Introducing THE SETTLEMENT IS DEAD

Part 1 – Why It Happened … What’s Next for Freelance Rights

Settlements, like organisms, have morphologies. Today the settlement in In re Literary Works in Electronic Databases Copyright Litigation is in the throes of its death rattle.

Exactly how much more time elapses before formal burial depends on the vagaries of the legal system. For years, the settlement has stumbled along like a poorly conceived Broadway play. It did the equivalent of bombing in previews in New Haven; through sloppy last-minute amendments, tortured explanations, even procedurally and factually incorrect court filings, the lawyers proceeded to beat up the script, hire new co-stars, fire the choreographer.

Nothing worked. Now the settlement faces a ruling by the Second Circuit Court of Appeals that it is invalid on jurisdictional grounds. In a split decision by a three-judge panel, the court two months ago held that holders of unregistered copyrights – comprising well over 99 percent of the infringements covered by this consolidated class action – are ineligible not only to sue, but also to participate in a settlement initiated by holders of registered copyrights.

I reemphasize that the objectors believe this ruling is wrong. It arose sua sponte from the judges themselves – in other words, it was not a basis of our appeal.

By the same token, the current ruling is not exactly our problem, either. In their petitions for reconsideration by the appellate court, both the plaintiffs and the defendants argue for reversal of the jurisdiction ruling. In our own petition, objectors’ attorney Charles Chalmers cites authority that our own “merits” issues – most notably, that the class was inadequately represented by counsel and named plaintiffs – are “dispositive” (i.e., they should be addressed before the judges even get to considering the jurisdiction question).

One way or another, the settlement’s goose is cooked.

In upcoming posts I’ll explain the legal and political landscape I expect to emerge from the settlement’s collapse. The short description is: more litigation, less “closure.” I believe this is a good thing, not because I’m lawsuit-happy but because lawsuits are part of the mix for improving the world. (Other parts of the mix involve effective organizing of freelance writers to improve contract terms, including elimination of all-rights contracts, and lobbying Congress to reform the burdensome registration requirements of American copyright law not seen anywhere else in the world.) The industry wants “closure”? Fine. Then it can agree to the fair and equitable royalty system suggested by the Supreme Court in Tasini v. Times.

But first – what happened here?

Seven years ago (seven years ago!) freelance writers appeared to be on the brink of an historic breakthrough. In 2000, the case against the relatively dinky UnCover document delivery service – the first-ever use of class action to redress infringement of authors – settled for $7.25 million. The next year, the Tasini plaintiffs won across-the-board in the Supreme Court, clarifying beyond a shadow of a doubt that publishers did not, by default, have the privilege of remarketing individual works on electronic databases without permission or compensation.

Yet the consolidated class actions, originally filed in August 2000, announced a global settlement in March 2005 for a cap of $18 million. Let’s repeat that. UnCover: $7.25 million. Every other similar infringer in the known world combined: $18 million. Does not compute, ladies and gentlemen. Not to mention that the latter even snuck in a giveaway of future rights!

In retrospect, I think it’s clear that one of the things that killed In re Literary Works was its very pretense of comprehensiveness. By this I mean not just that too many cooks spoiled the broth. I mean that the class reps and their mouthpieces accepted as their charge the fool’s errand of devising an all-encompassing solution to the electronic rights problem in one fell swoop. It was a solution to a problem held by only one side – the defendants, the publishers.

Litigation is not supposed to be about plaintiffs enabling illegal behavior by defendants. It is about plaintiffs winning damages for illegal behavior by defendants. If the Damoclean sword of damages motivates the bad guys to clean up their act and cooperate on a future regime that is fair to writers, fair to them, and fair to the public of information consumers, that’s great. Otherwise, let’s talk about damages, and talk about them seriously, with a transparent damages model and a real threat of a jury trial prosecuted by attorneys with the determination and resources to go to the mat for their clients. Let’s not leave our fate to the saber-rattling fantasies of a National Writers Union president, immediately diluted to near-zero by his impertinent rhetoric about how he doesn’t want to “destabilize the industry.”

In the end, the legal issue of the inclusion of unregistereds in the settlement was just a microcosm of the settlement’s master defect: its illusion that it could be all things to all people. As a result, publishers used a “standstill” during years of pointless mediation to continue infringements, expand infringing products, invent new ones, and create still more “facts on the ground,” putting writers in an even deeper hole.

A real lawsuit does none of these things. It is surgical, not theoretical. It produces evidence, not absurd and mendacious settlement assertions – by plaintiffs’ counsel, no less – that there is “no” evidence of willful infringement. I have been working on this stuff for 14 years. I know better. So do the readers of this blog.

More soon.