Inside Google

By failing to pass orphan works legislation in previous sessions, Congress practically guaranteed a messy settlement would result from Google’s scanning and display of millions of out-of-print works found only in libraries, several lawmakers said at a House Judiciary Committee hearing Thursday. But some, including Democratic Silicon Valley Rep. Zoe Lofgren, argued against injecting themselves into the ongoing court review of the Google Book Search settlement, for which the Justice Department will file its analysis with U.S. District Judge Denny Chin by Friday of next week.

After hearing more claims from critics that Google will have a legal monopoly over out-of-print works, Google’s top lawyer pledged the company would license such works to competitors and split the proceeds. That wasn’t good enough for Amazon.com, whose executive repeatedly contrasted his company’s permission-based approach to scanning books with Google’s approach. The chief of the Copyright Office, weighing in for the first time on the settlement, warned that it would
usurp congressional authority over copyright law.

The expanded Google Book Search "could be the greatest innovation in book publishing since the Gutenberg press," said committee Chairman John Conyers, D-Mich. Google’s exclusive right to orphan works under the settlement is troubling, but could be resolved through legislation, "and I have indications from [Google] that they would support such a remedy," he said. Google didn’t attain its dominance through anticompetitive behavior, Conyers said: "To date, they have built a better mousetrap in the eyes of mousetrap purchasers."

Lofgren warned that the "future of literacy" was imperiled if Congress set poor conditions for the digital book market. "We made a very grand effort" to pass orphan works legislation, and lawmakers are considering the issue again because "someone decided to seek forgiveness rather than permission," she said, alluding to Google. But Lofgren defended the "utility" of broad settlements from class-action lawsuits, and said she was "disturbed" that some critics were challenging it as an abuse of the class-action process, as did a prominent Washington antitrust lawyer and author (WID Aug 24 p2). Lofgren also said she was "ashamed" the Copyright Office waited until Thursday morning to hand in its testimony, violating the committee’s 24-hour rule for advance receipt of testimony texts.

It took "three years of painstaking negotiation" to reach agreement with authors and publishers, Google Chief Legal Officer David Drummond said. Though "we strongly believe we would have won the case" by claiming fair use to scan and show snippets of book text, the settlement achieves a better result than even a Google win, he said. Smaller colleges want to "level the playing field" with bigger schools through institutional subscriptions, and by clearing up ownership rights to millions of books, other providers can scan them with no legal fears, Drummond said. He called the settlement "complementary" to a future orphan-works bill.

Amazon started scanning books before Google, with three million now digitized, said Paul Misener, vice president of public policy. The difference is that, "one by one," Amazon got permission from rightsholders first. The settlement would give Google "exclusive, liability-free monopoly rights over millions of works," he said. "What does a competitor get? Nothing," because rightsholders would have to opt in to competitors’ book projects and opt out of Google’s. Contrary to previous legislation, Google also won’t have to perform a "diligent search" to locate owners of orphan works, he said. Consumer Watchdog’s John M. Simpson, perhaps Google’s most vocal nonprofit critic in Washington, said the settlement "simply furthers the relatively narrow agenda" of Google, the Authors Guild and Association of American Publishers. Congress should pass orphan-works or fair-use legislation, so Google won’t get an "unprecedented monopolistic advantage" over some books.

Blind people "want the right to buy books," but some of Google’s competitors "have stiff-armed us" on requests to make books available in blind-friendly formats, said National Federation of the Blind President Marc Maurer. "Only a minimum of difficulty" is required to translate books to accessible formats, yet Google alone has come through, he said. "We spend our lives trying to get at information that others take for granted," and a failed settlement will shut an emerging market to the blind, Maurer said. Authors Guild Executive Director Paul Aiken said the settlement caps a 25- year effort to make out-of-print works available again, noting the guild’s BackInPrint.com service for ordering new bindings of such books. A similar British book registry has a 90 percent success rate in locating authors, he said. As revealed by recent hearings in Brussels, some Europeans don’t like the settlement because they think "we’re getting a significant advantage" over European digital-library efforts, Aiken said.

The judiciary would exceed its constitutional role if Chin approved the settlement, which "makes a mockery" of Article One of the Constitution and its provision of copyright authority to Congress alone, Register of Copyrights Marybeth Peters said. The settlement creates "in effect" a compulsory license for some works and exceeds the scope of the litigation, giving Google a new right to sell books, she said, calling for a "full public debate" led by Congress. The presence of foreign books in the libraries from which Google scanned could also threaten U.S. international commitments on intellectual property rights, Peters said.

University of Chicago law Prof. Randal Picker said the settlement was a "beta," and it would be "un-Googlish" to scrap the whole thing over some troubling provisions. Chin can task DOJ with continuing oversight over the settlement, and DOJ may have problems with Google’s proposed pricing algorithm for books whose owners don’t set prices themselves, he said. Congress and Judge Chin can work in tandem to expand the orphan-works license to all companies, not just Google, Picker said — but Congress should also scrap the "reasonable search" prerequisite for using an orphan work, a hurdle to their use. "Google is no monopolist," said David Balto of the Center for American Progress and former FTC antitrust regulator. The pricing algorithm "is not all that unusual" in the context of prior antitrust settlements, and orphan works are too small a problem to warrant much concern. The controversial most-favored nations clause in the settlement is crucial so "people can’t free ride" on Google’s effort and incurred risk in scanning books, he said: "They deserve the credit for trying to clarify these areas."

‘We Don’t Have a Role to Play’

Google’s Drummond debuted a new offer to potential competitors at the hearing: The company will expand its Google Editions platform for selling in-print works, launched this summer, to out-of-print works as well. It makes accessible from any Internet-connected device book purchases from participating retailers, hosted by Google and made available through APIs. Amazon, Barnes & Noble, and Microsoft — if it enters the market — would be able to sell out-of-print works already scanned by Google through their own platforms, and split the 37 percent of revenue Google keeps from sales, Drummond said. It would essentially be a reseller program, with "most" of the revenue share going to resellers.

Amazon’s Misener wasn’t satisfied by Drummond’s "thrilling new piece of information," as Conyers called the offer. "The Internet has never been about intermediation," Misener said. Holding up a thick binder containing the full settlement, he said Google competitors would still need "express approval" to use orphan works. Pressed by Ranking Member Lamar Smith, R-Texas, Misener said Google was the "only entity in the world that could treat copyright on an opt-out basis. … This is completely turning copyright law on its head." The Open Book Alliance, to which Amazon belongs, said later that Drummond’s promise was "pure vaporware" and something he’s previously said Google planned to do. Google would still have control over the books, to be governed by "questionable and undefined privacy policies," it said.

Aiken told Smith that authors don’t expect to be controversial provisions for in-print books, the vast majority of works at issue. The guild spent 30 months negotiating not only with Google but also the Association of American Publishers, with whom it has a historically antagonistic relationship, and secured several protections for authors not ordinarily available, Aiken said.  Authors expect that publishers actually will try to avoid triggering some settlement provisions for that reason, he said.

Since Congress hasn’t "aggressively and effectively" addressed the orphan-works problem, it shouldn’t interfere in ongoing court review, said Rep. Mel Watt, D-N.C. "I’m a great respecter of this division of powers we have here, and I feel a little awkward" talking about a legislative fix for an issue that’s still under both court and DOJ review. "We’re definitely dabbling in all three branches of government today. Am I missing something here?" he said to audience laughter. Picker said Congress can’t avoid being involved, since only that body can create a licensing regime for orphan works. Asked by Watt about the legality of Google’s scanning, Misener contrasted Amazon’s seeking permission to Google’s "extremely risky and irresponsible" scanning without asking. Pressed by Watt about whether Google acted illegally, Misener said: "That was the consensus" of the plaintiffs.

The allowances given to the proposed Book Rights Registry concerned Rep. Howard Coble, R-N.C. Aiken assured Coble that copyright owners can opt out of the settlement, and that the registry has an economic incentive to license their works to as many digital providers as possible, not just Google. Peters confirmed that her office wouldn’t have any oversight role over the "compulsory license-like" system. It’s not clear from the settlement what rights the registry would have to license works elsewhere, Picker said. But Aiken pointed to collecting societies such as ASCAP and BMI as guides for how the registry would work, asking copyright owners for "blanket approval to cut new deals."

Lofgren agreed with Watt that "we don’t have a role to play" in the settlement, which constitutes "the private sector achieving what we failed to achieve." Google, authors and publishers have solved the problem identified in a Copyright Office report years ago on orphan works, she said – – lack of a technology platform for setting up an orphan-work registry. An Amazon Kindle owner, Lofgren said the digital book industry "for the first time [has] some real heavy-duty competition." Since it’s unlikely Congress will reverse the copyright-term extensions approved in 1998, Congress should step back, she said. "This is a major step forward for literacy and the culture.