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2009-09-03

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Authors! Did you know that September 4th is your opt-out deadline for the Google Book Settlement?
 

What is the history of the Library Project announced by Google in 2004 and the controversial "Google book settlement"?

The Google book settlement is the result of a class action which was filed in 2005 against Google in the United States District Court for of New York, Authors Guild of America v Google Inc, No 05 CV 8136 (JES) (SDNY), as well as a related case filed by five publishers, The McGraw-Hill Cos v Google Inc, No 05 CV 8881 (JES) (SDNY). The cases were originated as a result of the Google Library Project, announced by Google in 2004, pursuant to which Google entered into agreements with a number of libraries to digitise books in their collections. The authors and publishers sued Google for copyright infringement based on the reproduction, distribution, and display of their works digitised through the Library Project and used by Google without proper authorisation. Google defended its actions as fair use. The court did not, however, rule on any issue of liability or Google’s “fair use” defence before the settlement was reached.

What should be the main concern of authors and publishers here in South Africa?

• The settlement would dramatically impact copyright owners around the world, South Africa included, as it would give Google a license to use nearly every foreign book ever published, even books that have never been published in the United States. While Google could sell and display those books to US customers only, many foreign owners are unaware involuntarily licensing of how their rights in the important US market. Moreover, the deal would license Google to use the foreign book data to improve its dominant web search and advertising services that can and will be offered worldwide.
• Concerns have been voiced by some about whether the settlement gives Google too much market power; the administrative burdens and costs imposed on authors and publishers to claim books and maintain up-to-date rights information; the impact of the settlement on traditional contractual relationships between authors and publishers; the treatment of unclaimed (or “orphan”) works under the settlement; the resolution of non-US authors’ and publishers’ claims through the class action mechanism (which is unknown in other countries); and the sheer complexity of the settlement.

What are the implications of this settlement?

• In response to the lawsuit Google entered into a tentative interim settlement agreement by which Google proposed to pay more than $125 million on future royalties into a Books Rights Registry (BRR) to be distributed to the rights-holders pursuant to a formula. In exchange, Google will obtain the right to digitise and make millions of books available online. Rights-owners have until 4th September 2009 to "opt out" of the proposed settlement. The New York court hearing on the fairness or otherwise of the settlement is set for 7th October 2009.
• The highly complex settlement agreement consists of more than 300 pages, and forms the basis of how the parties propose to settle the court action. In the US it is possible for private parties to enter into a settlement that not only affects them but also binds non-parties who are certified by the Court to be affected in the same way. So in this case a New York Court will be asked to approve the settlement, not just with respect to the parties involved in the case, but also with respect to all authors and publishers who are said to fall within the class (made up of the authors sub-class and the publishers sub-class). In the US, once approved, the settlement will, therefore, mean that unless an author or publisher has reserved his/her/its rights by formally opting out of the settlement, they will not be able to make any claim that Google is infringing on the copyright in their books.
• Since South Africa is a signatory to the Berne Convention, the settlement is, therefore, also applicable to South African authors and publishers. The settlement applies to South African authors and publishers, not because they have published in the US, but simply because they have published a book to which the settlement applies, anywhere (including solely in South Africa). If the settlement is allowed to go through it will affect the rights on all books published on or before 5th January 2009 in any country that is a signatory to the Berne Convention. The Berne Convention states: “Authors shall enjoy, in respect of works for which they are protected under this Convention, in countries of the Union other than the country of origin, the rights which their respective laws do now or may hereafter grant to their nationals, as well as the rights specially granted by this Convention.”
• The settlement agreement states: “If you are a citizen of another country or live in another country, you are likely to own a US copyright interest if:
• Your Book was published in the United States;
• Your Book was not published in the United States, but your country has copyright relations with the United States because it is a member of the Berne Convention; or
• Your country had copyright relations with the United States at the time of the Book’s publication.

You should assume that you own a US copyright interest in your Book, unless you are certain that your Book was published in, and that you reside and are located in, one of the few countries that have not had or do not now have copyright relations with the United States.”

Why is 4th September 2009 so important?

4th September 2009 is the "Opt-Out Deadline’": the deadline for opting out of the Google Book Settlement, or opting in and objecting to it.

What are the options available to an author or any other rights-holder?

Publishers and authors have four options:

1. Negotiate a separate deal with Google under its partner programme. If you have already done so, the Partner Programme agreement will take precedence, although it may or may not cover all the rights that Google gets under the settlement agreement.
2. Opt out by formally notifying Google. The deadline for opting out is 4th September 2009.
3. Opt in. If you opt in and lodge a claim in respect of a book prior to 5th January 2010, you will receive a share of the $45 million that Google has put aside to pay rights-holders (the exact amount will depend on how many people claim, but will be between US$60 and US$300). You will also receive 63 percent of any revenue received by Google (eg from advertising around your book search result or if it is made available on subscription to a library or other institution).
4. Do nothing – in which case you will lose the right to sue Google in the US even if Google does digitise your book and publish excerpts, and you will not receive any revenue for that use.

There are a number of other dates which are important, but the main thing now is for a publisher whose rights will be affected, to decide which of the above four options to adopt. Then, if opting in is chosen, a further decision needs to be taken as to which books to claim, remove (totally) or exclude (eg to restrict display) from Google's database.

What happens if one simply does nothing?

If you own a US copyright interest in a book or an insert, you need not do anything at this time to remain in the Settlement. If you complete the Claim Form, you will receive the benefits of the Settlement if approved by the Court, and your claims for copyright infringement against Google and the Participating Libraries will be released and will be dismissed by the Court. If you remain in the class, you will be bound by any judgement or determination of the Court in connection with the Settlement, whether favourable or unfavourable.
 

And your advice would be? Just to sit tight?

My view is not to opt out of the settlement.

• A publisher, or author, as the case may be, should start to claim all his/her/its locally originated titles via the settlement site. One may well remove all "in print" titles from the settlement and negotiate a separate partnership agreement to cover these (on better commercial terms than the settlement) and leave older titles (where the publisher doesn’t have digital files etc) in the settlement as the cost of digitising for the partner programme is unlikely to be justifiable and there are more complex issues around ownership of digital rights for the partnership programme.
• The settlement would dramatically impact copyright owners around the world, as it would give Google a license to use nearly every foreign book ever published, even books that have never been published in the United States. While Google could sell and display those books to US customers only, many foreign owners are unaware of this involuntarily licensing of rights in the important US market. Moreover, the deal would license Google to use the foreign book data to improve its dominant web search and advertising services that can and will be offered worldwide.
• To simply control what Google is allowed to do with your book – including denying them any license at all – the preferable option will be to stay in the class, register your book with the Book Rights Registry and then use the controls therein to specify what Google is allowed to do – including how much of your book they’re allowed to display online (nothing, a snippet as in a search result, a preview of a few pages, the full book); whether you want them to be able to sell it; and what price you want to charge (with the revenue split 63/37 rights-holder/Google).

Unless a publisher is anxious to sue Google it makes far more sense essentially to do nothing, which means you’re part of the class, and then to decide how, if at all, you want your books to be displayed via this Google facility.

How best to proceed?

Read the full Notice, which is available at http://www.googlebooksettlement.com.

Decide whether you should:

• Remain in the settlement. If you do so, you will be bound by the Court’s rulings, including a release of your claims against Google.
• Object to or comment on the settlement. You must object/comment in writing by September 4th, 2009.
• Opt out of the settlement and retain your right to sue Google individually. You must opt out in writing by September 4th, 2009.
• File a claim for a cash payment (if you are eligible to do so). You must file your claim by January 5th, 2010.

The Court has appointed Class Counsel to represent the two Sub-Classes. If the settlement is approved, Class Counsel for the Author Sub-Class will request attorneys’ fees and expenses, which Google has agreed to pay. You can also hire your own attorney at your own cost. The Court will determine whether to approve the settlement at a Fairness Hearing on October 7th, 2009 at 10:00 am.

How will Google eventually monetise this project?

• Google has a number of plans for commercially exploiting the huge and still-growing corpus of digitised books it controls. It plans to run advertising alongside search results and online page views. It also plans to sell subscriptions to the whole corpus (or parts of it) to libraries. It plans to sell individual consumers the right to read books or parts of books online and print out pages. Other uses it envisages for the future include selling e-books, in the form of downloadable PDF files, selling Print on Demand copies, and offering custom compilations of pages and portions of books as course materials for the education and training markets. It cannot be thought an irrelevance that on 2nd June, 2009 Google announced that it had plans to facilitate the sale of e-books by publishers in its Partner Programme. In order to avoid being legally challenged under foreign copyright laws, Google plans (for the present) to confine these activities to the US market.
• Under the settlement Google has promised to pay an initial $45 million dollars to establish a Book Rights Registry. This is to be a not-for-profit entity charged with representing the interests of rights-holders in connection with the Google Book Settlement. Google also promises to pass on to this Registry 63 percent of the revenues it receives from commercially exploiting the corpus of digitised books. The figure of 63 percent is arrived at by allocating a nominal 70 percent to the rights-holders and then slicing off 10 percent of this figure to cover Google’s "operating costs". It may be noted that under the standard arrangements of traditional book publishing the author is paid his or her agreed due and the publisher aims to make a profit out of the income that remains.
• Google will take its substantial (37 percent) slice off the top of the revenues earned by the books before any money flows by way of the Registry to the registered rights-holders. The continuing costs of running the Registry are to be funded by taking a percentage of the revenues passed on by Google before what is left is divided among those rights-holders who have successfully registered a claim. An attachment to the settlement agreement estimates that the percentage withheld by the Registry for running costs will be between 10 and 20 percent of what it receives from Google. It should be noted that this is an estimate only, and does not bind the Registry’s directors.
• Rights-holders, then, should expect to receive at most about 53 percent of any income earned by the use of their works. If the Registry turns out to be expensive to operate, they may receive a great deal less.
• Under the settlement, Google proposes to deal with works differently depending on whether or not they are defined as "commercially available" according to the terms of the agreement. The agreement defines a book as commercially available at a given point if the rights-holder or his or her licensee were offering it for sale new in the United States "through one or more then-customary channels of trade". In that case Google will classify the book as "in print" and will not make any "display uses" of it, such as providing previews to searchers, including it in institutional subscriptions, or allowing consumer purchase of online access. The definition of "commercially available" has caused alarm among foreign publishers, since it seemed to imply that books in print but not published or directly distributed in the US would be made available by Google to searchers (in preview) and customers (for online access), unless and until the rights-holders have registered the works at issue with the Book Rights Registry and changed the settings, or applied to have them completely removed from the book corpus. However, following consultation with the lawyers who negotiated the settlement on behalf of the AAP, the Publishers Association of the UK has reported that Google plans to classify any book as commercially available if it can be purchased new from within the US through a website.
• In the case of books deemed to be in print, any revenue will be remitted to the publisher, who will pay the author some kind of royalty.
• Any revenue that flows to registered rights-holders through the Book Rights Registry from the commercial exploitation by Google of books that it does not deem commercially available (and that have not been excluded from such use by the rights-holder) is to be distributed along the same principles as the payments from the Settlement Fund.
• For works that are included in the corpus of books offered for institutional subscription, an "inclusion fee" is to be paid, in addition to fees based on the usage of individual books and ‘inserts’. The inclusion fee is to be ‘targeted at… $200 per Book’. By ‘targeted at’ is meant that this is the figure aimed at, depending on sales of subscriptions. It may not be reached, or it may be exceeded. In any case, it will not be payable to rights-holders until ten years after the first payments for institutional subscriptions are made by Google to the Registry. Once an inclusion fee has been paid, the rights-holder will not be able to exclude the work from use in the institutional subscription corpus unless they repay the inclusion fee, or share of the fee, that they have previously received for the work. The revenue from inclusion fees will be shared among the rights-holders according to the same principles which are applied to other revenue sources.
• The settlement agreement lays out the default pricing arrangements in considerable detail. It is open to rights-holders to specify their own prices, which the agreement states that only they can change. However, Google reserves the right to offer "temporary discounts off the List Prices from time to time at its sole discretion". The payment to the Registry will be at the list prices "unless otherwise agreed by Google and the Registry": in other words, it is always open to Google and the Registry to agree to pass the cost of any discount on to the rights-holders.
• Under the agreement no payment will be made to the rights-holders for any revenue earned by Google from advertisements served on web pages containing search results. The undisputed right to serve advertisements next to the results of searches on the Book Search corpus is one of the major potential benefits to Google from the settlement agreement. At present no advertisements are served by Google on Book Search results, apparently out of concern that this would weaken its case for the "fair use" of the books.

Do you foresee authors benefiting financially?

Under the settlement Google will make a payment of $45 million into the Book Rights Registry. It is guaranteeing minimum payments of $60 dollars for a book, $15 for an "insert" and $5 for a "partial insert". If enough rights-holders register that more money is required, Google has promised to provide the necessary additional funds.

• Only if a book is out of print and the rights have reverted to the author will the author receive the full payment. If the book is still in print, the payment will be remitted to the publisher. It appears that this will apply regardless of whether the author has licensed the electronic rights and/or the US rights to the publisher. The publisher will pay to the author "the appropriate splits or royalties as may be specified in the author-publisher contract for the Book or as the parties may otherwise agree". Of course, no existing contract will make specific provision for a payment from the Google Book Settlement Fund. It may provide for electronic rights in some shape or form, but there may well be room for argument over how the one-off payment from Google relates to the precise terms of the contract. And in other cases it will simply come down to "as the parties may … agree". Whatever the author receives, it will not be the full amount.
• In the case of out-of-print books where the rights have not reverted to the author, a share will be paid to the publisher, on a fixed basis. For books with a publication date before 1987, the Registry will pay 65 percent of the revenues to the author and 35 percent to the publisher. In the case of books published during or after 1987, the split will be 50/50.
• It may be noted that not all authors of "inserts" will receive a payment from the Settlement Fund. In order to claim for an "insert" a claimant will have to state that they "did not give permission for online use of the Insert as part of the work in which the Insert appears, or … if such permission was granted, it was no longer in effect on or after June 1, 2003". Otherwise, it would appear that they cannot make a claim.
• No money will be paid to rights-holders out of the Settlement Fund until at least a year after the settlement is approved by the court; and even with this provision written into the agreement, Google has thought it prudent to warn visitors to the Book Search Settlement website that payments will not come promptly.

How will this unfold now, and which dates are we to look out for?

• 5th January 2009 ("Notice Commencement Date"): The rights in virtually all works published on or before this date in book form will be affected by the settlement, unless the authors or rights-holders opt out.
• 4th September 2009 ("Opt-Out Deadline"): Deadline for opting out of the Google Book Settlement, or opting in and objecting to it. (This was originally 5th May, but was extended.)
• 7th October 2009: Final Fairness Hearing by the court
• 5th January 2010: Deadline for registering with the Book Rights Registry and claiming a share of the money Google Inc is offering to rights-holders whose work was digitised without their permission on or before the opt-out deadline of 4th September 2009. (Google does not plan to stop digitising on 4th September, but rights-holders will be able to claim compensation only for works that were digitised on or before that date.)
• 5th April 2011: Deadline for rights-holders who do not opt out of the settlement but who wish to have their books removed from Google’s database. After that date, Google will exclude their books from the database only if they have not already been digitised. There is no final deadline for registering books or inserts. Rights-holders who do not opt out can register their works with the Book Rights Registry at any time.

Will this affect our traditional views of copyright?

The Google settlement will essentially rewrite copyright law by allowing Google to use the material without “permission”, without negotiating how the material will be used, and without negotiating compensation and payment provisions with authors and publishers directly.

It can be argued that the settlement disassembles the basics of copyright law without legislative consideration and essentially forces the results on rights-holders. Its effects can be far-reaching. The settlement does not apply to US authors only, but is binding on authors worldwide even if they are not aware that their rights are affected by the suit.

The settlement really turns copyright upside down. Instead of protecting authors’ rights, the proposed settlement is asking of the court to reallocate the economic and moral rights to authors’ work, to give Google rights to use their material, and to determine the compensation authors must accept. To make matters worse, the effect of the settlement essentially gives Google a monopoly over the scanned publications and does require the company to make them available to other online services that might offer them at different prices or with different compensation for authors.

A question begging to be answered is whether the three main parties to the settlement truly are representative of the people who might be affected. The reason for my stance is that a group like the Authors Guild represents only a small percentage of authors and Google is just but one of many companies with an interest in the digital book business.

Another question is whether a class-action lawsuit can be regarded as the right forum to force an agreement that has such widespread implications.

Finally, the terms of the deal itself raise eyebrows. Google gets permission to scan the books, but there's no mechanism for granting such a license to anyone else. In theory, it appears someone would have to just start scanning, wait to be sued, and then negotiate a similar deal, which is hardly practical and a recipe for fostering competition.

This week Amazon, Microsoft and Yahoo also indicated that they will oppose the settlement. Whether or not the court will confirm the settlement is thus an open question; only the future will tell.

Do you agree or strongly disagree with Bertus Preller's take on the Google Book Settlement and his advice to South African authors? Write to SêNet at webvoet@litnet.co.za.