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Judge Puts Off Ruling On Google’s Proposed Digital Book Settlement

By THE WASHINGTON POST

Fri, Feb 19, 2010 at 11:26 am

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NEW YORK, NY — Google confronted a barrage of criticism from opponents of its proposed digital book settlement Thursday as the Internet search giant tried to persuade a federal judge to approve a deal that would allow it to create the world’s largest online library.

During a marathon hearing before U.S. District Judge Denny Chin, lawyers representing the Justice Department, children’s book authors, privacy advocates and business competitors said Google’s agreement with some authors and publishers should be rejected because it would violate copyright laws.

The opponents also argued that the $125 million settlement — which would allow Google to scan and publish millions of out-of-print titles — could give the company an unfair edge over other online publishers in the nascent but exploding market for digital books.

"In forward-looking businesses, Google wants complete immunity," said William Cavanaugh, the deputy assistant secretary for the antitrust division of the Justice Department.

After the hearing, Google issued a statement acknowledging its critics but defending the settlement. "We appreciate the concerns voiced, but we believe the settlement strikes the right balance and should not be destroyed to satisfy the particular interests of the objectors," the company said.

Google’s foray into online publishing is part of a fast and furious march into many other Web-related businesses. In the past two months, the company has started selling its own cellphone and said it would dip into the world of telecommunications with tests for ultra-fast fiber-optic networks. And on Thursday, energy regulators approved Google’s request to buy and sell bulk electricity.

However, the company has had some recent stumbles that could hurt its brand. Its launch last week of a social networking tool for its e-mail program angered many users because it exposed personal information.

Some consumer groups warned Thursday that the company that preaches not to be evil could suffer from eroding trust.

"They are part of this Silicon Valley culture which says ‘don’t ask for permission because you can always ask for forgiveness,’ " said John Simpson, head of the nonprofit group Consumer Watchdog. "The problem is that they are starting now to be so big and so ambitious that some of the things they are trying to do now are overreaching in a way that will very likely tarnish their brand."

Chin said during Thursday’s hearing that he did not know when he would issue a ruling on the proposed settlement, which has already been revised once to satisfy concerns raised by the Justice Department. Chin said he had received volumes of comments from the public that merited careful consideration.

"There’s too much to digest," Chin said. "I have an open mind."

Several attorneys at the hearing said a ruling could be weeks away, if not longer.

While Chin did not offer clear guidance into his thinking during the hearing, several lawyers said subtle clues could be drawn from his questions. The sometimes impatient judge took many notes and asked lawyers for Google and its settlement partners — the Authors Guild and the Association of American Publishers — about a controversial portion of the settlement that would automatically include the holders of rights to titles unless they voluntarily opt out of the program.

"If you did an opt-in you would eliminate a lot of objections," Chin noted, reiterating arguments from the Justice Department and the nonprofit Internet Archives.

The judge also asked about so-called orphan works, whose authors and rights holders can’t be found. Google and its critics have sparred over how many books fall into that category, with estimates from a few million to tens of millions of titles. Google has said it would try to find rights holders of these works, but critics say the deal is designed to give Google exclusive rights to these works and protect it from lawsuits from rights holders.

"I would surmise that Google wants the orphan books and this is what it is about — orphan books that will remain unclaimed," Chin said.

Google’s attorney, Daralyn Durie, argued that the opt-out structure was appropriate because it presented no economic harms to those rights holders, who weren’t receiving compensation for their works that weren’t being reprinted. The deal, she said, provided an incentive for rights holders to come forward and receive monetary rewards.

"One way to get something is unquestionably better than nothing at all," she said.

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