The Google Book Settlement Decision & Opt-In/Opt-Out Models of IP Protection in Cyberspace

The District Court has rendered its decision rejecting the Amended Settlement Agreement (ASA) in The Authors Guild v. Google, Inc., the Google Books copyright infringement case for digitalizing books from University libraries and other sources. The decision actually nicely highlights the incompatibility between traditional copyright and other intellectual property models and the fast moving pace of the internet and related technologies. Basic copyright, patent, and related intellectual property laws rely primarily on opt-in models for the use of covered intellectual property. One needs to negotiate a license before using the material, i.e. a rights holder needs to opt-in to the use of their material on the internet or otherwise. If they refuse to opt-in or simply cannot be located or otherwise identified, traditional intellectual property regimes restrict the use of the material until they have opted-in. Thus, orphan works remain restricted until their parentage can be identified an consulted.

By contrast, valuable property in cyberspace has been developed primarily on an opt-out model — material can be used until the rights hold comes forward and objects. The opt-out model casts the onus of policing and rights protection on the rights holder, leaving the cyber entrepreneur to use potentially protected material unless and until the rights holder objects. Much of Google’s search engine business has been built on precisely this model. When challenged in litigation over the indexing, thumbnails, and caching of copyrighted sites, Google often successfully points to technological aids, such as robot.txt files and metatags, by which a copyright holder can essentially opt-out of such activity. For example, in Field v. Google, Inc., 412 F. Supp. 2d 1106 (D. Nev. 2006), the court relied on such technological aids to exonerate Google in a copyright infringement case. Likewise, in Parker v. Yahoo!, Inc. , 2008 WL 4410095 (E.D. Pa. 2008), the Court treated the failure to use such known technological exclusion tools, i.e. the failure to opt-out, as creating an implied license. Similarly, the so-called Safe Harbor Provisions of the Digital Millennium Copyright Act (DMCA),17 U.S.C. section 512, provide qualified Online Service Providers (OSPs) and others immunity from copyright infringement liability for hosting infringing works on the internet, so long as they provide an effective means to receive and respond to so-called “take-down” notices — essentially a rights holder opt-out system. It was precisely this opt-out system that Viacom and the NFL attacked when they unsuccessfully accused YouTube, another Google property, of copyright infringement for hosting their material on the site without their prior authorization. The content rights holders desired to force a much larger portion of the costs of policing their rights onto YouTube by essentially insisting on a traditional opt-in copyright model. Relying on the Safe Harbor Provisions of the DMCA, however, the District Court in Viacom International, Inc. v. YouTube, Inc., 718 F.Supp.2d 514 (S. D. N.Y. 2010), rejected the opt-in model, noting that YouTube was doing all it could to effective respond to to rights holder take-down notices on its servers and that was all that was legally demanded. Thus, for those fortunate cyberspace entrepreneurs who qualify for OSP protection under the Safe Harbor Provisions of the DMCA, that Act turns the traditional opt-in licensing model of copyright law into a cyber-friendly opt-out model in which they can grow and innovate.

Given the essentiality of opt-out models to growth and innovation in cyberspace, it is not surprising that in attempting to settle the Google Books digitalization suit, Google attempted to use the settlement process to turn digital internet book publishing, particularly for out-of-print and orphan works, from an opt-in model to an opt-out model. In fact, the parties sought to use the settlement process for a Rule 23 class action into a method of converting the copyright publication licensing process for such works from opt-in to opt-out. And it was precisely on this treacherous shoal that Googles’ voyage into making the world’s knowledge searchable and publicly accessible foundered. Much of the stated opposition to the ASA in the Google Books case came from authors and authors rights groups who simply objected to being involuntarily swept into a system to which they did not consent. As creative authors they developed and were nurtured by an opt-in system which they did not readily want to abandon. On the other hand, the sheer magnitude of the Google Books digitalization project highlights the central problem with opt-in systems for the technological age — transaction costs. The sheer magnitude of the costs of ascertaining, locating, and securing advances licenses from each book copyright rights holder makes a project like the Google Books digitalization project fiscally impossible under a traditional opt-in copyright model. In addition, the opt-in model provides no solution for the problem of orphan works where neither the author nor publisher of a book survives and no other rights holder can be located. Opt-out models, by contrast, are fast and efficient, reduce or eliminate clearance transaction costs, place the onus of policing on the rights holder, and tend to make more works generally available on the internet. Thus, in a technological age, opt-out models of protecting copyrights and other intellectual property may very be more efficient at “promot[ing] the Progress of Science and useful Arts,” the constitutional objective of copyright and patent law set forth in Article I, Section 8, Clause 8 of the United States Constitution.

If opt-out models reduce inefficient transaction costs, make more works publicly available, and fulfill the constitutional objectives of copyright and patent protections, one may wonder why Google’s efforts through the ASA to convert digital book publishing from opt-in to opt-out did not succeed, particularly after the ASA had been preliminarily accepted, subject to comment, by the same Circuit Judge, Judge Denny Chin, who ultimately rejected it. The constant theme in his final opinion is that any change of this magnitude from an opt-in system of copyrights to an opt-out system of the type proposed by the ASA was not a question for judicial resolution, but, ultimately, for change by Congress. Thus, if Google wanted the settlement approved, Judge Chin indicated at the end of his opinion that the settlement system would need to be renegotiated from an opt-out system to an opt-in system. Whether Google will choose that approach, given the high transaction costs and lower coverage already noted with such a system, or attempt a legislative fix for the problem in Congress remains to be seen. In any event, the rejection of the Google Books ASA highlights the basic problems with our intellectual property regimes in a technological age — the fact that they assume an opt-in, rather than opt-out, approach for rights holders. Perhaps if Congress really wants to be true to the Constitution and further the ultimate constitutional purpose of copyright and patent protections in “promot[ing] the Progress of Science and useful Arts,” it will consider ultimate reform of both regimes which move, like the Safe Harbor Provisions of the DMCA, primarily to opt-out models, rather than opt-in models, as the basic presumption surrounding intellectual property protections. What remains to be seen is whether such models comport with our international law obligations under the Berne Convention and the Tripps Agreement.


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