The amended settlement dropped in the eleventh hour. Here’s a redline version and here’s the related memorandum with the procedural details. The best news coverage is the New York Times story; the best blog coverage is Danny Sullivan’s. I’ve just completed a first pass through the amended settlement, tweeting all the way.

The biggest change is that the class of affected books has been dramatically reduced, although not at all in the way I was expecting. Books registered in the U.S. are still in, as are books published in Canada, the U.K., and Australia. That change should largely take foreign non-Anglophone books out of the settlement entirely. There are a number of other tweaks to the definitions to deal with specific classes of works (e.g. comic books).

On the antitrust front, there are changes to address two of the specific concerns raised by the DOJ. The 63/37 split (and almost everything else) will be negotiable, and Google will have more extensive rights to discount books provided it’s willing to eat the lower margins. These were unnecessary provisions in Settlement 1.0; Google and the parties aren’t giving much up by agreeing to these changes.

A number of other concrete issues have been fixed here and there. Unclaimed funds are no longer diverted to the Registry or other copyright owners. Google won’t share personal information with the Registry except via legal process. Creative Commons licensing options are explicitly provided for. There will be an Unclaimed Works Fiduciary to act on behalf of the unclaimed (including orphan) copyright owners at the Registry. (It’s called a “Fiduciary,” but the scope of its duties isn’t actually specified. I guess we need to see the Registry charter for that.) The secret termination clause is now “Intentionally Omitted.” Many other disputed issues from round 1, such as other privacy risk and less favorable treatment of Inserts, remain unchanged.

The heart of the settlement’s promise, peril, and problems has always been its treatment of unclaimed works—a category that contains the orphan works. Settlement 1.0 allowed Google to use and sell them on an opt-out basis, and Settlement 2.0 does the same. That gave Google exclusive access to a market segment that no one else can enter, and thus raised antitrust concerns; the DOJ hit this barriers-to-entry point hard in its Statement of Interest.

Settlement 2.0 has a very interesting response. The Unclaimed Works Fiduciary (or “UWF”) is given extensive powers to set terms on their behalf. Most of this, while good for protecting the interests of orphan owners, is irrelevant to the antitrust issue. It doesn’t matter whether the UWF can object to the pricing bins if no one besides Google is able to sell these books at any price. But there’s one, very important, very enigmatic exception, spelled out in section 6.2(b)(i):

General. The Registry will be organized on a basis that allows the Registry, among other things, to (i) represent the interests of Rightsholders in connection with this Amended Settlement Agreement, (ii) respond in a timely manner to requests by Google, Fully Participating Libraries and Cooperating Libraries, and (iii) to the extent permitted by law, license Rightsholders’ U.S. copyrights to third parties (in the case of unclaimed Books and Inserts, the Unclaimed Works Fiduciary may license to third parties the Copyright Interests of Rightsholders of unclaimed Books and Inserts to the extent permitted by law).

When I worked through Settlement 1.0, I concluded that “to the extent permitted by law” didn’t by its own terms authorize the Registry to license third parties (such as competitors to Google). If such licensing would otherwise be legal, it empowers the Registry to act, as a matter of its charter. But the settlement is quite careful to indicate that all the relevant licenses flow directly to Google, and the Registry holds no rights itself, so it has nothing to license in a way that would be “permitted by law” except where the copyright owners have voluntarily given it such powers, which can’t happen for unclaimed works.

By carrying over the same language for the UWF, Settlement 2.0 confirms that Google will have the only game in town for the unclaimed works. Nothing in the amended version gives the UWF any new powers for such purposes; the other clauses that refer to it give it power to negotiate specific terms with the Registry and Google under the various programs the settlement specifically allows Google to set up. The DOJ all but invited Google and the plaintiffs to empower the Registry to license Google’s competitors; they declined that all-but-invitation. They’re going to try to tough this one out; the DOJ will have to decide whether to back down or to fight, as this amended settlement doesn’t give it one of the central changes it asked for.

Now, it’s true that “to the extent permitted by law” is an obscure phrase in this context. My best working hypothesis is that the parties used to to take account of possible future changes to the law. Thus, the New York Times story says, “The trustee, with Congressional approval, can grant licenses to other companies who also want to sell these books… .” And Danny Sullivan, listening to the conference call, wrote:

Richart [JG: Sarnoff, presumably]: we are certianly hopeing that this settlement is the key that unlocks a positive outcome on the legistlative process on orphanworks as nw there’s a way to actually implement any legistlation that congress decides on orhpahn work

As I understand this, their idea is that the Registry, via the UWF, will be in a position for Congress to rely on in any orphan works legislation. All it would take is a wave of Congress’s magic wand, and the Registry will be handing out licenses to Google competitors. Thus, apparently goes the argument, we’re helping facilitate a Congressional orphan works solution. “To the extent permitted by law” leaves the door open for future action of this sort.

It’s a very clever hack. I have my doubts whether it’s legal.

Suppose that Congress doesn’t act. In that case, Google will be the only distributor able to sell to these orphan works. The settlement gives it preferential access to this market, while leaving an absolute legal barrier to entry in the way of all competitors. The speculative possibility that Congress might someday act to open up the market to others doesn’t create actual competition now. “To the extent permitted by law” changes nothing. So if the settlement would fail on antitrust grounds, this clause can’t save it.

Suppose, on the other hand, that Congress does act, blesses the Registry, and creates a statutory licensing system operated by the UWF. That would be a reasonable outcome. It would create legitimate, competitive, compensated access to orphan books. But if the whole thing depends on Congress, why do we need the class action?

I’m sure there will be much more to say about the amended settlement in the days, weeks, and months to come. My instant reaction is that it makes a number of meaningful, if modest, improvements, but leaves unaddressed the central issue that led me to worry about the settlement in the first place.

Thanks for all your hard work, James; you have made it so much easier for the rest of us.

Section 3.5: contributors to multi-authored works are still not being given the right to remove their work or withhold it from sale or access, only from display.

Attachment A - Author-Publisher Procedures - has survived largely intact: it still makes hay of everyone’s contracts, and allocates publishers electronic rights that, in many cases, they don’t possess.

And if the UK is dragged into this mess, it would in some cases allocate publishers US rights that they don’t possess, as well.

I should say, ‘purport to allocate’, since, as I have explained before, I still don’t see that a decision in a foreign court, made at the behest of third parties, can alter the effect of a contract signed in the UK.

I second the thanks and congratulations to James, not just for your insights and engagement but for your enormously successful work to facilitate broader understanding and opportunities for discussion of both settlement proposals 1.0 and 2.0.

Do we know the new objections deadlines and fairness hearing court dates?

James regarding the orphans’ e-publishing licenses, they may pass to Google Book, but they are non-exclusive, and so as I understand the structure, the BRR can grant other non-exclusive licenses to e-publish orphans to other e-publishers, such as Amazon, Barnes & Noble,etc.

The 63-37 split was price fixing and unlawful per se under the anti trust laws, and not even market level as Sribd and others give e-authors 80% or more.I attacked it in my objections, and so did the DOJ.U.S.v National Assn of Real Estate Boards (1950) 339 U.S.485;Goldfarb v.Va.State Bar(1975)421 U.S.773. In Auletta’s book, he gives some background as to where the 63-37 numbers come from-from linked web site ads, where Google’s share includes a 15% admn charge which makes its overall share of such ads to about this 37% level, so they sought the same split for the book advertising . Opening the split to negotiations, re- empowers agents ,authors and publishers and delivers real value to them.

I think there is still need for US Dist Ct oversight of the BRR governance and transparency . I am still a candidate as an independent author side director of the BRR.

Overall, it appears Google has been chastened and spun off,and divested some control over the scanned data base and accepted some limits on its future commercial exploitation of this hugely valuable digital and cultural asset. Whether this is still fair, just or equitable, and is compliant with US anti trust laws, awaits further study.

James G. said

The biggest change … Books registered in the U.S. are still in, as are books published in Canada, the U.K., and Australia. That change should largely take foreign non-Anglophone books out of the settlement entirely.

In the New York Times story Dan Clancy of Google Inc. is quoted as saying:

“We’re disappointed that we won’t be able to provide access to as many books from as many countries through the settlement as a result of our modifications, but we look forward to continuing to work with rightsholders from around the world to fulfill our longstanding mission of increasing access to all the world’s books,”

All through this legal wrangling Google has continued to digitize books from around the world and just because books from certain countries are no longer part of the settlement there is no sign from Google that they will stop their digitization of these works. It will be interesting to see how France and Germany react to the continued infringement of their copyrights by Google. Douglas Fevens Halifax, Nova Scotia The University of Wisconsin, Google, & Me

I can almost guarantee that Google will continue scanning all books from the University of Michigan, as well as from other major libraries that allow them access to everything: in-print, in-copyright, foreign-language, orphan, public domain, etc. The libraries don’t care, because Google indemnifies them against any legal challenges. Besides, the library gets a free copy of the scan.

If Google loses the case in France they’ll keep going anyway, and quietly dark-archive these scans. They will also be scanning books from Germany, Japan, India, China, and every other country that has objected so far. They may even quietly sneak payments to some European libraries, to get better access to foreign-language books.

In my opinion, Google’s strategy began with its non-disclosure contracts with libraries in 2003-2004, and it continues with this settlement revision. That strategy is simply to forestall any legal actions that might slow down its scanning. By the time anyone is able to slow down the scanning, Google will own copies of everything. If by then they cannot display it everywhere they’d prefer, alongside their ads, that’s still an impressive corporate asset. They may have to dark-archive some of it, but no one can tell them to delete anything. They’ll just move it to offshore servers.

Someday, somehow, Google will make a lot of money off of this asset, despite various governments around the world that may continue to object to its copyright infringement.

In light of the fact that this revised settlement says nothing about reader privacy, I suspect that the best we can hope for is that the EU in Europe, and the FTC in the U.S., will be increasingly aggressive on the privacy issue. This is probably Google’s weakest link at this point. Google’s geeky fanboys love Google’s copyright infringement, which means that the privacy issue, by default, is a better bet for those who hope to enlighten large numbers of ordinary people about Google’s global game plan.

Don’t take my word for it. This past week CNET interviewdd Google CEO Eric Schmidt:

CNET (Tom Krazit): Why is this Google Books matter so important to you as a company?

Eric Schmidt: Because the mission of the company is all the world’s information and no one has attempted to go out and get all this sort of trapped information stuck in libraries until Google.

Two things I’d like to know:

1) According to the people that have a negative stance on GBS, what were/ are (if they’ve changed) the true intentions of copyright law?

2) What are the current total yearly revenues generated from all the works in the Book Registry?

Brandt: As a long time user of your proxied, Google-based search engine (thanks!), I must say the tone of your comment seems jaded. The expressed outrage is so filled with hyperbole it is difficult to take you seriously. A few examples:

Someday, somehow, Google will make a lot of money off of this asset, despite various governments around the world that may continue to object to its copyright infringement.

Yes, I hear display ads are Google’s “meat and potatas”, not their search ads where intent is explicit.

Google’s geeky fanboys love Google’s copyright infringement, which means that the privacy issue, by default, is a better bet for those who hope to enlighten large numbers of ordinary people about Google’s global game plan.

Good job. Way to dismiss any entity that may be able to objectively look at the issue and not find Google completely in the wrong. The issues are being worked out, slowly but surely; though it seems numerous forces of disinformation are at work.

It doesn’t even seem like you care about under which premise the argument is made, paraphrasing, ‘We’ve got privacy and copyright, and since everyone is a pirate, let’s go with privacy. Deal?’

They may even quietly sneak payments to some European libraries

I may win the lottery tomorrow. Proof? I bought a ticket.

FYI, they moved the sunset on orphan works up to 10 years.

A few notes on odds and ends:

• The revised settlement excludes microfilm. This addresses the objection from Proquest.
• The exclusion of OCLC regional networks from the consortia provisions is gone. This addresses the objection from Lyrasis.
• Nothing is added about standard data formats. This was a DOJ concern, presumably aimed at accessibility interests. Perhaps the addition of third party resellers would entail the use of standard formats, mooting this concern, but its hard to say.

On my blog I’ve written a longish article about the powers of the Unclaimed Works Fiduciary.

What are copyrights? To me copyrights are a form of human rights – the right of a creator to own the products that are produced from the labours of his brain. They protect us from intellectual slavery. Douglas Fevens, Halifax, Nova Scotia The University of Wisconsin, Google & Me

I have read the supporting memo, and it seems the 63&-37% split is negotiable for commercially available books only, not for orphans.

Also it is significant that “non-display uses” have been limited to sales of e books and data base subscriptions, at present. Future non display uses would be negotiated between rights holders, the BRR and Google.

The much decried, open ended release of future violations appears to remain a feature of the settlement though many objectors cited strong and relevant authority against it.

The memo recites that several amicus counsel participated in the negs for the amendments. Does any one know who these were and for which parties? The memo asserts that “most” of the filed objections came from overseas, foreign authors and publishers-without knowing the data on opt outs to date, this assertion cannot be verified, except to state that from the lists on Public Index, there were in fact many, many US filed objections both for individual authors and important groups. I noted a very spirited comment string running on the Business Week story about the amendments, including some from authors for whom the current amendment news was their first information about the GBS.

Daniel Brandt is right. Google plans to go on doing what it is already doing, no matter which countries are supposedly in or out of the GBS. According to Dan Clancy: “The company [Google] would still index New Zealand books, showing snippets from them and link its users to vendors or libraries, unless the rights holder had authorised otherwise, he said.”

Thanks for this link, Lynley.

Do you have the least idea what Clancy means by ‘complications over copyright issues’ in the first paragraph?

I realise that question is ambiguous. What I mean is, I cannot on the face of it see what ‘complications over copyright’ arise in New Zealand that are not just as much an issue in the UK.

Gillian - You are right, New Zealand copyright law has far more in common with UK, Australian and Canadian copyright law than the copyright laws of any of those countries have with US copyright law. As is the case with Australia and Canada, our publishing practices follow the UK model. So why is Clancy blaming “complications over copyright” for NZ’s exclusion from the GBS? Does he think we don’t speak English? The most likely explanation is that NZ authors punched way above their weight in their opt-out letters and objections to the court. Clancy has more fights than he needs already in the US, Europe, Japan, China & India. He doesn’t need NZ. But he does need big English-speaking countries whose the big publishing firms are part of US AAP members’ empires. So Clancy did hasty secret deals with quislings in the Uk, Canada and Oz, and so we get GBS 2.0

The only satisfactory resolution of this mess that Google created, would be for the Justice Department to drop a ten-ton antitrust suit on them that kills the settlement for once and for all. One item in the suit would specify Google’s illegal (and anticompetitive) book scanning, and request an immediate injunction against Google and the University of Michigan to stop the scanning of copyrighted works. Other universities will get the message, and they will stop too. Then at some point down the road, the issue of whether illegally-copied material should be dark-archived can be decided. Meanwhile, Congress will have to get busy and figure out what sort of new laws are needed.

My sense is that Lynley is right about NZ authors raising enough of a per-capita stink to be left alone. It’s harder to know about “copyright complications,” as that paragraph isn’t cited to anyone, and may reflect the reporter’s view rather than Dan Clancy’s, or could be a garbled version of what someone said. It would hardly be the first time that an article on the settlement has been ambiguous or muddled.

‘secret deals … in the UK, Canada and Oz’ - Lynley Hood, above

The Memorandum in Support contains the following passage:

Plaintiffs were represented in these negotiations by highly experienced counsel, who benefited from the guidance of the Associational Plaintiffs – the Authors Guild and AAP – as well as recently from the Canadian Publishers’ Council, the United Kingdom Publishers Association, the Australian Publishers Association, and the Authors Licensing and Collecting Society of the United Kingdom, with respect to issues affecting Canadian, U.K., and Australian publishers and authors. Those organizations are among the leading trade organizations dedicated to protecting and advancing publishers’ and authors’ rights.

It comes as no surprise to me to see the ALCS in there, given that Maureen Duffy, its Honorary President, is one of the two new ‘representative plaintiffs’ from the UK, and given that it sent a letter in support of the original settlement to the court (according to the American Library Association, it was the sole rights-holder organisation to do this).

However, I find it noteworthy that no Canadian or Australian authors’ organisation is listed here. Robert Pullan, the new Australian ‘representative plaintiff’, is Chair of the Australian Society of Authors, but the organisation itself was not, apparently, directly involved.

The Australian Society of Authors sent a letter raising concerns about the settlement; lack of transparency was its key theme.

The Writers Union of Canada sent an objection, asking for major changes to the settlement agreement: exclusion of foreign works not published or distributed in the US; the settlement of the lawsuit to be restricted to the original grounds of complaint; authors to be able to ‘opt in’ to using the Book Rights Registry, not to have to opt out; etc. It has already rejected the amended settlement agreement.

The memorandum makes it very plain what has been going on: the publishers’ associations have all been given seats at the table, while very nearly all the advocacy organisations for authors have been shut out. This ought to shriek a warning to even the most trusting authors in the UK, Canada and Australia.

The single exception is the ALCS, which is an authors’ collecting society. Historically, most of the money it distributes has come from licenses for photocopying. Together with the Copyright Licensing Agency (CLA), which issues the licences and collects the money, the ALCS has been working on moving into licensing scanning.

Its autumn newsletter notes that times are hard, and the CLA ‘is working harder than ever before to retain its licensees, license new organisations, and maintain the level of licensing fees’.

In its letter to the court, the ALCS stated that many of its members had ‘asked ALCS to undertake the administration of payments due’ under the GBS. The ALCS is funded on a commission basis.

Another theory on why New Zealand has been dropped from GBS 2.0: On October 15, 2009 Michael Arrington and his correspondents reported on TechCrunch.com that if you enter “Google Ireland” “Google Pakistan” “Google Africa” etc etc into Google’s search engine, the top result is always Google New Zealand. This curious outcome, together with the massive wave of opposition to GBS 1.0 from NZ authors, must have delivered a stern message to Google: NZ is world power that must not be taken lightly. The problem has since been fixed, but message remains the same.

Upon review of the redlined amended settlement and the Dec.14 amended notice sec.12, it appears that your objected ambiguous language in sec.6.2(b) has been deleted, and that sec.4.5(b)(v) mandates the UWF/BRR and Google to grant marketing licenses to 3rd parties/competitors for the scanned unclaimed works, allowing such 3rd party e publishers to retain a majority of the sales revenues received for their efforts.