On Wednesday, a group of photographers, illustrators and graphic artists filed a class action lawsuit against Google. The class action plaintiffs allege that Google had, in effecting its Google Books program, committed copyright infringement by (i) scanning and creating digital copies of images without permission; (ii) storing digital copies of the images; and (iii), distributing and publicly displaying the images. According to the plaintiffs, the suit was “designed to redress the most widespread, well-publicized, and uncompensated infringement of exclusive rights in images in the history of book and periodical publishing.”

(H/t Marty Schwimmer.)

WASOFF: For those of us who are following this closely, it’s going to be fascinating. Maybe not generally fascinating, but for those of us like you and I, Chris, who’ve been following this closely, it’s going to be interesting.

There are about 30 different speakers, the neighborhood of 30 different speakers that have been recognized by the court as having the ability to speak at the hearing. The number is a little bit of a moving target. The overwhelming majority of those – more than five-sixths of them, by the present count, about 25 of them – are going to be speaking in opposition to the current amended settlement agreement. About five will be speaking in favor.

All of those speakers will be given only five minutes each, and the court has suggested that they coordinate their remarks to prevent too much redundancy. The judge has also said he’s going to read all of the written submissions to the court, even if speakers have not been given an opportunity to speak or can’t cover all of their points in their five minutes. So we know what Judge Chin will be doing for the next period of time. He has a lot of reading to do.

Following those individual presentations, there’ll be a representative of the Department of Justice speaking, and then finally, the parties to the suit, the proponents of the settlement. Because at this point, Google, the authors and the publishers – or more properly, Google, the Authors Guild and the Association of American Publishers – are on the same side. Even though they were adversaries in the litigation, they’re all the proponents. They’ll be given an opportunity to speak as well.

The entire courtroom will be filled essentially only with people who are going to be speaking because there’s that big a crowd who will be speaking. There’s an overflow room that’s been designated. There’ll be a video broadcast. The Twitter feeds will be interesting. It’ll be a very, very, very full day.

As the United States noted in its September 18, 2009 Statement of Interest (D.E. 720) (“U.S. SOI”), widespread lawful electronic distribution and use of copyrighted works, including in-print, out-of-print, and so-called “orphan” works, holds vast promise. Breathing life into millions of works that are now effectively dormant, allowing users to search the text of millions of books at no cost, creating a rights registry, and enhancing the accessibility of such works for the disabled and others are all worthy objectives.

It was with those objectives in mind that the United States encouraged discussions among the parties regarding possible modifications of the original Proposed Settlement (“Proposed Settlement” or “PS”) to address the many concerns raised by various commenters and the United States. In response, the parties made a number of substantial changes to the Proposed Settlement. For example, the ASA: eliminates the open-ended provisions that would have conveyed to Google the rights to engage in unspecified future uses of the works covered by the ASA (compare PS § 4.7 with ASA § 4.7); calls for an Unclaimed Works Fiduciary (“Fiduciary” or “UWF”) subject to court approval to protect owners of unclaimed works (ASA § 6.2(b)(iii)); provides that, after five years, 25 percent of unclaimed funds from unclaimed works may be used to locate the respective rightsholders (rather than be redistributed to other members of the Book Rights Registry) (ASA § 6.3(a)(i)(2)); reduces the number of foreign works in the settlement class (compare PS § 1.19 with ASA § 1.19); and eliminates the most-favored-nation provision (PS § 3.8(a)) that would have guaranteed Google optimal license terms into the future.

Despite this substantial progress, substantial issues remain. Although the United States believes the parties have approached this effort in good faith and the ASA is more circumscribed in its sweep than the original Proposed Settlement, the ASA suffers from the same core problem as the original agreement: it is an attempt to use the class action mechanism to implement forward-looking business arrangements that go far beyond the dispute before the Court in this litigation. As a consequence, the ASA purports to grant legal rights that are difficult to square with the core principle of the Copyright Act that copyright owners generally control whether and how to exploit their works during the term of copyright. Those rights, in turn, confer significant and possibly anticompetitive advantages on a single entity – Google. Under the ASA as proposed, Google would remain the only competitor in the digital marketplace with the rights to distribute and otherwise exploit a vast array of works in multiple formats. Google also would have the exclusive ability to exploit unclaimed works (including so-called “orphan works”) without risk of liability. The ASA’s pricing mechanisms, though in some respects much improved, also continue to raise antitrust concerns.

The DOJ brief also listed eight steps it “recommended” to mitigate the risks to rightsholders of out-of-print, unclaimed, and orphan works, if the Court were to find, contrary to its opinion, that the settlement was consistent with the Court’s Rule 23 authority:

1. Use an opt-in regime for the forward-looking aspects of the settlement
2. Create a meaningful waiting period before Google may commercially exploit out-of-print works without the permission of the rightsholder (e.g., two years from the time the title is publicly listed in the Registry).
3. Delay or condition acceptance of the modified settlement agreement until the Unclaimed Works Fiduciary and the Registry set standards designed to further reduce the volume of unclaimed works after expiration of the waiting period.
4. With respect to out-of-print works, at the expiration of the mandatory waiting period, require a reasonably diligent search for the rightsholder by either Google or the Registry, and public disclosure of the results of that search, before the opt-out provisions can apply to the exploitation of new commercial products.
5. Qualify the definition of “Book” in ASA § 1.19 with respect to foreign rightsholders to capture those books that are (1) “United States work[s]” as defined in 17 U.S.C. § 101 and registered with the U.S. Copyright Office, or (2) if first published in Canada, the UK, or Australia, were also published in the United States at a later date or registered with the U.S. Copyright Office.
6. Limit exploitation to a defined term, such as five or ten years, after which period the marketplace could be reassessed. At the end of this limited license term, renewal of the license could be negotiated by the Registry; or the Court could retain jurisdiction over the case for the sole purpose of reviewing whether the term should be extended or revised upon its expiration.
7. Make the parties agree to comply with the terms of any copyright legislation enacted in the future governing areas addressed by the modified settlement agreement.
8. Examine whether there exists a means for rival distributors to access orphan and rights-uncertain works consistent with Rule 23.