GBS: Sonnenschein CLE Report

Benjamin Burge, a 2L at New York Law School and a member of the PIBSI team, filed the following report on a recent CLE event in New York:

On October 22, 2009, Sonnenschein, Nath & Rosenthal LLP held a CLE meeting on the Google Book Search lawsuit and proposed settlement entitled, “Google Book Settlement: Past & Future.” The presenters were Deveruex Chatillon, the former General Counsel at Scholastic and now partner focusing on content litigation; Katherine Funk, a partner in the antitrust section; and Reid Ashinoff, a partner focusing on class-action lawsuits.

Chatillon introduced the panel and introduced the basics of the lawsuit and settlement to the audience. After the lengthy introduction, Ashinoff discussed the Rule 23 implications of the proposed settlement. It must be noted, as it was by Ashinoff and others, that this discussion could potentially be mooted by the yet-to-be-filed amended settlement. With that caveat, Ashinoff focused on the huge divide in relief granted in the proposed settlement between in-print and out-of-print/orphan works. He noted that this is likely due to the fact that the class representatives were the original plaintiffs, and were getting the best outcome for themselves. He reasoned that as a necessary result, the settlement needs to better represent all of the classes of works which it tries to encompass. To accomplish this, the classes must either be re-defined, with the inclusion of at least one additional class, namely orphans, or needs to remove works that are currently orphaned from its scope. A further remedy could be to granting orphans the same rights as in-print holders once they become identified. Ashinoff noted that implementing these could be extremely difficult, and that therefore this settlement might, like asbestos litigation, be an area better suited for Congressional attention than private suit.

Ashinoff then discussed the potential problems with both notice of the settlement and the release granted to Google therein. With regards to the release, he supported the same conclusion that many others have noted, that as a release is supposed to be either related to the complaint or a factual predicate, this settlement’s release is so far-reaching in scope that it may be altered by the court. Further, he discussed how there have been multiple complaints about the notice period, namely that the notice was inadequate as it was only in English, that it was not served on all potential parties, and that it the notice period was insufficient. One of his suggested remedies was that Google be forced to have a banner on its home page for a period of years giving notice, which was a hit with the crowd but will likely not be with Google.

Funk then spoke about the settlement’s antitrust implications; the most notable being that it seems to give Google an exclusive right to the orphan works via the Registry’s licensing capabilities. The easy solution to this issue is to allow the Registry to license any book that has been digitized. She then spoke about the potential price-fixing scheme presented in the settlement’s algorithmic pricing and noted how it was different from BMI and ASCAP, which have separate bilateral agreements with rights holders. Finally, Funk noted that even if the court does approve the settlement, the DOJ is not prevented from stepping in to stop or alter it, either immediately or in the future. Furthermore, competitive vendors to Google are not bound by the settlement, and could file a Sherman Act § 2 complaint against either Google or its vendors for antitrust violations.

Finally, a question from the crowd asked Ashinoff how he might counsel Google to deal with the orphan works issue from a class-action settlement, and he noted that it might actually be a feasible option for Google to remove orphans from the settlement, use these works, and just run the risk that the owner might show up. As by definition the rights holder of an orphan cannot be found, if no one ever has the ability to hold Google accountable for this plan of action, it might be the easiest path.