By Jake Goldenfein
February 18th 2011 marks one year since the Amended Google Books Settlement (AGBS) fairness hearing, with Judge Denny Chin yet to issue a ruling. Though the Google Book Search program cannot be implemented without Judge Chin’s approval, both academy and industry are prodigiously analysing its potential ramifications. Establishing a collective management organisation (CMO) called the Book Rights Registry is one of the AGBS’s more provocative features. Very simply, the Book Rights Registry would collect and distribute revenues from the Google Books program to the rightsholders of digitised texts. As the specific issues generated by the AGBS fall to redoubled investigation, so do their corollaries for the institution of copyright. Accordingly, on January 28th 2011, the Kernochan Centre at Columbia University Law School in New York held its annual symposium on CMOs and their role in new licensing regimes. By way of introduction, June Besek, Director of the Kernochan Centre, noted the AGBS was one of the two fundamental reasons why CMOs are receiving more attention (the other being that collective management is a lesser institution in the US than the rest of the world), making the symposium extremely timely.
Google’s inclusion of collective management in the AGBS has reinvigorated the analysis of CMOs, as collective management may play a part in the AGBS’ controversial rights clearing process. To briefly summarise – Google began digitising the collections of major US university libraries, making available snippets of text for search engine enquiries. The US Authors Guild and Association of American Publishers brought a class action lawsuit against Google, claiming copyright infringement on behalf of rightsholders of the texts scanned and digitised. Google originally asserted a fair use defence based on the limited quantity of text displayed as search results, however the parties eventually settled, authorising Google to engage in activities more expansive than those inducing the original action. Google would be permitted to make available full, digitised texts on private and institutional bases, with revenues distributed to rightsholders through the Book Rights Registry. Controversially, the settlement used the ‘opt-out’ mechanism of class-action procedure to subvert the traditional requirement of permission from rightsholders. This clever piece of litigation strategy may enable Google to digitise and commercialise (actions within the rights reserved by copyright) the legacy of western publishing without undergoing the otherwise impossible task of clearing rights. Remarkably, this inversion of the default copyright position for a massive canon of information is achieved through private (settlement) action rather than legislative reform.
Many are familiar with the function of CMOs, such as APRIA in Australia, who license music performance rights from its repertory to users of all kinds. For example, if you operate a bar, you pay a fee to APRIA to lawfully play music to the public. The CMO determines the fee, then distributes revenues to rightsholders based on its usage data. While APRIA has its equivalent in the US, CMOs in other categories of rights are far less prolific. Perhaps this paucity is linked to the poisonous connotations of the term ‘collective’ amidst an American environment of strict economic rationality. Indeed the keynote speaker at the conference, Daniel Gervais, argued a purely economic approach to collective rights management makes those agencies’ role less compelling. He argued, in Europe comparatively, collective management is considered a preferred system rather than a necessary evil.
Gervais highlighted some central features of collective management including the lack of excludability. Any user may access any work within the CMO repertoire provided they pay the licensing fee. This reduces transaction costs, and highlights how, while industry actors often have a program of saying ‘no’, CMOs generally say ‘yes’. In this sense, CMOs may facilitate movement away from the permission culture that accentuates the conflicts of copyright in the internet age.
Schott Hemphill, an anti-trust and IP professor at Columbia Law School, discussed the competition issues regarding collective management – generally, and in reference to the AGBS. He highlighted the fundamental concern emanating from the horizontal relationship amongst rightsholders that enables setting higher licensing prices than if rightsholders were acting individually. The original Google Books settlement entitled the CMO to establish a profit maximising price. Of course, this smacks of cartelisation. However, the amended agreement clarified that the pricing algorithm enables individuals to price their works severally. Orphan works issues also emerge in an anti-trust analysis of the AGBS, with the US Justice Department contending that later entrants to the ‘ebook’ market will struggle to replicate access to orphan texts as those rightsholders (by definition) cannot opt-in. Naturally, within the massive envelope of materials digitised by Google, many rightsholders are not identified or located. By requiring absent authors to ‘opt-out’, the settlement grants Google a de facto monopoly over those works. However, Hemphill remarked Google’s substantial risks in commencing digitisation would increase access to orphan works from effectively zero, thereby obviating anti-trust liability because the cost of the product is not increased. Apart from contending the anti-trust complaint is not made out, Hemphill also declared problematic the inclusion of competition issues in Judge Chin’s fairness determination as Chin’s mandate considers legitimacy for settlement class-members only, not the public at large.
As a CMO, the Book Rights Registry utilises extended collective licensing (ECL) machinery. ECL operates by extending the relationship between rightsholders and CMOs, by virtue of law, to all individuals within that class of rightsholder. Consequently, as pointed out by Alain Strowel from the Facultés Universitaires Saint-Louis in Brussels, this model has vast utility in licensing mass digitisation projects (and orphan works). Extended collective licences are already legislatively prescribed in Europe for cable television transmissions and other communications, while Nordic ECL law has omnibus provisions facilitating application to all categories of rights (including those necessary for the Norwegian National Digital Library). Uniquely to the AGBS, the legal extension to ‘outsiders’ is by virtue of private law, not legislation, and the benefits flow to only one user – Google.
Berkeley Law School professor Pamela Samuelson objected to the AGBS for precisely those reasons, stating her preference that other parties also have access to the mass digitisation. She argued for legislation establishing a CMO with extended collective licensing of orphan works and out of print books only (although she cites preference for the limited liability model of the proposed US orphan works legislation). Rather than vesting this resource in a private company like Google, Samuelson endorses creating a national Digital Public Library along the lines of the Europeana project.
Finally, the last speaker at the Symposium, Séverine Dusollier from the University of Namur succinctly highlighted the spectrum of licensing options from individual management of rights to compulsory licensing, and canvassed the various legislative proposals including levies on internet use and devices, and commandeering ISPs as collection agencies, licensors and enforcers.
The collective licensing options discussed at the conference have been subject to varying amounts of analysis and implementation. Clearly, the importance of developing adequate and appropriate licensing regimes is not escaping academics or policy makers, and the quantity and complexity of those options is only expanding. However, convincing established content industries continues to suffer for their preference of Digital Rights Management technologies over licensing innovation. For that reason, many eagerly await Judge Chin’s determination. Those opposed to the AGBS often cite Google’s ‘end-run’ around copyright law and the danger in privatising of such a phenomenal resource. However, considering US Congress’ inability to even pass necessary orphan works legislation, it is questionable whether the US Government has the political, let alone technical means to bring such a valuable public asset into fruition. In addition, recent US copyright reform focuses predominantly on term extension and fiercer enforcement, leading some to prefer Google’s vision of copyright to that of the US Government. No doubt whether or not the AGBS is approved, the concept will remain a substantial influence on the progress of digital licensing in times to come.
Video of the symposium is available on the Kernochan Centre’s website here.
Jake Goldenfein is a PhD candidate in Law at the University of Melbourne
(return to the top of this edition)