Justice Dept. devastates Google Books settlement, as the parties rush to the back rooms

The big news from the Justice Department's critique of the Google Books deal is that are "frantic negotiations going on in back rooms right now,” New York Law School prof James Grimmelan told the New York Times.

This we know because DOJ's statement to the court tells us:

The United States has been informed by the parties that they are continuing to consider possible modifications of the Proposed Settlement to address the many concerns raised by various commenters and by the United States in its discussions with the parties.

The letter is a game-changer, the one document that is sending Google and its partners into feverish negotiation, after withstanding a torrent of objections. DOJ's letter to the court then goes on to explain why, unmodified, this deal is a loser:

1. The current deal is not "fair, reasonable and adequate" to the class members. It gives Google a forward-looking release from liability for infringing class members' copyrights, while it allows the class representatives (the publishers and the Authors Guild) to opt out of any Google products they don't like.

   The provisions of the Proposed Settlement that authorize the Registry to license Google to exploit the copyrighted works of absent class members for unspecified future uses (potentially derivative works or other uses) – essentially authoriz(e), upon agreement of the Registry, open-ended exploitation of the works of all those who do not opt out from such exploitations.

2. The deal violates antitrust law.

   First, through collective action, the Proposed Settlement appears to give book publishers the power to restrict price competition. Second, as a result of the Proposed Settlement, other digital distributors may be effectively precluded from competing with Google in the sale of digital library products and other derivative products to come.

3. Most importantly, the deal shuts off competition in digital distribution of books virtually forever. It gives Google "de facto exclusive rights" of orphan works.

   The Proposed Settlement appoints the Registry to negotiate with Google on behalf of the entire class regarding new commercial uses of digital books, and releases Google from any copyright liability arising from those new uses. The Proposed Settlement does not forbid the Registry from licensing these works to others. But the Registry can only act “to the extent permitted by law.” And the parties ... believe the Registry would lack the power and ability to license copyrighted books without the consent of the copyright owner – which consent cannot be obtained from the owners of orphan works. If the parties are correct, the Registry will lack the ability to provide competitors with licenses that will allow them to offer to the public anything like the full set of books Google can offer if the Settlement Proposal is approved.

Having said all this, the massive scanning and digital distribution of out of print and orphan works is a very good thing. It just can't be Google's good thing. And DOJ is literally telling Google how to fix this problem:

This risk of market foreclosure would be substantially ameliorated if the Proposed Settlement could be amended to provide some mechanism by which Google’s competitors’ could gain comparable access to orphan works (whatever such access turns out to be assuming the parties negotiate modifications to the settlement).

The Times quote the Authors Guild's paul Aiken: “Clearly, the Justice Department is saying ‘find something that would make this near universal library happen.’ ”

Agreed, it would suck if we just had to go back to the current stupid system of orphan works being locked away and out-of-copyright books being stuck in libraries. The great hope is that what has happened so far can be extended to competitive, universal access in open formats. And now it looks like that might happen, thanks to the government. As Grimmelman notes:

The parties are scared enough to be talking seriously about changes, with each other and the government. The government is being the stern parent making them do it.