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By Barry Werbin and Bryan Meltzer, Herrick, Feinstein LLP

The highly publicized, now eight year old, "Google Books" class action case came to a close at the district court level on November 14th, with Southern District Judge Denny Chin granting Google summary judgment on its copyright fair use defense. The Authors Guild, Inc., et al. v. Google Inc., 05 Civ. 8136 (S.D.N.Y. Nov.14, 2013). In the process, Judge Chin revealed that he is among those who believe that Google has changed the world for the better. Retaining the action at the district court level despite his recent appointment to the Second Circuit Court of Appeals, Judge Chin found that Google Books is "transformative" and benefits "all society."

As the backdrop to the unusual trajectory of the case, in 2004 Google turned its attention to the mass digitalization of books by starting an ambitious project called "Google Books." Under the program, Google entered into agreements with various major research libraries to digitally scan their entire collections with optical technology that would permit full text searching. The digital copies would then be made available to participating libraries and Google would permit public online searches of the content. In response to search queries, only portions, or "snippets," of a book's content would be displayed to anyone having Internet access and a computer. As of today, over 20 million books have been scanned for the project.

The Authors Guild and three authors/copyright holders, the plaintiffs in the Google Books case, filed a class action, alleging that Google was committing mass infringement of authors' copyrighted material by digitally scanning and storing the entire contents of the books and displaying the snippets without their permission. The case was assigned to Judge Chin, who was then a District Court judge. After initial extensive litigation and several years of intense negotiation, all the parties reached a complex class action settlement agreement that would have granted broader rights to Google in exchange for a $125 million settlement payment. However, when the settlement was presented to Judge Chin -- who by then had been appointed to the Second Circuit -- for approval in 2011 (as class action settlements require judicial approval), he rejected it in response to many objections filed by interested parties, including the Justice Department, which voiced potential antitrust concerns.

Judge Chin then certified the plaintiff class before addressing any of the substantive copyright issues and Google's fair use defense. Google appealed the class certification to the Second Circuit, which issued an unusual ruling earlier this year in which it reversed the class certification as being premature and remanded the case to Judge Chin for a decision on Google's fair use defense, on the grounds that "the resolution of Google's fair use defense in the first instance will necessarily inform and perhaps moot our analysis of many class certification issues...." Authors Guild v. Google Inc., 721 F.3d 132, 134 (2d Cir. 2013).

After the case was remanded and discovery completed, both plaintiffs and Google moved for summary judgment with respect to the "fair use" defense. Following the judicial trend of focusing on whether the alleged infringement was "transformative," Judge Chin has now held that Google's use of the copyrighted books constitutes "fair use" under Section 107 of the Copyright Act.

The statutory "fair use" defense is derived from the Constitution's directive in Article I, Section 8, that the purpose of copyright, along with patents, is "[t]o promote the Progress of Science and useful Arts." The "fair use" doctrine is codified in Section 107 of the Copyright Act, which requires courts to asses at least four delineated factors, namely: (1) the purpose of the use (i.e., is the use for commercial or nonprofit educational purposes), (2) the nature of the copyrighted work, (3) the amount and substantiality of the infringed portion used compared to the copyrighted work as a whole, and (4) the effect of the infringement upon the potential market for or value of the copyrighted work. While a court must consider these four factors in evaluating a fair use defense, the court is free to consider any other relevant factors, a point also noted by Judge Chin.

Judge Chin cited to Judge Pierre Leval's notable 1990 Harvard Law Review article entitled Toward a Fair Use Standard, where the "transformative use" theory was first articulated. Judge Leval there opined that the use of a copyrighted work should be deemed a "fair use" if it is "transformative" (i.e., "adds something new, with a further purpose or different character, altering the first with new expression, meaning, or message ...") 103 Harv. L. Rev. 1105, 1111 (1990). Following Judge Leval's lead, in 1994 the Supreme Court ruled in the context of a commercial parody that under the first fair use factor, "the enquiry focuses on whether the new work merely supersedes the objects of the original creation, or whether and to what extent it is 'transformative,' altering the original with new expression, meaning, or message. The more transformative the new work, the less will be the significance of other factors, like commercialism, that may weigh against a finding of fair use." Campbell v. Acuff-Rose Music, 510 U.S. 569 (1994). Since then, courts have increasingly decided "fair use" defenses by analyzing whether the alleged use was "transformative."

In finding that Google Books' use of the copyrighted works was "transformative" and protected as "fair use," Judge Chin considered each of the four factors enumerated by Section 107.

First, with respect to the purpose and character of Google Books' use, Judge Chin found that, while Google's "principle motivation is profit, the fact is that Google Books serves several important educational purposes." In particular, Judge Chin found that Google Books (i) "transforms expressive text into a comprehensive word index that helps readers, scholars, researchers and other find books," (ii) serves as "an important tool for libraries and librarians and cite-checkers as it helps to identify and find books," (iii) helps "users locate books and determine whether they may of interest" and (iv) transforms "book text into data for purposes of substantive research, including data mining and text mining in new areas, thereby opening up new fields of research."

Judge Chin also found that Google did not directly profit from the use of the copyrighted material because it did not sell its scans of the copyrighted works, did not sell the snippets that it displays and did not run ads on the "About the Book" pages that contain the snippets. Accordingly, Judge Chin found that the first factor concerning the use of the copyrighted material "strongly favor[ed] a finding of fair use."

Second, with respect to the nature of the copyrighted works, Judge Chin found that the vast majority of books found in Google Books are non-fiction, published and available to the public. As non-fiction books that can be found in the public domain are afforded less protection, Judge Chin found that the second factor concerning the nature of the copyrighted material favored a finding of fair use.

Third, with respect to amount and substantiality of the copyrighted material used, Judge Chin found that while Google scans the full text of the books verbatim, "it limits the amount of text that it displays in response to each search." However, despite his approval of Google's limitation on the amount of text displayed, Judge Chin concluded that the third factor "slightly" favored a finding against fair use.

Fourth, with respect to the effect of the use upon the potential market or value of the copyrighted works, Judge Chin rejected the plaintiffs' argument that Google Books negatively impacted the market for the books and served as a "market replacement." To the contrary, Judge Chin found that "a reasonable factfinder could only find that Google Books enhances the sales of books to the benefit of copyright holders." In particular, he found that Google Books promotes the authors' works and improves their book sales. Accordingly, Judge Chin found that the fourth factor concerning the effect of the use of the copyrighted material weighed strongly in favor of a finding of fair use.

Weighing these factors and considering what he perceived to be Google Books' other public benefits, such as its ability to preserve old books and enable disabled and underserved populations to actually have access to the books, Judge Chin found that Google Books is "transformative" and its alleged infringement of the copyrighted works is protected by the "fair use" doctrine. He further found that Google could provide its partner libraries with digital copies of the books they already owned because such actions (by both Google and the libraries) also constitute "fair use."

Based on these findings, Judge Chin granted Google's motion for summary judgment in its entirety. In doing so, he further solidified Judge Leval's "transformative" use doctrine.

The case is clearly headed back to the Second Circuit. As that Court previously punted the class certification issue to allow Judge Chin to decide the "fair use" question because it could "moot" the certification issue, many practitioners believe that it is likely that the Second Circuit will affirm Judge Chin's decision.

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This page contains a single entry from the blog posted on November 22, 2013 4:49 PM.

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