Wednesday, September 23, 2009

Copyright Office and Dept of Justice critique Google book settlement

Two weeks ago, Marybeth Peters, the US Register of Copyrights, harshly criticized the proposed Google Book Settlement in testimony before the House Judiciary Committee. That same day, David Drummond, Google's Chief Legal Officer, testified with a combination of verbal sleight-of-hand, obfuscation, and apples-to-kumquats comparisons. Last week, the US Department of Justice filed its critique with the judge overseeing the Settlement.

The critiques highlight a key point I raised earlier -- that unclaimed royalties for "orphan" books will ultimately be distributed to those authors and publishers who sign up with a newly formed Book Registry. In fact, the DOJ argues that this creates a schism between the owners of claimed and unclaimed books, thus rendering the "class" which claims to have filed the class-action suit invalid.

The critiques also make clear (as I have argued) that the settlement is a boon for Google in that it grants an effective monopoly on orphan books. No other company could obtain the same access without following in Google's footsteps: wholesale unauthorized scanning, followed by a lawsuit, followed by a settlement. Google actually seems to agree with this, stating "nothing in the settlement prevents anyone from doing what we have done." Google then attempts to evade the "monopolist" term by noting that the proposed Book Registry could "license to third parties to the extent allowed by law" [my emphasis]. Note, however, that what Google would gain from the Settlement is not "allowed by law," so that Google's monopoly is written into the settlement.

Google claims to be a new entrant to the book market with "zero market share". While Google may not yet be selling books, it is certainly selling ads placed next to book excerpts, which is how Google makes money in the first place. Google also claims that it would be too expensive and time-consuming to track down the owners of unclaimed books and negotiate with them; but it's hard to accept that Google's genius engineers and billions of dollars couldn't resolve this problem.

Google also claims that the proposed book registry's job "is to go out and find rightsholders." But that is certainly not the case. The registry has no incentive to find rightsholders. In fact, it has a dis-incentive: the fewer rightsholders who register at the registry, the more unclaimed money there will be; and that unclaimed money will first be used to pay expenses of the registry, and then the remainder will be distributed to those who did register. As the DOJ puts it, "The greater the economic exploitation of the works of unknown rightsholders by Google and the Registry, the stronger the incentive for known rightsholders to retain the unclaimed revenues for themselves."

Some choice quotes from Ms. Peters:
  • "We realized that the settlement was not really a settlement at all... Instead, the so-called settlement would create mechanisms by which Google could continue to scan with impunity,well into the future, and to our great surprise, create yet additional commercial products."
  • "the proposed settlement would give Google a license to infringe first and ask questions later"
  • "To allow a commercial entity to sell such works without consent is an end-run around copyright law as we know it."
  • "The question of whether a book is in-print (generally, in circulation commercially) or out-of-print (generally, no longer commercially available) is completely inconsequential as to whether the work is entitled to copyright protection under the law."
  • "certain provisions of the proposed settlement dramatically compromise the legal rights of authors, publishers and other persons who own out-of-print works."
And a few from the DOJ:
  • "The Proposed Settlement seeks to implement a forward-looking business arrangement rather than a settlement of past conduct"
  • "[the Proposed Settlement allows] the control of prices for orphan books by known publishers and authors with whose books the orphan books likely compete."
  • "Under the Proposed Settlement, competing authors and publishers grant Google de facto exclusive rights for the digital distribution of orphan works."
  • "only Google would have the ability to market to libraries and other institutions a comprehensive digital-book subscription."

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