Citation: Matthew Sag, The Google Book Settlement and the Fair Use Counterfactual, 55 New York Law School Law Review 19 (2010)
In a nutshell:
In The Google Book Settlement and the Fair Use Counterfactual, Matthew Sag argues that the settlement should be judged against the most likely outcome of the litigation it resolved, a ruling that library book digitization was fair use subject to a low-cost opt-out for copyright owners, and that by this measure the settlement’s search functions were uncontroversial while its commercialization of orphan works went beyond anything fair use would have allowed.
Summary
Written while the Amended Settlement Agreement was awaiting court approval, the article asks how the settlement of the Google Book Search litigation should be evaluated. Sag’s benchmark is the most likely outcome of the lawsuit the settlement resolved. Comparisons to a hypothetical public digitization program or an idealized legislative fix, he argues, ask the wrong question. The class actions brought by the Authors Guild and publisher plaintiffs began as a dispute over whether scanning millions of library books to build a search engine was fair use; the settlement converted that dispute into a comprehensive agreement covering consumer purchases, institutional subscriptions, and the electronic distribution of entire books.
Working through the four fair use factors and the precedents on copy-reliant technology (the reverse engineering cases, the plagiarism detection case iParadigms, and the image search cases Kelly and Perfect 10), the article concludes that Google would probably have won, but with a condition attached: digitization would qualify as fair use so long as copyright owners could opt out of the database at nominal cost. Sag defends the opt-out in transaction-cost terms. With roughly 8.4 million unique in-copyright books at stake, proactive rights clearance at even $200 per book would have cost $1.68 billion. A low-cost opt-out is the workable form of private ordering under these conditions, and it negates most claims of market harm under the fourth factor.
The comparison cuts both ways. The parts of the settlement that let Google keep digitizing, indexing, and displaying snippets mirror the fair use counterfactual, with the settlement’s opt-out machinery standing in for the opt-out a court would likely have required. The points of departure are commoditization and control: default previews of up to 20% of a book, consumer purchases, and institutional subscriptions have no fair use justification, and the treatment of orphan works produces what critics called an orphan works monopoly. Sag identifies two ironies. A fair use victory would have unblocked orphan works for every entrant, while the settlement solves the problem for Google alone, so Google was better off compromising than winning. And class action law itself prevented the parties from extending orphan works licensing to Google’s competitors.
Why read this article?
The article contains a detailed contemporaneous roadmap of the Amended Settlement Agreement: the Book Rights Registry and the Unclaimed Works Fiduciary, the Display and No-Display classifications and preview modes, the pricing algorithm and pricing bins, the Research Corpus for non-consumptive research, and the Author-Publisher Procedures that allocated control and revenue between authors and publishers. Anyone trying to reconstruct what the settlement would have done will find the mechanics laid out here.
It is also an early application of the non-expressive use theory Sag developed in Copyright and Copy-Reliant Technology and later work. The prediction held up well: Judge Chin rejected the settlement in 2011, the litigation resumed, and the courts in Authors Guild v. HathiTrust and Authors Guild v. Google ultimately held that book digitization for search is fair use. This article shows what that outcome looked like from the other side, when it was still a counterfactual.
Further Reading
Pamela Samuelson, Google Book Search and the Future of Books in Cyberspace, 94 Minnesota Law Review 1308 (2010) – Surveys the settlement’s implications for authors, libraries, and readers, and questions whether a class action settlement was a legitimate vehicle for restructuring the market for digital books.
James Grimmelmann, The Elephantine Google Books Settlement, 58 Journal of the Copyright Society of the U.S.A. 497 (2011) – Argues that the settlement’s class action, copyright, and antitrust problems were aspects of a single issue: the use of a class action to concentrate an intellectual property industry.
Randal C. Picker, The Google Book Search Settlement: A New Orphan-Works Monopoly?, 5 Journal of Competition Law & Economics 383 (2009) – Analyzes the competition-policy problems raised by the settlement, including the revenue-maximizing pricing algorithm and Google’s unique position with respect to orphan works.
Robert Darnton, Google & the Future of Books, The New York Review of Books (February 12, 2009) – An essay by the then-director of the Harvard University Library warning that the settlement could turn access to the digitized record of knowledge into a monopoly priced like academic journals.