Billy Barnes is a JD candidate at the University of Toronto.

Last Friday, Google filed a revised settlement agreement for the class action law suit regarding its Google Book Search service. The settlement addresses many complaints directed at the original proposed settlement in October 2008. The two most important of these are the handling of unclaimed and orphan works, and potential antitrust issues. This new agreement solves some of the most glaring problems with the original but leaves some cause for concern.

The Class

The original settlement would have applied to all owners of U.S. copyright interest in a book. This included non-U.S. citizens who had a book published in the United States, or who lived in countries that are members of the Berne Convention or countries that have other copyright relations with the United States. The revised settlement only includes the United States, Canada, Australia and the United Kingdom.

Paying the Rights Holders

The original settlement proposed a Book Rights Registry to track ownership of copyrighted materials, distribute payments to authors, and deal collectively with Google. 63% of revenue generated by Google (through uses such as advertising, database subscriptions, and e-book sales) would be given to the registry. Rights holders would have five years to collect their money before it could be used by the registry. The obvious problem is that this provided little incentive to actually search out the rights holders. The revised settlement addresses this with two changes. First, unclaimed funds can no longer be absorbed by the registry. Instead, after five years the money may be used to pay for efforts to locate rights holders and, after ten years, it can be donated to a court-approved charity or turned over to state governments where required. Second, it requires an independent court-appointed Unclaimed Works Fiduciary to represent the rights holders of orphan works and who must approve all uses of unclaimed money.

Competing with Google

Under both versions of the settlement, the Book Rights Registry is able to deal with other organizations on behalf of rights holders. However, the original settlement contained a clause (3.8) stating that the Registry “will extend economic and other terms to Google that, when taken as a whole, do not disfavor or disadvantage Google as compared to any other substantially similar authorizations granted to third parties by the Registry”. In other words, no other organization could get better terms than Google. The new agreement removes this clause.

One possible source of future controversy is the powers of the fiduciary with respect to third-parties. The settlement grants the fiduciary the power to license uses of unclaimed works but also states that this power can be exercised “to the extent permitted by law”. The Registry has the same powers and phrasing with respect to claimed works under the added restriction that they cannot go against the directions of a rights holder. But copyright law doesn’t permit a person to license work they do not own. What does this mean for third parties? One interpretation is that the Registry would not be able to license to organizations other than Google without authorization from rights holders. The other organizations are not party to the contract and thus can’t rely on its provisions with respect to them. On the other hand, the contract says the parties will create a registry that has the power to license works. The registry should therefore have the power to license works. The phrase may also anticipate future legislation governing the licensing of unclaimed and orphan works—a possibility that is addressed elsewhere in the settlement. Critics have argued that the solution proposed by this settlement will set back such legislation, but if the agreement does indeed give Google an advantage over its competition, it might lend the issue a sense of urgency that it had previously lacked. If the registry does have the power to deal with third parties, it will probably attract regulation.

Final Thoughts

Normally one doesn’t think of a class action lawsuit as being a good thing for a company. Yet, it’s only because of this suit that Google can reach an agreement with all rights holders at one time. Many have argued that it unfairly benefits Google, but Google took a big risk and is paying a large price for these benefits. Hopefully, they will extend to others but in any event, I believe we’re better off with one giant digital library than none.

Posted in Copyright, Literary Works, Ownership