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What's Wrong with the Google Book Settlement

by Lynn Chu

Posted August 6, 2009. Be sure to visit the writersreps home page for links (R hand column) to more essays on the Google Book Settlement, the scope and complexity of which will leave your head spinning.

The Google Book Settlement far exceeds any mere litigation settlement. Settlement is about damages for specific, past harms. This, by contrast, is a business proposal. The plaintiffs' claim was about the harm from Google’s book copying before January 5, 2009. After four years of self-serving business planning, what the parties now place before the court is no “settlement” of this claim at all, but a 335 page publishing and union contract—a proposal for a business venture they wish to present to the class.

The plaintiffs had no authority to make this publishing deal on behalf of anyone. They are no-one’s literary agent. It is especially improper to try to turn a federal court into a sort of offering agent to sell a business proposal to a class.

This agreement waives a lot more than infringement from digitizing or snippets published on Google's site prior to 1/5/09. It waives all liability for anything having to do with this 335 page settlement agreement. This is a huge problem, because the scope of this agreement ranges so very far from the settlement of a claim.

Legally speaking, it is inappropriate, to say the least, for litigants to try to push a publishing and union deal down the throats of all authors and publishers in America, particularly by coopting the prestige and authority of court process and of “law.” In every detail, this document does nothing but fill the pockets and the hard drives of its negotiators—Google, and the plaintiffs in their new role as Google’s special purpose entity, the Registry. For owners, it’s a bad deal, (1) because the structure interposes multiple corporate veils which eliminate individual owner accounting, and audit, and all other individual rights and controls, funnelling all proceeds into “nets” pooled by a Registry lacking significant audit powers of its own—and apparently created for the specific purpose of laundering all individual accounting to owners as to their proceeds and sales, and (2) the fact that the sole payouts are on only a few narrowly defined revenue streams comprising probably the least lucrative proceeds Google will obtain from its exploitation of the derivative work that it stole from all authors, past and future.

Only authors care about the value of their derivative works. Most of the value of the derivative work that is the subject of this claim, the digitizations, also known as the "research corpus," is author property exclusively reserved from book publishers. The vast collective value of this unique new derivative work was ignored in the plaintiffs' negotiation. Book publishers usually (though not always) have only limited publication rights and no share of unusual exploitations. Authors’ interests in these broader rights, however, much at issue here, are sacrificed on the altar of mere unit and subscription access sales. That excludes important, and, especially collectively, much more lucrative, proceeds from the exploitation of authors' works. For example, ad revenues. And many more non-obvious types of exploitation that few of us have thought much about yet.

The plaintiffs, meanwhile, are handed a new fiefdom to run at the class’s expense, a transaction that looks suspiciously like a bribe. A fit punishment to the “class” for daring to sue Google, perhaps—were it not for the fact that no one but the plaintiffs chose to sue over whether digitization was “fair use.”

No one single non-negotiable, no-advance, one-size-fits-all publishing contract can be imposed on all literary works in America. Every creative work has an individual value (or rather, multiple values, relative to every individual person) which varies not only from that of other works, but depends on many factors, like time, and the moment in time one chooses to calculate value. No court has the power to order everyone in the world to sign, at one arbitrary moment, a publishing contract, or worse, “deem” everyone to done so by failing to reply to a private litigation settlement notice, the equivalent of Nigerian spam. No contract this burdensome, property-stealing, and uncertain in application, can be imposed on people using a class action notice procedure. In this context, it is deeply unfair.

A publishing contract and a union representation agreement are not litigation settlements. Settlements must be limited in scope to the matter in dispute and a valuation of past damages. The economic damage of mere digitization, without more, may be zero. In that case, the plaintiffs’ attorneys would be due one-third of nothing, i.e., nothing. Obviously, that would not be satisfactory to the plaintiffs’ attorneys.

Damage in an infringement action results when a copyright property is exploited with gains unjustly received, past or future. Google has not disclosed all the exploitations it has made or will make of the derivative work a/k/a “research corpus.” So it is impossible to calculate its present value for purposes of waiving a claim. The settlement agreement imposes no detailed reporting or accounting duties for all proceeds of exploitation of the derivative work, either to individual owners, or even the Registry. Rather, it says the digitizations are now nothing but Google’s exclusive property. This reverses copyright law. Entertainment lawyers should recognize the contract trick, used incessantly in Hollywood, though class action attorneys or litigators may not.

The litigants are brazenly trying to use the court process to assemble for their own use yet another valuable data asset to own and monetize, subject to no accounting, quite in addition to and wholly apart from the digitizations that Google originally stole. The settlement agreement, in itself, is a massive data demand request, all in the service of the litigants’ new business enterprise.

Google, using its special purpose entity the Registry, has no right to demand, commandeer, read, or make quasi-judicial determinations about the meaning of people’s contract files. It is nothing but meaningless busy work which Google now has no incentive to minimize, as it is all costed to authors. Just as Bank of America had no incentive, in the Kamelowicz case, to point out to a sleepy Alabama state court that the plaintiffs’ attorneys in their “settlement agreement” were walking away with fees far in excess of any benefit conferred on the class, by attaching class property not at issue in the suit, thus robbing it blind. Susan P. Koniak and George M. Cohen’s law review article, “Under Cover of Settlement,” (1996) is immensely instructive on this point.

Google would have an incentive to make its customer authors happy by accommodating their needs and wishes and changing its publishing options, like allowing anyone to display specified cuts at particular times, whenever they chose. This could be easily accomplished online. Instead, the settlement agreement locks a rigid, rule-bound, and essentially meaningless dictated-as-of-this-moment structure, permitting only certain types of Registry approved publications and rates, for all time, at fixed amounts, with all manner of irrelevant regulatory diddles of no consequence to anyone, substituting the Registry’s judgment for that of all authors, en masse, and even for Google, in whose business judgment we can probably trust much more than this Registry. The Registry obviously perceives itself as a regulatory agency, meddling and dictating, to stand forever between the owner, and Google as publisher. There is no rational need for this entity, and it is counterproductive. Interactivity creates far better opportunity for Google’s publishing program to evolve flexibly and positively for all concerned, but only if authors get to speak for themselves face to face with Google’s customer service, not forced to operate only via a single bureaucratic entity that serves no function other than to consume owners’ revenues.

Google is already changing its practices in response to author and agent outrage over excessive displays of works online, by halving its limited preview cap to licensing publishers, and blocking back to snippet sizes even on that halved dynamic search. So the settlement agreement’s misbegotten contractual dynamic-search 20% limited preview option, easily usable to effectively read much of a book online (or all of it over time), sapping other sales, is already being modified and made obsolete, except for the fact that it will be abusively imposed on anyone who refuses to join Google’s electronic plantation.

In every detail, the settlement agreement is rigged against the interests of the class and for the benefit of the litigants’ proposed new business operation. For many authors, particularly the oldest and most valuable, it is literally impossible to comply with the litigants’ data demand for data and copies of contracts and dispositive supporting documentation for one’s ownership, and so avoid falling into the disfavored “orphan” class, especially as to selections (“Inserts”). Orphan revenues will then be eaten to feed the Registry, and, next in line, to the compliant registrant class. Few if any authors or publishers can list all permissions they, their licensees, and all licensees of those licensees, ever granted over a lifetime. Nor should anyone be required to do so. Over time, publication, particularly of this type—always on and everywhere—saturates a market for a work, substituting for one’s own, authorized sales. Book publishers today feel victimized by the internet just because used books now compete with sales of their new editions. What will happen to book reading when large chunks of everything in the world are available to be read at all times, everywhere, online?

Google has digitized all books. That means that Google already has all Tables of Contents. So Google can write a script to list out all contributors to classic anthologies and put them searchably online—probably in under 10 minutes. It can also probably ferret out selections in books in less classically anthological forms, by analyzing proper names and initial capped titles, with relative ease. Google therefore, is able to produce far more definitive lists for all of us to review, than we can practicably furnish to it. Google surely already has analyzed all that data. Google has just chosen not to make any of that data available in any clear way to us—only hopelessly mingled and confused with works it has licensed the old-fashioned way. This, so that we all remain in the dark, and, as Silicon Valley strategy has it, to sow tactical “fear, uncertainty and doubt” and disable us, till Google wins all, gouging us in its window of opportunity. There is no reason to force all owners to hand over all their lists, private contracts and file records, to prove their ownership to a thief. Particularly not when the clear purpose of the exercise is to develop data to be used to permit and justify Google’s past, future, and continuing copyright infringements.

Does the “settlement agreement” even constitute a publishing contract with all members of the class who fail to “opt out”? If approved, will Google then have a valid defense to a future infringement suit for unlicensed publications displayed after 1/05/09 in “good faith” reliance that the “settlement agreement” comprises a permanent permission to publish? Will Google then be immunized from all future infringements of the works copied pre-1/05/09? Without launching yet another big lawsuit to find out, we can’t possibly know with any certainty.

Where is Google’s list of all books it copied pre-1/05/09, to which this suit pertains? We need that list to come to any valuation of damages. Google can start by furnishing all of us with that. If we don’t find our names and works on this list, then we’re already “out” and there is no need to feed Google, or its Registry, with any of our data at all. Obviously they don’t want us to know that, because their goal is to get everyone’s data.

Secondly, no book publishing trade group or their attorneys are competent properly to economically value such a new, valuable, far-reaching property as the derivative work of the digitizations en masse. Even to try at this early moment in internet history would be speculative and unwise.

The sole thing this settlement agreement had to do but did not, was reserve all owners’ rights and remedies with regard to all results and proceeds of the stolen derivative work of the digitizations, consistent with copyright law. Rather, it implies the opposite. Individuals might grant away such rights, freely, by personal contract with the buyer, for what the individual regards as a good deal. Collectivities should not.

No court should permit Google to require all owners in America to be forever bound to produce contracts, lists of works, permission licenses, claim forms, supporting documentation, notes and affidavits, concerning verbal conversations about ownership, options, approvals, and rights of consultation as to each anticipated form of publication, then be forced into arbitration, and out of federal court, about all copyright issues in the future. Copyright law protects creators, but only in federal court. Quasi-judicial efforts to predetermine everyone’s claims are for the benefit only of publishers.

For Google to try to leech a multi-claimant database out of this litigation hurts authors. Spotting the aggregative power of the court, Google thinks it can grab that lightsaber and make it serve its business interests, flipping copyright law into reverse for itself.

Step one, Google should post the list of what it copied prior to 1/05/09, to which this suit pertains. Google can also easily analyze the digitizations and pull out the list of all contributors to anthologies and other ascertainable types of selections. And it can also post a second searchable list: all book works and selections now displayed under direct license, from anyone, preferably showing the name of the licensing entity and person, and their contact data, to boot.

Step two, what Google really wants to do here is ask Congress to change the copyright law to favor itself. At least Congress, unlike the courts, is set up to fully and openly debate the merits and demerits of regulatory mechanisms proposed as a substitute for clear, simple rules of common law property, contract, and copyright. Congress at least knows a corporate effort to wangle a self-serving law at the expense of the public when it sees it, and, more or less, can be expected to do a reasonable if imperfect job of resisting the grossest abuses. And if they do get a thing wrong, they are able to fix it, eventually, as no court can do. The legal-draftsmanship skills on the Hill, and in the better agencies, are also higher than those of mere plaintiffs’ lawyers in a private transaction.

Google however sees its opportunity—that these plaintiffs can be more easily bribed and manipulated than Congress can to serve Google’s interests. Congress might declare digitizations to be a public asset, open to all to use for free, including competitors (save by publishing without permission). Heaven forfend!

So, the game becomes, make it all as hairy as possible, plug it up with goodies and benes to appeal to all the agents’ self interests, plug it all into the mindbending arcana and cushy assumptions of class action practice, then, sit back and expect the court not to notice, but rubberstamp.

Google’s second option, after paying off the plaintiffs, would be to acquire publishing rights from individuals in the usual way. Google might have done this more easily than anyone in America. Rather than trying to extract vague pseudo-legislative proclamations from a court, it could have just posted a simple 1-2 page agreement online to be turned on by any owner happy to warrant ownership and indemnify Google for breach. As usual one would read the terms of that contract, then consult with whichever experts or business partners (such as agents or publishers) one wishes or is contractually obliged to consult. In doing this the author might consider such issues as, how easily can I terminate and get out of this monstrosity? Or, might there be a better deal or terms of publication for me around the corner? Should I do this now? Or wait for a better moment more in line with my plans, later? This is nothing but the classic, “robust” solution of the copyright law, a law that respects individual contract and property. All such decisions, to sign publishing contracts, or union agreements, or anything else, need to be made in an atmosphere not of “court order,” but of “caveat emptor.”

Warranty and indemnification for breach in publishing contracts deters false claimants. Why do these litigants avoid the simple, cheap and lawful solution? Precisely because they are desperate for us to feed to them all our data. They hope we will not even notice what we are being suddenly compelled to do. Claims data is merely one more valuable data asset that may soon prove useful for Google to argue down all prices on owners, some of whom might prefer to charge more than others brandishing dubious claims. Or Google might sell that data to others to do the same thing—game authors’ prices on them with dubious alternate licensors.

Google is not entitled to collectivize all book copyrights and sweep all authors into a single deal on a single contract. Representing the interests of no-one, it just wants a cut of the action of all world literature, forever. The only parties benefitted by any of this are the litigants. Not the class.

Google is in the data asset collection business. Rhetoric about “innovation,” self-promotion about good intentions, and claims of sweetness and light aside, Google just wants a comprehensive claims database handed over to it, to use against authors and true owners of properties, whenever it requests.

Google is not entitled to read our contracts or permissions or to gather or digitize them, or make determinations or adjudications about them. This is OUR private data. Adjudicating contract validity and meaning is for us alone, and, if it comes to that, for the federal courts.

Not a word in this Settlement Agreement provides an iota of protection for our data in Google’s, or its special purpose entity, the Registry’s, hands.

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