Since our previous article on the settlement, the US Department of Justice (DOJ) has issued a Statement of Interest in which it recommends that the Court should reject the settlement in its current form as it violates class action and competition law.
In terms of class action law, the class of persons applying for a class action settlement need to be representative of those who will be affected by the settlement in the future. The proposed settlement breaches this principle of representation because it affects people outside the class. Absent class members include owners of out of print works and foreign rights holders and so the objection is particularly relevant for New Zealand copyright holders who would be subject to the settlement but are not represented by the class. The DOJ suggests that adding foreign owners of in print and out of print works to the class would address the problem of lack of representation of foreign rights holders.
The DOJ also suggests the settlement would be anti-competitive as it would give Google a monopoly on the sale of digital library products and other derivative products in the future. Under the settlement, competing authors and publishers grant Google exclusive rights for the digital distribution of out of print works. To obtain the same rights a competitor would probably have to have the means to copy millions of books and hope that it would prompt a similar class action suit. The DOJ suggests that a mechanism in the settlement whereby Google’s competitors could gain access to the out of print works would address some of the anti-competitive concerns.
In summary, the DOJ does recognize that the digitization of books is in the public interest by breathing new commercial life into millions of currently unavailable works. However, the fact that consumers will ultimately pay the price in the future due to lack of competition, and that the settlement would bind people including New Zealand rights holders who are not represented by the class, are two issues that need to be remedied before the settlement should be accepted by the Court.
Though the DOJ is not a party to the case, the opinion has weight and will likely be seriously considered by the Federal District Court Judge who has scheduled a hearing for the case on October 7.