Thursday, March 12, 2009

Flashback to a Flashback

The item below was originally posted to this blog on January 6, 2008, under the headline "FREELANCE RIGHTS Flashback: 'Promised Bang Could Be a Whimper.'" The content itself was first written more than four years ago.

By January 2005, my email exchanges with Spencer Hosie, co-lead plaintiffs' counsel in the consoliated class action copyright infringement mediation talks, had convinced me that the settlement that was about to be announced was a pig in a poke. Five years earlier I had consulted on the launch of the first of the cases that wound up being consolidated. All this background is explained in my July 2005 declaration in support of the objections to the settlement,; see in particular the 37th and final paragraph.

Before finding attorney Charles Chalmers and organizing a slate of objectors -- who now stand on the brink of scuttling the settlement before the Second Circuit Court of Appeals -- I wrote an article explaining what I intended to do and why I was doing it. The essay was submitted, without success, to many trade publications. The text is below.


The Promised Bang of the Upcoming
Copyright Class Action Settlement for Authors
Could End Up Being a Whimper

All of you haven’t forgotten, have you, the huge landmark copyright class action case to redress freelance writers for the systematic piracy of their previously published works by for-profit database companies?

The sad truth is that I can hardly remember that lawsuit myself. And I’m the person who launched the darn thing nearly five years ago.

On the cyberstreet, the word is that this hydra-headed
monster, a consolidation of copycat cases now known as
In re Freelance Works in Literary Databases Copyright
, Multi-District Litigation No. 1379, Judge
George M. Daniels, Southern District of New York, is
to settling. Then again, that’s been the word
almost from the get-go. Two major authors’ organizations
– the National Writers Union and the Authors Guild –
have pieces of the action. Every once in a while I
check the latter’s website, with results reminiscent of
the Bill Murray movie Groundhog Day. Here’s the Guild’s
February 2005 “update”:

Authors Guild Lawsuit Against Major Databases in Mediation
The class-action lawsuit filed by the Guild, ASJA and
several writers alleging massive copyright infringement
of freelance articles by major electronic databases,
including Lexis-Nexis, Dow Jones Interactive, Dialog and
others, is now in court-ordered mediation.

Others who have pieces of In re Freelance Works – and
thereby stand to share in many millions of dollars in fees
whenever they can finish their Kabuki dance with the
defendants and their insurers and indemnifiers, and then
persuade the judge to approve the settlement – include
three distinct teams of plaintiffs’ attorneys. To give you
an idea of the strange bedfellows found in litigation land,
one team paired the general counsel of the United Auto
Workers, parent of the National Writers Union, with a guy
named Gary Fergus, whose previous claim to fame was his
role in counseling Enron on those notorious memos plotting
the manipulation of
California energy markets.

Indeed, the folks with fingers in the pie of authors’
copyright class actions, that briefly hot sub-discipline of
the lawyering dodge, run the gamut from Enron to the
company’s very own book-cooking, and now defunct,
accounting firm, Arthur Andersen. In 2000 the first-ever
copyright class action on behalf of authors, Ryan v. CARL,
settled for $7.25 million, including $2.9 million to the
attorneys; Andersen skimmed an additional $500,000 off the
top for doing practically nothing as “settlement claims
administrator.” (That is, unless you define doing something
as erroneously rejecting a number of legitimate
infringement claims and failing to list dozens of others on
the public online claims database.)
As Mencken might have put it, no one ever went broke
underestimating the altruism of lawyers. Yet even if the
esteemed advocates of In re Freelance Works, the first
important writers’ rights case of the 21st century, actually
have their clients’ best interests at heart (as I believe
many do), the passage of time and the accompanying
realignment of interests conspire against a happy ending.
In the absence of a stunning reversal, the settlement is
certain to whiff on its threshold challenge: creation of a
comprehensive and equitable industry-wide regime of
prospective secondary-rights management.
Without a legal leg to stand on, but armed to the teeth in
the tools of attrition, publishers are only too happy to
greet a denouement consisting of a single large check to
make those pesky writers and their mouthpieces go away once
and for all. In the interim, the industry successfully
shoved down the throats of most of its freelance
contributors all-rights and work-for-hire contracts that
henceforth will allow it to take through the front door in
broad daylight what used to get slipped onto the freight
elevator in the dead of night.
Which is why, if the settlement winds up reading more or
less as I expect, I intend to use my standing as a member
of the plaintiff class to object at the fairness hearing
before Judge Daniels. If necessary I’ll organize a “counter-
class” of objectors. Whether it’s next week, next month, or
next year, I’ll hope that a display of dissidence
sufficiently unnerves the court and the parties to the
point where they conclude they have to reset the mediation
and knock their heads together still more. And this time
bring everyone inside the tent.
Of course derailing a major settlement is no easy sell.
Some experts go so far as to call it quixotic. Most notably,
if successful, the effort would leave tens of millions of
dollars in infringement claim settlements on the table,
making any objector, at least initially, less than wildly
popular with fellow writers. (In reality, this isn’t such a
big deal; on an individual basis, these awards tend to track
the pay scale of our common chosen profession – something
approximating minimum wage.) But that doesn’t faze me. The
same experts were saying similar things back in 1997, when I
was shopping an innovative lawsuit against an article fax
delivery service called UnCover to class-action law firms in
the Bay Area – a suit that turned into the aforementioned
Ryan v. CARL.
In 2001, the year after Ryan settled, the U.S. Supreme Court
issued its crucial ruling in Tasini v. New York Times, a
case brought nearly eight years earlier by Jonathan Tasini,
then president of the National Writers Union. By a 7-2 vote,
spanning Antonin Scalia to Ruth Bader Ginsburg, the justices
determined that there was, after all, nothing ambiguous about
Section 201(c) of the Copyright Act. The statutory default is
that republication rights of individual articles, whether
print or electronic, belong to the freelance writer, not to
the first-print publisher. Period.
“The Publishers’ warning that a ruling for the Authors will
have ‘devastating’ consequences, punching gaping holes in the
electronic record of history, is unavailing,” the High Court
said in the most pointed passage. “… The Authors and
Publishers may enter into an agreement allowing continued
reproduction of the Authors’ works; they, and if necessary
the courts and Congress, may draw on numerous models for
distributing copyrighted works and remunerating authors for
their distribution.”

In the wake of the combination of the Tasini decision and the
class action success, I believed that marketplace
solutions were at hand. I thought the second class action I
packaged, Posner et al. v. Gale Group et al., filed in August
2000, stood a fighting chance of spurring the missing reform
of the information revolution: a genuine and equitable
royalty system analogous to the music industry’s ASCAP.
(While on the staff of the writers union from 1994 to 1997,
I had started a fledgling collective-licensing agency called
Publication Rights Clearinghouse, which was quickly followed
by the Authors Guild’s Authors Registry.) Now the Supreme
Court itself was inviting such an approach, and the Damoclean
sword of punitive damage awards for past infringements would
seemingly motivate publishers to negotiate in good faith at
But I was wrong. I failed to account adequately both for the
breathtaking arrogance of the publishers and for the awesome
imagination deficit of the lawyers.
The former manifested itself in actions by The Times and
others to purge electronic archives of material they’d never
had the right to license. These turned article databases and
the historical record into “Swiss cheese.” Sometimes the gaps
were disclosed to information consumers, sometimes not; but
in any event all attendant imperfections were duly blamed on
Tasini. (Right: The Supremes merely said that publishers
“may” enter into agreements with authors allowing continued
reproduction, not “must.”)
As for the lawyers, at the beginning of the second round of
authors’ copyright class actions they were full of the usual
self-promotional blather about a public-interest breakthrough.
The silence of the ensuing half-decade, however, has been
ominous. Today it’s vital for the creator community, as well
as for librarians and information professionals, to understand
that this mother of all class actions morphed into a bad deal.
Bad for us. Bad for you. Bad for the vitality and diversity of
our culture in the digital age.
For in retrospect it’s apparent that publishers, by and large,
were never seriously interested in negotiating. The proof is
in their two favorite tactics of the copyright class action
era. First, by using their full leverage, including the hiring
blacklist, to impose contracts that thwart the spirit of the
Copyright Act of 1976 and the Supreme Court ruling of 2001,
they were saying in effect: Sure, our claim-jumping licensing
practices in the eighties and nineties were about as wholesome
as a round of three-card monte on a Times Square sidewalk …
but, presto, no more, that’s all in the past!

Their second tactic – thumbing their collective nose at the
future – is the one that really sticks in my craw. Even as
mediation has dragged on for half-a-decade, publishers and
their database partners, like settlers in occupied
Gaza, have
created new “facts on the ground.” These colonialists go by a
variety of new models, such as HighBeam, KeepMedia, and, and boast content from Gale/Thomson, one of
the class-action defendants. Blatant and willful infringers
all, they’re revoltingly confident that the ultimate
settlement will simply grandfather in their outlaw ways. So
confident that they didn’t even bother to wait for a judge to
approve the settlement before boring full-speed ahead.
Meanwhile a multimillion-dollar check to “settle” “claims” of
past wrongdoing constitutes the most prosaic cost of business
– the outrageously antidemocratic business of hoarding
“intellectual property for me but not for thee.”
My friends, only one outcome from Multi-District Litigation
No. 1379 could begin to justify the forests that were
denuded, the thousands of hours of paralegal time that were
squandered, and the feeble redistribution of funds that was
exacted. No anti-lawyer ideologue am I. There’s genuine value
in litigation … and in legislation … and in organizing and
labor action. Each has a role to play in improving our world.
At this juncture of information industry and legal history,
though, fair-minded observers will conclude that the
litigation card was overplayed. Resisting a glib settlement
of the class-action copyright litigation is the first step
toward restoring a proper balance.


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