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Google and authors propose new book settlement terms to satisfy DOJ and others

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Katten Muchin Rosenman LLP
USA
November 20 2009

The parties to the copyright lawsuit over the Google Books project have modified their proposed settlement terms in response to pushback from the Obama administration and other outside groups. A group of authors and publishers sued Google in 2005, claiming that Google violated their copyrights by scanning books, creating an electronic database of them, and displaying short excerpts without the permission of the copyright holders. In October 2008, the parties proposed a settlement under which Google would be allowed to sell advertisements on its site and sell digital versions of books that are out of print but still under copyright in exchange for paying 63% of the revenues it earns to a registry that would distribute royalties to copyright owners.    

Numerous external parties objected to the proposed settlement. Most notably, in September, the U.S. Department of Justice (DOJ), which had already been separately investigating the competitive impact of the proposed settlement, filed a brief outlining its antitrust concerns. The DOJ concluded that the settlement appeared to restrict price competition among authors and publishers and had the potential to foreclose other digital distributors from competing with Google in the sale of digital library products.

In response, last week the two sides proposed a revised settlement. The changes include the following: (i) the agreement now covers only books with copyrights registered in the United States, the United Kingdom, Canada, and Australia, while excluding other foreign titles; (ii) the registry will search for rightsholders for unclaimed works and hold revenues on their behalf, (iii) the works covered by the settlement would be syndicated to Google’s competitors; (iv) the agreement limits the forms of additional access models that Google and the registry may agree on in the future; and (v) the agreement clarifies the algorithm for competitively pricing books to consumers. The court will consider the revised settlement proposal after affected and interested parties once again have the opportunity to make objections.

The DOJ’s action in this private civil suit serves as a key example of how the Obama administration is actively engaging antitrust issues, even where they arise in complex new digital arenas. (The Authors Guild, Inc., et al. v. Google Inc., Case No. 05-CV-8136 (S.D.N.Y.))

James J. Calder

James J. Calder

David J. Gonen

David J. Gonen

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