Modified GoogleBooks Settlement Offered - Justice Department Considering

The Wall Street Journal reports that the Authors Guild, the Association of American Publishers and Google have re-submitted their revised Settlement Agreement for Google Books to U.S. District Judge Denny Chin in New York. The Department of Justice, which had responded to the original Settlement with a list of concerns in a Statement of Interest, is reviewing the new revision.

The revised pact submitted late Friday would allow Google to distribute millions of digital books online, but would cut the number of works covered by the settlement by at least half by removing millions of foreign works.

Yet the issue of whether it is fair for the settlement to let Google distribute books whose legal rights owners haven't been identified—known as orphan works—is still drawing criticism.

People familiar with the matter say the Justice Department remains concerned that the fact the settlement gives Google immunity from lawsuits related to orphan works may be anticompetitive. The department is expected to file its reaction to the modified agreement by early next year.

A spokeswoman for the Justice Department said the department is reviewing the revised agreement and its investigation into the settlement is "ongoing."

Google, the Authors Guild and the Association of American Publishers designed the revised settlement to mollify the Justice Department and other critics who blasted the original settlement as overly broad and anticompetitive. Under that settlement, announced in Oct. 2008, Google would gain permission to distribute and sell millions of digital books online in exchange for sharing revenue with rights holders.

The new settlement keeps the same structure, but makes a number of changes, including adding more pricing options to address concerns about potential price-fixing and clarifying what sort of services Google can offer related to digital books.

It also aims to address some of the concerns about orphan works by establishing an independent fiduciary to look out for the interests of those rights holders and specifying that revenue collected from those works won't flow back to other rights holders—a move aimed at addressing criticism from the Justice Department.

The modifications were defended by Richard Sarnoff, co-chairman of Bertelsmann Inc., a holding company of publisher Bertelsmann AG, who negotiated the settlement. He said the parties addressed the competitive concerns around orphans by writing into the settlement that Google must act as a reseller of those works to any third party. Google had previously announced its intention to do so.

"This settlement won't determine the digital future of publishing," Mr. Sarnoff said. "It's about reclaiming publishing's past in a way that would be impossible to do in the U.S. in any other manner. And it will benefit scholars, readers, and the rights holders of these books."

But critics say the move doesn't resolve one of their main concerns: that the agreement gives Google exclusive immunity from lawsuits from unknown rights holders.

The notion that the company could distribute those works without the threat of getting sued by rights holders has drawn heat from a broad group of critics, including Google competitors such as Amazon.com Inc., which argue it would be risky to invest in scanning books without a promise of similar immunity.

"I don't see how this fixes anything about orphans," said Gary Reback, an antitrust lawyer who co-founded a group of companies and organizations including Amazon and Microsoft Corp. that is fighting the settlement, in an interview Sunday.

the article, by Jessica E. Vascellar and Jeffrey A. Trachtenberg, notes that the parties hope to set a hearing on the settlement sometime in February, now. The tone taken in the WSJ article actually seems much harsher on the Settlement than the Justice comments warranted. The original tone of the Justice comments were actually very supportive of the GoogleBooks Project, and simply raised issues with the Settlement. The Electronic Frontier Foundation (EFF) offers a very nice Readers Guide to the Google Book Settlement, currently dated October 31, 2009, with legal analysis by their senior staff attorney, Fred Von Lohmann. But, to their credit, they also include a link to New York Law School's Prof. James Grimmelmann's analysis of the Settlement. They also include varying opinions and commentary from librarians Paul Courant at the Univerisity of Michigan, who basically supports the Project and Prof. Siva Vaidhyanathan, who opposes it. We can hope that the nice folks at EFF links will update their commentary, but you can certainly link to the original materials, which show you the changes in color.