Singularity Law » Google Book Search

Google Book Search: The Good, the Bad and the Really Bad

Professor Scott — Mon, 09 Mar 2009 04:39:56 +0000

Last month I was honored to speak at the mid-Winter Copyright Society U.S.A. meeting in San Francisco. My presentation was focused primarily on the Google book search settlement, and its implications for copyright owners in general. I had previously written on how I felt that Google had gotten the better end of the deal, which I reiterated at the meeting. That generated a lively debate, including comments from some of the attorneys present who had apparently been involved with the settlement discussions.

Even after hearing their side of the story, I am still convinced, that the book industry got a raw deal.

Factual Background

The facts of the case are straightforward. In 2002, Google began quietly digitizing books. Their goal apparently was to digitize every book ever published, whether or not it was still under copyright. The “Google Book Search” project was officially launched in 2004 with agreements with numerous large, research libraries that had agreed to give access to their collections to Google. The Google Book Search service permitted Internet users to search the complete text of the books that had been scanned. However, depending on whether or not the book was still under copyright, the user could either display the entire text (public domain books) or short snippets of text before and after the keywords searched for (in-copyright books).

In September 2005, Google was sued for copyright infringement by the Authors Guild, the American Association of Publishers and a number of individual authors in a class action. The plaintiffs claimed that the project was “massive copyright infringement” and should be shut down. The litigation dragged on for over 3 years, during which time Google scanned, digitized and indexed over seven million books from major university libraries.

Summary of Settlement

On October 28, 2008, the parties announced a settlement of the litigation. The agreement, stretching to 141 pages, provides that Google will pay $125 million plus establish a new licensing system with publishers. The system will allow any copyright owner to opt-out of the settlement, will require Google to pay 63% of all revenues generated by the use of copyrighted books to a “collection society” (the “Book Rights Registry”) for distribution to copyright owners, and require the implementation of a DRM/subscription model for full-text access, but not for searching –- which will be limited to short snippets for in-copyright works.

Who Won?

While the copyright owners will receive compensation for the use of their in-copyright, but out-of-print books, and will require Google to negotiate separate deals with copyright owners of in-print, in-copyright books, the settlement, in my opinion (as well as an increasing number of critics) definitely favors Google for a number of reasons.

1. First mover advantage. Google has been feverishly digitizing books for over 4 years now. It has processed at least seven million books. While perhaps not a “critical mass” of books yet, it is an enormous head start over any potential competitor.

2. All publishers bound by the settlement. Because the case was filed as class action, all publishers will be bound by the terms of the settlement unless they choose to opt out. This includes not just U.S.-based publishers, but publishers in every Berne Convention country – basically every country with a publishing industry. For publishers that do not opt out, they will be bound by the terms of the settlement. Google does not have to negotiate separately with every publisher (except those that might opt out). Any future competitor, however, will need to negotiate with every publisher – a very expensive proposition – and there is no guarantee that a competitor would be able to cut an identical deal with every publisher, or even a deal that is as good as what Google is getting. Indeed, if the settlement plays out as I envision, publishers will be so angry that any competitor that attempts to duplicate Google’s service will be in for a rough time cutting a reasonable deal.

3. Barriers to entry. Google already has deals with a number of the major research libraries to have access to their collections for free, in exchange for which they will get a copy of the digital database (and some other benefits). Any competitor probably will not be able to make the same deal with these major libraries. It is unlikely that the same libraries would want to put up with the disruption to their organization of having multiple scanning projects going on at the same time. Competitors would need to find other collections to digitize, or pay a large amount of money to these libraries – a cost that Google did not have to incur.

4. High settlement amount. The large amount will discourage others from entering the field – giving Google a virtual monopoly on every book coming within the settlement. Publishers will not be willing to give subsequent competitors a better deal.

5. Others cannot claim fair use. It will be more difficult for others to claim “fair use” if they decided to compete with Google. While there was no determination of whether Google’s conduct was or is a “fair use,” a judge in a subsequent case may look at this settlement as “evidence” that massive digitizing of copyrighted works is not a fair use – otherwise, why would Google, which claimed fair use all along, have settled for such a large amount? A decision in this case that Google’s use of copyrighted material was a fair use would have opened the door for many competitors to piggyback on the court’s decision and built competitive databases protected by fair use. So a lack of a ruling on this pivotal issue definitely plays into Google’s hands.

6. The settlement grants a compulsory license to Google for all books printed prior to February 5, 2009. The settlement establishes a legal business model for Google to monetize this huge and growing database of copyrighted materials with the copyright owners’ blessing. Google get 37% of all revenues generated, where previously it was getting nothing. (This is a much larger percentage than iTunes gets for their music downloading service.)

7. Google gets to set the rates for the various revenue streams. Perhaps one of the most amazing aspects of the settlement is that Google gets to decide how it will monetize the sale of the plaintiffs’ copyrighted works going forward. I cannot think of any previous copyright infringement suit where the alleged infringer not only got an expansive license to continue its allegedly infringing activities, but the infringer is given greater rights to the works than when it was allegedly infringing, and given complete discretion over how it will monetize the exploitation of the plaintiff’s works in the future. (It would be as of the record companies had settled their copyright infringement suit against Napster by giving Napster complete access to their entire catalogs, and letting Napster set the price for selling those songs to its file-sharers, including the right to continue to allow file-sharers to download the songs for free!)

Under the settlement, Google has the right to make money from (i) selling downloads of in-copyright but out-of-print books, (ii) selling advertising on pages in which the copyrighted works are accessible by users, and (iii) selling subscriptions to libraries for access to the book database. But it is Google, and not the copyright holders, who gets to set the price for these revenue streams. Theoretically, Google could charge nothing for these uses of plaintiffs’ books, and the book publishers would get nothing more than the settlement amount. While that is not likely to happen (since publishers still have opt-out rights that could be exercised if they are dissatisfied with the way the scheme is working), there is nothing in the settlement agreement that requires Google to charge a minimum amount, or anything at all.

8. Few copyright owners are likely to opt out. While copyright owners are free to opt-out of the system, it would be foolish for most copyright owners to do so. They essentially have three choices – go along with the system, opt-out and forego the revenues they would get under the system, or try to set up their own system to monetized digitized version of their works (which hasn’t worked in the music industry, and is unlikely to work here). A fourth choice — to do a deal with another database developer — is unlikely for the reasons stated above.

9. The Book Rights Registry will operate at the publishers’ expensive, not Google’s. While Google has earmarked $37 million to establish the “Book Rights Registry,” the actually operating expenses will be borne by the publishers out of their cut. This will save Google untold millions in administration costs, and having to track down the copyright owners of orphan works, works owned by publishers who have either gone out of business or merged into another publisher, and individual copyright owners who may have died and the current ownership of the copyright is splintered amongst his or her heirs.

Conclusion

The cost to Google to settle ($125 million) sounds like a lot on the surface, but will average out to far less than $1 per work that Google will be digitizing over the next several decades. Certainly a cheap price to pay for a compulsory license to a treasure trove of the world’s greatest (and not so great) books.

Viacom: Hey Google, What About Us?

Professor Scott — Fri, 14 Nov 2008 04:05:20 +0000

Several weeks ago now, Google announced the settlement of a copyright infringement case filed against it by a group of American publishers who objected to the Google Book Search project. (I recently wrote about the settlement here.) The Google Book Search project has the goal of digitizing virtually every book ever published, and making that database searchable. The plaintiffs had objected both to the digitizing, which involved wholesale copying of complete books, as well as displaying the search results, which they argued constituted further copying (and therefore infringement). Google based its defense entirely on the fair use doctrine under Section 107 of the Copyright Act (17 U.S.C. §107).

The settlement has Google paying the book publishers $125 million in exchange for essentially a perpetual license to digitize and store all of their books now in existence, as well as future books that they may publish. It places strict limitations on Google’s ability to display books that are in-print and in-copyright, but allows Google to not only display portions of out-of-print, but still in-copyright books, but to sell access to those books. Google can charge for access to the digital version of those books, and will be allowed to retain 37% of all revenues generated from the sale of those books and certain advertising revenues it may generate as well. In exchange, the publishers will dismiss their infringement action, and since it was filed as a class action, the settlement will bind both the named plaintiffs but all other U.S. publishers as well, unless they opt out.

This settlement has not gone unnoticed by Viacom, Inc., which also has a major copyright infringement suit pending against Google. Unlike the publishers’ case, the Viacom action involves the posting of Viacom owned videos on YouTube, a company owned by Google. Executives of Viacom are quoted as saying, basically, that since Google settled the publishers’ case, there is no reason it shouldn’t settle with Viacom (and pay Viacom a hefty settlement fee as well). While Google might decide to do so, if it made business sense to do so (as it did in the publishers’ case), the two cases have very little in common, other than the fact that they both involve Google as a defendant and they are both copyright infringement cases.

The Viacom case did not arise from a direct infringement by Google (or YouTube) of any copyrights owned by Viacom – which was the claim in the publishers’ case. Instead, the Viacom action seeks to hold Google liable for third party postings of Viacom videos on the YouTube website. Instead, of having to fit its actions under the fair use doctrine of copyright law, whose reach is very fact-specific, in the Viacom case, Google is able to take advantage of the DMCA “safe harbor” provisions, which immunize Google from any liability, as long as it complies with the requirements of the DMCA. While Viacom is arguing that Google cannot take advantage of the “safe harbor” provisions, that is an uphill battle that Viacom is likely to lose.

These are two very different lawsuits based on two very different provisions of U.S. copyright law. While Google may decide to settle with Viacom for business reasons, or Viacom may be able to convince a judge that Google is not entitled to the protections afforded by the DMCA, the two cases are entirely unrelated. Viacom is taking a big chance by pursuing this case, since of it loses, it will open the floodgates to having its videos posted all over the Internet (even more so that today). It is Viacom that should be looking for a way out of this mess it has gotten itself into, not Google. And you can be sure that any settlement entered into will be much more favorable to Google than to Viacom. (IMHO).

The Singularity Law Podcast Episode 6: Happy Birthday, DMCA!

Professor Scott — Wed, 05 Nov 2008 03:22:05 +0000

The DMCA celebrates its tenth birthday; are we better off than we were ten years ago? Who is the real winner in the Google Book Search settlement? Can California’s legislature control violent video games? Michael and Josh tackle these questions and more on this week’s edition of The Singularity Law Podcast!

Click the play button below to listen, or click here to subscribe to us on iTunes!

Here are the show notes for this week’s episode:

Shownotes for The Singularity Law Podcast: Episode 6 for November 4, 2008

Our Panel for Today:

Prof. Michael Scott of The Singularity Law Blog
Josh Kagan of The Josh Kagan Blog

DMCA’s 10th Anniversary: Where Do We Go From Here?

EFF: “Unintended Consequences: Ten Years Under the DMCA”

The Google Book Search Settlement

Michael Scott: “Google Stares Down Book Industry: Publishers Blink, Google Book Search Wins”
EFF: “Google Book Search Settlement: A Reader’s Guide”
EFF: “Google Reaches Settlement With Authors and Publishers Over Google Book Search”
Google Watch (eWeek): “Google Gets Great Deal in Book Search Settlement”
Authors Guild: “$125 Million Settlement in Authors Guild v. Google”
Text of Settlement Agreement
Class Notice

Regulating Violent Video Games

Josh Kagan: “Violent Video Games Go (Back) to Court”

Final Thoughts

Google Stares Down Book Industry: Publishers Blink, Google Book Search Wins

Professor Scott — Tue, 28 Oct 2008 19:00:57 +0000

In September 2005, Google was sued by the Authors Guild, the American Association of Publishers and a number of individual authors for copyright infringement for its “Google Book Search” project (which was launched in 2004). The plaintiffs claimed that the project was “massive copyright infringement” and should be shut down. Google held the plaintiffs at bay for more than three years, during which time it scanned, digitized and indexed large numbers of books from major university libraries. (The exact number of books has not been disclosed, but it is believed that millions of books have been digitized.)

On October 28, 2008, Google and the AAP announced a settlement of the litigation. The agreement, stretching to 141 pages, provides that Google pay $125 million, plus establish a new licensing system with publishers. The system will allow any copyright owner to opt-out of the project, will require Google to pay 63% of all revenues generated by users’ access to the database to a “collection society” (the “Book Rights Registry”) for distribution to copyright owners, and will result in the implementation of a DRM/subscription model for full-text access, but not for search – which will be limited to short snippets for in-copyright works.

Who won?

While the copyright owners will receive compensation for the use of their works, the settlement (if approved by the court) will definitely work in Google’s favor going forward. First, the high settlement amount will discourage others from entering the field – giving Google a virtual monopoly on every book, periodical and other copyrighted work coming within the settlement. Second, it will be more difficult for others to claim “fair use” if they decided to compete with Google. While there was no determination of whether Google’s conduct was or is “fair use,” a judge in a subsequent case may look at this settlement as “evidence” that massive digitizing of copyrighted works is not a fair use – otherwise, why would Google, which claimed fair use all along, have settled for such a large amount? A decision in this case that Google’s use of copyrighted material was a fair use would have opened the door for many competitors who could have piggybacked on the court’s decision and built competitive databases protected by fair use. So a lack of a ruling on this pivotal issue plays into Google’s hands.

The settlement allows Google to charge for access to these millions of digitized works – something that previously would have been difficult for Google to do and still claim “fair use.” So the settlement establishes a legal business model for Google to monetize this huge and growing database of copyrighted materials with the copyright owners’ blessing. Google get 37% of all revenues generated, where previously it was getting nothing. (Much more than iTunes gets for their music downloads.)

The settlement agreement is, in essence, a compulsory license for Google to copy virtually any copyrighted work without having to negotiate individually with copyright owners. And it sets the “market rate” for any negotiations Google will have in the future with copyright owners who are not part of the settlement. While copyright owners are free to opt-out of the system, it would be foolish for most copyright owners to do so. They essentially have three choices – go along with the system, opt-out and forego the revenues they would get under the system, or try to set up their own system to monetized digitized version of their works (which hasn’t worked in the music industry and is unlikely to work here). A fourth choice — do a deal with another database developer — is unlikely, since this settlement sets up huge barriers to entry for any competitive service.

So, despite the price tag, I would say that Google is the big winner in this battle, and that the publishing industry may (no, I predict, WILL) live to regret the day they gave Google exclusive control over the online, worldwide distribution of their works.

The Singularity Law Podcast Episode 4: The Elephant in the Room

Professor Scott — Mon, 20 Oct 2008 03:48:32 +0000

Will DRM be the final nail in the coffin of PC gaming? How anonymous can the Internet be? Why won’t YouTube grant a full legal review of all DMCA takedown requests on election campaign videos? Will trademark owners be forced to monitor domain name registrations? Can libraries go digital? Can a record label infringe its own copyright? Michael and Josh tackle these questions and more on this week’s edition of The Singularity Law Podcast.

Click the play button below to listen, or click here to subscribe to us on iTunes!

Here are the show notes for this week’s episode:

Shownotes for The Singularity Law Podcast: Episode 4 for October 19, 2008

Our Panel for Today: