Prof. Randal C. Picker, The University of Chicago Law School
February 10, 2010

On Feb. 4, the Department of Justice filed its second statement of interest in the pending Google Book Search (GBS) case.  We now have a full slate of second-round filings as we head toward the fairness hearing set for a New York federal court on Feb. 18, 2010.  Where do we stand?

To recap very quickly, Google launched GBS with one core thought: all books available everywhere instantly.  To try to come even close to that, Google entered into partnerships with leading libraries to gain access to their holdings so as to make digital copies of those works.  Google then put the books online but did so in a way that tried to be sensitive to copyright (putting to one side, of course, the massive copying that it took to reach that point).  Google offered full-text download access to works in the U.S. public domain.  Google also offered more limited access to in-copyright works through agreements it struck with publishers.

That left a third category: in-copyright works for which no contract had been signed.  That might include works as to which Google had been turned down but also so-called orphan works, that is, works for which it was quite difficult or impossible to find or identify the rightsholder.  For both of these works, Google might claim the right to make fair use of those works and to do so without the consent of the rightsholder.  Google called this “snippet” use: Run a search and Google would show you a limited number of words from the text centered on your search term.

Two lawsuits ultimately emerged resulting in a complex class action and eventual settlement.  As commentary and objections were filed heading into the originally scheduled fairness hearing, including, most importantly an initial statement of interest by the Department of Justice, the parties to the settlement backed away to revise the settlement.  That amended settlement agreement (ASA) is now scheduled to be considered in the Feb. 18 fairness hearing.

Focus on the case as framed by the new DOJ statement of interest.  The DOJ argues that “the ASA suffers from the same core problem as the original agreement: it is 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.”  Class actions under Rule 23 just can’t be stretched to create the far-reaching deal set out in the ASA: “the United States has reluctantly concluded that use of the class-action mechanism in the manner proposed by the ASA is a bridge too far.”

It is time to find out.  There are a staggering number of objections to the ASA.  These range from antitrust concerns — more on those in a second — to privacy issues, to how foreign authors and works are treated, and on and on.  But we have reached a point in the process where we need to get some sense from Judge Chin on how he sees the scope of the class-action power in copyright.  Whether he sees a broad power or a narrow power will determine the path forward.

Return to the original structure of GBS.  For works in the public domain, the ASA is unnecessary.  Google can do whatever it wants with those works, just as you and I can.  It doesn’t need the ASA for it to make public-domain works available in GBS.  And if Google can contract with publishers or authors to use their works, it doesn’t need the ASA either.  Indeed one of the concerns expressed by DOJ in its most recent filing is precisely that Google is negotiating separate contracts with major publishers and that those publishers themselves will not be bound by the ASA.  That makes it seem like it is possible that the ASA has been negotiated by parties who won’t be subject to it — a genuine concern — but here the point is that Google will be able to make the in-contract books available through GBS, again, with or without the settlement agreement.

That leaves the orphan works.  The genius — or evilness — of the settlement agreement has always been precisely in the way in which it would enable the use of orphan works.  The DOJ filing recognizes the broad benefits to the public that might arise through expanded access to these largely inaccessible works.  The critical question is how the orphan works match up with copyright class actions.  DOJ clearly believes that the full version of the forward-looking provisions for orphan works are outside of what is possible in a class action.

At the same time, DOJ seems to suggest that a class-action settlement could validate Google’s digitization and snippet display of those works: “the provisions that settle the specific allegations of infringement in the Class Complaint — those that allow Google to scan millions of copyrighted works and to make available small portions of such works in response to search requests — address disputes within the Court’s subject matter jurisdiction.”  It isn’t clear to me whether this addresses just past digitization and snippet use but also is intended to allow the ASA to validate going forward snippet use of these materials.

You can see where we are now.  The public domain and in-contract works should be in GBS either way, assuming some version of the deal goes forward.  As to the orphan works, there are three natural possibilities: (1) full-text available, if Judge Chin believes that the ASA is within the scope of class-action copyright law; (2) full-text searchable with snippet view, if Judge Chin takes a narrower view but allows going forward snippet use for orphan works; and (3) full exclusion of orphan works from GBS.  That said, obviously, the ASA represents a negotiated deal and it isn’t clear to me whether the parties would back away, in part or completely, if Judge Chin embraced alternative 2 or 3.

The DOJ filing also addresses antitrust issues, so let me address those briefly.  (You can read my more extended views here , here , and here if you’d like.)  The questions regarding pricing raised by DOJ are serious and substantial issues but not issues that need to be resolved in advance of implementation of the agreement.  Although parties can approach DOJ for advance guidance on a potential new business venture through DOJ’s business review process, they certainly need not do so.  DOJ can bring to bear its standard enforcement apparatus should pricing problems actually emerge in practice.  This is a timing question and the DOJ filing says very little about why the pricing issue needs to be resolved in advance rather than after it is in operation.

That leaves what DOJ labels Google’s de facto exclusivity.  I have found that troubling all along as well, but it isn’t clear that there is an internal antitrust remedy for this.  The new DOJ statement of interest cites no case law or statutes as authority for its power to resolve this issue.  Instead, this seems to be a concern addressed to Judge Chin now should he approve some version of the settlement agreement in which Google gets exclusive authority vis-à-vis the orphan works.

As I have argued before, this would be a decision by a governmental actor to grant a single franchise to the orphan works.  This takes us back to the scope of the class-action power: If Judge Chin concludes that he has the power to grant a license to the orphan works to Google, does he also have the power to expand that license, perhaps, say, by allowing the unclaimed works fiduciary to license those works on behalf of the orphan works holders?

I think that makes it Judge Chin’s move.