Although Sen. Patrick Leahy urged his colleagues Tuesday to vote on 13 pending judicial nominations, including that of 2nd Circuit Court of Appeals nominee Denny Chin, not everyone is as eager to see New York judge move to the appellate court right away.
Chin, who was nominated last October and approved by the Senate Judiciary Committee in December, is overseeing Google’s proposed settlement to digitize millions of books. Google entered into a class-action settlement with a number of authors and publishers in 2008.
After a marathon hearing on the settlement last month during which competitors, public interest groups, other authors and the Justice Department aired their grievances, Chin is faced with the task of issuing a ruling in the long-running case.
The settlement stems from a pair of 2005 lawsuits against the Internet search giant. About 500 objections to the settlement have been filed — largely from critics who argue it violates copyright law and gives Google an unfair advantage in the e-book market.
Observers expect Chin to suggest changes the parties might make in order to get the settlement approved, as courts do not often reject negotiated settlements between private parties outright.
But if such a ruling further prolongs the process, and Chin is confirmed to the 2nd Circuit, it’s unclear if the matter might be moved to a different judge.
Chin was included in Sen. Leahy’s list of 14 nominations that were still waiting for a floor vote. Eight of them, including Chin, are not considered controversial.
After presiding over a full-day hearing, and with 500 objections and thousands of pages of filings to plow through, federal Judge Denny Chin is now faced with the task of sorting through all that information and figuring out who is right about Google’s plan to digitize and sell millions of e-books.
The Internet search giant entered into a class-action settlement with authors and publishers in 2008, which was the subject of yesterday’s hearing in Chin’s court in the Southern District of New York. Chin did not indicate when to expect a ruling from him on the fairness of the settlement.
Based on a review of the transcript, it is evident both sides dug in their heels at the New York hearing. Google clashed with critics of the settlement on who was included, why they were included, how far the settlement went, what benefits it would give Google, and even how many books were included in the deal.
That number would be 174 million, argued Gary Reback, the antitrust lawyer leading the charge for critics with the Open Book Alliance: “We didn’t end up with a single seller for those 174 million books, just by chance. We didn’t end up there through some pro-competitive initiative by Google. We got there through concealment and misdirection,” he said.
Google, in contrast, estimated that the settlement touches only about 10 million works, around half of which are part of the out-of-print category that has sparked so much controversy.
One issue at the heart of the hearing was why Google and the parties to the settlement didn’t set up a process that would allow authors to opt-in to the settlement, instead of the current arrangement that authors are required to opt-out of. The Justice Department has suggested such a move could fix the bulk of the settlement’s problems as far as it is concerned.
Google’s lawyer, Daralyn Durie, argued that there could be no settlement without an opt-out class because finding and negotiating with individual rights-holders was prohibitively expensive. ”There is no other way to create a market for these out of print works so that they can become available and so that their rights-holders can be located,” Durie said.
“We know it doesn’t work because if it worked, someone would have done it already. Microsoft abandoned its scanning project, so have others. They couldn’t figure out a way to make it commercially viable,” she said.
Judge Chin seemed disinclined to approve the settlement as is, and likened the release from copyright liability it would provide to Google to a release from future claims of discrimination. “You’re getting a general release from absent participants, from people who haven’t shown up yet,” he told a lawyer for the authors in the settlement.
Google’s argued the two were different, because discrimination is illegal, while distributing copyrighted works is not. Copyright law is designed to encourage the production of works and protect the economic interests of rights-holders, both of which the settlement does, Durie argued.
“[Rights holders] can come forward a year from now, they can come forward two years from now, they can come forward five years from now and say I want this to stop. All that will have happened to them in the interim is if people have purchased their works, money will be sitting and waiting for them. That’s it,” she said.
Many critics at yesterday’s hearing expressed concern about the authors who were covered by the settlement, but who did not know about it. The parties argued that between 80 and 90 percent of all rights-holders are eventually found. Last year, the New York Times documented the extensive search the parties undertook to find missing authors.
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Main Justice is going through the early draft transcripts of today’s hearing in federal court in New York on the Google books deal, and we’ve pulled out some choice snippets:
“To end the suspense, I am not going to rule today,” Judge Denny Chin, of the Southern District of New York, said in his early remarks. “There is just too much to digest. And however I come out, I want to write an opinion that explains my reasoning.”
The court first heard from several supporters of the agreement, then from the settlement’s opponents. The Justice Department followed, and then the parties got in the last word.
• A professor from Howard University School of Law argued that Google’s book project would open up access to books and help level the playing field. The critics’ reliance on copyright law ignored the spirit of the law, Lateef Mtima argued. ”Copyright is intended to be an engine of cultural development, not a brake on it,” she said.
• A lawyer for Sony, which makes digital book readers, argued in favor of the settlement. Janet Cullum, from the law firm Cooley Godward Kronish, said: “The settlement will make available to the consumers a vast quantity of books, including many that would otherwise likely never become available in digital format,” she said. Cullum also said that, if the settlement was approved, the mechanism designed to track down missing rights holders would be effective enough that the problem of works whose copyright holders are unknown would be limited.
• A professor from the University of Michigan who oversees the school’s libraries said the settlement would provide access to titles that might otherwise be forgotten. “The bulk of what I’ve written is now out of print, hard to find and never sold all that well in the first place,” said the University of Michigan’s Paul Courant.
The university spends millions each year maintaining old books that are falling apart, he said, and can’t provide digital access to books without the kind of comprehensive settlement Google is trying to get. “The alternative to the settlement is not a utopia of universal digital access. Rather, it is the status quo under which most of the works of the 20th century simply cannot be legally read in digital form and physical and institutional proximity to great collections is the only effective means of access,” Courant said.
• John Morris from the Center for Democracy and Technology urged the court to approve the settlement, but said that it raised privacy concerns because it would let Google track and monitor what books people read in ways that libraries do not.
Later, responding to similar concerns raised by another speaker, the judge seemed unsure what to make of the argument. “When I order something on Amazon, suddenly I’m getting an e-mail saying if you like that book, you’ll like this one. Is this different? Should I be concerned about these e-mails I’m getting from Amazon about what I’m buying?” he said.
• “It’s not going to be a great library, it’s going to be a great store,” said a children’s book author, who expressed frustration that illustrators had been dropped from the settlement.
• Author and class action lawyer Scott Gant worried about the authors who were a part of the settlement but knew nothing about it. Google estimated there are 174 million works out there. Gant estimated that there are tens of millions of absent class members, and said that Google has reached out to only about 2 million.
• Tom Rubin, Microsoft’s chief intellectual property lawyer, argued that, if the settlement was approved, other companies would be penalized for following the law. Microsoft and other competitors that had tried similar projects scanned only those books they explicitly had permission to scan. “Google by comparison took a short cut by copying anything and everything regardless of copyright status. They’re like a trucking company that instructs its drivers to go 90 miles an hour. It’s not surprising that competing companies that obey the speed limit can’t keep up,” Rubin said.
• Many critics reiterated arguments that Congress and not private parties should deal with the problem of orphan works, and said that the settlement would set a bad precedent for future copyright questions. “If this settlement agreement is approved I think it will encourage Google and possible others to go out and scan lots of other materials and then say, hey, we could litigate about this but it would be expensive and ugly, so why don’t we just reach a deal right now. And I think that would be unfortunate,” said academic Pam Samuelson.
• Gary Reback, the antitrust lawyer leading the charge for Google Books critics with the Open Book Alliance argued that, with the settlement, Google would be the sole supplier for 174 million books. “We didn’t end up with a single seller for those 174 million books, just by chance. We didn’t end up there through some pro-competitive initiative by Google. We got there through concealment and misdirection,” he said.
A hearing on Google’s plan to digitize millions of books is under way in a packed federal courtroom in New York this morning, with news wires reporting that Judge Denny Chin would issue no ruling at today’s hearing because there was “too much to digest.”
In press releases this morning outlining their testimony, critics of the plan reiterated their opposition.
“In essence Google’s latest arguments seem to boil down to this: ‘Our motto is don’t be evil, so you can trust us to control the world’s digital library,’ said John Simpson, with a group called Consumer Watchdog which has criticized Google on privacy issues.
“Copyright is the lynch pin upon which writers depend to control and profit from their work,” said Michael Capobianco of the Science Fiction and Fantasy Writers of America. If the settlement is approved, it “would create the worst kind of precedent, turning copyright on its head and forcing writers into an unwanted business arrangement against their will,” he wrote.
Google cut a deal through a class-action settlement with authors and publishers that would let the search giant scan out-of-print works and create a massive digital library. Google’s competitors, library groups and dozens of others have objected to the settlement.
Both sides of the deal have exchanged attacks in recent weeks, with critics including the Justice Department raising copyright and antitrust concerns. The controversy is focused on the ability the settlement would give Google to publish so-called “orphan works”, or those whose ownership is unclear.
In the past, companies have refrained from scanning such books for fear for getting hit with massive fines when an owner turned up. This settlement would give Google immunity from such lawsuits.
In a filing last week, Google said that no one “seriously disputes that approval of the settlement will open the virtual doors to the greatest library in history, without costing authors a dime they now receive or are likely to receive if the settlement is not approved.”
We will update as the hearing continues.
The settlement that would give Google the ability to create a massive digital library of out-of-print books is facing another round of criticism, as the deadline passed today for briefs to be filed in federal district court in New York City.
Google entered into a class-action settlement with authors and publishers in 2008, but revised it after critics, including the Justice Department, complained that it violated antitrust and copyright law. Objectors had until today to file briefs discussing the changes, and many sounded similar themes.
Read all of the briefs here.
Google competitor Amazon.com and an organization called Internet Archive, which is working on its own digital library, said the changes the parties made to the initial settlement were largely cosmetic, because the settlement still gave Google a de facto monopoly over out-of-print works whose copyright holder couldn’t be found.
The objectors also said that the formula the parties created to set book prices violated antitrust laws. ”The changes made by the parties fail to cure any of [the settlement's] fatal defects,” Amazon said in its filing. “The antitrust problems of price-fixing, exclusive dealing and cartel structure persist.”
A Google spokesperson said: “This is another step in the approval process of the settlement. There have been many organizations and individuals who have filed their support of the amended settlement agreement with the Court. They believe, as we do, that the settlement will open access to millions of books.”
Many opponents have urged Congress to get involved. The Open Book Alliance, a coalition of organizations and companies that includes Microsoft, Amazon, and Yahoo, said in its filing: ”The Court’s procedures are ill-suited for resolution of what is now at stake in this matter -– rewriting the copyright law, restructuring the publishing industry, and maintaining a competitive search market.”
But several staffers on the Senate and House Judiciary committees told Main Justice that no immediate action on legislation related to the so-called orphan works was likely, especially before a Feb. 18 court hearing on the settlement.
The Open Book Alliance is advised by Gary Reback, who pushed the government to investigate Microsoft in the 1990s. The group’s filing lashes out at Google’s revisions: “The paltry proposals offered by the parties for amending the Settlement –- truly, a disdainful response to the vast outpouring of global criticism -– change little, but clarify much,” the group said in its filing.
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As rumors about Google’s upcoming clash with the Justice Department’s Antitrust Division swirl, Google has opted to continue its charm offensive, reports the New York Times.
The task of convincing journalists, professors, lobbyists, and Congressional staffers of Google’s harmlessness largely falls to Google’s Senior Competition Counsel Dana Wagner, formerly an antitrust lawyer with the Department of Justice. His money line: “competition is a click away.”
For those of you keeping track, Google is currently the subject of three antitrust-related inquiries:
- Collusion between technology companies to not steal employees away from each other (DOJ)
- The Google Books settlement (DOJ)
- Shared members on the boards of Apple and Google (FCC)
You can read the full NYT article, detailing Wagner’s charm (as well as some of Google’s arguments) here.
The Justice Department has issued civil investigative demands (CIDs) to two publishing companies regarding a deal struck with Google last year, allowing Google to digitize books and monetize them through Google Books, reports the Wall Street Journal (subscription required).
The Journal did not give any indication as to why the Department is seeking these records specifically.
The Department’s Antitrust Division is probing the Google Books settlement because of fears that it may give Google Books a monopoly, since no other company could legally digitize books without explicit permission from each individual publisher. Google, on the other hand, is getting a deal where publishers have to opt-out, meaning Google can use books without negotiating with the rights owners of every book it puts online. There are also concerns that the parties involved in the settlement negotiations may not be representing the interests of all of the parties that will be affected by the settlement.