Letter from AmeriKat I - DoJ v Google Book Settlement

The AmeriKat has been a bit AWOL the past few weeks due to her recent onslaught of LPC exams this month. She has made an interim appearance just in time for Valentine’s Day to inject some IP enjoyment in those lives who, like her, may not enjoy gifts of a dozen roses or chocolate but rely on the low-calorie alternative of US IP news. In the spirit of the holiday, the AmeriKat just conducted a USTPO trade mark search for “Valentines” and returned 254 entries, including “Happy Valentines Day” for non-alcoholic fruit juices (Reg No. 2789964) and “Brie My Valentine” for cheese (Reg No. 1259555). And really nothing says “I love you” like knowing there are almost 300 trade mark registrations for that heart-skipping sentiment. Happy Valentines Day!

Love not in the air for Department of Justice and Google

This Thursday the final fairness hearing in the Google Book Settlement will take place in Courtroom 23B in New York City. Two weeks ago the final briefs were submitted to Judge Denny Chin’s court. The most notable of the briefs, in the AmeriKat’s opinion, was that of the one submitted by the US Department of Justice (DoJ) in opposition of the amended settlement. The DoJ commended the parties but stated that despite their efforts the Amended Settlement Agreement (ASA) suffers from the same problems as its predecessor in that it

“purports to grant legal rights that are difficult to square with the core principle of the Copyright Act that copyright owners generally control whether and how to exploit their works during the term of copyright. Those rights, in turn, confer significant and possibly anticompetitive advantages on a single entity – Google…Google would remain the only competitor in the digital marketplace with the rights to distribute and otherwise exploit a vast array of works in multiple formats…including so-called ‘orphan works’.” (page 2)

Later in the filing, the DoJ stated that the US had concluded that the “use of the class action mechanism in the manner proposed by the ASA is a bridge too far.” In support of this contention the DoJ cited the Supreme Court’s decision in Amchem Prods v Windsor which cautioned that Rule 23 of the Federal Rules for Civil Procedure (which sets out some of the requirements of a class action settlement) must not “carry the large load of restructuring legal regimes in the absence of congressional action” (see this AmeriKat letter for background to Rule 23). This signifies a slight change of emphasis from the DoJ’s comments in relation to the first settlement. In the first filing, the DoJ focused on Rule 23’s application that a settlement must always have a view to the absent class members. The DoJ stated that the first settlement exploited the rights of the absent class members, and therefore fell foul of Rule 23. Here the DoJ, although not ignoring the importance of the potential prejudice to absent class members, placed greater emphasis on the fact that such a substantial legal and structural change as could be effected by the second settlement (i.e., in resulting in one-entity’s substantial market dominance) cannot be carried solely on the back of Rule 23.

The AmeriKat can only but agree with this. After years of litigation, one may have forgotten that Google was not sued in 2005 because they were selling the works, but because they were copying (scanning) the books. The settlements identified the new copyright use, that of selling the digital scans on-line, and included this use in the terms of the settlement. This was always outside the scope of the original dispute and which is why the DoJ has stated that the parties are clearly attempting to “use the class action mechanism to implement forward-looking business arrangements that go far beyond the dispute before the Court in this litigation.” As the DoJ filing states, these are beneficial provisions that Google could have never secured at “trial or even through normal private negotiations.”

The DoJ stated that the Court should encourage continuation of settlement discussions and is committed to working with all stakeholders on the “scope and content of an appropriate

settlement of this mater, and on legislative or market-based solutions to ensure a robust marketplace for digital works.” Last week Google shot back a lengthy filing of their own that predictably dismissed all of the DoJ’s concerns and painted the proverbial “it will be a better world if this settlement is approved” picture. The filing cited alternative case law that suggested that the ASA was no more as broad than what has been permitted in previous class action disputes. In obviously restrained language the brief also stated that

“the [settlement] cannot claim to create a Library of Alexandria (above right), and no settlement can bring back the works lost to Caesar’s fire. But it is hoped that this compromise between authors, publishers, libraries, and a company willing to spend hundreds of millions of dollars to digitize so much of the printed history of humanity will be another small step toward the vision that the Alexandrian Library represents.”

The AmeriKat asks what IPKat readers to predict the outcome of this week’s hearing and whether Judge Denny Chin’s nomination to the Court of Appeals for the Second Circuit by President Obama will impact the case, if at all.

For further information see these articles in the Financial Times, Wired, Wall Street Journal and BBC.

To read the more than 900 filings in this case please see this link here.