Inside Google

Brief Argues Books Settlement Violates Both U.S. And International Copyright Law, Is Anticompetitive

WASHINGTON, D.C. — Consumer Watchdog today filed a brief urging a federal court to reject the proposed Google Books settlement because it is anticompetitive and violates both U.S. and international law.  Separately, the consumer group called a Books privacy policy Google offered late last week inadequate.

“The proposed class-action settlement is monumentally overbroad and invites the Court to overstep its legal jurisdiction, to the detriment of consumers and the public,” said Consumer Watchdog in a friend-of the-court brief. “The proposed Settlement Agreement would strip rights from millions of absent class members, worldwide, in violation of national and international copyright law, for the sole benefit of Google.”

Google had resisted releasing a Books privacy policy unless the settlement were approved, but posted a policy late last Thursday in response to pressure from the Federal Trade Commission. Google needs to give users the option to have no data gathered at all, Consumer Watchdog said. Google failed to say how long it intended to keep accumulated data and failed to say whether it would co-mingle the books data with other information and use it to target advertising.

“The proposed book settlement was negotiated in secret by the parties in the suit and there was no opportunity to represent and protect the broad interests of all consumers,” said John M. Simpson, consumer advocate with Consumer Watchdog.  “This deal simply furthers the relatively narrow agenda of Google, The Authors Guild and the Association of American Publishers.”

If approved the settlement would give Google unprecedented control of a digital book database without adequate  user privacy guarantees, Consumer Watchdog said.

In its federal court brief the nonprofit, nonpartisan consumer group said the proposed settlement should be rejected by U.S. District Judge Denny Chin because:

— It is not fair, adequate or reasonable because it far exceeds the actual controversy before the court and abuses the class-action process: “The proposed class action settlement claims to resolve the actual dispute between the parties, but it also goes much, much farther, and purports to enroll millions of absent class members in a series of new business ‘opportunities.’  For those absent class members who fail to step forward and claim their share, however, this ‘opportunity’ operates as a theft—essentially the parties propose to sell the copyrighted works of absent class members, and then split the proceeds among themselves.”

— It is an unauthorized attempt to revise the rights and remedies of U.S. Copyright law. “The proposed Settlement Agreement, if approved, would so massively reallocate the existing rights and remedies under copyright law that it would effectively rewrite the existing statutory regime for the benefit of a single player — Google.  But Supreme Court precedent is clear:  courts may not modify copyright law.  Only Congress has ‘the constitutional authority and the institutional ability to accommodate fully the varied permutations of competing interests’  that must be balanced when amending the Copyright Act.’”

— It conflicts with international law, specifically The Berne Convention for the Protection of Literary and Artistic Works, an international copyright treaty. “Not only does the proposed Settlement Agreement attempt to do an end-run around the legislative process, but it also proposes a scheme that Congress could not have adopted because of its clear violation of the United States’ international obligations under the Berne Convention for the Protection of Literary and Artistic Works.  As Congress has noted, ‘[a]dherence to [Berne] is in the national interest because it will ensure a strong, credible U.S. presence in the global marketplace…’ The Court should not approve what is tantamount to private legislation for the benefit of Google that would violate an international agreement and jeopardize the public’s interest in international copyright relations.”

— It gives Google an unlawful and anti-competitive monopoly. “Finally, because the settlement effectively suspends existing copyright law just for Google, it opens the door for Google to become the dominant player in new markets for online book search engines and book Subscription programs.  Accordingly, the settlement should be further rejected because it would violate Section 2 of the Sherman Act, which makes it an offense for any person to “monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States.”

Read Consumer Watchdog’s full amicus curiae brief here.

The case in U.S. District Court’s Southern District of New York stems from a suit brought by The Authors Guild and the Association of American Publishers.  The brief was filed for Consumer Watchdog by Kasowitz, Benson, Torres & Friedman, LLP.

“Consumer Watchdog asked Judge Chin to reject the proposed Google Books Settlement because it gives Google an unfair advantage in the book-search market, violates both U.S. and international copyright laws and is not in the public interest,” said Daniel Fetterman of Kasowitz, Benson.

The settlement provides a mechanism for Google to deal with “orphan works.”  Orphan works are works under copyright, but with the rightsholders unknown or not found.  The danger of using such works is that a rightsholder will emerge after the book has been exploited and demand substantial infringement penalties. The proposed settlement protects Google from such potentially damaging exposure, but provides no protection for others.  This effectively is a barrier for competitors to enter the digital book business.

“If the settlement were approved, it would give Google a default monopoly to books for which the rightsholders cannot be located, resulting in unfair competitive advantages to Google in the search engine, electronic book sales, and other markets,” the brief said.

In April Consumer Watchdog asked the U.S. Justice Department to intervene in the Google Books settlement and Justice subsequently announced it was investigating the deal.  Judge Chin has scheduled a hearing on the settlement for Oct. 7.

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Consumer Watchdog, formerly the Foundation for Taxpayer and Consumer Rights is a nonprofit, nonpartisan consumer advocacy organization with offices in Washington, DC and Santa Monica, Ca.  Our website is www.consumerwatchdog.org.

Kasowitz, Benson, Torres & Friedman LLP is a national law firm with over 300 lawyers specializing in high stakes, complex litigation.  The firm has offices in New York, Newark, Houston, Atlanta, Miami and San Francisco. For more information, visit www.kasowitz.com.
Contact: Daniel Fetterman, 212-506-1934, [email protected] or Peter Toren, 212-506-1986, [email protected] .