Southern District Rejects Google Books Settlement and Cites Shapiro, Arato’s Objections in Support of Its Ruling

On March 22, 2011, the Honorable Denny Chin issued a landmark ruling and rejected a $125 million class action settlement that would have allowed Google to create the world’s largest digital book library.

A group of authors and publishers sued Google in 2005, alleging that the company was infringing their copyrights on a massive scale by scanning entire books and displaying “snippets” from the works in on-line searches. The settlement sought to resolve those claims on behalf of hundreds of thousands of class members located throughout the world. The settlement also sought to grant Google significant rights to exploit entire books, without the permission of the copyright owners.

Over 400 objections were lodged with the Court, including objections that Shapiro, Arato submitted on behalf of leading foreign publishing societies and book publishers. The court rejected the settlement, finding that it was not “fair, adequate and reasonable,” as required under Rule 23 of the Federal Rules of Civil Procedure. The court found that the agreement “would give Google a significant advantage over competitors, rewarding it for engaging in wholesale copying of copyrighted works without permission, while releasing claims well beyond those presented in the case.”

In reaching this conclusion, Judge Chin pointed out – as Shapiro, Arato & Isserles LLP’s objections expressly argued – that the author and publishing groups that purported to represent the worldwide class members had interests that were at odds with many foreign rightsholders and that those groups may not have adequately represented the foreign class members. In addition, the Court found that, given the number of foreign works embraced by the settlement and the difficulties foreigners had determining whether their works had been registered with the United States Copyright Office, the settlement would impose unique burdens on foreign rightholders. The Court specifically cited Shapiro, Arato’s objections in support of this point (Opinion at 41 and 44.)

The proposed settlement that the District Court rejected followed an earlier, even broader, proposed settlement. Shapiro, Arato had submitted objections to that earlier settlement as well on behalf of its foreign clients. Google responded to those objections by narrowing its proposed settlement to exclude a large number of foreign rightsholders from the settlement’s reach. But as Shapiro, Arato & Isserles LLP successfully argued in its second round of objections, the narrower proposed settlement still insufficiently protected the rights and interests of foreign rightsholders.

Cynthia S. Arato appeared at the Court’s February 18, 2010 Fairness Hearing to object to the proposed settlement, and she has been quoted in various news accounts regarding the settlement and its legal implications (links below). Alexandra A.E. Shapiro co-authored the objections. To read Judge Chin’s opinion, Click here. 

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