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Justice Department Moves To Revise Google Book Project

September 20, 2009

The Department of Justice advised a federal judge on Friday to reject a proposed legal settlement between Google Inc. and a large group of authors and publishers.  The agreement would allow the Internet search giant to scan and sell millions of out-of-print books online.

In its brief filed late Friday in a U.S. District Court in New York, the Justice Department said the class action settlement raises copyright and anti-trust issues, and threatens to thwart competition and drive up prices unless it’s revised.

But the department encouraged the parties to continue discussions to address concerns.

The 32-page filing marks the first time the Justice Department has publicly shared its views about the settlement.

“This Court should reject the Proposed Settlement in its current form and encourage the parties to continue negotiations to modify it,” wrote the nation’s top law enforcement agency in its 32-page filing, which marks the first time the department has publicly shared its views about the settlement.

“The breadth of the proposed settlement…raises significant legal concerns,” it said.

“The public interest would best be served by direction from the Court encouraging the continuation of those discussions.”

U.S. District Court Judge Denny Chin is set to hold a hearing on October 7 on the settlement, which was reached last October between Google and the Authors Guild and the Association of American Publishers following a copyright infringement suit the latter had filed against Google in 2005.

The settlement called for Mountain View, California-based Google to pay $125 million to resolve outstanding claims and to create an independent “Book Rights Registry” to provide revenue from sales and advertising to authors and publishers who agree to digitize their books.

Microsoft, Amazon, Yahoo, privacy advocates and consumer watchdog groups, along with the governments of France and Germany, have all filed objections to the settlement with the court.

Meanwhile, Sony Electronics, which makes the Sony Reader electronic book reader, and a group of 32 law and economics professors, have filed briefs supporting the settlement.

In its filing, the Justice Department proposed changes to the agreement that it said would help resolve its concerns. These include limitations on some of the more open-ended provisions for future licensing, additional protections for unknown rights holders and addressing issues of non-U.S. authors and publishers.

The department also proposed creating a mechanism by which Google’s rivals could gain comparable access to book collections.

“The proposed settlement has the potential to breathe life into millions of works that are now effectively off limits to the public,” the Justice Department said.

“Nonetheless, the breadth of the Proposed Settlement — especially the forward-looking business arrangements it seeks to create — raises significant legal concerns.”

The current settlement would give Google exclusive authority over books by foreign rightsholders and so-called “orphan works”, or books whose copyright holder cannot be found, the department said.

“The Proposed Settlement raises concerns about the adequacy of representation afforded to absent class members, especially owners of ‘orphan’ out-of-print works and foreign rightsholders,” the department said.

“The Proposed Settlement operates to sweep in untold numbers of foreign works, whose authors, under current law, are not required to register in the same manner as US rightsholders.”

Although its investigation into whether the settlement violated anti-trust provisions was “not yet complete” the department nevertheless expressed concerns.

“In the view of the Department, the Proposed Settlement raises two serious issues.”

“First, through collective action, the Proposed Settlement appears to give book publishers the power to restrict price competition.

“Second, as a result of the Proposed Settlement, other digital distributors may be effectively precluded from competing with Google in the sale of digital library products and other derivative products to come,” it said.

The department’s brief comes one week after the head of the U.S. Copyright Office argued that the deal violates “fundamental copyright principles.”

Marybeth Peters, the U.S. Register of Copyrights, told the AFP news agency that the settlement “absolves Google of the need to search for the rights holders or obtain their prior consent and provides a complete release from liability.”

“It could affect the exclusive rights of millions of copyright owners, in the United States and abroad, with respect to their abilities to control new products and new markets, for years and years to come,” she said.

Google has already accessed some of the nation’s largest libraries, and has scanned some 6 million out-of-print books into its electronic index.

However, it has so far only been able to show portions of those digital copies.  The current settlement would clear the way for Google to sell all of those out-of-print books and scan even more into its index.

Google co-founders Larry Page and Sergey Brin have long dreamed of making out-of-print books accessible to anyone, and the project has turned into somewhat of a campaign for the pair.

Indeed, the project has received broad support from librarians, disabled rights activists and large corporations like Sony Corp.

But consumer watchdogs worry the settlement may open the door for Google to collect too much information about the books that people are reading, a claim Google has tried to address by pledging to set a separate privacy policy for its digital library.   The Justice Department’s brief did not address privacy issues.

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