What Daniel should say at the Google Books Settlement Fairness Hearing

On October 7, 2009, Judge Denny Chin will preside over a Fairness Hearing with regards to the proposed settlement between Google and a group of plaintiffs including a number of publishers and a class of all owners of a United States copyright interest in a book or insert. The purpose of the hearing will be to determine whether the terms of the settlement are fair, reasonable, and adequate, whether the class should be certified, and whether the agreement should be approved.

As Daniel is a member of the settlement class, he would be entitled to speak if he chose to do so. In his shoes I would urge the court to uphold the agreement because the public benefit resulting from Google’s activity is too great to toss aside, but to also follow the example of Judge Michael Davis and call for legislative reform.

The issue that has drawn the most attention, especially from public interest organizations including PK, NYLS’s Institute for Information Law and Policy, and the Internet Archive, and many commentators is the “orphan works problem.” The Settlement Agreement by its opt-out nature gives Google license to make use of works that, by definition, no competitor will be able to license. But should the court decline to approve the Agreement over the issue? I’m not sure the Court is the appropriate body to be solving the issue for any party other than Google. Barring a surprising turn of events with regards to a questionable effort to intervene, the Judge probably doesn’t have the ability to “settle” the issue with persons or entities not party to the suit. This is an issue best left to the legislature to remedy by altering the law so as to limit the liability to persons of entities wishing to license orphaned works, but unable to do so. While the reintroduction of formalities, renewal, and a reduced copyright term would be better, the Berne Convention forces us to consider work-arounds. Prof. Lessig thinks that Congress is too corrupt in general to reach solutions beneficial to the public, but I don’t think there’ll be much resistance here. Large content publishers who typically would oppose any attempt to limit the reach of copyright remedies will realize that the problem doesn’t effect them, since they are among the least likely copyright holders to not maintain careful records and catalogs of their works.

Unrelated to the settlement, but central to the case itself is the issue of fair use. It’s no surprise that Google settled rather than stand on its fair use claims. By the time Google settled, it had scanned 6 million in-copyright books. It could have faced a judgment of a trillion dollars for willful infringement. Pamela Samuelson of Berkeley has recently written about reforming statutory damages, Charles Nesson of Harvard is attempting to challenge their constitutionality in the Tenenbaum lawsuit, and Fred von Lohmann of EFF has spoken specifically on the problem of getting defendants to assert a fair use defense even where it’s clearly appropriate due to the fear of facing massive damages. Most fascinatingly, Judge Michael Davis, the presiding judge in Capitol v. Thomas, implored Congress to overhaul statutory damages while setting aside a verdict of over $200,000 in damages as excessive. The subsequent $2 million verdict on retrial thanks to statutory damages underscores the point. I would ask Judge Chin to add his voice to Judge Davis’ and call for reform. This, however, may be futile, since the threat of statutory damages is so powerful. They will lobby with all their might to prevent any diminution of such a powerful coercive tool. It was only in 1999 that maximum damages were increased by 50% from $100,000 to $150,000, and the recent PRO-IP Act attempted to multiply damages for infringement of compilations.

I would also ask Judge Chin to call for Congress to consider a compulsory licensing regime for digitization of print works for commercial purposes. One of the strangest aspects of the Settlement Agreement is that by virtue of the Class Action form, and settling before any substantive progress of the suit, the plaintiffs were able to settle on behalf of all owners of US copyright interests in books without ever facing a class certification challenge from Google. The transaction costs problem that arguably drove Google to scan without seeking permission in the first place disappeared in a puff of legal fiction. In fact, some rights holders have objected to the Settlement on these grounds, noting that a settlement class containing both publishers and authors cannot have aligned interests. Others have railed against authors being forced to give a “private compulsory license” to Google. While the frothy-mouthed anger of some of these opponents who may as well have signed their letters “Google delenda est!” are caricatures of copyright maximalism, they offer an interesting idea. The solution shouldn’t be to punish Google, but instead to offer the public the same spoils – a compulsory licensing regime. Using the mechanical license for sound recordings as a blueprint, let’s say that anyone can digitize a book for a set royalty after the copyright holder has authorized at least one entity to digitize. The transaction cost barrier is removed for anyone wanting to create a digital book library. I’m not sure that I’d make any demands about forcing Google to open its library of raw scans to its competitors. While I’d like to avoid wasting resources by forcing competitors to physically scan when all they need to do is get a copy of a file the first scanner already has, I haven’t come up with a satisfactory compensation scheme.

The slippery slope with compulsory licensing for digitization is that it undermines any market failure based argument in favor of a fair use based right to make private digital libraries of books you already own. This is a frustrating proposition, why shouldn’t I be allowed to bring the power of a search engine to bear on books I already own without having to buy another copy? Additionally, this directly conflicts with the tacit acceptance of the right to rip CDs for personal use. Are we allowed to rip CDs for free because it’s our right to do so, or because when RIAA v. Diamond came down, there wasn’t an easy way to transact for pennies worth of licenses? Private copying is a vexatious issue that this Settlement Agreement still leaves wide open.

-- RazaPanjwani - 03 Aug 2009