Technology and I.P.

  • April 8, 2011
    Guest Post

    By Marla Grossman, a partner at American Continental Group.


    The Obama Administration’s emphasis on stimulating the U.S. economy and creating U.S. jobs, as well as the increasing recognition from Congress that a strong patent system is critical to an innovation-friendly government, has made it more important than ever for Congress to pass a permanent legislative solution to the damaging practice of taxing innovation by diverting user fees away from the U.S. Patent and Trademark Office (USPTO). Such a solution is part of the patent reform bill recently passed in the Senate, S.23, and is also part of the patent reform bill introduced by the House last week, H.R. 1249.

    The USPTO is the federal agency that processes patent and trademark applications, disseminates patent and trademark information, and administers the laws relating to patents and trademarks.

    Since 1990, the USPTO has been entirely funded through the payment of patent and trademark application and user fees; before 1990, taxpayers supported the operations of the USPTO. However, with the passage of the Omnibus Reconciliation Act of 1990 (OBRA), taxpayer support was eliminated. OBRA imposed a significant fee increase on America’s inventors in order to replace the taxpayer support the USPTO was, until that point, receiving. The fees paid by users of the patent and trademark systems are referred to as “USPTO user fees.” The revenues generated by this fee are collected by the USPTO and then transferred into a general Treasury account. The USPTO is required to request that the Congressional Appropriations Committees allow the agency to use the revenues in the account.

  • March 24, 2011
    Guest Post

    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.

  • March 22, 2011
    The epic legal drama continues over Google's effort to digitize millions of books for a universal library.

    Federal Judge Denny Chin has rejected a class action settlement that Google had reached with a coalition of authors and publishers, saying the settlement "would simply go too far."

    Chin continued, that the settlement would "grant Google significant rights to exploit entire books, without permission of the copyright owners," and give Google "a significant advantage over competitors, rewarding it for engaging in wholesale copying of copyrighted works without permission, while releasing claims well beyond those presented in the case."

    The Google books project was challenged in federal court by the Authors Guild and Association of American Publishers. In 2009 a settlement between the parties was reached, stating that Google could create a registry of books and pay $125 million to people whose copyrighted books have been scanned and to locate the authors of scanned books who have not come forward, Reuters reports. The settlement, Bloomberg notes, would have also provided Google "immunity from copyright laws, allowing the company to distribute millions of books on the Internet in exchange for sharing the revenue it would generate."

    Responding to Judge Chin's 48-page opinion, the Authors Guild said in a press statement that it "lauds the many benefits of the settlement," and "has left the door open for a revised agreement. In his conclusion, Judge Chin says that ‘many of the concerns raised in the objections would be ameliorated if the ASA [the Amended Settlement Agreement] were converted from an ‘opt-out' settlement to an ‘opt-in settlement. I urge the parties to consider revising the ASA accordingly.'"

    Hillary Ware, a managing counsel for Google, expressed disappointment in Chin's opinion, saying the company was considering its options," The Wall Street Journal reports.

    "Like many others," Ware added, "we believe this agreement has the potential to open-up access to millions of books that are currently hard to find in the U.S. today."

    In an ACS Issue Brief, James Grimmelmann, a law professor at New York Law School's Institute for Information Law and Policy, examined the Google Books settlement. David Balto, a senior fellow at the Center for American Progress also explored the settlement in this guest post for ACSblog.

  • March 15, 2011
    The cyberspace advertising and search engine behemoth Google is increasingly drawing the attention of Congress.

    As noted by The Wall Street Journal, Sen. Herb Kohl, chairman of the Senate Judiciary Antitrust Subcommittee "may hold hearings on Google this legislative session to examine whether the company is abusing its dominance in the Internet search market."

    In a press release, Kohl lays out the agenda for the subcommittee's work during this congressional session, including an examination of "Competition in Online Markets/Internet Search Issues."

    The statement continues:

    In recent years, the dominance over Internet search of the world's largest search engine, Google, has increased and Google has increasingly sought to acquire e-commerce sites in myriad businesses. In this regard, we will closely examine allegations raised by e-commerce websites that compete with Google that they are being treated unfairly in search ranking, and in their ability to purchase search advertising. We also will continue to closely examine the impact of further acquisitions in this sector.

    Google is already facing official scrutiny over its search-engine tactics in Europe.

    The New York Times reported in February that the European Commission "began a formal antitrust investigation of Google three months ago looking for evidence that Google had the power to shut out competition and restrict advertisers from doing business with other search engines."

  • February 25, 2011
    Google's massive effort to create a digital database of books is still tangled in a class action lawsuit, and as Marc Rotenberg, executive director of the Electronic Privacy Information Center (EPIC) tells Politico Pro, a subscriber-based service, was "entirely based on giving Google control over many of the nation's historic library resources and then be a gatekeeper for who could get access to those materials."

    In his interview with Politico Pro, Rotenberg expounded on the legal battle over the Google books project, adding that it was "taking materials that were freely available and now seeking to charge for them. And also was hoping to collect a great deal of information from people wanting to get access to the materials."

    In an ACS Issue Brief, James Grimmelmann, a law professor at New York Law School's Institute for Information Law and Policy, outlined similar concerns, writing that "Google has been systematically making digital copies of books in the collections of many major university libraries. It made the digital copies searchable through its web site - you couldn't read the books, but you could at least find out where the phrase you're for appears within them. This outraged copyright owners, who filed a class action lawsuit to make Google stop." The settlement of the class action has not been resolved, but in his Issue Brief Grimmelmann asserted that the settlement "would give Google a license not only to scan books, but also to sell them."

    Rotenberg also told Politico Pro that he believes "Google is posing the greatest privacy challenges to the future of the Internet. The reason for that is simple: Google exercises a dominant position over most of the essential Internet services. That includes search, e-mail, advertising, online video and increasingly the Web browser. Each one of those activities involves intensive data collection. The risk associated with Google's dominance of the Internet leads very directly to growing concerns about the privacy."