State AGs Gang Up on Google Book Deal – DoJ May Be Next

A day after Google announced it had bought itself some digital help in its Google Books project by way of reCAPTCHA, reports surfaced of new governmental objections to a settlement the company reached last year with publishers and author groups.

The attorneys general of five states have filed a class action objection to the settlement with the U.S. District Court, Southern District, New York. The AGs claim a part of the settlement between the Author’s Guild and Google creating a Book Rights Registry office that would handle copyright claims for out-of-print books and untraceable royalty recipients would violate their state treasurers’ jurisdictions over unclaimed funds.

Also, the Department of Justice was expected to file a statement on the settlement with the Court on Friday. The E-Commerce Times asked for a copy of the DoJ statement, but nothing was received by press time.

“The DoJ deadline is today, and they have until midnight to file,” Google spokesperson Jennie Johnson told the E-Commerce Times mid-Friday afternoon Pacific Time. “We’ll have a statement once it’s filed, but after we’ve had some time to read it.”

Google had hoped for some breathing room regarding its efforts to digitize books after the settlement with groups representing authors and publishers was announced in October of 2008. However, Google’s chief competitors in the publishing arena — Amazon, Microsoft and Yahoo — have asked for a closer regulatory look, saying Google has consolidated too much power over online books.

The AGs’ Concerns

The E-Commerce Times has obtained a copy of the class action objection signed by attorneys general of Washington, Pennsylvania, Connecticut, Missouri and Massachusetts. “This treatment will violate fundamental tenets of fairness and adequate representation of future profits generated through the commercial use of properties owned by unregistered class members will not be preserved for their benefit, but instead will be used primarily for the benefits of registered class members, who do not own the underlying work generating those profits,” the document states.

Non-legalese translation: The state AGs fear any revenues generated by the sale of ads included in digital copies of books whose rights-holders haven’t been tracked down wouldn’t end up where they should by legal precedent: a state treasury’s Unclaimed Funds department. Under the terms of the settlement, the Book Rights Registry would manage those funds.

All of this is evidence that Google’s competitors have lobbied state and federal officials to look deeper into the issue, and those efforts are starting to bear fruit, according to Greg Sterling, editor of the Search Engine Land blog.

“This coincides with the source of concerns about the concentration of power in Google’s hands, their control over so-called ‘orphan’ works and their ability to exploit the database,” Sterling told the E-Commerce Times. “It all has to do with the latest wave of Googlephobia, stoked in part by Microsoft, about Google controlling online advertising and Google being Big Brother and Google controlling too much data.”

Google wasn’t the first to consider book digitization, said Sterling. Microsoft, Yahoo and others had also considered getting deeper into this nascent market but abandoned those efforts for a variety of reasons. “Google was left alone by default as the sole company really doing this on the kind of scale we’re talking about,” Sterling said.

The Legal Calendar vs. Recent Google Announcements

Earlier this week, Google let the world know it had acquired reCAPTCHA, a company managing authentication efforts for more than 100,000 Web sites. The same optical text-scanning that helps fight spam by requiring a real person to type in CAPTCHA words will also aid Google with its book scanning efforts. Also, Google has announced an agreement with On Demand Books to let users print and buy hard-copy versions from its digital book database.

“I don’t see Google backing away from this. They have too much invested, literally and figuratively,” Sterling said. “They already have endured a lot. It will be interesting to see the (DoJ) response. If it’s marginal stuff that needs to be fixed, I think Google will say, ‘We’ll work with everyone.’ But if it goes to the heart of the project, I expect Google to be more defiant.”

The Open Book Alliance, a consortium of author/publishing entities, libraries and tech companies objecting to the Google Books settlement, has suggested that Google offer low-cost or free licenses to competitors. Some might consider that unfair to Google, Sterling said, since it has born most of the cost to put books on a digital platform, only to be asked to give away licenses to those who had a chance to share in those costs from the beginning.

“Digitizing books is inevitable. It’s mandated by the trajectory of the culture and technology. This is now what the Europeans (and their regulators) are agreeing with. The question, is who does it, and under what circumstances, and who controls it? That’s the struggle.”

The next step in the process after the DoJ’s filing; an Oct. 7 hearing scheduled in the Southern District courtroom.