Judge strikes down Google's attempt to digitalize books.

Google’s ambition to create the world’s largest digital library and
bookstore has run into the reality of a 300-year-old legal concept:
copyright.

The company’s plan to digitize every book ever published and make them
widely available was derailed on Tuesday when a federal judge in New
York rejected a sweeping $125 million legal settlement the company had
worked out with groups representing authors and publishers.

The decision throws into legal limbo one of the most ambitious
undertakings in Google’s history, and it brings into sharp focus
concerns about the company’s growing power over information. While the
profit potential of the book project is not clear, the effort is one of
the pet projects of Larry Page, the Google co-founder who is set to
become its chief executive next month. And the project has wide support
inside the company, whose corporate mission is to organize all of the
world’s information.

“It was very much consistent with Larry’s idealism that all of the
world’s information should be made available freely,” said Ken Auletta,
the author of “Googled: The End of the World as We Know It.”

But citing copyright, antitrust and other concerns, Judge Denny Chin
said that the settlement went too far. He said it would have granted
Google a “de facto monopoly” and the right to profit from books without
the permission of copyright owners.

Judge Chin acknowledged that “the creation of a universal digital
library would benefit many,” but said that the proposed agreement was
“not fair, adequate and reasonable.” He left open the possibility that
a substantially revised agreement could pass legal muster. Judge Chin
was recently elevated to the United States Court of Appeals for the
Second Circuit, but handled the case as a district court judge.

The decision is also a setback for the Authors Guild and the
Association of American Publishers, which sued Google in 2005 over its
book-scanning project. After two years of painstaking negotiations, the
authors, publishers and Google signed a sweeping settlement that would
have brought millions of printed works into the digital age.

The deal turned Google, the authors and the publishers into allies
instead of opponents. Together, they mounted a defense of the agreement
against an increasingly vocal chorus of opponents that included Google
rivals like Amazon and Microsoft, as well as academics, some authors,
copyright experts, the Justice Department and foreign governments.

Now the author and publisher groups have to decide whether to resume
their copyright case against Google, drop it or try to negotiate a new
settlement.

Paul Aiken, executive director of the Authors Guild, said in an
interview that it was too early to tell what the next step would be.
“The judge did expressly leave the door open for a revised settlement,”
he said.

Hilary Ware, managing counsel at Google, said in a statement that the
decision was “clearly disappointing,” adding: “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.” The
company would not comment further.

Google has already scanned some 15 million books. The entire text of
books whose copyrights have expired are available through Google’s Book
Search service. It shows up to 20 percent of copyrighted titles that it
has licensed from publishers, and only snippets of copyrighted titles
for which it has no license.

The settlement would have allowed it to go much further, making
millions of out-of-print books broadly available online and selling
access to them. It would have given authors and publishers new ways to
earn money from digital copies of their works.

Yet the deal faced strong opposition. Among the most persistent
objections, raised by the Justice Department and others, were concerns
that it would have given Google exclusive rights to profit from
millions of so-called orphan works, books whose rights holders are
unknown or cannot be found. They also said no other company would be
able to build a comparable library, leaving Google free to charge high
prices for its collection. And some critics said the exclusive access
to millions of books would help cement Google’s grip on the Internet
search market.

Judge Chin largely agreed with the critics on those points. But he
suggested that substantial objections would be eliminated if the
settlement applied only to books whose authors or copyright owners
would explicitly “opt in” to its terms.

When the Justice Department suggested as much last year during a court
hearing, Google rejected the idea as unworkable. It would leave
millions of orphan works out of the agreement and out of Google’s
digital library, greatly diminishing its value to Google and to the
public.

“Opt-in doesn’t look all that different from ordinary licensing deals
that publishers do all the time,” said James Grimmelmann, a professor
at New York Law School who has studied the legal aspects of the
agreement. “That’s why this has been such a big deal — the settlement
could have meant orphan books being made available again. This is
basically going back to status quo, and orphan books won’t be
available.”

Some longtime opponents of the settlement hailed the decision, saying
that they hoped it would prompt Congress to tackle legislation that
would make orphan works accessible.

“Even though it is efficient for Google to make all the books
available, the orphan works and unclaimed books problem should be
addressed by Congress, not by the private settlement of a lawsuit,”
said Pamela Samuelson, a copyright expert at the University of
California, Berkeley who helped organize efforts to block the agreement.

Gina Talamona, a Justice Department spokeswoman, said in a statement that the court had reached the “right result.”

A group of publishers said they were disappointed by the decision, but
believed that it provided “clear guidance” on the changes necessary for
the settlement to be approved.

John Sargent, the chief executive of Macmillan, spoke on behalf of the
publishers, which included Penguin Group USA, McGraw-Hill, Pearson
Education, Simon & Schuster and John Wiley & Sons.

“The publisher plaintiffs are prepared to enter into a narrower
settlement along those lines to take advantage of its groundbreaking
opportunities,” Mr. Sargent said in a statement. “We hope the other
parties will do so as well.”

He added: “The publisher plaintiffs are prepared to modify the
settlement agreement to gain approval. We plan to work together with
Google, the Authors Guild and others to overcome the objections raised
by the court and promote the fundamental principle behind our lawsuit,
that copyrighted content cannot be used without the permission of the
owner, or outside the law.”