Google Book Settlement Rejection

By Juliet McNulty on March 24, 2011

The District Court for the Southern District of New York has refused to approve the proposed settlement of copyright claims arising from Google’s digitization of books and presentation of excerpts online in a class action copyright infringement suit brought by the Authors Guild and others against Google, Inc. The Authors Guild v. Google, Inc., SDNY, No. 05 Civ. 8136 (DC), 3/22/2011.

Plaintiffs filed the suit claiming that Google had violated their copyrights and those of other Rightsholders of Books and Inserts by scanning their Books, creating an electronic database and displaying short excerpts without the permission of the copyright holders. In 2008, Google announced an agreement to pay $125 million dollars to settle the lawsuit. The settlement agreement also included licensing provisions, allowing Google to sell personal and institutional subscriptions to its database of books. In late 2009, the parties filed an amended settlement agreement, seeking court approval of the settlement pursuant to Rule 23 of the Federal Rules of Civil Procedure. Several groups, including the Department of Justice and some class members, objected to the amended settlement agreement on a variety of grounds. This week, Judge Chin, writing for the District Court for the Southern District of New York rejected the settlement.

The settlement was an attempt to balance concerns about copyright protection, antitrust issues, and privacy issues with the premise that “the creation of a universal digital library would benefit many.” However, certain objections regarding the proposed settlement’s potential impact on copyright holders and on free competition prompted the Court to reject the agreement.

While Judge Chin expressed little concern with the backward looking release aspect of the settlement, he concluded that there were portions of the settlement that went too far, describing it as “an attempt to use the class action mechanism to implement forward-looking business arrangements that go far beyond the dispute before the Court in this litigation … The questions of who should be entrusted with guardianship over orphan books, under what terms, and with what safeguards are matters more appropriately decided by Congress than through an agreement among private, self-interested parties. Indeed, the Supreme Court has held that “it is generally for Congress, not the courts, to decide how best to pursue the Copyright Clause’s objectives.” Eldred v. Ashcroft, 537 U.S. 186, 212 (2003).” The judge continued: “While the digitization of books and the creation of a universal digital library would benefit many, the ASA [Amended Settlement Agreement] would simply go too far … Indeed, the ASA would give Google a significant advantage over competitors, rewarding it for engaging in wholesale copying of copyrighted works without permission, while releasing claims well beyond those presented in the case.” In the end, the Judge hinted that changing the procedure from opt-out to opt-in might past judicial muster.

It will be interesting to continue to monitor this issue. Some commentators predict that Google may pursue and opt-in approach to digitization in both the U.S. and Europe.

By Gina Durham & Debbie Rosenbaum

The Authors Guild v. Google, Inc., SDNY, No. 05 Civ. 8136 (DC), 3/22/2011.

The District Court for the Southern District of New York has rejected the proposed settlement of legal claims arising from Google’s digitization of books and online display of excerpts in a class action copyright infringement suit brought by the Authors Guild and others against Google.

Plaintiffs filed the suit claiming that Google had violated their copyrights and those of other copyright rightsholders by scanning their books, creating an electronic database, and displaying short excerpts without the permission of the copyright holders. In 2008, Google announced an agreement to pay $125 million dollars to settle the lawsuit. The settlement agreement also included licensing provisions, allowing Google to sell personal and institutional subscriptions to its database of books. In 2009, the parties filed an amended settlement agreement, seeking court approval of the settlement pursuant to Rule 23 of the Federal Rules of Civil Procedure. Several groups, including the Department of Justice and some class members, objected to the amended settlement agreement on a variety of grounds. This week, Judge Chin, writing for the District Court for the Southern District of New York, rejected the settlement.

While Judge Chin expressed little concern with the backward-looking release aspect of the settlement, he concluded that there were portions of the settlement that went too far — particularly the future releases — describing it as “an attempt to use the class action mechanism to implement forward-looking business arrangements that go far beyond the dispute before the Court in this litigation.” Judge Chin continued, “The questions of who should be entrusted with guardianship over orphan books, under what terms, and with what safeguards are matters more appropriately decided by Congress than through an agreement among private, self-interested parties. Indeed, the Supreme Court has held that ‘it is generally for Congress, not the courts, to decide how best to pursue the Copyright Clause’s objectives.’ Eldred v. Ashcroft, 537 U.S. 186, 212 (2003).”

Judge Chin postulated that “[w]hile the digitization of books and the creation of a universal digital library would benefit many, the ASA [Amended Settlement Agreement] would simply go too far … Indeed, the ASA would give Google a significant advantage over competitors, rewarding it for engaging in wholesale copying of copyrighted works without permission, while releasing claims well beyond those presented in the case.” In the end, the Judge hinted that changing the procedure from opt-out to opt-in might past judicial muster.

The court accepted over 500 briefs from various parties supporting or opposing the settlement and early last year held a hearing on the fairness of the settlement. Statements released from the Author’s Guild and the Association of American Publishers suggest that they are more interested in renegotiating the settlement than appealing the decision. It will be interesting to continue to monitor this issue. Some commentators predict that Google may pursue and opt-in approach to digitization in both the U.S. and Europe.