Wall Street Journal
by AMIR EFRATI And JEFFREY A. TRACHTENBERG
March 23, 2011
Google Inc.'s six-year struggle to bring all the world's books to the Internet suffered another big setback at the hands of a federal judge.
Judge Denny Chin, in a ruling filed in U.S. district court in Manhattan, rejected a 2008 settlement that Google forged with author and publisher groups to make millions of books available online. The 48-page decision concludes that the $125 million deal would give the Internet giant the ability to "exploit" books without the permission of copyright owners, echoing the U.S. Justice Department's concerns about the deal.
"While the digitization of books and the creation of a universal digital library would benefit many," Judge Chin wrote, Google's current pact would "simply go too far." The deal would "give Google a significant advantage over competitors, rewarding it for engaging in wholesale copying of copyrighted works without permission," he said.
In his decision, Judge Chin also noted antitrust concerns related to the settlement, including that "would arguably give Google control over the search market" for books.
The judge denied the settlement between Google and the Authors Guild and the Association of American Publishers "without prejudice," meaning they could submit a revised pact that would better protect copyright owners.
He also suggested a way to revise the deal: rather than let copyright owners of books "opt out" of the settlement, copyright owners should be given the choice to "opt in."
Google's lawyers had said in court last year that an "opt-in" structure wouldn't be viable.
Hillary Ware, a managing counsel for Google, on Tuesday said the decision was "clearly disappointing" and the company would consider its options. "Like many others, we believe this agreement has the potential to open-up access to millions of books that are currently hard to find in the U.S. today," she said.
Publishers held out hope that a settlement can still be achieved. "Publishers are prepared to modify the settlement agreement to gain approval," said John Sargent, chief executive of Macmillan, a unit of Verlagsgruppe Georg von Holtzbrinck GmbH, in a statement issued by the Association of American Publishers on behalf of the publisher plaintiffs.
"We plan to work together with Google, the Authors Guild and others to overcome the objections raised by the Court and promote the fundamental principle behind our lawsuit, that copyrighted content cannot be used without the permission of the owner, or outside the law."
The decision is the latest in a series of blows to the ambitious plans of Google co-founder Larry Page to scan the world's 150 million or so books and make them accessible to users of Google's Web-search engine, an idea he broached shortly after the company was formed in 1998.
Google in late 2004 said it was working with several libraries to scan and digitize books and other writings in their collections, and has said it has completed 10% of the effort.
Google's plan was attacked in lawsuits by certain publishers and the Authors Guild in 2005. A settlement was reached in 2008. After objections were raised, the parties submitted this revised settlement.
The settlement, among other things, blessed Google's scanning efforts and also potentially allowed for ads to be shown on the book pages online. Google agreed to pay $125 million to establish a registry to allow authors and publishers to register their works and get paid when their titles are viewed online. It also allowed copyright owners to prevent Google from scanning their works and to collect money for each work that was previously scanned by Google.
For out-of-print but copyrighted books, the plan offered a chance for digital access. "There are tons of authors whose works may now never see the light of day, said Laurence Kirshbaum, a New York literary agent, on Tuesday.
But those who objected to the settlement, including the Justice Department, said Google would unfairly take advantage of millions of "orphaned" works whose content owners haven't been identified, or in cases where the copyright ownership is debated.
A Justice Department spokeswoman said: "We are pleased that the Court supported our position."
Gary Reback, a lawyer and co-founder of the Open Book Alliance, a group that opposed the settlement and includes Google competitors such as Microsoft Corp., Amazon.com Inc. and Yahoo Inc., said the rejection didn't resolve his concerns that Google uses scanned books to enhance its search engine by displaying snippets of the book's text, among other things.
A Google spokesman declined to comment.
Judge Chin's ruling changes little for Google users. About two million books that are in the public domain, such as works of William Shakespeare, currently can be viewed free on the Google Books site. They also are available through Google eBooks, a new online book store that allows people to purchase and read books on different devices.
Google Books users currently can view long previews of another two million books that are in copyright and in print, thanks to agreements between Google and tens of thousands of publishers that were separate from the legal settlement. Millions more books that are in copyright but out of print are currently available in Google Books in a shorter "snippet view." Had the settlement been approved, users would have been able to see longer previews and potentially buy those books.
For consumers and publishers, the impact of the decision may be lessened by the fact that digital books have now carved out a significant portion of the book business. One publisher chief executive said Tuesday that he expects his digital book sales to double in 2011. However, some voiced concern that absent a settlement, many authors may now no longer have clear digital future.
James Grimmelmann, an associate professor at New York Law School, said that the judge is clearly hinting that he would seriously consider approving the settlement if it is revised in a way that allows publishers and authors the right to opt into the settlement before Google can sell their works.
Mr. Grimmelmann said that the settlement basically consists of two parts: payment for what Google has done in the past, and the creation of an ambitious bookstore program to sell mostly out-of-print books. "If the parties can agree on an opt-in arrangement, it will give authors and publishers one more option for selling their works. This is pretty much how copyright works today," he said.
Jim Pitkow, who sold a Web-search company to Google in 2001 and is now an executive at Attributor, which helps publishers protect their copyrights, said yesterday: "Google has probably spent hundreds of millions of dollars scanning books and that has not been legitimized."
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