Advertising Counterfeit Goods: Who is Liable?

By Jenton Lee, Christina Pham, Raymon Sutedjo-The, Vaidy Venkitasubramanian, Andrew Win

What is this article about?

Selling sports apparel can be a lucrative business, as sports fans are typically quite loyal and willing to spend money to showcase their allegiance. Businesses can advertise quite effectively using social media channels, such as Facebook. These platforms, however, open the gate for everyone and make it possible for dubious companies to advertise counterfeit goods to potential customers.

Krystal’s NFL Shoppe sells official National Football League apparel and advertises on Facebook. The company is suing Facebook for failing “… to take any measures to curb or stop the placement of fraudulent and illegal ads on its website” and it’s planning to bring a class-action lawsuit on behalf of retailers and wholesalers of official NFL clothing. Krystal’s also named adSage and, an ad shop and e-commerce company, respectively, as defendants in the lawsuit.

This example relates to the issue of liability for content created and/or posted by others discussed in this week’s reading. We will examine the lawsuit and try to determine its validity by applying Section 230 of the Communications Decency Act (CDA) as well as comparing it to past cases such as Fair Housing Council (FHC) vs., Batzel v. Smith, and Carafano v.

Why is it relevant and important?

A big controversy that often comes up with cases involving the CDA is the possible harm that could come to users. This is due to the fact that providers are immune from liability for third party content they provide. In this case between Krystal’s and Facebook, not only are the users harmed from having purchased fraudulent products but Krystal’s also suffers from lost profits from advertising their wares at full price. This raises concerns about who is ultimately liable for the harm that comes from third party content providers through uninvolved service providers.

But is Facebook truly uninvolved? According to the CDA, service providers will be immune from the liability of the content provided by third party sources. In this case, to answer this question one needs to examine whether or not Facebook is an active participant in publishing and distributing content. Krystal’s accusation against Facebook is that they are more than just a passive party in this case due to their sophisticated data mining technology that can route targeted ads to a certain user-base. They believe that the ability to target the ads to certain users labels Facebook as an active publisher of content, since their “Create an Ad” feature offers pre-set options to target groups of users.

This is akin to the Fair Housing Council (FHC) vs. case in that Roommates enforced implied content through their form, where subscribers filled out contents based on the structure of what the forms was asking for. This went against the Fair Housing Act, where landlords and sellers of housing properties weren’t allowed to discriminate against renters and buyers. However, unlike the FHC vs. case, Facebook doesn’t force the advertisers to fill out the very specific elements of the ad. Facebook themselves have no control over whether or not the information that third parties provide are fraudulent or not.

What questions does it raise about the law and what problems arise from this law’s interaction with technology and society?

Looking at previous cases, we have seen that immunity was often granted to big companies like eBay and Google, which raises the question of whether or not the law unfairly protects big companies from being liable for such activities. Even if Facebook can’t be held liable for publishing fraudulent advertisements on its page, the question of who will protect the user from harm remains.

Facebook does not make a choice of displaying or promoting a particular advertisement and this might be enough to grant them immunity. If they get two ad requests for fraudulent jerseys and authentic jerseys, Facebook doesn’t make an editorial decision to promote one over the other and it is the user who makes the choice of clicking on the ad. But one must think of the role that Facebook has in influencing the user. The mere association with Facebook might give some credibility to the ad posted and the user might choose to go with a counterfeit product.

Section 230C of the CDA says that the provider of the interactive service (Facebook) shall not be treated as the publisher of any information provided by another content provider

Treatment of publisher or speaker–No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.

In this case, AdSage is the company that managed the ads, and DHGate is the distributor. One or both of them may be liable for creating the fraudulent content, but we don’t have enough information to determine who’s liable. Ultimately, the harm is done to the user and the law doesn’t do enough to protect the user from it.

How might the problem be decided if the law was interpreted in the same way as it was in the legal opinion/materials covered that week?

Perhaps the most important test that pertains to this case is the three-pronged test which determines whether or not the defendant is granted immunity from liability under section 230 of the CDA. In order to gain immunity, the defendant must satisfy each of the three prongs.

The first requirement of the three-prong test is that the defendant must be a “provider or user” of an “interactive computer service”. Facebook fulfills this first part because, as an “interactive computer service”, it provides a platform for users to interact and connect with each other and for advertisers to reach out to a large user base.

The second part of this three-prong test requires that the plaintiff perceive the defendant as the publisher or speaker of the harmful information at hand. In this case, the plaintiff, Krystal, argues that Facebook, the defendant, is “more than a ‘passive party’ to the ads because the company allegedly makes use of sophisticated data mining technology to assist the counterfeiters” (MediaPost Article). Therefore, Krystal’s is claiming that Facebook is a publisher because Facebook is using the data to specifically target the counterfeit ads to users who would normally be buying official jerseys.

The final component of the immunity test requires that “the defendant must not be the information content provider of the harmful information at issue” (Wikipedia – Section 230 – CDA) and that the offending information must come from a third party. Here, as Facebook did not provide the information regarding the counterfeit jerseys, it is not reasonable for them to be labeled as the information provider. Rather, it was AdSage and that acted as information content providers, with Facebook acting as the platform on which the two companies can advertise their information.

As a result of fulfilling each of the three prongs as required by the courts, Facebook should be provided immunity from liability as stated by Section 230 of the CDA.

Legal Precedence

Additionally, we can draw guidance from the legal precedents set in earlier cases that dealt with section 230 issues. There were three key points made in Batzel vs. Smith, that relate to the issue at hand:

  • …if the tipster tendered the material for posting online, then the editor’s job was, essentially, to determine whether or not to prevent its posting—precisely the kind of activity for which section 230 was meant to provide immunity.
  • …any activity that can be boiled down to deciding whether to exclude material that third parties seek to post online is perforce immune under section 230.
  • If the editor publishes material that he does not believe was tendered to him for posting online, then he is the one making the affirmative decision to publish, and so he contributes materially to its allegedly unlawful dissemination. He is thus properly deemed a developer and not entitled to CDA immunity.

Facebook’s entire advertising platform is built on the intention of having third parties post their ads online. If Facebook starts making decisions as to which ads should be posted and which should not, Facebook runs the risk of “making affirmative decisions to publish”, which would make them a developer. In the Betzel case, the Courts made it clear that if the defendant is seen as being a developer, then that would be grounds for the revoking any immunity from liability. But since Facebook isn’t making any editorial decisions in determining which ads to post, they remain neutral and maintain their status as an interactive computer service, not an information content provider. As a hypothetical scenario, if Facebook were to actively promote the counterfeit NFL jerseys over the real jerseys, then it could be argued that Facebook is indeed acting as a “developer”, and should not be granted immunity under Section 230.

To further drive the point home, we reference Carafano v. In the case, the Courts noted that the dating website (Metrosplash) was “merely a passive conduit” and “did absolutely nothing to encourage the posting of defamatory content”. Furthermore, the courts deemed that Metrosplash was not a content provider, but just an interactive computer service. With this distinction, Metrosplash was granted immunity under Section 230 of the CDA.

With respect to the counterfeit NFL jerseys, we argue that Facebook had done nothing to encourage the posting of fraudulent content. In fact, nowhere in the ad-creation form does Facebook ask whether or not the advertised item is fraudulent. As there is no way of distinguishing counterfeit items from authentic items on the form, we conclude that Facebook is taking a neutral stance, thereby strengthening the claim that Facebook is just a “passive conduit” in allowing advertisers to create an ad on Facebook.


On one hand, Krystal’s NFL Shoppe has a legitimate concern in trying to prevent other companies who are selling counterfeit goods. But using the framework of Section 230 of the Communications Decency Act and the legal precedent of prior cases, we think that the courts that will be deciding this case will most likely rule in favor of the defendants.

Your Printer is Like iTunes: DRM & the 3D Printing “Revolution”

By Fred Chasen, Isha Dandavate, Sydney Friedman, Vanessa McAfee, Morgan Wallace

So how is your printer like iTunes? Well, it isn’t yet. But as 3D printing has entered the market, it opens up a host of legal questions that are similar to those faced by applications and hardware companies that facilitate the consumption of mp3s. So, just as the courts use past precedents to address unfamiliar issues brought about by new technology, we consider previous approaches to DRM and personal use to shed light upon the opportunities and potential copyright issues brought about by 3D printing.

What’s the issue?
Advances in 3D printing and modeling have allowed people to easily use a personal computer for the purpose of creating physical objects. With these advances there is a growing market for “recipes” that a person can download and use as blueprints for printing. So, the issue is whether the sharing and use of these downloaded recipes files could potentially infringe upon copyright, and how digital rights management (DRM) should/could be leveraged to bring a balance between consumer expectations and vendor copyrights.

The exact way in which the DRM will function for these recipe files is still mostly theoretical. Intellectual Ventures has been awarded a patent on 3D printing rights management, but the company has not actually created a DRM system. From their track record as alleged “patent trolls,” it seems that Intellectual Ventures is banking on interest from other companies who will license the patent to create such a system.

Why is this important?
As 3D printing penetrates the mass market, it could potentially impact the market for a wide range of products, assuming that anything from guns to baby strollers could be printed. Giving the mass market an ability to produce objects once available only through manufacturers and retailers raises questions around copyright, DRM, and expectations for personal use.

The question also arises, what happens when a printer is able to make derivative works? This problem arose in this week’s assigned reading, when the Kindle 2 added a text-to-speech feature that could potentially replace the audiobooks market. In the context of 3D printing, would DRM prevent users from excerpting or transforming parts of the recipes? And does this functionality fall in the realm of reasonable expectations for personal use?

As we see in the entertainment space, efforts have been made to outline reasonable expectations of personal use. Mulligan et. al. argue in “How DRM-Based Content Delivery Systems Disrupt Expectations of ‘Personal Use’” that the music DRM has handicapped personal and fair use by limiting sharing and other functionality necessary for engaging with music. So we can conclude that there is a paramount need for evaluating reasonable expectations of personal use in the context of 3D printing in order to ensure that copyright interests are reconciled with consumer expectations for use.

Arguments & Implications

The scope and nature of 3D printing is arguably larger and more varied than that of music consumption– there are a limited set of ways in which people can consume music, but with 3D printing, the types of objects that could be printed are potentially infinite. Accordingly, the expectations of personal use of 3D printers would be varied depending on what is being printed. This makes it difficult to assess the reasonable expectations of personal use for the act of 3D printing.

So we break down the issue at hand and consider, most specifically, protection of the copyrights on the files (recipes) used to print rather than the printed objects themselves, therefore, considerations from DRM in the entertainment industry could be applied here. DRM, if implemented for these files, will likely prevent unauthorized sharing of a recipe, and place a limit on the number of times a recipe can be printed and on how many systems the recipe can be used on, just as music DRM does now. We argue that the future DRM system should be implemented in a way that is consistent with consumer’s expectations of personal use which, as defined by Mulligan et. al., include portability of files, excerpting and modifying files, and a limited relationship between users and copyright holders.

It is reasonable to expect that consumers will want to treat their 3D design files as they do other files on their computer. Portability will be important as consumers might expect to be able to e-mail designs to friends and family, store design files on their mobile phones or cloud storage systems, or use multiple 3D printers. It is also reasonable to assume that consumers may want to modify designs by either changing the physical properties of an object such as size or type of material. If DRM is implemented, designers should consider these expected personal use cases and implement the system in a way that prevents users from unknowingly violating copyright law.

Mulligan et. al. also discuss the shift in privacy under new DRM-based systems.  Instead of purchases being nearly anonymous to the copyright holder as they are in cash purchases from a distributor, information is collected directly by copyright holders.  In the DRM-based environment, copyright holders will construct business models around their interest of selling licenses, not physical goods.  The area of digital printing can easily go this way as well.  If implemented, users will have to go directly to the copyright holder to seek permission to print an object.  The copyright holders will soon be able to evaluate, take statistics and tailor their models to this new market, which will surely clash with distribution models seen previously.  Therefore, consumers will have to adjust to new expectations of privacy under the new copyright holder-led model.


As argued by Mulligan et. al., DRM must be refined to reflect the balance of copyright law. While courts wish to further progress of science and the useful arts by allowing authors to protect their work, there is also a limitations on the scope of copyright protections for the sake of consumers. Designing a system that is better tailored to suit the interest of both parties would include allowing for file sharing between parties (in a limited, reasonable way), allowing for “unlimited” file copying in ways that still create time and energy costs for users, allowing for transformation of the recipes created, and als protecting user privacy.

Like the development of the mp3 player, 3D printing will make possible a host of ways in which users and copyright holders can interact and transact business. However, it could also encourage copyright holders to implement stringent limitations on user experience. By more clearly defining legally reasonable expectations for personal use, technologists, policy makers and the courts will protect the balance of copyright law.

The Tussle Around Fair Use: Is Pinterest On The Right Track?

Prabhavathi Matta, Bharathkumar Gunasekaran, Ignacio Pérez, Shaohan Chen, Eunkwang Joo

 Images are the next big thing on the Internet. With constrictions on the number of characters in other social networking sites, images are a way to express yourself in a succinct way. It is precisely for this reason that Pinterest has gained widespread prominence on the Internet as an online image-sharing network. Users pin their favorite photos that they find online or upload themselves to share it with other pinterest users, who then re-pin to share them. Nielsen reported that Pinterest had nearly 16 million unique visitors in January in the United States alone, double the number it had in November last year. Most of the sites users are female.

After having extended its market reach, it is natural for a web startup to figure out a way to bring revenue. In the case of Pinterest, this has already begun with their pins linking to commerce websites and Pinterest getting a share for the referral. But what happens when the image used by the user was a copyrighted to an artist. As one can imagine, the site’s utility opens itself up to a lot of copyright violations by its members. This causes a lot of headaches for photographers and artists. This is where we can draw a parallel between P10 vs. Google case. In this blog we will strive to find parallels between Google’s and Pinterest’s usage of images and the potential implications. It is also important to consider that there is no lawsuit  against Pinterest at this time, but the nature of Pinterest service raises a lot of legal questions which we discussed below.

In the similar way as Google’s image search service, Pinterest displays copyright images without a direct approval of the authors and, most of the time, without even the knowledge of the authors. But Pinterest is already looking for a way to avoid legal problems and several changes have been made in the terms of services. In March of this year the website change its terms of services in a proconsumer way, the website will no longer sell users’ images, but the website is now delegating all copyright infringement responsibility on the user.

To establish direct copyright infringement, a plaintiff must prove two elements: (1) ownership of a valid copyright, and (2) violation of one of the exclusive rights granted “under copyright. Considering Pinterest directly infringes, in that it displays the full-size images hosted by third-party websites, it is important for Pinterest to analyze its service in terms of possible vicarious and contributory liability theories. But both “fair use” and “public domain” are gray areas, making it difficult to ensure that Pinterest liable or not by infringing the rights of others.

Fair Use doctrine permits use of copyrighted material for different purposes  – news reporting, search engine, research, teaching – the main purpose being stimulation of creativity for enrichment of the general public. We can look Pinterest as a search engine for images as of now, since they are not promoting any specific images for profit yet.

If we analyze under the the perspective of the fair use statements, Pinterest have some favorable points, but others clearly fall in gray areas. For example, under the topic of the purpose and character of the use, Pinterest asks users to comment on the image while pinning. The question arises whether the simple act of re-pinning and commenting on a work can be considered creativity. We believe that this“commenting act on the pin” does not add any transformative value to the picture.  And there is a huge difference with other types of comments: When someone reviews a  movie, the comment does not involve the full reproduction of that particular movie, but there is a full reproduction of the photography in Pinterest.

In Perfect 10 vs Google case, the court ruled that scaled/thumbnail images used in a Google Image search engine constituted fair use. Pinterest shows thumbnails of the images in the boards that any user can create, but after clicking any of those thumbnails, a full version of the image is displayed. In this full reproduction of the images, there is no clear references to the ownership or copyright of the images. Besides when the original image is deleted, the copy of the image on Pinterest’s server is not deleted.

Regarding the point whether Pinterest usage of photos is applicable to Commercial or Noncommercial topic, Pinterest business model does not include the concept of adwords or adsense, but they are creating a huge database with the opinion of users over that copyrighted images, and this situation falls in a gray area for two topics: the transformative work vs. the commercial use of that database. Considering that Pinterest goals are focused on create a huge database of images with the user opinions, this is much less broader than Google’s goals, which is to organize world’s information. And considering the use of the image in this way could be interpreted as a direct use, this could be a hard point to avoid for Pinterest’s lawyers.

In terms of the nature of the copyrighted work, it is easily conceivable that photography is art. We know that the courts tend to give greater protection to works of art. This factor weighs heavily against Pinterest. Since images can be considered as artistic expression, it cannot be considered fair use.

With respect to the amount and substantiality of the portion used in relation to the copyrighted work as a whole, In Perfect 10 vs Google, the court also agreed that including an inline link is not the same as hosting the material yourself. In the case of Pinterest, the images are copied 100% and the pinterest image does not differ at all from the original image. This also cannot be considered as fair use.

Finally, we should consider the effect of the use upon the potential market for or value of the copyrighted work. It is not easy to establish what could be the possible potential market for an image. In the case of Pinterest, its most plausible business model aims to find what it is interesting for the users and offer them the right product. But an image could have different artistic purposes. Is Pinterest impeding the artistic intention? The most likely answer for this question is that Pinterest is not interfering with the original purposes of any photography, but it is not compensating for the use of the photo in a different context.

According to Pinterest terms of use, the user is responsible for what is posted:

You acknowledge and agree that, to the maximum extent permitted by law, the entire risk arising out of your access to and use of the site, application, services and site content remains with you.

This part of the terms of service helps to relate Pinterest’s possible legal problems with previously “convicted” websites that were dedicated to allows users to share information, like Napster. Pinterest knows that its service can be used for copyright infringement, so it is clear that they fall in the category of “facilitating copyright infringement”.

Regarding vicarious infringement, in the case of Perfect 10 vs Google, the District Court states,

To prove vicarious infringement, P10 must show (1) that Google enjoys a direct financial benefit from the infringing activity of third-party websites that host and serve infringing copies of P10 photographs and (2) that Google has declined to exercise the right and ability to supervise or control the infringing 857*857 activity.

It goes on to compare it with the case of Napster. For the first part to judge vicarious infringement, the court concluded that “Google clearly benefits financially from third parties’ by displaying P10’s photos” by utilizing AdSense. For the second part, the point is “the ability to block infringers”. Napster’s architecture was based on a proprietary, closed-universe system, not an open, web-based service. It can control content  and once it removes the content which infringes copyright from its own website, the content becomes inaccessible. In contrast, Google cannot control over the whole Web. Google can only remove links of infringers yet the site is still there and is accessible by other means. Besides, Google cannot analyze every image in terms of infringement of content. For the lack of the “right and ability to control” infringing activity of others, Google is not responsible to vicarious infringement.

Returning to Pinterest, even though it does not earn any financial benefit by operating the website for now, there is a possibility that Pinterest can make revenue afterwards. It can be deduced from the P10 v. Google case, that the benefit would be admitted as direct financial benefit if it contains any infringing images on its website. Regarding the second part, Pinterest is not able to analyze every image it has in its website in terms of infringement similar to Google. The rate of growth in the number of images is high which causes Pinterest not to be able to identify each image. Pinterest, however, is a “closed-universe” system as Napster was. It stores images and other metadata on its own servers so that it can handle any content on its website. If Pinterest removes a link to any image, the image no longer exists in the world. For this point Pinterest would have the responsibility to delete infringing contents when it is required to block. Hence, if Pinterest starts to earn financial benefit from infringing content, the responsibility of vicarious infringement will follow as well.

The ease with which information can be copied over the World Wide Web makes it difficult to protect copyrighted content from infringement. The blurry nature of the contours of laws governing copyrighted content on the net poses a lot of challenges for companies whose business model revolves around user generated content.

The main difference between Google and Pinterest is their ability to have control over contents. If one has the ability, it is assumed to have the responsibility to control infringement. For this reason it is expected that businesses that depend on user generated content provide service without storing the contents in order to avoid any risk. Yet another strategy for the corporations is to try and cooperate with copyright holders and share their profits by advertizing the contents stored.

Finally, to think about the current and potential problems arising from copyright law’s interaction with Pinterest’s technology and society, we analyzed these problems based on different point of views from different types of stakeholders in Pinterest’s world. There are three different groups of players that formed the Pinterest: 1) Content owners, who own the copyright of the contents; 2) Pinterest users, who use Pinterest’s service to create their collections of images they like; 3) Pinterest team, who provide the service to run the business.

There are three main different types of content copyright owners in Pinterest’s case: Pinterest users, professional photographers, and business associations such as e-commerce retailers. In the case of Pinterest users and business association, they are more willing to pin their own contents in order to show the world and try to receive benefits such as acquiring more “Likes” or attract potential customers to purchase their products through the linked images. For professional photographers, however, the case becomes different. Since most of professional photographers sell their work to sustain their business, the service that Pinterest provides might have the potential risk of decreasing people’s willingness to purchase their work. Unlike other thumbnails cases we are going to discuss this week, the quality and pixel on Pinterest’s website is much clear and sometimes can also be reused if users intend to do so.

Even though Pinterest has provided the solution (to insert some HTML codes Pinterest provided into the web pages) for professional photographers to prevent users from pinning their work, there is still questionable since professional photographers cannot prevent users from taking screenshot of their work them post those images onto Pinterest board by using upload tools which Pinterest provided. Besides, in the long term, we also doubt if there will be other legal and/or ethical problems once Pinterest switches their business model and try to acquire profits from these contents.

After all, copyrighted contents play really important roles not only in Pinterest world but also in our real world, and how to maintain a fair and sustainable ecosystem of sharing will be the next biggest challenge for this fast growing company.

Digital Copyright in the Internet Age – Google, Publishers Settle Book-Digitization Dispute

Authors: Luis Aguilar, Ajeeta Dhole, Kate Hsiao, Matthias Jaime, Lisa Jervis


This week publishers and Google reached a settlement in the long-running copyright infringement case, according to

Google Books, formerly known as Google Print, is a service from Google Inc. that searches works that Google has scanned and stored in its database. Back to 2005, writers and publishers sued Google, claiming that digitizing the world’s books was an infringement of copyright. However, Google claimed that scanning and indexing the copyrighted works without the copyright owners’ consent should be seen as fair use.

After years of debate, the settlement with Google and the publishers finally turned out. The settlement allowed the U.S. publishers to choose to make available of or remove their works in Google Books. When it comes to the selling on the Internet, the rights holders will get 67 percent of the take and Google gets the remainder. (The dispute with authors is still outstanding.)

Why It’s Important

The most immediate consequence of this settlement is that it will allow Google to start selling digitized books on Google Play and display 20 percent of the text . The agreement will include works from some of the biggest names in publishing including McGraw-Hill Companies, Pearson Education, Penguin Group, John Wiley & Sons and Simon & Schuster. For consumers and copyright holders then, it would seem this result will be mutually beneficial.

However, this settlement is an extension of a previous agreement rejected in Federal courts last year. In that agreement, the issue that led to government intervention regarded orphan works, books whose copyright holders cannot be found.  Under the original settlement, Google had claimed orphan works are too available under fair use and would index and make them available for sale online. Judge Chin who oversaw the settlement disagreed, stating, “the ASA 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.” (pdf)

With this new settlement, the issue of orphan works is still not resolved, nor are Google’s claims to access copyrighted books under fair use. Fair use is defined as the use of a copyrighted work for purposes such as criticism, comment, news reporting, teaching, scholarship, or research, and it is not an infringement of copyright. It remains to be seen if Google can successfully claim its actions comply with the court’s interpretation.

Point Counterpoint

Why the Google Settlement is Bad

Though it doesn’t carry the weight of law or legal precedent, the overall message
of this settlement is that Google is an 800-pound gorilla that can successfully
leverage illegal tactics to make business deals. Perhaps even more important, their
contention that the Library Project scanning was fair use will not be tested in court.
And the fair use argument here is unconvincing: Section 107 paragraph (1)’s test
of purpose of copying is not met; adding massive amounts of valuable copyrighted
content to its search results clearly serves a business purpose (this contention is
buttressed by the part of the settlement deal allowing Google to sell the digitized
works in the Play store). Neither is paragraph (3)’s metric of the amount of work
used; a strong argument can be made that twenty percent of a book is a substantial
portion. Paragraph (4), concerning effect on the market, also poses a problem
for Google’s argument, a providing that much content for free surely diminishes
customer demand.

An actual court test of this argument would have been helpful for copyright holders
to maintain their rights to control their content when that control is under constant
threat by the fast pace of technological change. If decided properly, it would have
established a legal environment that encourages content-sharing partnerships
negotiated up front, rather than an approach that rewards infringement with a
better negotiating position.

Why the Google Settlement Is Good

While the publisher-challenged “fair use” scope of the lawsuit may have been too broad since it included any book types, we cannot disregard the helpfulness of Google’s scanning and indexing technology for one very specific fair use purpose: education. Without such indexing, if (for example) a specific difficult programming concept emerged, a student generally has only had the class’s assigned book to aid in understanding the concept. If the book doesn’t help, it is a tedious process to find other reference material due to the specificity of the concept, the lack of adequate search capability for reference material, and cost. 17 USC § 107 states “…the fair use of a copyrighted work, including such use by reproduction in copies…for purposes such as…scholarship, or research, is not an infringement of copyright.” Google’s scanning project provides a technology whereby it not only becomes easier to find more relevant material because of the more powerful indexing and breadth of what’s available, it also allows review of reference introductions and indexes which will give a much better indicator as to the depth of the explanations and audience level. This is not to concede that Google’s “fair use” defense is a valid one, since their scanning and indexing technology was created to bust into the e-book market like Kool-Aid Man into a late ’70s living room. But it is a strong defense of their technology, which replaces woefully inadequate methods that help students find relevant material that crosses business, library and publisher borders.


While the settlement has broad implications in the overall message that it conveys, it is important to recognize that this particular settlement is only limited to the works of select publishers that are party to the settlement. (The dispute with some authors, through the Author’s Guild, is still ongoing.) It allows Google to continue digitizing works of the said publishers, gives the latter the option of not making their works available to Google, and possibly establishes a business contract between the two parties that allows both to commercially benefit from the sale of the digitized books via the Google Play store. The Google Play store provides the publishers an established and reputable platform as an additional avenue to market and sell their works for improved sales and profits. The settlement does not give Google the legal rights to monetize copyrighted works that are outside the purview of the settlement. The publishers involved in this settlement are heavyweights of the publishing world, and if they so chose, they could have contested the settlement further, on an equal footing with the behemoth that is Google. Also, while Google has an advantage in that it has a head-start in the digital publishing landscape due to its ongoing digitization efforts since 2005, it cannot be termed as an unfair advantage, as this or similar settlements do not preclude any other Google competitor from negotiating similar or better deals with the publishers.

However, as discussed earlier, the settlement also means a lost opportunity to legally test and answer some important questions around digitization of copyrighted works—whether Google was originally, legally justified under the ‘fair use’ clause in its unauthorized reproduction and digital publishing of 20% of the copyrighted works, especially as Google is a for-profit company and, regardless of their stated intent of creating “a universal digital library with a searchable index for a wealth of new information”, indexing information contained in the books would clearly improve their search results and benefit them commercially. Also, the settlement does not resolve this dispute for other works that are not included under this settlement, or provide legal answers on who owns the copyright for ‘orphaned works’ whose copyright has expired or is unknown. We look to the pending litigation of Google vs. Author’s Guild to provide more definitive, legal answers on these issues.