Court rejects Google book settlement

I've just got round to reading US Circuit Court Judge Denny Chin's decision rejecting the Google Book Settlement. Three days late to the party now and millions of words of commentaries are already gathering dust on the subject. If you're looking for a good place to get a real understanding of the ruling, though, look no further than James Grimmelmann, one of the foremost analysts of the saga from the beginning. And as James says:

The legal analysis supporting this conclusion takes perhaps five pages out of forty-eight. The rest of the opinion is … well, it’s complicated."

But fwiw here's my tuppence worth.  The judge is clear in his opening:

"The question presented is whether the ASA is fair, adequate, and reasonable. I conclude that it is not.

While the digitization of books and the creation of a universal digital library would benefit many, 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."

Yet in the legal analysis that follows he primarily relies on the breach of the scope of relief under Rule 23 of the US Federal Rules of Civil Procedure, governing class action lawsuits, to reject the settlement. Essentially Google and the Authors Guild are using the cover of a class action lawsuit to cut a broad business deal that will ignore/downgrade the interests of significant classes of rightsholders not party to the agreement, provide the Authors Guild with privileged access to and guaranteed revenues from an online books monopoly and give Google protection from legal action for future behaviour. The deal goes way beyond the scope of the original copyright infringement lawsuit brought by the Authors Guild against Google.

"3. Scope of Relief Under Rule 23
The ASA can be divided into two distinct parts. The
first is a settlement of past conduct and would release Google
from liability for past copyright infringement. The second would
transfer to Google certain rights in exchange for future and
ongoing arrangements, including the sharing of future proceeds,
and it would release Google (and others) from liability for
certain future acts. (See, e.g., ASA §§ 10.1(f), 10.1(g),
10.2(a)).8 I conclude that this second part of the ASA
contemplates an arrangement that exceeds what the Court may
permit under Rule 23."

On orphan works, he considers their protection a matter for Congress and regarding the scope of the agreement in polite legal language he might be interpreted as suggesting the parties are extracting the proverbial Michael.

"a. A Matter for Congress
First, the establishment of a mechanism for exploiting unclaimed books is a matter more suited for Congress than this Court...

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...

b. The Scope of the Pleadings
Second, the ASA would release claims well beyond those contemplated by the pleadings...

Google did not scan the books to make them available for purchase, and, indeed, Google would have no colorable defense to a claim of infringement based on the unauthorized copying and
selling or other exploitation of entire copyrighted books.Yet, the ASA would grant Google the right to sell full access to copyrighted works that it otherwise would have no right to
exploit. The ASA would grant Google control over the digital commercialization of millions of books, including orphan books and other unclaimed works. And it would do so even though
Google engaged in wholesale, blatant copying, without first obtaining copyright permissions. While its competitors went through the "painstaking" and "costly" process of obtaining permissions before scanning copyrighted books, "Google by comparison took a shortcut by copying anything and everything regardless of copyright status." (Hr'g Tr. 43 (Thomas Rubin,
counsel for Microsoft))...

I conclude that the released conduct would not arise out of the "identical factual predicate" as the conduct that is the subject of the settled claims."

He also gives no credence to the argument that the agreement is not substantially different to other broad based class action agreements.

"While it is true that in virtually every class action many class members are never heard from, the difference is that in other class actions class members are merely releasing "claims" for damages for purported past aggrievements. In contrast, here class members would be giving up certain property rights in their creative works, and they would be deemed -- by their silence -- to have granted to Google a license to future use of their copyrighted works."

Google is not getting blanket immunity from future copyright infringement by virtue of an agreement with the Authors Guild.

The copyright analysis is, as Grimmelmann says and interesting mix of statutory and policy arguments but ultimately the judge concludes there is no decision for him to make on copyright.

"In any event, I need not decide the precise question of whether the ASA would in fact violate
§ 201(e);"

But:

"the notion that a court-approved settlement agreement can release the copyright interests of individual rights owners who have not voluntarily consented to transfer is a troubling one."

On antitrust concerns again the judge is clear that the settlement would give Google a "de facto monopoly" over orphan works, "arguably... control over the search market" and "the ability to deny competitors the ability to search orphan books" but doesn't proceed to any hard legal conclusions on this.

On privacy he says:

"The privacy concerns are real. Yet, I do not believe that they are a basis in themselves to reject the proposed settlement."

So privacy matters but not enough to single handedly bring down the settlement.  You get the impression that the judge felt the need to mentioned privacy because CDT and EPIC objected to the settlement on privacy grounds but that he doesn't have a lot to say on the subject.  In some ways it might have been better left out of the judgement than marginalised to this extent. He reckons Google could build in additional privacy protections but gives absolutely no indication of what these or what their governing principles might be.

On foreign authors' rights, he concludes:

"I need not decide whether the ASA would violate international law."

The judge's overall conclusion (p45-46) encourages Google and the Authors Guild to get together and renegotiate an opt-in version of the settlement which he seems to believe would address many of his own and objectors' concerns.

"In the end, I conclude that the ASA is not fair, adequate, and reasonable. As the United States and other objectors have noted, many of the concerns raised in the objections would be ameliorated if the ASA were converted from an "opt-out" settlement to an "opt-in" settlement. I
urge the parties to consider revising the ASA accordingly.

The motion for final approval of the ASA is denied, without prejudice to renewal in the event the parties negotiate a revised settlement agreement."

Given the capacity of smart lawyers to turn nominal opt-in provisions into de facto opt--out reality, I would be sceptical about such a re-settlement dealing substantively with the representation, copyright, anti-trust, privacy or international law issues, regardless of how cleverly crafted it might be to meet Judge Chin's technical Rule 23 class action requirements.  As to what happens next a revised settlement seems most likely.  James Grimmelmann predicts:

"

• Google is allowed to continue scanning and searching in exchange for cash payments on the order of (but perhaps not exactly) the $60 in the present settlement, and it’s required to provide an opt-out. Very few people have argued that this form of settlement would be beyond the court’s power. The precise explanation of how this would be distinguishable from the present settlement, although quite feasible, will require some nuance and subtlety.
• The Display Uses — Consumer Purchase, Institutional Subscription, etc. — are either gone entirely ore are offered on an opt-in basis. The difference between these two possibilities is not large, since, in effect, Google already offers an opt-in through the Partner Program.
• The libraries receiving digital copies are released from liability but are even more tightly restricted in the uses they can make than under the present settlement.
• The fates of other facets of the settlement such as the Research Corpus, will be hammered out in the negotiations.

My read is that the parties are not enthusiastic about litigation. This has been a long road, they are tired, and the publishing world has moved very quickly from underneath the settlement. They will be happy to have a settlement that lets everyone claim a kind of minor victory, and to be done with the ordeal."