
that music = infringement; ready to order $118M in SD
– AGU v. Texaco: scientist’s copying of 7 research articles for
archival purposes = unfair use
• 6M books in © out of 7M in GBS x $750 = $4.5B
– Whole lot more if up to $150K per work!
• G also defendant in Viacom v. YouTube case; facing
substantial exposure in that case too
• Risks also for libraries as to digital copies from G
April 14, 2009 OCLC/Kilgour Lecture 8

9. CORE OF SETTLEMENT
• G to provide $45M to compensate © owners as to books
it has scanned
• G to fund creation of a new collecting society, the Book
Rights Registry, for $34.5M
• Authors and publishers can sign up with BRR to get
payments from that $45M + share in any new revenues
BRR collects that are subject to the revenue split (BRR
gets 67%)
• 3 initial services:
– display parts of books in response to user queries (ads run vs.
queries)
– sale of books to individuals (accessible only in the cloud)
– sale of subscriptions to institutions
• G will continue to scan books, up to @ 15M
April 14, 2009 OCLC/Kilgour Lecture 9

10. WHAT ABOUT LIBRARIES?
• Those who have contributed books to corpus will
get back from G a digital copy of those books
– The settlement means they will no longer be risking
liability for having contributed books to G or taking
back digital copy
• Public libraries will be given 1 terminal each for
accessing the corpus, but can’t print out or copy
• Many research libraries will be institutional
subscribers to GBS, able to view whole works in
the corpus, able to print out small # of pages
• But no special deal for public school libraries,
gov’t libraries, other libraries
April 14, 2009 OCLC/Kilgour Lecture 10

11. BENEFITS
• Removes a dark cloud of liability from the heads
of G and cooperating libraries
• More public access to more books than if G had
not undertaken to make GBS at all or if G
restricted GBS to public domain books
– Likely to show that “orphan” books have real value
• Revenues will flow to authors and publishers
who register with the BRR
• Those authors and publishers who do not want
their books in GBS can ask for removal
• New business models, choices for consumers
April 14, 2009 OCLC/Kilgour Lecture 11

12. SO WHAT’S NOT TO LIKE?
1. G getting exclusive rights as to orphan books
2. Other mass digitization projects may be
imperiled
3. Settlement creates 2 complementary
monopolies—GBS & BRR—with power to set
prices and other terms for access to books
4. BRR will have interests different from authors
whose books make up most of the repository
5. No privacy guarantees
6. Excessive fees to class action lawyers
April 14, 2009 OCLC/Kilgour Lecture 12

13. ORPHAN WORKS
• Google will have a monopoly on making
available “orphan books”
– Estimated 75% of books in corpus
– G able to monetize this as well through individual
sales, subscriptions, ads next to displays
• BRR cannot license others to scan orphan
books because it can only license uses of books
whose © owners have registered with it
• It is only because of the settlement of the class
action that G can get this exclusive license
– G would almost certainly have objected to the class
certification otherwise
April 14, 2009 OCLC/Kilgour Lecture 13

14. IMPLICATIONS FOR OTHERS
• No one else (e.g., Amazon) can get an
equivalent license to G’s without scanning books
like G and hoping for a similar class action
lawsuit vs. it, and then a settlement on the same
terms!
– Would this be too risky?
• Will G’s settlement of the lawsuit undercut fair
use argument that later scanners might make for
mass digitization?
– Some say yes; G says no
• Settlement may also take some wind out of
legislative push for “orphan works” legislation
April 14, 2009 OCLC/Kilgour Lecture 14

15. TERMS & CONDITIONS
• BRR and G will set prices, other terms & conditions for
books, subscriptions, new business models
– G says that it will price to promote broad access, but if it attains
the monopoly that is consistent with the logic of the settlement,
will it do so?
– BRR will have institutional bias vs. allowing or alerting authors to
possibility of public domain, CC licenses for books in registry
– BRR unlikely to complain that prices are too high or DRM &
license restrictions too severe
– If no competition as to orphan works, terms won’t get better,
other innovations may not happen
• Researchers will have to get permission in advance from
G to do research over the whole corpus
April 14, 2009 OCLC/Kilgour Lecture 15

16. BRR
• BRR can license others (e.g., Amazon) to scan and
make books available as to authors and publishers that
have registered with it, but will BRR be willing to license
them if this competes with the sweet deal it has with G?
• BRR will get 63% of the revenues from use of in-©
books, even as to books written by authors who are not
registered with the BRR!
• BRR will have board of half AG, half AAP
representatives (who are copyright maximalists!)
• Neither AG nor AAP share the research values of the
majority of authors whose works are in the corpus
• Collecting societies historically have engaged in
anticompetitive acts, spend $$ on themselves, not
distribute substantial sums to actual rights holders
April 14, 2009 OCLC/Kilgour Lecture 16

17. LAWYER FEES
• 2 law firms involved, 1 for AAP, 1 for AG
• Settlement will make $45.5M available to
compensate the class action lawyers
– THAT’S MORE THAN ALL THE AUTHORS WHOSE
BOOKS ARE BEING SCANNED COMBINED!
• They didn’t work THAT hard
• Is this an abuse of the class action process?
• G would have fought class certification if
litigation went forward
April 14, 2009 OCLC/Kilgour Lecture 17

18. PRIVACY
• Libraries who supplied the books to G have longstanding
policies of respecting patron privacy as to books
– Many librarians would take a bullet (metaphorically) before
violating user privacy
• Nothing in the settlement agreement speaks about
privacy interests of users
• G will be “selling” books to individuals that can only be
read in the cloud
• G will be able to monitor what users are reading, etc.
• Institutional subscribers may also care about privacy
• G has thus far been unwilling to make commitments
about respecting GBS user privacy (even though willing
to do so with other services, e.g., Google Health)
April 14, 2009 OCLC/Kilgour Lecture 18

19. WHAT CAN THE JUDGE DO?
• Litigants cannot settle class action lawsuits without a
judge approving the settlement
• The main ? before the court is whether the settlement is
fair to the class
– NOT whether the settlement is in the public interest
– Possible some members of the class will object to the settlement
(e.g., scholars who object to AG, AAP as representative of the
class)
– Also possible for members of the class to opt out
• Some likelihood of interventions
– My firm will be affected by the settlement, even though it is not a
party to the lawsuit (maybe Amazon, MS, or Yahoo)
• But judge has no power to change the settlement
April 14, 2009 OCLC/Kilgour Lecture 19

20. OTHER OPTIONS
• If the settlement is approved, antitrust oversight
may be needed because the logic of the
settlement makes likely that GBS/BRR may
ultimately engage in monopolistic abuses
• Antitrust authorities could require G to give a
license to others to scan orphan books
• Congress could pass legislation to allow other
mass digitization to happen or to insist on
privacy protections for users
• The judge could say no, in which case Google
would have to defend the fair use claim,
challenge class certification
April 14, 2009 OCLC/Kilgour Lecture 20

21. CONCLUSION
• If it were up to me, I would not approve the settlement
• AG does not represent the interests of the scholars who
wrote books that constitute the overwhelming majority of
works in the corpus
• Libraries may rue the day that AG v. G settled
– Think about the complaints vs. journal publishers
• This settlement is a privately negotiated compulsory
license to orphan books, and a major restructuring of the
future of the book industry w/o meaningful government
oversight
• It is, however, so complicated that it’s not getting the
attention in the scholarly communities that it should have
• Judge may approve unless well-crafted objections soon
April 14, 2009 OCLC/Kilgour Lecture 21