As numerous outlets are reporting, a federal judge rejected the proposed Google Books Settlement (Wikipedia backgrounder) yesterday, citing a number of concerns:

1. “Adequacy of Class Notice”
2. “Adequacy of Class Representation”
3. “Scope of Relief Under [Federal Rules of Civil Procedure] Rule 23”
4. “Copyright Concerns”
5. “Antitrust Concerns”
6. “Privacy Concerns”
7. “International Law Concerns”

In this post, I want to comment just on #5 since the court’s discussion of this point focused on the orphan works problem, an issue I analyzed at length just last summer in a journal note (PDF here).

In brief, “orphan works” are creations protected by copyright law but with unclear ownership.  Prospective users of orphan works are in a bind because they cannot ascertain who to ask for permission yet still face the prospect of substantial penalties if an owner eventually surfaces and sues for copyright infringement.  As a result, orphan works remain in legal limbo and rarely are used to their full economic and/or cultural potential.  Orphan works include many (though certainly not all) books that were published during the 20th century (still under copyright) but are now out of print (unclear ownership).

Google sought a way out of this legal limbo so that it could put such books in its database.  Specifically, Google sought to escape the orphan works problem by leveraging the “opt out” structure of this class action lawsuit.  One of the ways that class action lawsuits “work” is by binding a group of people — including those who could have “opted out” of the litigation by filing their own lawsuits but didn’t — to the outcome of the class action.  Here, Google wanted the owners of orphan works (who by definition would not be “opting out”) to be bound by the terms of the settlement.  This would have allowed Google to digitize and distribute those orphaned works.

Writing for the Southern District of New York, Judge Denny Chin expressed concern that the proposed settlement would have given Google too much power over orphan works:

The ASA [Amended Settlement Agreement] would give Google a de facto monopoly over unclaimed works. Only Google has engaged in the copying of books en masse without copyright permission.  As the United States observed in its original statement of interest: “This de facto exclusivity (at least as to orphan works) appears to create a dangerous probability that only Google would have the ability to market to libraries and other institutions a comprehensive digital-book subscription. The seller of an incomplete database — i.e., one that does not include the millions of orphan works — cannot compete effectively with the seller of a comprehensive product.” And as counsel for the Internet Archive noted, the ASA would give Google “a right, which no one else in the world would have, . . .to digitize works with impunity, without any risk of statutory liability, for something like 150 years.”

(internal citations omitted, emphasis added).

While I certainly share the court’s concern with the prospect of a Google monopoly over orphan works, I also find it rather ironic that the court cited monopoly as one of the “problems” that prevented it from approving the settlement.  After all, copyrights are themselves monopolies; they prevent non-owners from using copyrighted works in a whole host of ways (subject to fair use and certain — often technical — exceptions).  Indeed, courts straightforwardly enforce copyright monopolies every time a copyright owner wins an infringement lawsuit.

If monopolies are such a problem, why do we allow them as the foundation of copyright law?  There are policy-based answers, of course, but it seems strange that Judge Chin didn’t engage in any real policy analysis except to say:

The questions of who should be entrusted with guardianship over orphan books, under what terms, and with what safeguards are matters more appropriately decided by Congress than through an agreement among private, self-interested parties.

Of course, many would argue that U.S. copyright law and policy essentially is “an agreement among private, self-interested parties” that simply gets ratified by Congress.  Perhaps the litigants here made the mistake of picking the wrong forum.