By James Grimmelmann, Associate Professor of Law, New York Law School.
On Tuesday, Judge Denny Chin quietly deflated the Google Books settlement. His long-awaited opinion in Authors Guild v. Google, Inc. rejected a proposed settlement, which would have given Google the right to sell electronic copies of out-of-print books. The opinion is short, readable, and filled with eloquent quotations from objections, many filed pro se. It moves quickly through more issues than I could discuss in a blog post, so here I'll focus on its central holding, that this kind of "forward-looking business arrangement" is simply beyond the court's power to approve under Rule 23.
The basic issue posed by the settlement has always been that it turns an ordinary class action inside-out. The underlying lawsuit, filed in 2005 by authors and publishers, objected to Google's program to scan books, index them, and show short "snippets" of a few sentences as search results. In the normal course of things, this suit would have proceeded to a judgment, either that Google infringed copyright or that its book search engine was protected fair use.
And ordinarily, any settlement would have fallen somewhere between those two possibilities. Perhaps it would have allowed Google to continue some of its scanning but not all of it, and perhaps Google would have paid copyright owners, but not as much as they could have won at trial. It would have been, in short, a genuine compromise between the parties' legal positions.
When the settlement was proposed in 2008, and amended in 2009, however, it had metastazied into something much more ambitious: a combination of universal library and ultimate bookstore. Google would use its scans to sell complete digital copies of the books to consumers and libraries. It would keep 37 percent of the revenue, and the remaining 63 percent would be split between authors and publishers according to a complicated formula. The whole thing would be subject to an intricate, almost Rube Goldbergian governance scheme involving Google, authors, publishers, libraries, and a new Book Rights Registry to keep track of everything.
There was much to like about the settlement. Hundreds of thousands or millions of books are "orphan works," still in copyright but doomed to remain out of print because their copyright owners can't be found. Congress has twice considered the problem, but without reaching consensus on what to do about it. The settlement cleverly sidestepped this problem, since individual consent isn't required in a class action. The orphans would have been available again on Google's shelves, while money accumulated for their owners if they ever did show up. The details were controversial and often problematic, but it was at least a clever idea for breaking the orphan-works logjam.
Unfortunately, no matter how noble the goal, a class-action settlement is a terrible vehicle for this kind of forward-looking copyright reform. As Judge Chin concluded, the settlement is disconnected from the lawsuit it supposedly "settles." It doesn't compromise the claims against Google so much as use them as an excuse to get the parties into a room together for an open-ended negotiation. That's okay when it's only individual parties who'll be bound by the results of the negotiation, but deeply troubling when it's a class of millions.
If it's possible to rewrite copyright law and reshape the publishing industry in the guise of "settling" a class action, then almost anything in society is fair game for clever class-action lawyers. The legal principles on which Google and the authors and publishers defended the settlement, if accepted, would mean that a class-action settlement could be used to bind class members to almost any contract. Imagine reshaping the nation's pension system through a class-action lawsuit by all workers against their employers. Whatever you think of pension and retirement law, surely crafting its basic contours is a job for Congress and state legislatures, not the courts.
Judge Chin's opinion distinguishes the backwards-looking and forwards-looking portions of the settlement. It concludes that these latter portions, which "would transfer to Google certain rights in exchange for future and ongoing arrangements" and "would release Google (and others) from liability for certain future acts" are beyond the scope of what Rule 23 permits a court to approve.
The rest of the opinion deals with a wide range of other issues thrown up by settlement objectors: including copyright, antitrust, privacy, and international-law issues. Almost all of these problems are linked to the settlement's misuse of a class-action settlement. For example, the antitrust and privacy concerns discussed in my ACS Issue Brief on the settlement stem directly from the concentration of power in Google's hands that the settlement would have worked.
The opinion is sympathetic to many of these objections: Judge Chin thrice pronounces himself "troubled" or says that an issue is "troubling." He uses the wide range of issues to support an argument that the settlement reaches beyond what the courts can appropriately resolve into the realm of wide-ranging social transformation best left to Congress.
In its actual holdings, though, the opinion is judicially minimalist: it illustrates the problems without taking a definitive position on them. Judge Chin thrice explains that he "need not decide" or "rule" on the issues. Instead, they help tip the scales towards conclusion that the settlement is not "fair, adequate, and reasonable" to class members: they are individually debatable, but collectively damning. An appeal is possible, but seems unlikely to go far.
Google deserves credit for daring to dream big about Internet-enabled access to books. Google and the authors and publishers even deserve credit for the settlement, with all its flaws. It too dreams big in seeking a way to make this technological vision a legal possibility. They chose an inappropriate procedural vehicle, as Judge Chin has recognized. But now the orphan-works debate will shift back to where it belongs: Congress.