Sep 1 2009

Should Google be a regulated utility under its "Settlement"?

 

The Google Book Settlement (GBS) would give Google unprecedented power over hundreds of thousands of copyright owners and control of an asset that may become essential to 1) book publishers, 2) book authors, and 3) any entity that desires to operate a search or archive function regarding published books. The Settlement should not be approved unless it ensures all competitors and others access and fairly protects the copyright owners who were not represented at the “settlement” discussions and whose property is being stolen.

 

Over-arching any support for the Google “Settlement” is the view that this deal may create a cool and valuable “public” resource and that, without the settlement, the resource may be impossible to create. But the impossibility issue relates to the fact that the asset cannot economically be created without trampling on the property rights of hundreds of thousands of copyright owners. How to negotiate a license with the hundreds of thousands of copyright owners that exist and the many that would say no? The GBS solves this by answering – “no need to do so, Google is doing a good (and profitable) thing, and the property owners should be happy.” The fact that in the end there may be a valuable asset available to some of the public should not distract us from the reality that this asset will be under the control of a private, large and profitable corporation. And no one else will be realistically able to replicate it. Ever.

Google is not altruistic, nor should it be. Making a profit is a good thing, for Google. It is doing what it proposes to do in the “Settlement” for profit. 

What source of profit does Google expect? That is simple. If the settlement is approved and the project completed, Google will have a perpetual lock on the digitized services involved in reference to the books, to archiving books in digital form, and to provide search services with respect to that archive. The advertising and subscription income from this monopoly will be immense. Monopolies are not illegal. But monopolies created by joint arrangements imposed on other parties should be. As much as the cost of creating the copies is huge, the profit from having created them and the market power it will give Google are far greater.  And the market control will not end. All new authors and new copyright owners, though not expressly covered by the “Settlement” are likely to find irresistible the need to allow their works to be posted in the only game in town. If your book is not there, where is it and how do I find it?

In a recent decision, the Court of Appeals for the Federal Circuit observed that a patent pool, created by agreement in order to implement a jointly developed standard, might be engaged in patent misuse to the extent that the pooling arrangement contained provisions that limited use of affected patented technology to develop a potential competing technology. I am no fan of intellectual property misuse doctrines. But this use of the “pooled” copyrights (voluntarily or forcibly pooled) to prevent development of competing technologies is an inherent feature of the Google Settlement.

Is the GBS fair to copyright owners? Certainly not:

  • For copyright owners of works that have been infringed already, the GBS proposes to pay between $5 and $60. But statutory damages for infringement are $750 per work and can go much higher. A settlement making this much of a reduction in statutory damages suggests that the claim itself was invalid and the copyright owners are receiving no more than nominal compensation for a claim that seems to me to be a valid one.
  • The nominal payment contemplated by GBS makes no distinction among the different works in terms of their market value, a factor that would very likely be important in any ordinary litigation or ordinary license. Clearly, copying the latest Harry Potter volume is worth more that copying the obscure book that was my first publication. Yet, Harry Potter gets $5-$60, as do I. Even I think that the $60 to me is too low.
  • The GBS would impose these nominal payment “settlements” on thousands of copyright owners of out of print books without adequate notice or opportunity for the property owners to object. This is the “orphan work myth.” Simply because a work is out of print does not mean that the copyright owner is unavailable or, even, hard to find. I, for example, recently purchased from E-bay a copy of my second book – which has been out of print for many years. It is not fair to give people like me no notice or realistic chance to object based on the claim that we are hard to find.
  • The copyright owners whose works have not yet been copied are treated even more unfairly. They lose the ability to prevent someone else from taking an aspect of their property. They lost it under circumstances in which they probably could not have yet brought a federal lawsuit and through representatives who do not represent them.

The GBS should be rejected. 

If it is not rejected, the possessor of an essential asset that dominates a market and that was created by joint conduct (the agreement) should be required to provide low cost, non-discriminatory access to all others and its profit from this anti-competitive agreement and the asset it created should be closely regulated.

If it is not rejected, has the court not created a private entity that wields eminent domain powers with respect to copyright?   Google would possess an asset dominating a market, created by joint conduct (the agreement), and vested with the public power to take the copyright interests by judicial order. In such circumstances, why should it not be treated like a utility, common carrier, or essential facility that should be required to provide low cost, non-discriminatory access to all others and its profit from this anti-competitive agreement and the asset created with the power and sanction of the court should be closely regulated.

Written By:Emmanuel Michau On September 2, 2009 2:05 AM

From Paris ,France

Dear Ray
I am impressed by your comments on the GBS!Indeed you point out a seriuos challenge for us lawyers to face.Now the solution is really not obvious.If we were to suggest a solution I would attept the following : low price Ok , standard price for evry owner ok ,but open access to it from Google at any request for free.Does that make sense to you??
Emmanuel

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