Litigation

Settlement Rejected In Google Library Project Copyright Case

NEW YORK - (Mealey's) A federal judge on March 22 refused to endorse a proposed settlement of copyright infringement allegations surrounding the Google Library Project (GLP) (Authors Guild, et al. v. Google Inc., No. 05-Civ-8136, S.D. N.Y.). 

According to Circuit Judge Denny Chin, who continues to preside over the case in the U.S. District Court for the Southern District of New York despite his 2009 appointment to the Second Circuit U.S. Court of Appeals, an amended settlement agreement (ASA) presented by defendant Google Inc. and a plaintiff class of authors and publishers "would simply go too far."  

"It would permit this class action - which was brought against defendant Google Inc. to challenge its scanning of books and display of 'snippets' for online searching - to implement a forward-looking business arrangement that would grant Google significant rights to exploit entire books, without permission of the copyright owners," Judge Chin said in a 48-page ruling. 

The Authors Guild filed the instant lawsuit in 2005, claiming that the GLP's stated goal of digitizing literary works would result in widespread copyright infringement.  After more than two years of negotiations, the parties proposed a $125 million settlement in October 2008.  The figure included $45 million in compensation from Google for class members whose works have already been published in the GLP, as well as an allotment of $34.5 million to establish a "Books Rights Registry" to track the project, administer future revenues and oversee an opt-out plan. Pursuant to the ASA, Google would be authorized to continue digitizing books and inserts, sell online access to individual books, sell advertising on pages from books and more, according to Judge Chin.  Five hundred objections and 6,800 opt-out notices ensued, and after several delays, the ASA was presented to Judge Chin for approval.   

As an initial matter, challenges relating to the adequacy of class notification were rejected.  Objections relating to adequacy of representation were more successful, however, with Judge Chin indicating that he is "troubled" by evidence of "antagonistic interests between named plaintiffs and certain members of the class."  The objectors similarly prevailed with regard to the scope of the relief under Federal Rule of Civil Procedure 23.  According to Judge Chin, that portion of the ASA that would transfer to Google certain rights in exchange for future and ongoing arrangements, including the sharing of future proceeds, while simultaneously releasing Google from liability, "contemplates an arrangement that exceeds what the Court may permit."    

Additionally, the judge cited "statutory concerns" in that the opt-out provision - which provides, essentially, that copyright owners who do nothing lose their rights - could grant Google the ability to expropriate the rights of copyright owners in violation of Section 201(e) of the Copyright Act.  Although the question need not be directly answered at this stage of the litigation, Judge Chin said, it was enough to find that a court-approved settlement agreement cannot release the copyright interests of individual rights owners who have not voluntarily consented to transfer. 

"It is incongruous with the purpose of the copyright laws to place the onus on copyright owners to come forward to protect their rights when Google copied their works without first seeking their permission," he added.

[Editor's Note:  Full coverage will be in the April 4 issue of Mealey's Litigation Report: Intellectual Property.  In the meantime, the decision is available at www.mealeysonline.com or by calling the Customer Support Department at 1-800-833-9844.  Document #16-110404-005Z.  For all of your legal news needs, please visit www.lexisnexis.com/mealeys.] 

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