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Googlebooks pact rejected by federal judge

'De facto monopoly' feared

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A federal judge has rejected an amended version of Google's $125 million book-scanning settlement with American authors and publishers, a deal that threatened to rewrite American copyright law and give Google exclusive rights to so-called orphaned works.

On Tuesday, Judge Denny Chin rejected the Amended Settlement Agreement (ASA) proposed by Google and its fellow parties after the DoJ objected to the original settlement. "The question presented is whether the ASA is fair, adequate, and reasonable," Chin said. "I conclude that it is not.

"While the digitization of books and the creation of a universal digital library would benefit many, the ASA would simply go too far. It would permit [Google and its fellow parties]...to implement a forward-looking business arrangement that would grant Google significant rights to exploit entire books, without permission of the copyright owners. Indeed, the ASA would give Google a significant advantage over competitors, rewarding it for engaging in wholesale copying of copyrighted works without permission, while releasing claims well beyond those presented in the case."

Judge Chin, of the Southern District of New York, also said the deal "would give Google a de facto monopoly over unclaimed works”.

In a statement sent to The Register, Google managing counsel Hilary Ware said: "This is clearly disappointing, but we'll review the Court's decision and consider our options. Like many others, we believe this agreement has the potential to open-up access to millions of books that are currently hard to find in the US today. Regardless of the outcome, we'll continue to work to make more of the world's books discoverable online through Google Books and Google eBooks."

In the fall of 2008, Google settled a lawsuit from the US Authors Guild and the Association of American Publishers over its Book Search project, which seeks to digitize texts inside many of the world's leading research libraries and make them searchable online using "snippets" from each text. Google has already scanned at least 12 million titles, and many are still under copyright.

The settlement created a "Book Rights Registry" where authors and publishers could resolve copyright claims in exchange for a cut of Google's revenues. But it also gave Google the unique right to scan and sell and post ads against orphan works – books whose rights holders have yet to come forward and make a claim. Although other organizations could negotiate the rights to books in the Registry, the Registry alone would have the power to set prices.

Many were concerned the Registry would have no incentive to keep prices down, while international authors and publishers objected to the deal because they did not want to be bound by a settlement from a US civil court case. Under the World Trade Organization's Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), foreign copyright holders need not register with the US to maintain their rights stateside, but under the terms of Google's settlement, authors could not protect themselves from the settlement without explicitly registering.

To wit, they were in the same boat as US rights holders. The Books Rights Registry uses the "opt-out" model. You're works are part of the Registry unless you specifically opt out.

Opposition to the deal was widespread, but the most vocal objections came from the Open Book Alliance, a collection of organizations including the Internet Archive, Microsoft, and Amazon – all competitors to Google Book Search.

In September 2009, the US Department of Justice urged Judge Chin to reject the deal as it was originally written, citing concerns over class action, copyright, and antitrust law, and a month later, Google and its fellow parties submitted a revised pact.

Under the revised pact, an independent fiduciary would retain all orphan works revenues that would have gone to the rights holder. After five years, 25 per cent of these funds could be used to locate the orphans' rights holders. And after 10 years, these funds could be given to literacy-based charities. But Google would retain the right to digitize and make money from orphaned works.

On Tuesday, the Open Book Alliance applauded Judge Chin's decision to reject the revised pact. "The New York Federal District Court’s rejection of the Google Book Settlement is a victory for the public interest and for competition in the literary and Internet ecosystems," reads a statement from the organization. "The US Department of Justice and the State Attorneys General who fought to protect consumers and competition should be applauded. Judge Denny Chin’s reasoned and thoughtful analysis was worth the wait."

In his decision, Judge Chin suggested moving the pact to an "opt-in" model. But the Open Book Alliance has reservations on this count. "While opt-in is a preferred structure, the Open Book Alliance..believes it requires complex changes to the proposed settlement and would not address the severe antitrust and privacy problems that the court describes in the decision," the Alliance said. ®

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