Inside Google

Brief Argues Books Settlement Continues Steal From Absent Class Members, Remains Anti-Competitive

WASHINGTON, DC — Consumer Watchdog today filed a brief urging a federal court to reject the revised Google Books settlement because it is remains anticompetitive and violates both U.S. and international law.

Though the original settlement was withdrawn and amended in the face of objections from the U.S. Justice Department, Consumer Watchdog and others, “the revised settlement suffers from the same fundamental problems as its predecessor,” the nonpartisan, nonprofit group said in a friend-of-the-court brief.

Consumer Watchdog said the public deserves a ruling on what constitutes fair use, the original issue prompting the suit, but left unresolved in the proposed settlement.

“The settlement still abuses the class-action mechanism and purports to enroll absent class members automatically into new business ‘opportunities,’ in violation of current copyright laws,” the brief said. “This scheme acts to the disadvantage of absent class members and would result in unfair competitive advantages to Google in the search engine, electronic book sales, and other markets, to the detriment of the public interest.  Along the way, the settlement raises significant international law and privacy concerns.”

Click here to read Consumer Watchdog’s full amicus curiae brief.

“Google claims it is building a digital library to benefit the public. In fact this deal, negotiated in secret, simply furthers the relatively narrow agenda of Google, The Authors Guild and the Association of American Publishers,” said John M. Simpson, consumer advocate with Consumer Watchdog.

The case in U.S. District Court’s Southern District of New York stems from a suit brought by The Authors Guild and the Association of American Publishers. The brief was filed for Consumer Watchdog by Kasowitz, Benson, Torres & Friedman, LLP.

“The proposed amendments to the Google Book Settlement are insufficient, and the settlement remains fundamentally flawed. If approved, this settlement would improperly destroy potentially millions of absent authors’ exclusive copyrights and would give Google an unfair monopoly that is not in the public interest,” said Daniel Fetterman of Kasowitz, Benson.

In its federal court brief Consumer Watchdog said the proposed settlement should be rejected by U.S. District Judge Denny Chin because:

— The settlement continues to abuse the class action process and is not fair reasonable or adequate: “This revised plan is still nothing more than a private business arrangement, masquerading as a settlement, that would steal from unsuspecting absent class members while benefiting Google. Notably, it is only the Rightsholders’ share of the proceeds that will be donated to charity, and Google would still make a profit from these sales.”

— The amended settlement continues to give Google an unlawful and anti-competitive monopoly: “In effect, the agreement temporarily suspends the copyright laws for Google, giving it the rights to copy, distribute, and publicly display millions of copyrighted books—including ‘orphan’ works for which Rightsholders cannot be easily located. By utilizing the class action settlement mechanism to obtain these rights, Google avoids the transaction costs that any potential competitor would have to incur.”

— The proposed settlement is an unconstitutional attempt to revise the rights and remedies of U.S. Copyright law: “ In essence, the parties ask the Court to strip copyright protection from millions of books, putting the onus back on the copyright holders to step forward and reclaim their works. But this Court may not rewrite copyright law. Only Congress has ‘the constitutional authority and the institutional ability to accommodate fully the varied permutations of competing interests’ that must be balanced when amending the Copyright Act.”

–The proposed settlement settlement continues to conflict with international law: “One of the most significant revisions to the proposed settlement is that many international Authors and Publishers are now excluded from this settlement through the revised definition of ‘Book.’  But Rightsholders from Australia, Canada, and the United Kingdom—all countries that are signatories to the Berne Convention—are still included. And authors from these countries would be subjected to the identical, and impermissible, ‘formalities’ that were found in the original settlement.”

— The amended settlement does not do enough to protect reader privacy: “The current amendment merely restricts what data could be shared with the Registry, but otherwise remains silent about whether, and to what extent, the public’s reading preferences could be shared with other organizations such as news outlets or governmental authorities acting without a search warrant. And while Google has publicly asserted that its current privacy policy will apply to its book activities, that policy is voluntary by nature and subject to change at Google’s whim.”

— The public deserves a ruling on the question of fair use: “The Plaintiffs contend that Google’s copying and displaying copyrighted Books violates 17 U.S.C. § 106, while Google argues that such use is permitted under the fair-use doctrine. If, as Google claims, its search-engine activities are protected by fair use, a ruling on this matter would not only resolve the parties’ conflict, but would (if resolved in Google’s favor) allow the creation of a competitive book-search market, not one controlled solely by Google, who is already the market leader in on-line search engines.”

The brief concluded:  “If, as Google claims, its ‘limited’ search-engine activities are protected by fair use, the public deserves an adjudication on this matter, to allow the creation of a competitive book-search market. And it is up to Congress to create a solution to the orphan-works problem that would allow all potential users to benefit, while protecting the copyright holders as well as international interests. The parties simply cannot justify this ‘solution’ which does not adequately protect the Rightsholders and unfairly benefits a single party. Accordingly, Consumer Watchdog respectfully asks that the Court not approve the settlement.”

In April Consumer Watchdog asked the U.S. Justice Department to intervene in the Google Books settlement and Justice subsequently announced it was investigating the deal and then opposed the initial settlement. The Justice Department’s comments on the amended settlement are due Feb. 4. Judge Chin has scheduled a hearing on the amended settlement for Feb. 18.

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Consumer Watchdog, formerly the Foundation for Taxpayer and Consumer Rights is a nonprofit, nonpartisan consumer advocacy organization with offices in Washington, DC and Santa Monica, Ca.  Our website is: www.ConsumerWatchdog.org.

Kasowitz, Benson, Torres & Friedman LLP is a national law firm with over 300 lawyers specializing in high stakes, complex litigation.  The firm has offices in New York, Newark, Houston, Atlanta, Miami and San Francisco. For more information, visit www.kasowitz.com.
Contact: Daniel Fetterman, 212-506-1934, [email protected] or Peter Toren, 212-506-1986, [email protected].