A Cross and a Clove of Garlic

February 5th, 2010

It seems that the saga of the Google Books Settlement has been dragging on for years. We may now be approaching the denouement. Hostility to the Google Books Settlement has been widespread, with its defenders increasingly isolated as the full implications and impact of the proposed settlement become appreciated.

Four principle concerns have been expressed. The proposed settlement:

• Drives a coach and horses through international copyright law

• Forces authors and publishers to choose between two deeply unattractive options: unfair terms or effective exclusion from the digital world

• Creates a court-sanctioned monopoly for millions of works, and

• Gives Google the means to further entrench its monopoly in search and search advertising

All this as a result of a class action (which has no equivalent in Europe) in a court in the Southern District of New York and without recourse to the legislative process; either in the United States or Europe.

The original court hearing on the proposed settlement was due to be held in September 2009. As a result of many objections, including from the French and German governments and, perhaps most significantly, the US Department of Justice, the hearing was pushed back to 2010.

Some changes to the proposed settlement were made. However, for many these did not go nearly far enough and numerous further objections have been lodged with the court. Representatives of publishers and publishers’ groups, collecting societies, author organisations and individual authors from Austria, France, Germany, India, Israel, Italy, Japan, New Zealand, Spain, Switzerland, and the United Kingdom have all filed their objections.

However, once again, it may be the comments filed by the US Department of Justice which carry the most weight. In a ‘statement of interest’ filed with the Court on 4 February 2010, the Department of Justice repeats its earlier concerns that a class action procedure is the wrong way to decide such important issues.

Of equal importance are the Department’s objections that:

• The proposed settlement would “confer significant and possibly anticompetitive advantages on a single entity – Google”

• In relation to the pricing mechanism “It is unlawful for competitors to agree with one another to delegate to a common agent pricing authority for all of their wares.”

• “There is no serious contention that Google’s competitors are likely to obtain comparable rights independently”, and

• “Google already holds a relatively dominant market share in [the search] market. That dominance may be further entrenched by its exclusive access to content through the [proposed settlement]. Content that can be discovered by only one search engine offers that search engine at least some protection from competition. This outcome has not been achieved by a technological advance in search or by operation of normal market forces; rather, it is the direct product of scanning millions of books without the copyright holders’ consent and then using [a class action procedure] to achieve results not otherwise obtainable in the market.”

The seal of the Department of Justice bears a picture of a bald eagle. Google may be feeling today that a picture of a cross and a clove of garlic might be more appropriate.

David Wood
ICOMP legal expert

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News analysis: Exploring payment models for online publishing

January 29th, 2010

Aside from Apple’s major announcement, the past weeks have seen heated debate on the subject of pay walls. With the New York Times recently announcing its pay wall plans and the London Times set to follow suit, voices have emerged both questioning a percieved reliance on the pay wall model as a form of ’salvation’, as well as those commending the subscription approach for the potential for online advertisers to be associated with ‘premium’ quality content. It has attracted so much attention that it led The Economist to label 2010 as “The Year of the Pay Wall”.

Whether subscription-based, advertising-based models or a careful blend of both is the way forward, there is a palpable sense of urgency that an effective method of ‘content financing’ has to be agreed soon. Such a sentiment could be gauged from the comments of Hubert Burda (of German publishing company Burda Media) at the DLD Conference in Munich, who has questioned the role that search currently plays in impacting publishers’ revenues.

ICOMP Secretariat

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Microsoft takes decisive action to Improve Privacy Protection for Bing searches while Google only offers excuses

January 21st, 2010

Just the other day Microsoft announced major steps to increase privacy on Bing. In a letter to the European Union’s data protection agencies that jointly make up the so-called “Article 29 Working Party” the company announced that it will delete the entire IP address from search queries at six months - a significant improvement on the current policy of doing so after 18 months. Yahoo! has earlier announced a three month limit on retention time. This puts both companies in line with the maximum retention time requested by the Art.29 Working Party of six months. Google now remains the only major search engine that retains full IP-addresses for nine months and then only deletes an insignificant part of them.

Equally important no other major search engine meets Microsoft’s level of anonimyzation. In an initial reaction in an interview to a French weekly news magazine, Alex Türk, the president of the Article 29 Working party, welcomed Microsoft’s move as “incontestably positive”. According to Mr. Türk Microsoft’s leadership in this regard must now be met by similar steps from its competitors and in particular from Google. Claims by Google that they were at the leading edge on privacy matters made him laugh, he said. Far from it, was his assessment.

If normal competition conditions were operative in the search market this situation would then put significant pressure on the market leader to take similar steps. But any hopes that the market leader in search would do so were immediately dashed by Peter Fleischer, Google’s top privacy expert in Europe. “Google has no intention of offering to further shorten the time it holds data” is what he had to say in an interview. In the same interview he stated that “We find it incomprehensible that a company would throw away useful data when holding it poses no privacy threat”.

So when do search data not pose “a privacy threat” according to Mr. Fleischer? Apparently it is enough to delete just the last three digits of an Internet address of a user to make even the most private data no longer privacy sensitive. The issue is that it is still possible to gauge identities based on such truncated IP addresses. Users should therefore be very worried by Mr. Fleischer’s comments and Google’s persistent refusal to comply with European law and to hold the interests of its users high.

And when does Google think such truncated data are still “useful”? In an extraordinary statement Peter Fleischer has been trying to use the recent attacks by hackers in China to justify Google’s stance. In a telephone interview to ComputerWorld Peter Fleischer said “The unprecedented hacking and the threat of similar such attacks in the future emphasised the importance of internal analysis of logs”. It has already been pointed out by others that this is Google’s effort at turning its China crisis to its own advantage. The European Data protection Agencies will not be fooled by this. Nor should Internet users. Those that stick to the market leader which now has around 80% of the search market in Europe, can only hope that Google will resist the temptation to consider such data as useful simply because they can help them send what Google calls “interest-based advertising” to users.

Auke Haagsma
ICOMP Director

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ICOMP Member CEPIC gives its views on La Martinière

January 19th, 2010

ICOMP member Sylvie Fodor of CEPIC has given an interesting view on the challenges faced by French publisher La Martinière in a blog post entiled What Asterix And Google Have in Common. You can find the full article here.

ICOMP Secretariat

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Digitalisation: the Cart before the Horse?

January 12th, 2010

Digitalisation of the world’s books has led few if any voices to be raised against the aim of ensuring the widest possible access to knowledge, learning, art and culture. On the other hand, many voices have been raised against the means to this end, and some of the collateral damage being caused. Just before Christmas, the Paris Tribunal de Grande Instance added its authoritative voice to the debate.

The case, brought by members of the La Martinière publishing group, sought damages and an injunction against Google in respect of past acts of digitalisation and publication by Google of works belonging to La Martinière.

Key findings of the Court were as follows:

• Google France shared responsibility with Google Inc, its US parent,

• French law was applicable because the harm suffered took place in France (French books digitalised to be read by French internet users on French soil on a website with the extension ‘.fr’),

• The act of digitalisation and publication as practiced by Google was one which required the prior authorisation of the copyright owner (but which had not been obtained),

• A review of Google’s site revealed nearly 24,000 pages of incriminating material.

The Court awarded damages and granted an injunction requiring Google to remove the offending material.

This judgment seems destined to become just one part of an enormous library of jurisprudence dealing with the use of intellectual property on the Internet. As such, it risks adding to the divide between content creators and users. On the other hand, as we grope towards a consensus as to how to balance the interests of those two groups, the Judgment does add some useful guidance to the debate, at least the legal one.

In particular, two points have been confirmed. First, authors need to be consulted in advance and to have their authorisation obtained (the horse before the cart, not the other way round). Second, the fact that the scanning and uploading may take place elsewhere does not prevent the application of European law.

These are useful reminders. As the great game of authors’ rights is played out in the US Courts and the proposed Google Book Settlement (see previous posts), it is important to bear in mind that the European legal and legislative process cannot be put to one side or ignored – at least, not indefinitely.

David Wood
ICOMP legal expert

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ICOMP: Revised Google Book Search Deal A Massive Disappointment

November 16th, 2009

Last Friday, 13 November, the parties to the US Google Book Search litigation filed a revised settlement proposal. The original proposal had drawn vociferous objections from the French, German, and US governments, as well as from authors, publishers, libraries, academics, and consumer groups across Europe and the world.

Although ICOMP is still studying all 173 pages of the revised proposal, it clearly does not fix the serious problems that plagued the original settlement and that led to widespread European condemnation. Although some European works will technically now fall outside the scope of the settlement, Google appears intent to continue copying and engaging in “snippet” display of copyrighted European works through its existing arrangements with American libraries. In short, the behaviour that sparked years of anger and frustration amongst European publishers and authors goes on. To say the least, the revised settlement is a massive disappointment.

No one seriously doubts the value of expanding online access to books and making books more easily searchable online. But Google’s newest settlement proposal, like the earlier version, is a disaster. It would give Google a monopoly over millions of the world’s books. It would also further entrench Google’s dominance in search, including in Europe, and stifle innovation and harm consumers in a vitally important sector of the Internet ecosystem. It should be - and for the good of the Internet must be - rejected.

Bad for Competition and Innovation

ICOMP, like many others, objected to the original settlement proposal because it would have granted Google de facto exclusive rights for the digital distribution of millions of orphan works as well as many other books. It also would have given Google a virtual monopoly over the ability to search books online, further strengthening its widespread existing monopoly in online search and search advertising. As the US Department of Justice noted, the settlement would “create a dangerous probability that only Google would have the ability to market . . . a comprehensive digital book subscription.”

The revised settlement proposal does nothing to fix these problems. New provisions giving retailers the ability to “resell” access to Google’s scanned copies of books to consumers will do nothing to diminish Google’s monopoly grip on digitized books and search. This proposal is like a monopoly internet service provider saying it will allow the Internet to be accessed multiple PCs. That might allow competition in PCs, but would do absolutely nothing to enable competition in ISP provision. The revised settlement proposal essentially guarantees that no other commercial entity in the world, either in Europe or elsewhere, will be able either to access directly or to replicate the massive books database that the settlement proposal places under Google’s sole control. It also means that consumers wishing to search for books online will have no choice - it will be Google or nothing. Google has long sought to build a moat around its monopoly in search. This settlement threatens to make Google’s search monopoly an impenetrable fortress.

The revised provisions on orphan works are similarly a failure. They merely provide for the appointment of a board member on the Book Rights Registry to serve as a “guardian” of the interests of orphan works owners and state that identified authors and publishers will no longer profit from the exploitation of orphan works. But Google gets to keep a significant share of any profits from orphans works and to maintain its monopoly grip on online access to orphan works.

If Google were serious about allowing meaningful competition, the settlement would allow any company to access copies of orphan works scanned pursuant to the settlement on the same terms as Google. This would have been a simple fix to make and would have alleviated many of the most serious competition concerns. As the settlement stands, no competition authority in the world is likely to see it as allowing meaningful competition in the supply of online access to orphan works.

Equally disturbing is that this settlement, by making Google the monopoly gatekeeper to online access to books for US readers, will give Google inordinate influence over Europe’s own efforts to develop online digital libraries. It will give Google overwhelming influence over how much consumers and libraries pay for access, and how much authors and publishers earn. It is clear that Google’s pricing in the US will also have a strong influence on the pricing of any similar digital library project that emerges in Europe.

Without competition, Google will face no pressure to innovate, to improve its services, or lower its prices. Online access to millions of books will remain locked up in the database of a single American company, and only Google will have the key. The world’s literary heritage is simply too important to abandon to such a fate.

Bad for the Internet

In sum, the revised settlement proposal would confer on Google and Google alone what amounts to a blanket authorisation to copy and exploit millions of books. The proposed settlement would effectively foreclose competition in one of the most important markets of the future - providing innovative, high-quality access to books, especially out-of-print and orphan works. If approved, the settlement will inflict serious harm on the Internet ecosystem, harm that could easily be avoided while still realising the important goal of expanding online access to books. And although the settlement ostensibly is confined to the United States, it is absolutely clear that its anti-competitive effects will be felt in Europe and elsewhere around the world.

Underlying these concerns is the fact that the entire process in reaching this settlement has been fatally flawed. Many rights holders criticised the woefully inadequate notice of the original settlement. And despite a chorus of pleas from European governments, rights holders, libraries, and others that the parties open up the process to affected stakeholders, the parties negotiated in total secrecy and now offer this proposal on take-it-or-leave-it terms.

As the German government noted in its objections to the original settlement, “the proposed Settlement is a privately-negotiated document that is shrouded in secrecy, formulated behind closed doors by three interested parties, the [US] Authors Guild, the Association of American Publishers, and Google, Inc., resulting in a commercially driven document that is contrary to established international treaties and laws.” Nothing about the revised settlement changes these fundamental facts.

Private commercial litigation and secret negotiations are not the way to decide the future of books, particularly where they destroy competition and undermine innovation. For the good of the Internet, this settlement proposal should be rejected.

David Wood
ICOMP legal expert

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The EUObserver: Creative Rights and Content Online

November 5th, 2009

As the reach of the Internet continues to grow, EU regulators are scrambling to understand its implications for copyright and other intellectual property rights.

Managing creative content online will be one of the major policy challenges for the new European Commission and European Parliament over the next five years.

The appearance of the Pirate Party on the European political scene and the French ‘Hadopi’ law are the latest signs of just how important this debate is.

The first copyright act in the world was the British Statute of Anne, from 1710, named after the Queen of England. It will be 300 years old 10th April 2010.

The law offered up to 28 years protection of copyrights ‘for the Encouragement of Learned Men to Compose and Write useful Books’ and because reprint of books without consent of the authors would lead to “the Ruin of them and their Families”.

The emergence of the print-press was the new technology at the time leading to fresh lawmaking. In our time the new thing is the Internet, but some of the concerns have not changed:
* How to encourage learned people to produce useful content online?
* How to prevent pirates from copying content without consent?
* How to enforce European copyrights in a global online market?

The Paris’ ‘Hadopi’ law, named for the new government agency charged with hunting down the pirates, is considered draconian by online rights advocates for the powers the agency has, backed by a series of special piracy judges, to cut off internet access and even jail repeat offenders.

While civil rights campaigners worry about the tracking of people’s websurfing and the restriction of what they argue is now a service as essential as water or electricity, the French bill has inspired other European governments, keen to stuff the internet piracy genie back in the bottle.

While some European countries have ruled out the French and a similar British approach, others are watching with interest to see whether the laws are successful before introducing similar bills.

The European Commission threw the debate open in October 2009 with a paper on creating a single market for creative content online and a statement outlining principles for online music sales.

An EUobserver’s conference in December will take these themes forward. The key questions to be discussed are:
* How to keep the Internet open and at the same time ensure quality content can be produced and
paid for?
* What changes are needed to intellectual property rights for the smooth exchange of non-material
goods in a European single market for Creative Content Online?
* How to secure cultural diversity in Europe while introducing multi-territorial licensing for musical work?
* What are the new successful business models for creative industries online?

It is the fourth annual high-level conference on creative rights organised by EUobserver. The December gathering in Brussels will bring together European artists, industry representatives, consumers and lawmakers to debate these issues.

DATE 1st December 2009
TIME 14:00 – 17:30
VENUE Musical Instruments Museum, Brussels

For more information and to register go to: http://conferences.euobserver.com/creative09/index/

Lisbeth Kirk,
Editor-in-Chief
EUobserver

A journalist by education, Lisbeth Kirk is the founder and editor-in-chief of EUobserver, guiding the company in both the editorial realm and its business-orientation. EUobserver is one of the most influential, agenda-setting, online news services covering European Affairs since 2000.
lk@euobserver.com
www.euobserver.com

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ICOMP launches Internet Imperatives and Transparency Paper in Brussels

October 8th, 2009

As I have briefly written on (see below), ICOMP launched its Imperatives for a Healthy, Secure and Competitive Internet on Tuesday during a lunch debate at the European Parliament with Commissioner Viviane Reding. The debate, hosted by the German Liberal MEP Alexander Alvaro, one of the Parliament’s most outspoken experts on internet issues, and chaired by Lord Watson of Richmond, ICOMP’s Chairman, was attended by over 50 people, including Members of the European Parliament, ICOMP Council Members, as well as other industry representatives and journalists.

Commissioner Viviane Reding was presented with the first copy of ICOMP’s ‘Internet Imperatives’ (for more info see blog post below). The ICOMP Imperatives are intended as a starting point for a debate among policy-makers, industry and the general public on the concrete steps to be taken by the incoming European Commission and the recently elected European Parliament in the new parliamentary term to address the key challenges facing the digital world. “The recent economic downturn has brought about a focus on accountability,” Lord Watson, ICOMP’s Chairman said, “it therefore stands to reason that there is great interest in this subject both within Brussels and across Europe.”

Talking about EU priorities concerning the online marketplace, Commissioner Reding stated that one of her priorities is to address the issue of mass scale digitisation of books and orphan works. In particular, she said that the EU should create “a modern set of European rules that encourage the digitisation of books, including a European Rights Registry or a European System of Rights Registries able to guarantee that publishers and authors’ rights are respected and fairly remunerated.” Commissioner Reding also mentioned that before the end of her mandate, she will launch a reflection paper with a set of possible policy and legislative options aimed at paving the way for a Digital Single Market for Creative Content for the benefit of right holders, internet service providers and consumers. Finally, she underlined the protection of privacy and of personal data in the online environment is another key issue that needs to be addressed.

Following the event in the European Parliament, ICOMP held a Business Roundtable to introduce and discuss its newly published White Paper on the role of transparency in online search and search advertising. Those present included a select group of EU decision makers, academics and industry experts. Through many conversations with members and stakeholders, ICOMP has come to believe that transparency and openness in the search advertising marketplace are of central importance as it is online advertising that makes possible many of the free services that the public enjoys online today. The conclusion reached by participants was that the opacity within online advertising, arguably the engine room of the Internet, is potentially stifling the promise of the Internet to deliver value and innovation.

The “Imperatives” and the White Paper on Transparency are available on ICOMP’s Issue Statements page.

David Wood
ICOMP legal expert

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Fostering support for Internet Imperatives in Brussels

October 6th, 2009

Today Commissioner Viviane Reding was handed the first copy of the ‘Internet Imperatives’, a charter produced by ICOMP as part of a wider effort to increase support across industries and among regulators for principles promoting a healthy and competitive online environment. Reding welcomed the concrete contribution to the debate on an Open Internet.

The Imperatives are intended as a starting point for a debate among policy-makers, industry and the general public on the concrete steps to be taken by the incoming European Commission and the recently elected European Parliament in the new parliamentary term to address the key challenges facing the digital world. “The recent economic downturn has brought about a focus on accountability,” Lord Watson, ICOMP’s Chairman said. “It therefore stands to reason that there is great interest in this subject both within Brussels and across Europe.”

A copy of the Imperatives document is available on ICOMP’s Issue Statements page.

David Wood
ICOMP legal expert

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Google Book Search Settlement – growing concerns force postponement

September 25th, 2009

The proposed Google Book Search Settlement has been generating increasing interest and concern on both sides of the Atlantic.

The background to the proposed Settlement is a US class action lawsuit brought against Google Books by the US Authors Guild, the Association of American Publishers and a number of individual authors and publishers for breach of copyright. The action challenged the wholesale practice of Google scanning and uploading copyrighted works into its database without seeking consent of the authors and publishers concerned. The proposed Settlement was negotiated by the litigating parties but would also have a significant impact on the rights many thousands of publishers and authors who are not directly involved in the case, including European authors and publishers.

Prompted by concerns expressed by the German Government, the EU Commission held a public hearing into the effects in Europe of the proposed Settlement on 7 September 2009 (for a summary of the hearing, click here). Around the same time, both the German and French Governments submitted formal objections to the US Court hearing the case.

Objections are continuing to mount in the US. On 18 September 2009, the U.S. Department of Justice (DoJ) also formally intervened in the US Court proceedings, unequivocally concluding that the proposed Settlement should not be approved by the Court. The DoJ noted that the proposed Settlement sought to resolve “matter[s] of public, not merely private, concern” that are “typically the kind of policy change implemented through legislation, not through a private judicial settlement”.

Shortly after the DoJ filed its Statement, the plaintiff authors and publishers asked the Court to delay an upcoming hearing on the ground that revisions to the proposed Settlement were needed to take account of the DoJ’s concerns. Google agreed not to oppose that request.

The specific concerns raised by the DoJ focussed on the following issues:

First, the preliminary view of the DoJ was that the proposed Settlement raised “serious” competition issues. Those issues relate both to the creation of a de facto monopoly over distribution of orphan works (especially given the absence of access rights for Google’s competitors) as well as to concerns about the establishment of an industry-wide price fixing mechanism for online works. Although the DoJ’s analysis was limited to US antitrust rules, very similar rules apply in Europe.

Second, the DoJ expressed its concerns that because the settlement apportions all revenues generated by orphan works to owners of non-orphan works, the settlement “pits the interests of one part of the class (known rights holders) against the interests of another part of the class (orphan works rightsholders).” The DoJ also observed that although the proposed Settlement “sweep[s] in untold numbers of foreign works,” including many authors that have never published works in the United States, those authors were not represented by the class members who negotiated the proposed Settlement.

Third, echoing concerns expressed by many European rights holders, the DoJ called on the Court to “undertake a searching inquiry” into whether the parties to the proposed Settlement had met their legal obligations to inform affected authors and publishers about the terms of the proposed Settlement and noted that the Court “should not hesitate to require the parties to undertake further efforts to notify the class”.

The proposed Settlement has clearly raised very serious concerns at the highest levels of the US Administration and European Governments. Whilst few would dispute the benefits of digitisation, all are agreed it needs to be done in a way that reconciles the interests of readers, publishers and authors, respects copyright and does not distort competition in online markets.

ICOMP shares the DoJ’s serious reservations about the proposed Settlement and has publicly voiced similar concerns on a number of recent occasions.

The next steps are crucial. While the Settlement is on hold, Google continues its practice of scanning copyrighted books for its own benefit and without the consent of affected rightsholders. The conflict that the settlement sought to resolve therefore still exists. It needs to be resolved rapidly but fairly.

Very many stakeholders both in Europe and the US have shown willingness to contribute to the finding of solutions. Time will tell if Google and the other parties to the proposed Settlement are willing to engage in constructive dialogue.

In the meantime, the ground rules for that dialogue are clear. Discussions must be open, transparent and inclusive. This is too important a deal to be done behind closed doors - it was that secretive and limited approach that led to the current unsatisfactory Settlement proposal. Also while a solution is being sought Google should not make matters worse and ICOMP calls for an immediate stand-still of its current scanning practices.

Finally, ICOMP fully endorses the conclusions of the DoJ that “the end result should be a marketplace in which consumers can be assured that they are paying competitive prices for the benefit they receive–in a marketplace in which they have multiple outlets from which to obtain access to works. The benefits of this settlement should not be achieved through unjustified restrictions on competition”. It is astonishing that matters have progressed to such a point that the DoJ feels compelled to issue such a stark warning.

David Wood
ICOMP legal expert

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