Google Books Settlement Struck Down for Enabling Monopoly

Google's Books settlement has been rejected by New York court judge Denny Chin, who said it would not be fair to other book-scanning rivals such as

Google saw its Google Books settlement proposal struck down by a New York court March 22 for giving the search engine too much power in the nascent market for digital book sales.

New York District Court Judge Denny Chin said the deal "would give Google a de facto monopoly over unclaimed works" and concluded the deal was unfair to rightsholders whose copyrighted works would be served online without their permission.

Google and the Author's Guild and the Association of American Publishers in October 2008 inked their Google Book Search settlement, a plan in which Google would pay rightsholders $125 million to scan orphan books, or those works for whom authors can't be found or are unknown. Google has scanned 12 million books online as part of its massive book-scanning project.

Companies such as and Microsoft opposed the deal, arguing that it would give Google too much control over orphan works in an increasingly competitive space. The U.S. Justice Department said the deal might violate antitrust and copyright law.

Google revised the settlement in November 2009. Judge Chin, who has been reviewing the deal ever since, issued his judgment based on that revision March 22.

While he denied the motion for final approval of the deal, Chin suggested that the agreement would be more acceptable if it let rightsholders opt into the settlement before Google can sell their works.

"In the end, I conclude that the ASA [Amended Settlement Agreement] is not fair, and reasonable. As the United States and other objectors have noted, many of the concerns raised in the objections would be ameliorated if the ASA were converted an 'opt-out' to an 'opt-in' settlement."

Chin left open the possibility to another revision of the current settlement.

Google's Managing Counsel Hilary Ware said Google found the judgment disappointing but vowed to review the court's decision and consider its options.

"Like many others, we believe this agreement has the potential to open-up access to millions of books that are currently hard to find in the U.S. today," Ware added. "Regardless of the outcome, we'll continue to work to make more of the world's books discoverable online through Google Books and Google eBooks."

Google cannot appeal Chin's decision, so it appears renegotiating the settlement or scrapping it are its only options at this point. Google might simply have to pay authors and publishers more money for using copyrighted works.

Gina Talamona, spokeswoman for the DOJ, praised Chin's decision in a statement e-mailed to eWEEK:

"We believe the Court reached the right result on this complex, proposed settlement. The department expressed to the Court that, as structured, the settlement proposed by Google and the authors and publishers exceeded the scope of the underlying lawsuit on which it was based and created concerns regarding antitrust, class certification and copyright issues."