Federal Judge Rejects Google’s Settlement in Digital Books Case

Judge Chin, of the U.S. District Court, Southern District of New York, rejected a proposed settlement between The Authors Guild, representing the copyrighted content providers, and Google Inc., the accused copyright infringer, stating that the settlement for copyrighted orphan works, subject to Google’s digital scan and display project, was not “fair, adequate, and reasonable.”  The Authors Guild et al. v. Google, Inc., Case No. 05-Civ-8136 (SDNY March 22, 2011)(available here).

“While the digitization of books and the creation of a universal digital library would benefit many, the ASA [the Amended Settlement Agreement] would simply go too far. It would permit this class action — which was brought against defendant Google Inc. (“Google”) to challenge its scanning of books and display of ‘snippets’ for on-line searching — to implement a forward-looking business arrangement that would grant Google significant rights to exploit entire books, without permission of the copyright owners. Indeed, the ASA [settlement] would give Google a significant advantage over competitors, rewarding it for engaging in wholesale copying of copyrighted works without permission, while releasing claims well beyond those presented in the case.”  Slip opn. p. 2-3 (herein “p. 2-3″).

The Judge found that millions of books scanned by Google were still under copyright, but Google had not obtained copyright permission to scan the books.  The Court also considered objections by hundreds of others to the Settlement Agreement.

Amazon.com, Inc. and Microsoft Corp. objected on the grounds that the settlement would violate existing copyright law. They argued that judicial approval would infringe on Congress’s constitutional authority over copyright law and that the provisions of the settlement pertaining to “orphan works” would result in the involuntary transfer of copyrights in violation of the Copyright Act, as copyrighted works would be licensed without the owners’ consent. See 17 U.S.C. § 201(e).

Effectively, the court accepted the proposed class action settlement of past conduct which would release Google from liability for past copyright infringement but rejected the second part of the settlement dealing with future acts.  “The second [part] would transfer to Google certain rights in exchange for future and ongoing arrangements, including the sharing of future proceeds, and it would release Google (and others) from liability for certain future acts. I conclude that this second part of the ASA [settlement] contemplates an arrangement that exceeds what the Court may permit under [Fed.R.Civ.P.] Rule 23.” p. 21.  The rejection of this settlement therefore pushes the issue towards a Congressional resolution.

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