Intellectual Property Law

The Google Book Digitization Settlement: The Fair Use Question Remains

By Sheppard Mullin

In December 2004, Google announced its plan to digitally scan the entire contents of four university libraries and one public library, with the ultimate goal of enabling Internet users to search that content online.  In exchange for permission to digitize the works in the libraries and make "brief excerpts" of the works available on its site, Google promised to give the libraries a digital copy of the contents.  Although Google had already reached an arrangement with major universities (Michigan, Harvard, Stanford, and Oxford) as well as the New York Public Library, many authors and publishers quickly concluded that their copyright interests were not being protected.  Lawsuits were filed in the Southern District of New York in the fall of 2005, arguing that Google's attempts to scan and index wholesale works infringed on copyright protections.  See The Authors Guild, Inc., et al. v. Google Inc., No. 05 CV 8136 (S.D.N.Y. filed Sept. 20, 2005); The McGraw-Hill Cos., Inc., et al. v. Google Inc., No. 05 CV 8881 (S.D.N.Y. filed Oct. 19, 2005).  Negotiations to resolve the dispute began in 2006, and, two years later, a framework has emerged that both sides agree will protect the interests of authors and publishers and give Google the right to digitize millions of works.

On October 28, 2008, the settlement agreement between Google and the authors and publishers was filed in the Southern District of New York, although it is still awaiting final approval by United States District Judge John E. Sprizzo.  The settlement has already gained a great deal of attention, however, both for the concessions Google has made and the difficult copyright questions that remain unanswered.

Under the terms of the settlement, Google will pay $125 million to authors and publishers, including $45 million to copyright holders whose works were digitized without permission.  Google is now authorized to sell institutional subscriptions to an electronic books database, online access to individual works, and advertising on pages of books.  Google may also make previews, "snippets" (three or four lines of text from a work), and bibliographic elements of books available online.  Sixty-three percent of the revenue generated by these uses will go to the authors and publishers, while Google will keep the remaining 37%.  Google will also pay $34.5 million to establish a Book Rights Registry, an entity that will collect the revenues from Google and distribute them to the copyright holders.

The rights of authors and publishers will vary, depending on the status of their works.  Books that are in the public domain will be available for free, as they are now.  Books that are out of print but still protected by copyright will be available for a free preview, and the whole work will be accessible for a fee, unless the copyright holder opts out.  Finally, books that are currently in print will be available only if the copyright holder opts in.

After two years of negotiations, the settlement hammered out a way to preserve copyright and share the revenue generated by translating protected works into a new medium.  Although authors and publishers now have a system to compensate them for the uses of their works, the settlement skirts one of the major copyright issues that would have been addressed in the courtroom – namely, fair use.

In reaching the settlement, the parties dodged the question of whether the digitization of a book, in whole or in part, would qualify as a protected fair use.  Although Google has now resolved the question for itself, the question remains for other digitizers.  The settlement may provide a template for future arrangements between publishers and scanners, but its terms and limits may circumscribe the uses of digitized books in a narrower fashion than fair use would otherwise allow.  The parameters of access and use that Google has arranged – parameters that may offer it a competitive advantage and make the settlement an appealing bargain – may prevent readers and researchers from fully utilizing the works.  Since Google operates one of the few book digitization projects with the resources to reach a settlement like this, these terms and provisions may be the only example to guide the rest of us, offering no resolution of the fair use question.

The display of "snippets" of works poses another fair use question.  Google had been arguing that this was protected under fair use, but ultimately acquiesced to the copyright holders' demand that Google get permission before including snippets in the search program.  Even now, Google maintains that no permission is required to show or scan snippets, and that the concession was simply a business decision made in order to reach agreement with the other side.  Google argues that this provision of the settlement should not be seen as a legal admission that its use of snippets was not "fair."  Other interested parties will certainly take up the question of whether Google has preserved a fair use defense – parties such as Viacom, which filed a $1 billion infringement suit against YouTube and its parent company, Google.  The questions remain, and the saga continues.

Authored by:

Michael K. Dunn

(212) 332-3528

mdunn@sheppardmullin.com

Full post as published by Intellectual Property Law on December 08, 2008 (boomark / email).