What happened?
In 2004, Google began a mass book-scanning project which involved scanning and indexing texts to be made available for online searching, allowing users to view 'snippets' in its digital library. The Authors Guild and the Association of American Publishers subsequently brought a class action in 2005 for copyright infringement.
Google argued a defence of fair use under §107 of the US Copyright Act, which allows copying without permission from the copyright owner for a limited and 'transformative' purpose, such as for commentary, criticism or parody.
In 2009, after a revision of an original proposed settlement, the parties executed an amended settlement agreement (ASA).
The settlement agreement
The terms of what Google called the 'groundbreaking' agreement included the following:
- Google is authorised to continue to scan works, sell subscriptions to the database, sell online access to individual books, and sell advertising on pages from books;
- Google would pay to copyright holders 63 per cent of revenues received from these uses;
- Google would pay out over $45 million to copyright holders whose works have already been digitised.
- Prior express authorisation would be required before Google could display in-print books.
- Prior express authorisation would not be required before Google could display out-of-print books, but a copyright holder could direct Google to stop. Thus, copyright holders would be required to 'opt-out'.
Judge Chin's decision
US law requires court approval for the settlement of a class action, which is granted only if the court determines that the settlement is 'fair, adequate, and reasonable'.
In denying the motion for final approval, Judge Chin acknowledged the cultural, intellectual and educational benefits to be derived from a universal digital library, including the accessibility of books and the generation of new audiences. However, he nevertheless concluded:
… the ASA would simply go too far. It would permit this class action ... to implement a forward-looking business arrangement that would grant Google significant rights to exploit entire books, without permission of the copyright owners. 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.The 'opt-out' clause
Judge Chin found the 'opt-out' clause described above to be troubling, particularly with regard to 'orphan works' (that is, where the owner of a work cannot be identified or located). As the onus was being placed on copyright holders to come forward to protect their rights, the ASA would, in effect, transfer copyrights without the consent of the owners in violation of US copyright law.
Furthermore, the ASA would give Google a 'de facto monopoly over unclaimed works' and potential control over the search market.
Judge Chin noted that guardianship over 'orphan books' and the adaptation of copyright laws in response to changes in technology was a matter best left to Congress.
'Forward-looking business arrangement'
The ASA would, according to His Honour, release Google from claims 'well beyond those contemplated by the pleadings'. Although the original challenge was to the use of 'snippets', the ASA would grant Google the right to sell full access to copyrighted works, thus implementing a 'forward-looking business arrangement' that went far beyond the dispute before the court.
Other concerns
Judge Chin also concluded that the class plaintiffs did not adequately represent the class to which they belonged, and that there were privacy concerns about Google's ability to accumulate and disclose information about the reading behaviour of its users (although he noted that privacy protections could be addressed in a further revision of the ASA).
Judge Chin's full 48 page decision can be found here.
What now?
It remains to be seen where Google will go from here. Apart from appealing the court's decision, Google could attempt to scale down the settlement; as Judge Chin noted, many of the objections to the ASA could be effectively addressed if the ASA were converted to an 'opt-in' settlement. However this would remove 'orphan books' from the database and therefore lessen the value of the library significantly.
Should Google choose to litigate its original fair use defence, the display uses of the works would once again be restricted to 'snippets' as opposed to the sale of entire books.
Interestingly, had the case occurred in Australia, Google would be on even more unstable ground. Unlike the expansive US definition of fair use, the Australian 'fair dealing' defences are much narrower, as they are limited to certain specific purposes, principally, research or study, criticism or review, parody or satire, reporting news and the giving of professional advice.
Implications for Australian copyright owners
The ASA changed the definition of 'books' covered by the settlement to exclude many foreign works in response to numerous concerns raised by international entities. However, the ASA continued to apply to works published in the UK, Canada and Australia up to 5 January 2009, and works from other countries that were registered with the US Copyright Office by that date.
Although the ASA has been rejected, the decision left open the possibility of a revised settlement and provided guidance as to the modifications required for its approval. Therefore, should the parties revise the provisions of the ASA to create an 'opt-in' settlement and address privacy concerns, it is possible that Australian works may be included. However, as a result of Judge Chin's ruling, it is unlikely that Australian works, including 'orphan books', will be subject to the involuntary transfer of rights in relation to those works.
No matter what the outcome, the case has certainly emphasised the inadequacy of current copyright law. The value of a universal digital library was never in question; what this case (and others, such as iiNet) expose is the need for legislatures to adapt copyright regimes to these rapid and profound changes in technology.
Partner: Paul Kallenbach
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