Sunday, September 20, 2009

‘Reed Elsevier v. Muchnick’ Is Related to Google -- But Not Because of Antitrust

As noted in the previous post, the Justice Department really stepped up to the plate in its brief to Judge Denny Chin on the foundering Google Books settlement. The government’s lawyers produced a thorough overview of the deal’s problems in all three areas: antitrust, copyright, and class action law.

My one gentle correction would be that the brief’s reference to our Supreme Court case, Reed Elsevier v. Muchnick, did not pinpoint the most important links between the two cases, and drew attention to a not particularly relevant one.

The most important similarities are their sweeping scope, their dependence on a “license by default” mechanism for future rights, and their common named plaintiff: the Authors Guild.

The government’s brief focused here on something altogether different, the antitrust implications; and the citation of us was off-point. With accuracy, it was stated that the “risk of market foreclosure would be substantially ameliorated if the Proposed Settlement could be amended to provide some mechanism by which Google’s competitors could gain comparable access to orphan works.” Less clearly, the proposed settlement in the freelance case was said to be superior in the sense that "numerous companies beyond the named defendants [would be] allowed to obtain benefits of settlement."

First, the reason numerous companies would get the future benefits of the freelance settlement is that, unlike in the Google case, there is infringement not by a single company but a longstanding industry-wide problem – just about every major newspaper and magazine publisher and their electronic-database licensees have been stealing from writers, systematically and willfully, for decades.

Second, “numerous companies get the future benefits” because they are grabbing future rights without any ongoing compensation whatsoever. In this detail, the Google settlement is actually superior in that it at least calls for a royalty system, albeit not one inclusive enough or adequate.

There is much to be learned from combining the lessons of the doomed Google and freelance settlements. Both need to be opened up in different ways. As litigation, both need “opt in” rather than “opt out” provisions for absent class members.

Genuine ultimate solutions? True industry-wide negotiation with all stakeholders, concluding with royalty systems and compulsory licenses ratified by Congress, not the courts.


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