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The Google Book Search Settlement Agreement is an agreement between the Authors Guild, the Association of American Publishers and Google in settlement of Authors Guild et al. v. Google, a class action lawsuit alleging Copyright infringement. On October 28, 2008, Google announced an agreement to pay $125 million to settle the lawsuit. The settlement agreement also included licensing provisions, allowing Google to sell personal and institutional subscriptions to its database of books. On November 9, 2009, the parties filed an amended settlement agreement after the Department of Justice filed a brief suggesting that the initial agreement may violate US anti-trust laws.

The court held a Fairness Hearing on February 18, 2010. On March 22, 2011 supervising judge Denny Chin issued a ruling rejecting the settlement. Chin urged that the settlement be revised from "opt-out" to "opt-in" and set a 25 April date for a "status conference" at which to discuss next steps. A series of status conferences were held throughout 2011, but an amended "opt-in" settlement has not been reached. The case is scheduled to go to court by July 2012.

Background
In 2002, Google began digitizing books in libraries. In 2004, Google launched Book Search, allowing users to search its database of books. Users could view snippets of copyrighted books, and download and view full copies of public domain books.

Lawsuit
On September 20, 2005, the Authors Guild filed a class action lawsuit in the Southern District of New York against Google. The Authors Guild argued that Google's Library Project involved "massive copyright infringement" because it created digital copies of copyrighted works. In response, Google temporarily suspended scanning copyrighted works to allow for changes to its Print Publisher Program and allow copyright owners to submit lists of books they wish to be excluded.

On October 19, 2005, the Association of American Publishers filed another lawsuit against Google for copyright infringement, seeking injunctive relief. Google responded that its use was a fair use because they were only showing "snippets" for books where they did not have permission from a rightsholder.

In the Spring of 2006 the parties began negotiations to settle the lawsuit.

Initial settlement agreement
In October 2008, the parties to the lawsuit proposed a Settlement Agreement, which called for Google to pay out $125 million: $45 million would go to pay rightsholders whose copyrights had allegedly been infringed; $15.5 million to the publishers' legal fees; $30 million to the authors' lawyers; and $34.5 million to create a Book Rights Registry, a form of copyright collective to collect revenues from Google and dispense them to the rightsholders. In exchange, the agreement released Google and its library partners from liability for its book digitization. The agreement is built upon an intricate joint venture arrangement for the management of Google's book project, including a variety of revenue models. Google will generate revenue through an institutional subscription for libraries and a consumer subscription for perpetual access to individual books, referral links to retail booksellers, and advertising on book pages.

Amended settlement agreement
In November 2009, the parties amended the settlement agreement. The amended agreement includes the following significant changes:
 * Foreign Works
 * The amended agreement limited the scope to foreign books that are registered with the U.S. Copyright Office or published in the U.K., Canada, or Australia. Additionally, the amended agreement added board members to the Books Rights Registry from the U.K., Canada, and Australia.


 * Revenue Model
 * The rightsholder has the ability to renegotiate the revenue share, and Google has added flexibility in discounting.


 * Unclaimed works
 * The amended agreement created a fiduciary to hold payments due to orphan works. If the rightsholder is never ascertained, the funds are distributed cy-près instead of redistributed among rightsholders.


 * Public Access License
 * The amended agreement expanded the number of public licenses allowed for a library.

In February 2009, a Google Book Search Settlement web site was created where rightsholders could claim their books for the purposes of the settlement. Rightsholders whose books have been digitized by Google and who have claimed their books will receive a one-time payment of $60 per book, or $5 to $15 for partial works (called "inserts"), plus 63% of all revenues associated with their works, including subscription, referrals, and advertisements. After claiming a book, a rightsholder will also have the ability to alter the default display settings.

Amended Settlement Agreement Rejection
The court held a Fairness Hearing on February 18, 2010. On March 22, 2011 supervising judge Denny Chin issued a ruling rejecting the settlement.

Chin discussed seven objections to the settlement in his opinion, including the common objections about implications relating to copyright, antitrust, privacy, and international law. Chin's primary reason for blocking the settlement was based on the fact that the amended settlement agreement would "release Google (and others) from liability for certain future acts."

Chin urged that the settlement be revised from "opt-out" to "opt-in" and set a 25 April date for a "status conference" at which to discuss next steps.

A status conference was held on 1 June 2011 which deferred the meeting until 19 July. At the July 19 status conference the parties attempted to "reassure Judge Chin that the negotiations were making real progress," and Judge Chin scheduled another status conference for September 15, urging the parties to come to an acceptable opt-in agreement or face a "tight discovery schedule". The status conference on September 15 resulted in a discovery schedule that would have the case at trial by July 2012

Copyright
Siva Vaidhyanathan, associate professor of Media Studies and Law at the University of Virginia, has argued that the project poses a danger for the doctrine of fair use, because the fair use claims are arguably so excessive that it may cause judicial limitation of that right. Because of the settlement, Author's Guild et al. v. Google leaves the fair use dispute unresolved.

In December 2009, science fiction and fantasy author Ursula K. LeGuin announced on her website her resignation from the Authors' Guild over the settlement, claiming the leadership of the Guild had "sold us [its members] down the river" and that the settlement threatened "the whole concept of copyright."

Anti-trust
Since the settlement agreement covers the previously digitized books and provides a revenue model for future digitization, it "give Google control over the digitizing of virtually all books covered by copyright in the United States." Since the license agreement is non-exclusive, it does not necessarily tie publishers to Google's service. In a journal article, MIT Professor Jerry A. Hausman and Criterion Economics Chairman J. Gregory Sidak conclude that the service will be unable to exercise market power. Hausman and Sidak believe that Google Book Search should, on net, yield a significant gain in consumer surplus.

Prominent technology, publishing, library and author groups have formed the Open Book Alliance works to counter the "scheme to monopolize the access, distribution and pricing of the largest digital database of books in the world."

Censorship
Google will be able to create a "content management system" with their scans as a result of the settlement and will have the power to remove inappropriate books the same way that it is able to remove inappropriate movies from YouTube. Some fear that this could lead to censorship and that there is public interest in protecting the scans from being buried behind Google's ranking system.

Privacy
At the Final Fairness Hearing, privacy advocates such as the EFF and ACLU voiced concerns that Google would keep a record of books accessed through Book Search. Privacy advocates want Google to provide privacy assurances comparable to those enjoyed by visitors to traditional libraries.

Orphan works
Brewster Kahle, the co-founder of the Internet Archive and Open Content Alliance has been critical of the proposed settlement, saying "Let's free the orphans, not have them pass from their legal limbo into a life controlled by Google"

Response to the amended settlement
Before the amended settlement, the Open Book Alliance released a framework for "Settlement 2.0":
 * The settlement must not grant Google an exclusive set of rights (de facto or otherwise) or result in any one entity gaining control over access to and distribution of the world’s largest digital database of books.
 * Authors and other rights holders must retain meaningful rights and the ability to determine the use of their works that have been scanned by Google.
 * The settlement must result in the creation of a true digital library that grants all researchers and users, commercial and non-commercial, full access that guarantees the ability to innovate on the knowledge it contains.
 * All class members must be treated equitably.
 * The settlement cannot provide for competition by making others engage in future litigation.
 * Congress must retain the exclusive authority granted by the U.S. Constitution to set copyright policy.
 * All rights holders impacted by the settlement must have a meaningful ability to receive notice, understand its terms and opt-out.
 * The parties that negotiated the settlement must live under the terms to which they seek to bind others, rather than their own separately negotiated arrangements.

After the amended settlement, the Open Book Alliance said, "Fundamentally, this settlement remains a set-piece designed to serve the private commercial interests of Google and its partners...by performing surgical nip and tuck...[they] are attempting to distract people from their continued efforts to establish a monopoly over digital-content access and distribution."

The Open Book Alliance outlined its major concerns:
 * The settlement still allows Google to purchase a monopoly on digital books.
 * Authors must still opt-out of the agreement even if they have not given their consent to be included in the deal.
 * Google’s claims regarding the Unclaimed Works Fiduciary are misleading and simply false.
 * Consumer privacy has not been protected or improved.
 * Academic libraries and independent researchers are still at the mercy of pricing from Google’s one stop book shop.
 * Instead of negotiating with stakeholders, Google cuts them out.

The ruling outlined key areas of contention with the settlement: 1) Adequacy of Class Notice; 2) Adequacy of Class Representation; 3) Scope of Relief Under Rule 23 (relating to forward-looking business arrangements); 4) Copyright Concerns; 5) Antitrust Concerns; 6) Privacy Concerns; and 7) International Law Concerns. Among those described by Judge Chin to be of most concern were the copyright concerns and the scope of relief under rule 23.  While Chin states "that most of the Grinnell factors favor approval of the settlement," several over-riding issues favored denying the settlement.  The settlement would have "transfer[ed] to Google certain rights in exchange for future and ongoing arrangements, including the sharing of future proceeds, and it would release Google (and others) from liability for certain future acts," which "exceeds what the Court may permit under Rule 23."  Judge Chin suggested that this is a matter best dealt with by Congress, not the courts. Judge Chin also Determined that the settlement exceeded the scope of the claims against Google and "would release claims well beyond those contemplated by the pleadings." In addition, the judge carefully considered the concerns of members of the class who claimed they were not adequately covered by the class. In considering the copyright claims. Chin wrote, "It is incongruous with the purpose of the copyright laws to place the onus on copyright owners to come forward to protect their rights when Google copied their works without first seeking their permission."