The google book search settlement: A new orphan-works monopoly?

Journal of Competition Law and Economics

Volumn 5, Issue 3, 2009, Pages 383-409

  Picker, Randal C ^a,b  

^a UNIVERSITY OF CHICAGO LAW SCHOOL   (United States)

^b ARGONNE NATIONAL LABORATORY   (United States)

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[No Author keywords available]

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EID: 70349604353     PISSN: 17446414     EISSN: 17446422     Source Type: Journal    
DOI: 10.1093/joclec/nhp013     Document Type: Article

References (98)

1. See Google Corporate Information, http://www.google.com/corporate/ (last visited July 8, 2009).
2. See The Official Settlement Agreement, http://www.googlebooksettlement.com/ (last visited July 8, 2009).
3. See also Google's Discussion of the Settlement, http://books.google.com/googlebooks/agreement/ (last visited July 5, 2009).
4. See James Gibson, Google's New Monopoly, WASH. POST, Nov. 3, 2008, at A21
5. James Grimmelmann, How to Improve the Google Book Search Settlement 12 J. INTERNET L. 1, 11-20 (2009), available at http://works.bepress.com/cgi/viewcontent.cgi?article= 1022&context=james_grimmelmann
6. Robert Darnton, Google and the Future of Books, 56 N.Y. REV. BOOKS 2 (2009), available at http://www.nybooks.com/articles/ 22281.
7. 28 C.F.R. §50.6 (2009). See also Antitrust Division, U.S. Department of Justice, Instructions for Business Reviews, http://www.usdoj.gov/atr/public/busreview/201659b.htm (last visited July 5, 2009).
8. See Professional Real Estate Investors, Inc. v. Columbia Pictures Indus., Inc., 508 U.S. 49 (1993)
9. Eastern R.R. Presidents Conference v. Noerr Motor Freight, Inc., 365 U.S. 127 (1961)
10. United Mine Workers v. Pennington, 381 U.S. 657 (1985).
11. 1 Stat. 124 (1790).
12. See 17 U.S.C. §107 (2009).
13. See History of Google Book Search, http://books.google.com/ googlebooks/history.html (last visited July 5, 2009).
14. See Edward Wyatt, New Google Service May Strain Old Ties in Bookselling, N.Y. TIMES, Oct. 8, 2004, available at http://www.nytimes.com/2004/10/08/technology/08book.html.
15. See Press Release, Google Inc., Google Checks Out Library Books (Dec. 14, 2004), http://www.google.com/press/pressrel/ print_library.html.
16. See Press Release, University of Michigan News Service, Google/U-M Project Opens the Way to Universal Access to Information (Dec. 14, 2004), http://www.umich.edu/news/?Releases/2004/Dec04/library/index.
17. See Class Action Complaint, The Author's Guild v. Google Inc., No. 05 CV 8136 (S.D.N.Y. 2005), available at http://www.authorsguild.org/advocacy/articles/ settlement-resources.attachment/authors-guild-v-google/ Authors%20Guild%20v%20Google%2009202005.pdf.
18. See Complaint, McGraw-Hill Co., Inc. v. Google Inc., No. 05 CV 8881 (S.D.N.Y. 2005), available at http://www.authorsguild.org/ advocacy/articles/settlement-resources.attachment/mcgraw-hill/ McGraw-Hill%20v.%20Google%2010192005.pdf.
19. See Press Release, The Authors Guild, Authors, Publishers and Google Reach Landmark Settlement (Oct. 28, 2008), http://www.authorsguild.org/advocacy/articles/ settlement-resources.attachment/press_release_final_102808/ press_release_final_102808.pdf.
20. See Authors Guild v. Google Settlement Resources Page, http://www.authorsguild.org/advocacy/articles/settlement-resources.html (last visited July 5, 2009).
21. As Judge Learned Hand famously put it in United States v. Aluminum Co. of Am., 148 F.2d 416, 430 (1945): "A single producer may be the survivor out of a group of active competitors, merely by virtue of his superior skill, foresight and industry. In such cases a strong argument can be made that, although the result may expose the public to the evils of monopoly, the Act does not mean to condemn the resultant of those very forces which it is its prime object to foster: Finis opus coronat. The successful competitor, having been urged to compete, must not be turned upon when he wins."
22. Pacific Bell Tel. Co. v. Linkline Commc'n, Inc., 129 S. Ct. 1109, 1118 (2009).
23. See 17 U.S.C. §201-04 (2009).
24. See, e.g., Practice Mgmt. Info. Corp. v. American Med. Ass'n, 121 F.3d 516 (9th Cir. 1997), amended by 133 F.3d 1140 (9th Cir. 1998).
25. See NYNEX Corp. v. Discon, Inc., 525 U.S. 128, 133 (1998) (citing cases).
26. See cases cited supra note 5.
27. And the settlement agreement itself is not the only relevant document to the rights that will emerge from this process. For example, subsequent to completing the settlement agreement, Google signed a revised digitization agreement with the University of Michigan. See Press Release, University of Michigan News Service, U-M first to sign new digitization agreement with Google (May 20, 2009), http://www.ns.umich.edu/htdocs/releases/story.php?id=7162.
28. See Settlement Agreement §§ 1.61-62, The Authors Guild, Inc., Ass'n of Am. Publishers, Inc. v. Google Inc., No. 05 CV 8136 (S.D.N.Y. Oct. 28, 2008), available at http://www.authorsguild.org/ advocacy/articles/settlement-resources.attachment/settlement/ Settlement%20Agreement.pdf [hereinafter Settlement Agreement].
29. Id. §§ 1.60, 2.1(a).
30. Id. §17.33.
31. Id. § 1.124, 3.5(a).
32. Id. §3.5(a)(iii).
33. Id. §3.5(b).
34. Id. §3.5(b)(iii).
35. Id. §1.16.
36. See 17 U.S.C. §101 (2009).
37. See Settlement Agreement, supra note 23, §1.94.
38. Id. §1.62.
39. Id. §1.123, Art. VI.
40. Id. §§ 6.1(d), 6.3, 6.5, 6.6.
41. Id. §3.11.
42. Id. §§ 1.130, 7.2(d).
43. Id. §1.78.
44. Id. §1.36.
45. Id. §§ 1.58, 7.2(a), 7.2(b), 7.2(c).
46. Id. §§ 3.12, 6.6(b).
47. Id. §2.2.
48. Id. §1.48.
49. Id. §1.91
50. see Fred von Lohmann, Google Book Search Settlement: A Reader's Guide (2008), http://www.eff.org/deeplinks/2008/10/ google-books-settlement-readers-guide.
51. See Settlement Agreement, supra note 23, §1.90.
52. Id. §7.2(d)(viii).
53. Id. §7.2(d)(ix).
54. Id. §7.2(d)(x).
55. Id. §1.121.
56. Id. §7.2(d)(iii).
57. Everex Systems, Inc. v. Cadtrak Corp., 89 F.3d 673, 679 (9th Cir. 1996).
58. Bowers v. Baystate Techs., Inc., 320 F.3d 1317, 1324-26 (Fed. Cir. 2003).
59. See Settlement Agreement, supra note 23, at §2.4.
60. It is not clear to me whether the settlement agreement makes a host site an owner of the Research Corpus. There is a mechanism for removing works from the Research Corpus, id. §7.2(d)(iv), but that could just mean that the host site holds title, but a defeasable one, to the copy in the question. What turns on this could be the application of the first-sale doctrine, 17 U.S.C. §109(a) (2009), though that doctrine seems to contemplate sale or other dispossession of the copy in question and would not seem to free the host site from the licensing limits of the settlement agreement.
61. See Settlement Agreement, supra note 23, §4.1(d).
62. Id. §4.1(a)(iii).
63. Id. §4.1(a)(i).
64. As Harvard Librarian Robert Darnton has put it "...Google will enjoy what can only be called a monopoly - a monopoly of a new kind, not of railroads or steel but of access to information." Google will "first, entice subscribers with low initial rates, and then, once they are hooked, ratchet up the rates as high as the traffic will bear." Darnton, supra note 3.
65. See Pacific Bell Tel. Co. v. Linkline Commc'n, Inc., 129 S. Ct. 1109, 1118 (2009).
66. See Settlement Agreement, supra note 23, §§ 1.32, 4.2.
67. Id. §§ 1.143, 4.2(b)(i)(2).
68. Id. §4.2(c)(ii).
69. Id. §4.2(b)(ii).
70. Two new papers develop this point further. See Eric M. Fraser, Antitrust and the Google Books Settlement: The Problem of Simultaneity (June 23, 2009) (unpublished manuscript, on file with author)
71. Christopher Suarez, Proactive FTC/DOJ Intervention in the Google Book Search Settlement: Defending Our Public Values, Protecting Competition (May 25, 2009) (unpublished manuscript, available at http://ssrn.com/abstract=1409824).
72. See Settlement Agreement, supra note 23, §4.7.
73. Jennifer Howard, Harvard Says No to Google Deal for Scanning In-Copyright Works, Chron. Higher Educ., Oct. 20, 2008, available at http://chronicle.com/news/article/5417/ harvard-says-no-thanks-to-google-deal-for-scanning-in-copyright-works.
74. See Settlement Agreement, supra note 23, §§ 4.8(a)(i)(1), 4.8(a)(i)(3).
75. Id. §2.1(a).
76. To track the agreement with more detail, Section 4.5(a) defines a standard revenue split for purchases as 70% of Net Purchase Revenues. The definition of that in turn, id. §1.87, makes clear that those are all revenues received by Google from all revenue models other than advertising, less the 10% operating cost deduction.
77. There are parallel provisions for advertising revenues, id. §§ 4.5(a)(ii), 1.86, though the fact that there are parallel provisions rather than one unified provision suggests that I may be missing some subtle difference between the two.
78. See Settlement Agreement, supra note 23, §1.16.
79. Id. §6.3(b).
80. Id. §6.3(a).
81. Id. §6.3(a)(i).
82. Id. §6.3(a)(ii), Attach. C, 1.1(e).
83. See Stephen Labaton, Westlaw and Lexis Near Truce, N.Y. TIMES, July 19, 2008, available at http://www.nytimes.com/ 1988/07/19/business/westlaw-and-lexis-near-truce.html
84. In re Cardizem CD Antitrust Litigation, 332 F.3d 896 (6th Cir. 2003).
85. See Settlement Agreement, supra note 23, §3.8(a).
86. Id. §3.8(a) ("Effect of Other Agreements. The Registry (and any substantially similar entity organized by Rightsholders that is using any data or resources that Google provides, or that is of the type that Google provides, to the Registry relating to this Settlement) 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 (or any substantially similar entity organized by Rightsholders that is using any data or resources that Google provides, or that is of the type that Google provides, to the Registry relating to this Settlement) when such authorizations (i) are made within ten (10) years of the Effective Date and (ii) include rights granted from a significant portion of Rightsholders other than Registered Rightsholders....").
87. Id. §6.2(b).
88. Id. §6.7 ("Authorization of Registry. Where this Settlement Agreement confers on the Registry rights and obligations with respect to Books and Inserts, including with respect to the Registry's relationship with each of Google, the Fully Participating Libraries, the Cooperating Libraries and the Public Domain Libraries, Plaintiffs and all Rightsholders, as of the Effective Date, shall be deemed to have authorized the Registry to exercise such rights and perform such obligations on behalf of the Rightsholders with respect to their respective Books and Inserts, including to enter into Library-Registry Agreements.").
89. Google has addressed this question on its public policy blog: Under the settlement Google will be able to open up access to truly orphaned books, but we still think more needs to be done to allow anyone and everyone to use these works. Any company or organization that wants to open up access to this untapped resource should be able to do so. The settlement is not a panacea, since it only covers a subset of orphaned works, provides only certain uses, and is not able to extend these uses to other providers. The need for comprehensive orphan works legislation is not diminished. Derek Slater, Google Book Search Settlement and Access to Out of Print Books, June 2, 2009, http://googlepublicpolicy.blogspot.com/2009/06/ google-book-search-settlementand.html.
90. See Settlement Agreement, supra note 23, §3.5(b).
91. Id. at Art. VIII, Attach. D.
92. One could imagine any number of possible non-profit entrants, including the Internet Archive, the HathiTrust, JSTOR, or a completely new non-profit devoted to these issues.
93. See Settlement Agreement, supra note 23, §17.23.
94. As the Sixth Circuit framed its test in UAW v. General Motors Corp. 497 F.3d 615, 631 (6th Cir. 2007): "Several factors guide the inquiry: (1) the risk of fraud or collusion; (2) the complexity, expense and likely duration of litigation; (3) the amount of discovery engaged in by the parties; (4) the likelihood of success on the merits; (5) the opinions of class counsel and class representatives; (6) the reaction of absent class members; and (7) the public interest."
95. This is likely to be true, even if the Antitrust Division of the Department of Justice makes a filing in the case, as it may well do. See Letter from William G. Cavanaugh to Judge Denny Chin (July 2, 2009), reprinted in Order, The Authors Guild, Inc., Ass'n of Am. Publishers, Inc., v. Google Inc., No. 05 CV 8136, at 2 (S.D.N.Y. July 2, 2009).
96. Like most interesting propositions, the case law is not clear on whether Noerr-Pennington immunity would attach to the court's approval of the settlement agreement. The Supreme Court certainly did not allow a court consent decree to block additional antitrust inquiry into the arrangements in ASCAP and BMI. See Broadcast Music, Inc. v. Columbia Broad. Sys., Inc., 441 U.S. 1, 13 (1979) ("Of course, a consent judgment, even one entered at the behest of the Antitrust Division, does not immunize the defendant from liability for actions, including those contemplated by the decree, that violate the rights of nonparties.").
97. But more recent lower court decisions have clearly relied on Noerr-Pennington to block some challenges to court-approved arrangements. See Sanders v. Brown, 504 F.3d 903, 913 n.8 (9th Cir. 2007) (finding that Noerr-Pennington doctrine protected a private party from antitrust liability from anti-competitive harms resulting from tobacco settlement agreement negotiated with state entity but further declining to resolve whether that doctrine would insulate private parties from an anti-competitive settlement merely because that agreement was approved by a court).
98. The Second Circuit has taken a narrower approach than most circuits to the scope of Noerr-Pennington immunity in the master settlement agreements for the tobacco litigation. See Freedom Holdings, Inc. v. Spitzer, 357 F.3d 205 (2d Cir. 2004).