Google’s Fair Use Defense Takes Priority Over Author Class Certification

In the latest development in The Authors Guild v. Google book saga, the Second Circuit Court of Appeals ruled that the district court’s certification of the class was premature in light of Google’s assertion of a fair use defense and the absence of a ruling by the district court on the substance of Google’s fair use defense.  The Authors Guild filed this suit in 2005, alleging that Google infringed authors’ copyrights by scanning and indexing more than 20 million books and making snippets of books available to the public as search results.  The district court rejected an amended proposed class settlement agreement (ASA) on March 22, 2011.  My post entitled Google Book Settlement Rejected – For Good Reason discusses the district court’s decision.

After the district court rejected the ASA, the plaintiffs moved to certify a proposed class of “all persons residing in the United States who hold a United States copyright interest in one or more Books reproduced by Google as part of its Library Project, who are either (a) natural persons who are authors of such Books or (b) natural persons, family trusts or sole proprietorships who are heirs, successors in interest or assigns of such authors.”  (Opinion pdf page 3).  The district court granted the motion to certify the class.  Google appealed the district court’s ruling certifying the class, arguing that its fair use defense might moot the litigation and that the plaintiffs do not fairly and adequately protect the interests of the class. 

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Marybeth Peters Speaks About Ongoing Copyright Issues

This week I had the opportunity to hear former United States Register of Copyrights Marybeth Peters speak about ongoing copyright issues in the United States.  Her talk was entitled “Looking Back and Moving Forward:  Copyright’s Biggest Issues.”  Ms. Peters spoke at a Lewis & Clark Law School lunch in Portland, Oregon.  The lunch was co-sponsored by the Intellectual Property Section of the Oregon State Bar and the Copyright Society of the U.S.A., Northwest Chapter.  Lewis & Clark Law School is nationally recognized for its intellectual property law program, something I did not realize until I heard Dean Robert Klonoff’s remarks.

Ms. Peters must be the ultimate authority on events occurring at the Copyright Office since 1966, when she began working there.  It was fascinating to hear her speak about copyright issues.  Anyone who has a chance to hear Ms. Peters speak should jump at the opportunity.

Ms. Peters was the Register of Copyrights from 1994 to 2010.  The Register of Copyrights is the director of the Copyright Office of the Library of Congress. 17 U.S.C. §701

Ms. Peters stressed that copyright is a balance of interests and that compromise is essential in reaching that balance.  Here are some of the major issues she sees moving forward:

  • Recording artists’ public performance rights in the non-digital broadcasts of their sound recordings
  • Orphan works
  • Section 108 Reproduction by libraries and archives
  • Termination of rights
  • Section 104A restoration of copyrights for foreign works
  • Registration of photographic works by photograph licensing companies

Musical recordings are complicated because there are a number of independent copyrights associated with a single song.  Currently, recording artists and companies have no public performance right in non-digital broadcasts of their sound recordings.  17 U.S.C. §114.  Royalties for music broadcasts by a radio station, for example, go to the copyright owners of the musical compositions, but not to the recording artist or production company.  Recording artists and production companies are compensated through the sale of their recordings, but since there are now many ways to listen to a song without buying it, the possible revenue streams for recording artists are shrinking.  The Administration’s White Paper on Intellectual Property Enforcement Legislative Recommendations that I discussed in my post entitled “Illegal Streaming” a Felony? White House White Paper Directed at Activity that is Already Criminal proposes creating a right of public performance for copyright owners for sound recordings transmitted by over-the-air broadcast stations.

Orphan works are works for which the copyright owner cannot be located.  The problem is that these works are still protected by copyright law, even though their owners cannot be found, and are protected to the same extent as works for which the copyright owner is known.  The Importance of Orphan Works Legislation further describes the magnitude of the orphan works problem.

17 U.S.C. §108 allows libraries to reproduce copyrighted works under limited circumstances.  The problem is that the statute was designed to address reproduction by photocopying and does not adequately address the prevailing practice of making digital copies.

Termination of rights under 17 U.S.C.§203 was the subject of my blog post entitled Termination of Transfers Provision Applies to All Authors, Not Just Musicians.  This statute provides a mechanism for authors to terminate transfers or licenses granted on or after January 1, 1978, thirty five years from the date the grant was made.  Ms. Peters’ questions included:  What is an author?  What law governs works created after January 1, 1978, for contracts signed before that date?  Are the rights granted when a contract is executed or when the works are created?  The answers to the two previous questions determine whether the 1909 Act or the 1976 Act applies.  The Acts differ in important respects, so it matters which Act applies.

Section 104A restores lost copyrights to foreign authors under certain conditions.  In essence, it removes works from the public domain and gives foreign authors back their copyrights in those works.  It was enacted to bring the U.S. into compliance with the agreement on Trade Related Aspects of Intellectual Property (TRIPs).  Golan v. Holder challenges the restoration of copyrights to foreign authors under the Copyright Clause and on First Amendment grounds.  It is currently set for review before the U.S. Supreme Court.

The issue regarding the registration of photographic works by photograph licensing companies, such as Corbis Images, is that these companies were allowed to register photographs in batches, without listing each photographer individually.  The validity of some of these registrations is now being challenged.  Many of these photographers did not independently register their works.  Copyright exists from the moment a work is fixed in a tangible medium (17 U.S.C. §102), so these photographers still have their copyrights in these photographs.  Statutory damages are what is at stake in this issue.  17 U.S.C. §412(2) provides that statutory damages are not available unless the work was registered within three months after the first publication of the work.  If statutory damages are not available, the copyright owner must prove her actual damages and the infringer’s profits (17 U.S.C. §504), a fact intensive and extremely expensive process.

Ms. Peters discussed the Google book settlement case in the context of the orphan works and the §108 library reproduction issues.  She stated that the Google book settlement case has changed the way people view copyright throughout the world.  See my blog post entitled Google Book Settlement Rejected – For Good Reason for the highlights of the Google book settlement case.  Related to the Google book settlement case, but not directly involving Google, is a lawsuit filed by author groups against the HathiTrust and several universities for creating digital copies of books without the permission of the authors or other copyright holders.  Ms. Peters pointed in particular to the part of the lawsuit that objects to the HathiTrust’s plans regarding orphan works.  Authors, Copyright, and HathiTrust by Kenneth Crews briefly summarizes the issues involved in the litigation and provides numerous relevant links.

Ms. Peters obviously enjoys discussing copyright issues and is an entertaining speaker.  It was well worth my trip to Portland from the Seattle area to hear her speak.

Google Book Settlement Rejected – For Good Reason

Last week, Judge Denny Chin, sitting in the U.S. District Court, Southern District of New York, rejected the Google book settlement. He concluded that the settlement “is not fair, adequate, and reasonable.”  This post discusses how he came to that conclusion.


Google began scanning library books in 2004.  Many of those books were still protected by copyright.  Google did not get permission from the copyright owners to copy the books.  In 2005, a group of authors and publishers brought the class action copyright infringement suit against Google that gave rise to the Google book settlement.  The parties filed a proposed settlement agreement on October 28, 2008, which was preliminarily approved on November 17, 2008.  That proposed settlement received hundreds of objections.  The Amended Settlement Agreement (ASA) just rejected by the court was filed for final approval on November 13, 2009.  It was preliminarily approved on November 19, 2009, and it, too, was met with hundreds of objections.  The court held a fairness hearing on February 18, 2010.


The Class covered by the ASA includes all people who own a U.S. copyright interest in books or inserts (forwards, etc.) affected by a use authorized by the ASA.  Class members must affirmatively opt-out to be excluded from the settlement.  Under the ASA, Google was authorized to “(1) continue to digitize Books and Inserts, (2) sell subscriptions to an electronic Books database, (3) sell online access to individual Books, (4) sell advertising on pages from Books, and (5) make certain other prescribed uses.”  (Opinion, page 6).  Google would pay rightsholders a percentage of the revenues from these uses and from net revenues from sales and advertising.  A “Books Rights Registry” would administer the revenue distributions. 

The Registry would be required to locate rightsholders using “commercially reasonable efforts.”  Funds unclaimed after 5 years could be used to cover the expense of locating rightsholders of unclaimed works and after 10 years, unclaimed funds could go to literary-based charities.

Under the ASA, Google could not display in-print books without prior express authorization from the rightsholders.  Google could display out-of-print books without prior express authorization from the rightsholders, but would be required to stop if directed to by the rightsholders.  There are many nuances this brief description does not discuss.

The Court’s Opinion

The court’s opinion is organized around the kinds of objections received to the ASA.  These objections are:

  • Adequacy of Class Notice
  • Adequacy of Class Representation
  • Scope of Relief Under Rule 23
  • Copyright Concerns
  • Antitrust Concerns
  • Privacy Concerns
  • International Law Concerns

Judge Chin pointed out that the vast majority of the submissions filed commenting on the ASA objected to the ASA.  Around 6,800 class members opted out, which he thought was an extremely high number.  He thought the objections were great in number and some of the concerns significant.

A federal court cannot approve a class action settlement unless it is “fair, adequate, and reasonable, and not a product of collusion.” (Opinion, p. 14).  Judge Chin applied that standard in evaluating the objections to the ASA.

Adequacy of Class Notice.  Judge Chin thought the class received adequate notice.  Over 1.26 million individual notices were sent to potential class members worldwide, in thirty-six languages.  The Plaintiffs also maintained a website with information about the case.  In addition, there was a huge amount of publicity.  He thought it “hard to imagine that many class members were unaware of the lawsuit.”  (Opinion, page 19).

Adequacy of Class Representation.  Judge Chin concluded that “there is a substantial question as to the existence of antagonistic interests between named plaintiffs and certain members of the class.”  He thought the differences were troubling.

Scope of Relief Under Rule 23.  This part of the discussion refers to Federal Rules of Civil Procedure, Rule 23, governing class actions.  Judge Chin determined that the ASA contains two distinct parts.  The first part covers past conduct.  Google would be released from liability for past copyright infringement.  The second part covers future acts.  It would transfer certain rights to Google in exchange for future and ongoing arrangements and would release Google from liability for certain future acts.  Judge Chin found that the second part exceeds the scope of Rule 23.  The US DOJ argued that the ASA “is an attempt to use the class action mechanism to implement forward-looking business arrangements that go far beyond the dispute before the Court in this litigation.”  (Opinion, page 21).

Further, Judge Chin thought “the establishment of a mechanism for exploiting unclaimed books” should be addressed by Congress, not the courts.  He also reiterated that the class plaintiffs did not adequately represent the interests of some class members.  For example, the interests of academic authors and The Authors Guild authors are not aligned, as academic authors seek maximized access to knowledge and The Authors Guild authors seek maximized profits.

Judge Chin also indicated that the ASA is unlike other class actions settlements in which class members who have not been heard from release their claims for purported past grievances.  Under that ASA,

class members would be giving up certain property rights in their creative works, and they would be deemed– by their silence– to have granted to Google a license to future use of their copyrighted works.

(Opinion, page 30).

Copyright Concerns.  Judge Chin’s first point is that under the Copyright Clause of the U.S. Constitution (Article I, Section 8, clause 8), Congress was granted the power to address copyright issues presented by technology.  The courts were not granted that power.

Judge Chin’s second point is that the ASA opt-out provisions grant Google “the ability to expropriate the rights of copyright owners who have not agreed to transfer those rights” and that this may violate the Copyright Act, 17 USC §201(e).  Section 201(e) provides that government bodies, other officials, and organizations cannot seize exclusive rights under copyright when those rights have not been transferred voluntarily by the copyright owner.  The argument is that the ASA uses the court system to unlawfully seize these rights on Google’s behalf.  Judge Chin did not think it was necessary for him to rule on this point, although he is troubled by it. 

Judge Chin indicated that a copyright owner’s right to exclude others from using the work is beyond dispute.  A copyright owner has no obligation to exploit a work.  Under that ASA, absent class members who do not opt out of the class are “deemed to have released their rights even as to future infringing conduct.”  (Opinion, page 33).  Judge Chin stated

it is incongruous with the purpose of the copyright laws to place the onus on copyright owners to come forward to protect their rights when Google copied their works without first seeking their permission.

(Opinion, page 35).

Antitrust Concerns.  The first concern is that Google would have a de facto monopoly over unclaimed works.  The second concern is that Google would have control over the search market.  Google would have the only complete commercial database of orphan works (works for which the copyright owner cannot be located), adding to its market power in online search.  

Privacy Concerns.  A privacy concern is that the ASA does not follow established law protecting reader privacy by limiting the disclosure of reader information.  Judge Chin thinks the privacy concerns are real, but does not consider them by themselves a reason to reject the ASA.

International Law Concerns.  Although Google argues that the settlement affects only U.S. copyright interests, it is in fact much broader than that.  The U.S. is a 1989 signatory to the Berne Convention, so that all books published in any Berne Convention signatory country after 1989 are protected by U.S. copyright law.  The ASA attempts to restrict its application to foreign books registered in Washington, D.C. or published in Canada, the United Kingdom or Australia on or before January 5, 2009.  Foreign rightsholders are still concerned, though, because many foreign books were registered in the U.S. before 1989 to ensure U.S. copyright protection.  Foreign rightsholders also object, arguing that the ASA would violate international law, such as the Berne Convention and WTO TRIPS (World Trade Organization Trade-Related Aspects of Intellectual Property Rights). Foreign authors also have trouble determining whether they are covered by the ASA, due to the unavailability online of Copyright Office records dated before 1978.  

Orphan works are a problem all over the world, not just in the U.S.  Foreign objectors point out that each country should address this problem and that a class action settlement in the U.S. is not the best way to solve a problem affecting global competition.  Judge Chin thinks the objections of foreign nationals and governments are another indication that Congress should be the one to act, not the courts.

Conclusion.  As indicated above, Judge Chin concluded “that the ASA is not fair, adequate, and reasonable.”  He went on to say that “many of the concerns raised in the objections would be ameliorated if the ASA were converted from an ‘opt-out’ settlement to an ‘opt-in’ settlement.”  (Opinion, page 46).  He urged the parties to consider revising the ASA along those lines.