UPDATE: US DOJ Voices Concerns Over Google Books Settlement
19 September 2009 - 2:56PM
Dow Jones News
The U.S. Department of Justice said Friday night that a legal
settlement Google Inc. (GOOG) struck with authors and publishers to
make millions of books available online should be rejected in its
current form, but it encouraged the parties to revise the agreement
to address several government concerns.
"Because a properly structured settlement agreement in this case
offers the potential for important societal benefits, the United
States does not want the opportunity or momentum to be lost," the
department said in a 32-page legal brief.
The department's brief is the strongest sign yet that changes to
the controversial settlement are likely. Government lawyers said in
the court document that the parties are considering modifications
to the deal to address concerns raised by the department and other
critics.
Google reached the settlement last year, agreeing to pay $125
million to establish a registry to allow authors and publishers to
register their works and get paid when their titles are viewed
online. The deal resolved a consolidated lawsuit in which authors
and publishers sought to block the company from scanning books and
making them searchable online. The plaintiffs alleged that Google's
book search project violated copyrights.
The department said Friday the current settlement raised
antitrust, copyright and class-action law concerns.
Among its recommendations, the department said the parties
should limit broad settlement provisions on future licensing that
would allow Google to offer new products derived from its digital
books platform.
Highlighting a number of antitrust concerns, the department said
the current settlement could preclude other digital distributors
from competing with Google and could allow book publishers to
restrict price competition.
The department also questioned whether the settlement could
impose certain copyright policy changes, and it said the agreement
needed better protections for unknown copyright holders and foreign
authors and publishers.
Despite the concerns, the department said the settlement "has
the potential to breathe life into millions of works that are now
effectively off limits to the public."
Google, the Authors Guild and the Association of American
Publishers said in a joint statement that the department's legal
filing recognized the value of the settlement.
"We are considering the points raised by the department and look
forward to addressing them as the court proceedings continue," the
parties said.
A Google spokesman declined to comment on whether the parties
were considering making changes.
A Justice Department official, speaking on the condition of
anonymity, said it was "too early to tell" whether the types of
changes the government recommended would require the parties to
again notify all members of the plaintiff class about the terms of
the settlement.
The parties have previously voiced concerns about the time and
cost of doing that again.
The department's comments came in a brief filed with a federal
trial judge in New York who must decide whether to approve the
settlement. U.S. District Court Judge Denny Chin has scheduled a
hearing for Oct. 7 to consider the matter.
Supporters and critics of the settlement have flooded Chin with
comments on the pending agreement.
Critics, including Microsoft Corp. (MSFT) and Amazon.com Inc.
(AMZN) say the settlement gives Google a new monopoly to exploit
copyrighted books and could make it difficult for rivals to compete
in the market for digital titles.
Google and its supporters say the deal is a landmark agreement
that will give the reading public unprecedented access to digital
books and open up a new stream of revenue for authors and
publishers.
-By Brent Kendall, Dow Jones Newswires; 202-862-9222;
brent.kendall@dowjones.com