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.