The U.S. Department of Justice has come out against the proposed agreement to settle copyright lawsuits that authors and major publishers filed against Google over the search company's book search program.
"This Court should reject the Proposed Settlement in its current form and encourage the parties to continue negotiations," reads a filing the DOJ submitted to the U.S. District Court for the Southern District of New York late on Friday.
The proposed settlement must be modified by Google and the plaintiffs so that it complies with U.S. copyright and antitrust laws, the DOJ said in its filing, a 32-page Statement of Interest.
The DOJ's opinion is likely to be seen a major blow against Google, which has been in court over this matter for about four years and is eager to get the case settled.
The DOJ had until Friday to submit a written report to the court on the findings of a formal investigation over whether the proposed agreement violated U.S. laws.
Rumors that the DOJ had started reviewing the proposed agreement surfaced in April. The DOJ confirmed that it was conducting a formal investigation in July.
Those following the case have been widely anticipating the result of the DOJ's probe of the proposed agreement, which has been loudly praised and criticized since it was announced in October of last year.
Book authors and the Authors Guild filed a class action lawsuit, while five large publishers filed a separate lawsuit as representatives of the Association of American Publishers' membership.
The lawsuits were brought after Google launched a program to scan and index sometimes entire collections from the libraries of major universities without always getting permission from the copyright owners of the books.
Google made the text of the books searchable on its book search engine, claiming it's protected by the fair use principle because it only showed snippets of text for in-copyright books it had scanned without permission.
However, after two years of negotiations, Google and the plaintiffs reached middle ground, hammering out a wide-ranging settlement agreement that calls for Google to pay $US125 million and in exchange gives the search company rights to display meatier chunks of these in-copyright books, not just snippets.
In addition, Google would make it possible for people to buy online access to these books. The agreement would also allow institutions to buy subscriptions to books and make them available to their constituents.
A royalty system would also be set up to compensate authors and publishers for access to their works via the creation of the Book Rights Registry. This would be an independent, nonprofit entity entrusted with distributing payments to copyright holders earned through online access to their works. Revenue will come from institutional subscriptions, book sales and ad-revenue sharing.
The Registry, whose board of directors would be made up of an equal number of author and publisher representatives, would also locate and register copyright owners, who in turn have the option to request to be included in or excluded from the project.
A big portion of Google's $US125 million payment would go towards funding the Registry, while the rest would be used to settle existing claims by authors and publishers and to cover legal fees.
Google, the Authors Guild and the AAP maintain that the proposed settlement will be beneficial to authors, publishers and readers by making it easier to find, distribute and purchase books, especially those that are out of print.
However, critics have raised several objections, including what they perceive as excessive control by Google over prices and over so-called "orphan works." The latter are books that are under copyright but whose owners can't be found because the author has died or the publishing house disappeared.
The court where the case is being heard allowed hundreds of backers and critics of the proposed agreement to submit opinions for several months. That comment period closed earlier this month.
Consumer Watchdog, a consumer protection organization that earlier this year urged the DOJ to get involved, filed a 30-page document opposing the agreement, saying it will "strip rights from millions of absent class members, worldwide, in violation of national and international copyright law, for the sole benefit of Google."
There should be a competitive book-search market, while the U.S. Congress must solve the orphan works problem, according to the group. "The parties simply cannot justify this 'solution' which does not adequately protect the Rightsholders and unfairly benefits a single party," reads the Consumer Watchdog statement.
Meanwhile, the Center for Democracy and Technology (CDT) came out in favor of the deal, saying the new book search services will be "extraordinarily valuable, and will make available to the public a vast amount of knowledge and information that is largely inaccessible today."
The CDT tempered its endorsement by stating that the new services create "serious privacy concerns" and that the court should take "affirmative action" during the settlement process to make sure reader privacy is protected.
On Oct. 7, Judge Denny Chin will preside over a hearing where Google and the plaintiffs will have a chance to offer oral arguments in favor of approving the agreement. Those opposed will also have a chance to voice their opinions.