DOJ Opposes Google Book Settlement Terms, Not the Settlement

The Department of Justice has issued their brief in the Google Book Settlement case late Friday.  The United States is opposed to the settlement in its present form.  Compared to some of the commercial critics out there, the brief is quite mild in its opposition.  It states early on that the U.S. has been in constructive talks with the parties on the terms and suggests that the Department would like to see the deal modified rather than killed.  Here are words you wouldn't expect to find in Amazon or Microsoft's filing:

The United States strongly supports a vibrant marketplace for the electronic distribution of copyrighted works, including in-print, out-of-print, and so-called “orphan” works. The Proposed Settlement has the potential to breathe life into millions of works that are now effectively off limits to the public. By allowing users to search the text of millions of books at no cost, the Proposed Settlement would open the door to new research opportunities. Users with print disabilities would also benefit from the accessibility elements of the Proposed Settlement, and, if the Proposed Settlement were approved, full text access to tens of millions of books would be provided through institutional subscriptions. Finally, the creation of an independent, transparently-operated Book Rights Registry (the “Registry”) that would serve to clarify the copyright status and copyright ownership of out-of-print works would be a welcome development.

The brief identifies three areas of concern:

(1) claims that the Proposed Settlement fails to satisfy Rule 23; (2) claims that the Proposed Settlement would violate copyright law; and (3) claims that the Proposed Settlement would violate antitrust law.

In the view of the Department, the class could be a vehicle for settling the rights of non-class members who are absent from this proceeding.  The Department rejects the view that the Settlement should only take into concern past conduct and not future conduct.  Still, the Department has concerns about the exploitation of future rights of of all owners of out-of-print and orphan works.  Since Google and the authors and publishers have indicated they could conceivable limit those rights, the Department will work with the parties on defining those limitations.

The U.S. is also concerned with the class adequately representing orphan works rightsholders, particularly in regard to derivative products that may be developed by Google and the Registry.  There are similar concerns for foreign publishers and authors who's interests are not represented by any party, citing filings by France and Germany.  The Department again believes these issues can be obviated by further negotiations and is willing to participate to that effect.

The biggest objection to the Settlement is the industry-wide pricing granted to publishers that restricts what Google and potentially any else can charge for individual books.  This concern includes the restriction of future pricing for orphan works that may be in competition with other works from plaintiff publishers.  While the Department cannot comment completely on the Settlement until the final terms are set, it identifies the constraints on pricing under control of the publishers as likely anti-competitive without further negotiation.  As written, the Settlement gives defacto exclusivity to Google for distribution for orphan works.  That, the Department says, is a likely violation of the antitrust laws.

While addressing concerns of Google's competitors, the Department is representing its own views.  It doesn't want to stop the Settlement as much as it wants the terms within its view of the antitrust laws.

The brief is here.  [MG]