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March 22, 2011 10:11 PM

Judge Chin Rejects Google Digital Library Settlement

Posted by David Bario

From The Am Law Litigation Daily

A proposed years-in-the-making class action settlement between Google, the Authors Guild, and the Association of American Publishers would have altered the copyright landscape for the printed word. The $125 million deal, which received preliminary approval from then-Manhattan federal district court judge Denny Chin in November 2009, would have allowed Google to digitize millions of books in the creation of a vast online library. Copyright holders would not only have seen their works become accessible to every reader with an Internet connection, they'd also have shared in Google revenues from user downloads.

But that's not going to happen. Late Tuesday afternoon Judge Chin (who was elevated to the U.S. Court of Appeals for the Second Circuit last April) rejected the deal, finding the proposed settlement is not "fair, adequate, and reasonable." Chin's 48-page opinion vindicates--for now--objections from the Justice Department, authors, and Google's online competitors, and sends Google back to the table for more revisions.

In tossing the deal, the judge cited some of the concerns that have bedeviled the settlement since it was first proposed in 2008, as well as Google's own conduct. "The [amended settlement agreement] would grant Google control over the digital commercialization of millions of books, including orphan books and other unclaimed works," Judge Chin wrote. "And it would do so even though Google engaged in wholesale, blatant copying, without first obtaining copyright permissions."

Google, which first publicly announced limited plans for a digital library in 2004, pledged to press on. "This is clearly disappointing, but we'll review the court's decision and consider our options," the company said in a statement after the ruling. "Like many others, 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."

Objectors to the proposed settlement have been vociferous in calling for its rejection. Last February Judge Chin presided over a packed courtroom at a raucous fairness hearing, at which objectors asserted that the deal granted Google an unfair competitive advantage, gave it de facto rights to millions of unclaimed works, and transformed a suit initially targeting Google's display of short snippets of books into a licensing deal to sell and exploit entire works. (Check out this 2009 American Lawyer feature for more background on opposition to the settlement from the Justice Department, champions of "orphaned" books, and others.)

Those objections evidently persuaded Judge Chin. In reviewing the amended deal, he found that the class was rife with conflicting interests. Moreover, he concluded that in attempting to address objectors' concerns, Google and the authors and publishers tried to resolve issues better left to Congress.

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