The title of this post was updated (replacing “Display” with “Performance”) a day after it was originally published. See the update at the bottom of the post for more details.


Last week a federal district court in California decided in favor of the University of California defendants in a lawsuit brought by Ambrose Video Publishing (AVP) and the Association for Information Media and Equipment (AIME). A majority of the decision hinged around whether the plaintiffs had “standing” to bring the suit, and commentary by Kevin Smith and ARL go into more detail about that. The bit that I found interesting was reasoning by the judge that equated “public performance” rights with “streaming.” Far down in the judge’s decision was this line of reasoning:

AVP alleges that Defendants’ use of the DVDs (streaming them on the UCLA intranet) infringed on multiple exclusive rights that AVP has over the DVDs. These exclusive rights included the rights to control copying, public performance, public display, and public distribution. (Id.) Defendants argue that AVP (or “Ambrose”) does not state a claim for violation of AVP’s exclusive rights to publicly perform, publicly display, distribute, and copy under the Copyright Act because: (1) AVP granted Defendants the right to publicly perform the DVDs at issue; (2) UCLA’s streaming practice is not a “public display” under the Copyright Act;1 (3) there are no allegations that UCLA distributed copies of the DVD, as “streaming” is not distribution, and (4) any unauthorized copying was an incidental “fair use” under the Copyright Act and therefore permissible.

AVP argues that Defendants’ copying the DVD in a way that changes the format of the DVD to a digital format for use on the internet violates AVP’s rights under the copyright law. As to Defendants’ fair use argument regarding the making of unauthorized copies, Plaintiffs argue that Defendants’ use is not fair use because Defendants knew that their license was limited and did not provide for streaming (and therefore incidental uses of the streaming practice such as copying) of the DVDs.

(1) Publicly Perform

AVP concedes that it licensed Defendants to “publicly perform” the DVD. At oral argument, AVP conceded that within the scope of the right to publicly perform the DVD is Defendants’ ability to show the DVD in a classroom. Plaintiff’s basic argument is that streaming is not included in a public performance because it can be accessed outside of a classroom, and as remotely as overseas. However, Plaintiff does not dispute that in order to access the DVDs, a person must have access to the UCLA network and specifically to the DVD. The type of access that students and/or faculty may have, whether overseas or at a coffee shop, does not take the viewing of the DVD out of the educational context. The Court finds that the licensing agreement allows Defendants to put the DVD content on the UCLA internet network as part of the provision of the agreement that Defendants could “publicly perform” the DVD content, and therefore Plaintiffs have failed to state a claim of copyright infringement over their right to publicly perform the DVD.

(2) “Public Display” and “Distribution”

Plaintiffs do not specifically counter Defendants’ arguments that “streaming” is not distribution or that the Complaint lacks allegations of “public display.” The Court finds that Plaintiffs have failed to state a claim for a violation of these rights under copyright law.

(3) “Copying”

Defendants do not dispute that they did not obtain authorization from AVP before placing the DVDs’ content on the UCLA network. They argue that the copying was an incidental use of their right to publicly perform the DVDs. Incidental exercises of other lawful rights constitute non-infringing “fair use.” See perfect 10, Inc. v. Amazon.com, Inc., 508 F.3d 1146 (9th Cir. 2007) (holding that the creation of short-term copy to be a fair use). Here, Plaintiff AVP alleges that Defendants copied the DVD in order to be able to put it on the UCLA internet network. Because placing the DVD on the UCLA network is part of the right that Plaintiff licensed to Defendants, the copying was incidental fair use.

- Order Granting Defendant’s Motion To Dismiss, Association For Information Mediat and Equipment et al v. The Regents of The University of California et al, CV 10-9378, pp. 8-10, as captured from PACER by Internet Archive RECAP (emphasis added, legal citations removed from text)

To me, this seems to equate public performance with the right to stream. I would note that a public performance right is one that needs to be purchased/negotiated, and ownership of a physical DVD does not imply public performance rights. (This is where I take issue with the lead paragraph of the Ars Technica article covering this decision; it is not enough to have purchased the DVD — one must purchase the public performance rights as well.) Still, this is a significant decision for higher education institutions that seek to harmonize physical classroom capabilities/options with those of distance learners. Or, in other words, if it can be done in the physical classroom it can be done in the virtual classroom as well (with all of the identity and enrollment access checks in place). As the Chronicle of Higher Education quotes New York Law School associate professor James Grimmelmann as saying, “universities will have a little more breathing room for using media.”

This is, of course, not legal advice. Consult your own lawyers before using this court decision as precedent. And note that Ambrose and AIME still have the option of refiling the case subject to meeting criteria not talked about in this post.

Update

To “display” a work means to show a copy of it, either directly or by means of a film, slide, television image, or any other device or process or, in the case of a motion picture or other audiovisual work, to show individual images nonsequentially.

To “perform” a work means to recite, render, play, dance, or act it, either directly or by means of any device or process or, in the case of a motion picture or other audiovisual work, to show its images in any sequence or to make the sounds accompanying it audible.

- U.S. Code, Title 17, Chapter 1, Section 101 (“Definitions”); paragraphs for display and perform

Not that these definitions really clear up anything — there is clearly a diference between “display” and “perform” for motion picture works, but the exact distinction is not significant to me. There are probably whole treatises written on the difference, but I couldn’t come up with anything quickly that I trusted that explained the difference. As Jonathan points out, more clarity here would be welcome.

It is another e-books issue of DLTJ Thursday Threads with updates on three significant efforts: HarperCollins, Google Book Search Settlement, Digital Public Library of America. And, just for fun and to keep this from turning into purely a legal and blue-sky policy blog, we have a video of juggling robots.

Feel free to send this to others you think might be interested in the topics. If you find these threads interesting and useful, you might want to add the Thursday Threads RSS Feed to your feed reader or subscribe to e-mail delivery using the form to the right. If you would like a more raw and immediate version of these types of stories, watch my FriendFeed stream (or subscribe to its feed in your feed reader). Comments and tips, as always, are welcome.

More Libraries Decide To Give HarperCollins the Cold Shoulder

Library consortia, organizations, and individual library systems around the country continue intensely to debate the HarperCollins decision to limit ebook checkouts to 26, and many are joining a growing list of those deciding not to purchase HarperCollins ebooks. …

[Jo Budler, State Librarian of Kansas] is now heading a task force that has been formed by the Chief Officers of State Library Agencies (COSLA) that is debating a response to HarperCollins. The task force teleconferenced on March 9 with representatives from Georgia, New York, New Jersey, Massachusetts, Alaska, Colorado, Ohio, Texas, and Tennessee participating.

- More Libraries Decide To Give HarperCollins the Cold Shoulder, Michael Kelley, Library Journal

The past couple of weeks have seen more libraries and library consortia making decisions not to buy ebooks from HarperCollins after the 26-checkout limit came into force earlier this month. The article quoted above from Tuesday gives the latest roundup. HarperCollins’ March 1st Open Letter to Librarians is still on their blog, still accepting comments (overwhelmingly against the policy), and would seem to be the last official word from the company to date. OverDrive’s CEO Steve Potash is interviewed about e-books in a 4-minute video from Bloomberg Television’s “In the Loop” show, and part of the clip contains his commentary about the HarperCollins situation (“That is one publisher that is adding a new term based upon some of the concerns their authors and agents expressed about a continuing right that a library could have for many years.”). Competitors to HarperCollins are trying to use the outrage to their advantage. Some, such as Library Journal Editor in Chief Francine Fialkoff, see this situation as a call to action on the wider topic of ebook licensing. And the most creative response I’ve seen comes from Dave Bott who proposes a “borrow it now” upcharge and revenue share for libraries.

The Google Settlement Rejection: What Comes Next?

When it was introduced in 2008, the Google Book Settlement was hailed by its creators as historic. Now, it is history. On March 22, after more than two years of contentious debate, Judge Denny Chin rejected the controversial proposal on copyright and antitrust grounds. A status conference is set for April 25 in New York, and the parties are free (and some say likely) to appeal the decision, though at press time no appeal had been announced.

Seen as the solution to a straightforward copyright claim lodged by authors and publishers against Google in 2005, the settlement offered a complex blueprint for a new digital book business, a $125 million legal puzzle that involved a dizzying array of moving parts: thousands of authors, millions of titles, libraries, the public interest, murky copyright law, orphan works, and even the creation of a new central rights authority, the Book Rights Registry, all of which appear to be off the table now.

PW takes a quick look at what the settlement’s rejection means for the parties and other stakeholders.

- The Google Settlement Rejection: What Comes Next?, Andrew Albanese, Publishers Weekly

A few more things have been written since last week’s DLTJ summary on the Google Book Search settlement rejection. Publisher’s Weekly has a high-level overview of impact and plausable desires of the various groups: Google, publishers, authors, libraries, objectors and the public. James Grimmelmann continues to put out great work with a 10-minute interview from Bloomberg Law that gives an overview of the “legal and political implications” of the Judge Chin’s decision. And Robert Darnton, director of the Harvard University Library and member of the Digital Public Library of America (DPLA) steering committee, wrote an article for the New York Review of Books that is part analysis of the rejected class action and part cheerleading for the DPLA. Interestingly, at the same time this settlement about the Google Books Library scanning project was rejected Google confirms Canadian launch of eBookstore will go forward | Quill & Quire using the Google Books Publisher Program materials.

Digital Public Library of America “Concept Note”

On behalf of the Steering Committee, I wanted to share with you a draft “concept note” that describes where we stand in the DPLA planning process after our recent workshop. We are posting this document to this list, and to our planning wiki, with the intention of prompting discussion. Our next steps include development of the six workstreams; convening a group of potential funders; convening a series of further workshops on the specific questions that need to be decided; and building a proof of concept of the DPLA system to demonstrate the potential of this ambitious undertaking. I know I speak on behalf of the Steering Committee when I say that I look forward to your views.

- Concept note, published by John Palfrey to the dpla-discussion mailing list, 26-Mar-2011

Late last week, the Digital Public Library of America (DPLA) steering committee published a “Concept Note” that represents the current thinking based on the work of the workshop earlier this month and the subsequent discussions. As noted above, Robert Darnton, member of the Digital Public Library of America (DPLA) steering committee, wrote an article for the New York Review of Books that outlines in part some of the reasons and processes the DPLA might follow. Comments are happening on the dpla-discuss mailing list.

Quadrocopter Ball Juggling

Markus Waibel from robotspodcast pointed us to this amazing video showing two quadcopters juggling a small ball. The video is made by the Control of Distributed, Autonomous Systems lab of professor at the Swiss Federal Institute of Technology in Zurich (ETHZ), Raffaello D’Andrea. It is shot inside the Flying Machine Arena, a facility that provides a control environment for motion control research. The two quadcopters are based on the ‘Hummingbird’ quadrotor made by Ascending Technologies with new controls and custom made electronics fabricated by the institute. A vital component is a state of the art Vicon motion capture system that provides the localization data to the robots and makes extremely precise and dynamic control possible. You can learn more about the labs other projects here.

- Quadrocopter Ball Juggling, robots.net

Alright — that quote is admittedly filled with a bunch of technical gobbledegook (I don’t sound like that, do I?), but the video itself is pretty cool. It is one minute long and shows one then two hovering robots juggle a ball to a height of what looks like about 20 feet.

This week’s big news is hard to miss — we have a decision by the judge evaluating the settlement agreement in the Google Book Search lawsuit. This is probably the first of many follow-ups in DLTJ as this case keeps taking interesting twists and turns. Also of note this week is Cornell Library’s statement that it will no longer sign contracts that include non-disclosure agreements. Lastly is a pointer to a 10 minute video of Hans Rosling’s TED talk on machines leading to increased literacy.

Feel free to send this to others you think might be interested in the topics. If you find these threads interesting and useful, you might want to add the Thursday Threads RSS Feed to your feed reader or subscribe to e-mail delivery using the form to the right. If you would like a more raw and immediate version of these types of stories, watch my FriendFeed stream (or subscribe to its feed in your feed reader). Comments and tips, as always, are welcome.

Settlement Rejected in the Google Books Search case

In the end, I conclude that the ASA [Amended Settlement Agreement]is not fair, adequate, and reasonable. As the United States [Department of Justice] and other objectors have noted, may of the concerns raised in the objections would be ameliorated if the ASA were converted from an “opt-out” settlement to an “opt-in” settlement. I urge the parties to consider revising the ASA accordingly. The motion for final approval of the ASA is denied, without prejudice to renewal in the event the parties negotiate a revised settlement agreement. The motion for an award of attorneys’ fees and costs is denied, without prejudice. The Court will hold a status conference on 4/25/2011, at 4:30 p.m. in Courtroom 11A of the Daniel Patrick Moynihan Courthouse.

- Judge Denny Chin in The Authors Guild et. al. v. Google

Thirteen months after the last formal hearing, Judge Denny Chin issued the opinion of the New York Southern District Court: rejection of the settlement agreement between Google and a large class of authors and publishers. The path forward is not yet clear, but there seem to be three possibilities: 1) the parties file another amended agreement that effectively ignores orphan works (copyright holds would have to opt-into the settlement); 2) the parties appeal the rejection decision; or 3) the parties move back to litigating the original 2005 case (as amended in 2008). The first path — filling another amended settlement agreement — seems to be the most likely at the moment. In their response to the court’s ruling, the Association of American Publishers said, “[the court decision] provides clear guidance to all parties as to what modifications are necessary for its approval. The publisher plaintiffs are prepared to enter into a narrower Settlement along those lines to take advantage of its groundbreaking opportunities. We hope the other parties will do so as well.” Authors Guild President Scott Turow said, “we’ll be studying Judge Chin’s decision and plan on talking to the publishers and Google with the hope that we can arrive at a settlement within the court’s parameters that makes sense for all parties.” Google was pretty non-committal: “This is clearly disappointing, but we’ll review the court’s decision and consider our options.”

In his analysis of the opinion, New York Law School professor James Grimmelmann said, “If I had to bet, I would guess that we’ll end up with a revised settlement drafted to meet Judge Chin’s specification, which will be approved relatively quickly (at least compared to this last go-round).” Professor Grimmelmann goes on to predict the outlines of what a resubmitted settlement agreement might look like:

• Google is allowed to continue scanning and searching in exchange for cash payments on the order of (but perhaps not exactly) the $60 in the present settlement, and it’s required to provide an opt-out. Very few people have argued that this form of settlement would be beyond the court’s power. The precise explanation of how this would be distinguishable from the present settlement, although quite feasible, will require some nuance and subtlety.
• The Display Uses — Consumer Purchase, Institutional Subscription, etc. — are either gone entirely ore are offered on an opt-in basis. The difference between these two possibilities is not large, since, in effect, Google already offers an opt-in through the Partner Program.
• The libraries receiving digital copies are released from liability but are even more tightly restricted in the uses they can make than under the present settlement.
• The fates of other facets of the settlement such as the Research Corpus, will be hammered out in the negotiations.

Notable news and opinion on library related aspects of this decision come from HathiTrust (highly recommended), Stanford University, Eric Hellman (on what could be next for the Book Rights Registry), and Karen Coyle (list of open questions).

James Grimmelmann continues to be a key person to read as he, along with the law school students he supervises at The Public Index, dissect and make accessible the court filings and surrounding legal opinions. The Public Index also maintains a listing of notable news articles and opinions. The commentary is also happening in Twitter, which you can read in raw form by searching Twitter for the #GBS hashtag or by reading the daily aggregation/summation paper.li #GBS hashtag newspaper.

Cornell University Library’s Position on Nondisclosure Clauses in Licenses

To promote openness and fairness among libraries licensing scholarly resources, Cornell University Library will not enter into vendor contracts that require nondisclosure of pricing information or other information that does not constitute a trade secret. All new and renewed licenses submitted with nondisclosure clauses will not be signed but henceforth will be referred to the Associate University Librarian for Scholarly Resources and Special Collections for further negotiation.

- Cornell University Libraries Website

Cornell’s decision mirrors a resolution adopted by the Association of Research Libraries in 2009 and a statement by the International Coalition of Library Consortia in 2004. A more complete analysis of Cornell’s efforts is in the Chronicle of Higher Education (behind the Chronicle’s paywall) and Library Journal.

Hans Rosling and the magic washing machine

What was the greatest invention of the industrial revolution? Hans Rosling makes the case for the washing machine. With newly designed graphics from Gapminder, Rosling shows us the magic that pops up when economic growth and electricity turn a boring wash day into an intellectual day of reading.

- Description of Hans Rosling’s December 2010 TEDWomen talk

Hans Rosling makes another stunning and insightful 10-minute presentation using key statistics about population growth and energy usage. In this one he makes a link between the use of machines to replace manual labor and the advancement of literacy with the saved time. [Discovered in an NPR Planet Money blog entry.]

The text was modified to update a link from http://publishers.org/main/PressCenter/Archicves/2011_March/GoogleBooksSettlementStatement.htm to http://publishers.org/press/29/ on May 17th, 2011.

Wordle of the Opinion Rejecting the Google Book Search Settlement Agreement

As a preliminary matter, I conclude that most of the [legal] factors favor approval of the settlement. The ASA [Amended Settlement Agreement] was the product of arm’s length negotiations between experienced, capable counsel, with assistance from DOJ [Department of Justice]. Further litigation would be complex, expensive, and time-consuming. Although the parties have conducted only limited discovery, the case has been pending for some years. The legal and factual issues are complex, and there is a risk that if plaintiffs were to proceed to trial, they would be unable to establish liability or prove damages. As discussed further below, substantial questions exist as to whether the case could be maintained as a class action, in its present form, through trial. In light of the attendant risks, the financial aspects of the ASA fall well within the range of reasonableness.

Only two of the [legal] factors weigh against approval of the settlement: the reaction of the class and defendant’s ability to withstand judgment. As for the latter, there is no real risk that a judgment following trial would render Google insolvent, and thus the avoidance of insolvency is not an issue. The former, however, is important. Not only are the objections great in number, some of the concerns are significant. Further, an extremely high number of class members — some 6800 — opted out. … I turn to the objections now.

An Associated Press story in the Washington Post published shortly after the opinion was release includes a comment from Google’s lawyers:

Hilary Ware, Google’s managing counsel, called the decision disappointing and said the company was considering its options.

“Like many others, we believe this agreement has the potential to open up access to millions of books that are currently hard to find in the U.S. today,” Ware said in a statement. “Regardless of the outcome, we’ll continue to work to make more of the world’s books discoverable online through Google Books and Google eBooks.”

Last year ARL’s public policy group published a flowchart of options that the case could follow. With Judge Chin’s opinion, the number of options is reduced to two: appeal (and follow a large appeal decision tree) or not (and follow a large continued litigation tree).

To follow the discussion, look for the #GBS hashtag on Twitter, and in particular follow James Grimmelmann of New York Law School on Twitter and his blog along with a project he is supervising, The Public Index and its blog. Also watch the wisdom-of-the-crowds at the paper.li #GBS hashtag newspaper, which is updated daily and aggregates the links published to #GBS tweets.

The text was modified to remove a link to http://www.washingtonpost.com/nyc-judge-concludes-google-book-settlement-not-fair-adequate-and-reasonable/2011/03/22/ABG2DuDB_story.html on July 13th, 2011.

This week’s Thursday Threads highlights includes two legal cases that bear watching. The first is the case of SkyRiver/Innovative Interfaces versus OCLC (covered on DLTJ previously); now that the case has been moved to OCLC’s home court (the federal district court located in Columbus, OH), it is asking for the case to be dismissed. The second legal cases is the UCLA streaming media case, with issues ranging from fair use to licensing terms to DMCA violations; if this one goes to trial we might get some new case law surrounding the intersection of copyright and libraries. The remaining two pieces are a look at how publishers (and librarians) should avoid paving cow-paths and the origins of the hash symbol.

If you find these threads interesting and useful, you might want to add the Thursday Threads RSS Feed to your feed reader or subscribe to e-mail delivery using the form to the right. If you would like a more raw and immediate version of these types of stories, watch my FriendFeed stream (or subscribe to its feed in your feed reader). Comments and tips, as always, are welcome.

OCLC Files Motion to Dismiss SkyRiver/Innovative Lawsuit

This case arises because Plaintiffs believe they are entitled to free access to OCLC’s proprietary WordCat service, a comprehensive database of library records, developed over the past forty years. While framed as an antitrust case, Plaintiffs’ Complaint alleges only that OCLC has engaged in the types of appropriate behaviors expected of competitors: compete vigorously on price (or, at worst, price a product too high), work with libraries to develop new products, introduce innovative new products that threaten Plaintiffs’ profitability, and sell less expensive subscriptions than à la carte services. In short, even taking the Complaint’s allegations as true, the antitrust laws encourage OCLC’s behavior: vigorous competition against a company offering less expensive, but inferior products, is perfectly lawful. It is axiomatic that “[t]he antitrust laws are for the benefit of competition, not competitors.” Under these laws, OCLC is not obligated to give away its investment, to subsidize Plaintiffs’ prices by lowering its own, or to refrain from seeking to keep its subscriber libraries. Because Plaintiffs fail to plausibly plead that OCLC has done anything other than appropriately behave as any competitor would, and thus Plaintiffs have not suffered any antitrust injury and lack antitrust standing, the threshold requirements to proceed with an antitrust case have not been met, and this Court should dismiss the Complaint. Legal citations removed

OCLC’s Motion deliberately mischaracterizes the allegations in SkyRiver’s Complaint for OCLC’s own public relations purposes. Our legal team will respond in due course. Our position remains as it was in July when we filed suit – that OCLC has engaged in business practices which ultimately will be found to be illegal.

…

The goal of our lawsuit is to create a level playing field for competitors in the library technology marketplace—opening the doors to competition will lead to greater innovation and technological advancement. We look forward to proving our case in court.

So goes the latest round of legal maneuvering with a motion to dismiss filed by OCLC and a public statement by Leslie Straus of SkyRiver. Karen Coyle has two posts that dissects the OCLC motion. The timeline now in play is that SkyRiver/Innovative has until January 14th to file a reply to the motion to dismiss and OCLC has until January 31st to reply to that reply. There is also a “preliminary pretrail conference” set for January 4th that will likely take place by phone. The place to go for a comprehensive view of what’s happening with the case is Marshall Breeding’s SkyRiver versus OCLC page on Library Technology Reports. If you want more of the legal nitty-gritty (and don’t have a PACER account), look at the copy of the case docket on the Internet Archive RECAP service. (It doesn’t look like Justia is getting documents out of PACER.)

UCLA Sued Over Streaming of Educational Videos

This case involves the Defendants’ assertion that UCLA, one of the largest educational providers in the United States, can take copy-protected DVDs, produced and/or distributed by [Ambrose Video Publishing] and other AIME members, stream these DVDs via the Internet or the UCLA intranet to faculty and students enrolled in their courses in derogation of existing licenses and established copyright law.

The Association for Information and Media Equipment (AIME) followed through on its threat to sue the University of California at Los Angeles over the latter’s streaming of copyrighted videos through the university’s course management system. UCLA argued that since the course websites are limited to registered students that converting the videos to streaming is equivalent to showing them in class. That wasn’t good enough for AIME and co-plaintiff Ambrose Video Publishing (AVP), and they announced [PDF] that the lawsuit had been filed in a California federal district court. A copy of the complain is on the AIME website [PDF], and some ancillary material is in the Internet Archive RECAP copy of the case docket.

This case should be interesting because UCLA is claiming (according to the complaint filed by AIME) to rely on a couple of exemptions in copyright law: the public performance exemption for “face-to-face” teaching (17 U.S.C §110(1)), fair use (17 U.S.C. §107), and the public performance exemption for certain digital distance learning uses (17 U.S.C §110(2)). AIME/AVP is also claiming that UCLA is violating the provisions of AVP’s DVD license. It isn’t clear from the complaint whether this was a “click-through” license (taking effect by the act of ordering videos from the website) or an actual signed license between AVP and UCLA. Throw into the mix that AIME/AVP claim that UCLA violates the illegal-to-bypass-digital-rights-managment provisions of the Digital Millennium Copyright Act, and the outcome of this case — if it indeed does go to trial — one to watch.

Publishers, don’t pave that cow path

What we realized was that the market and the industry are shifting so quickly that trying to focus on the product too much will get you into the “death wobbles,” as we call them in Australia. In traditional publishing we tend to “concrete the cow path” — if the cow is going from the paddock to the waterhole this way, let’s concrete it so the cow goes faster. Then the cow decides there’s actually another way that’s quicker, and you realize that you’ve concreted the cow path for no reason whatsoever. Our instinct in publishing is to say: “What is your new pathway? I’ll concrete that one.”

The lesson is that you don’t want to concrete your cow paths. It is all about how you do things. You need to remain incredibly flexible. You need to intuitively understand your industry and your customer. Focusing on how you do things rather than focusing on exactly what it is that you’re doing is something we learned over the last few years.

As a profession, are librarians paving cow-paths? This metaphor early in an interview article with Gus Balbontin of Lonely Planet resonated with me. I’m also studying how software developers and operations staff can work together in a concept called “Continuous Delivery” — the notion that software in development should always be production-ready. If we can move so nimbly as to not “pave a cow-path” with software release schedules measured in months or years, we will likely be able to better respond to changes in the environment and user expectations.

How the # became the sign of our times

The term octothorpe was coined by engineers at Bell Laboratories in the early 1960s, who wanted a name for one of two non-number function symbols on the first touch-tone keypads (the other was the *, which they called a sextile). It didn’t catch on, and the # key became famous as an ineffectual way of interacting with the robots who work at your bank.

The Guardian newspaper in the U.K. has this historical treatment of that symbol we call the cross-hatch, the hash, the pound sign, and the octothorpe. Just like how the at-sign (‘@’) became important in e-mail addresses and later as the signal for an account name, the ‘#’ symbol has taken on a new life as the ‘hashtag’ that brings together topics on Twitter. This is a fun look at the origins of the symbol.

The text was modified to remove a link to http://www.aime.org/news.php?download=nG0kWaN9ozI3plMlCGp%3D&u=101215120000 on May 17th, 2011.

One of the baffling elements I’ve found in discussions of the history of OCLC is that of its tax exempt status under Ohio law. The latest example of this comes from documents filed in the SkyRiver/Innovative-vs.-OCLC case that make disparaging remarks about how OCLC got its state tax-advantaged status. (The text of the remarks in those documents are included below.) I was curious about this a while back and so did some research on the topic. I had set it aside and forgotten about it until this latest lawsuit brought it up again. So, to set the record straight, here is at least one version — hopefully written from a neutral perspective — of what happened nearly three decades ago.

A couple of notes before we begin. First, the title of this post purposefully starts with an indefinite article. This is not the story; this is a story that I have managed to piece together. I don’t do legal research and legislative history for a living, but I did have a class in those topics during library school. (Hi, Professor Wise!) This should not be considered a definitive version…it is as best as I can piece together.

Second note. Many of the documents come from LexisNexis Academic Universe. Even though the documents themselves are in the public domain (being of government origin), I’m not sure the LexisNexis versions can be openly published because they contain information from the LexisNexis editors. ¹ I could publish the raw documents if I were to go to the various governement offices that have this information and make copies, but that — quite frankly — is more effort that I’m willing to put into this project. So you’ll either have to take my word for it or look up the citations (provided in the text below) yourself if you have access to LexisNexis Academic Universe.

Third note. This post only deals with the tax status of OCLC as it relates to Ohio law. In other words, the taxes that OCLC would owe to the State of Ohio. OCLC’s exemption from federal income taxes under section 501(c)(3) of the Internal Revenue Service Code is another matter entirely. I’m sure there is a paper trail to that as well (part of which includes the IRS Form 990 declarations from which details of the SkyRiver/Innovative complaint are drawn), but I don’t know how to get to it.

The Origin

On January 23, 1980, appellant, OCLC Online Computer Library Center, Inc. (hereinafter referred to as “OCLC”), filed an application for real property exemption pertaining to certain land located in Dublin, Ohio, together with the five-story building and other improvements thereon, relating to the tax year 1979 and thereafter. The Commissioner denied OCLC’s application for exemption. OCLC has appealed from such denial to this Board.

On September 3, 1981, the Ohio Tax Commissioner denied the appeal. I don’t have a copy of that decision, but the decision at the appellate level includes the text of the appeal from OCLC. Based on that text, it seems like the denial was based on the “fact that Appellant’s real property is not used exclusively for charitable purposes” as defined by the Ohio Revised Code (sections 5709.12 and 5709.121, if you must).

There are numerous references to case law in Ohio that OCLC used in its appeal that I won’t list here, but there are two references to what I would offer are core values of OCLC that were refuted by the Ohio Tax Commissioner:

The Commissioner erroneously held as a matter of law and fact that Appellant OCLC failed to establish its uniquely charitable purpose of furthering the growth of human knowlege. The Commissioner’s narrow focusing upon and findings regarding Appellant OCLC’s provision of services at a cost savings improperly ignored other substantial elements of Appellant OCLC’s charitable purpose and interactivity with its library members.

The Commissioner erroneously held as a matter of law and fact that there is nothing unique in the nature of Appellant OCLC’s services that would make it an unlikely service to be engaged in by private enterprise. The essence of Appellant OCLC is the cooperative sharing of the bibliographic records of all its member libraries and the completeness of the resulting data base in which all its library members have a beneficial right of ownership and use and without which Appellant OCLC as a national library resource would not exist. It is an accident of fate that the resource is physically located in the subject real estate.

The Appellate Court Decision

An institution which has as its essential purpose the accumulation of bibliographic catalog data supplied by members organizations which is then made available to and for the use of its member organizations is not a “public college,” “academy,” or “public institution of learning” as such terms are used in [Ohio Revised Code Section] 5709.07. While it may by true that OCLC may actually teach individuals concerning the nature of the data stored in OCLC’s computer data base and how to use OCLC’s equipment in obtaining such data information through the use of OCLC’s equipment, such teaching process primarily subserves OCLC’s fundamental purpose of providing information as to the existence, owner and holder of particular books and other educational materials and a means to make arrangements to obtain such educational materials, if desired.

In the last analysis, OCLC is not an institution having a teacher-student character. OCLC is in the business of selling, leasing or renting equipment and facilities capable of providing information and access to written information, primarily in form the of books, held in public or private libraries of OCLC’s member organizations. The providing of such information by OCLC in the form of printed bibliographic catalog cards or via telephonic terminal connections with OCLC’s computer facilities, is primarily, if not solely, for members contracting with OCLC and for an established per transaction price paid by the member organization obtaining such information.

[...]

Although a laudable purpose, the business of providing a computerized library network, the storing of library related bibliographical catalog data, and the selling or licensing the use of equipment necessary to gain access to such stored data or to communicate with member organizations having a contractual relationship with OCLC, is not a charitable purpose. There are many data processing corporations providing data storage capabilities for the benefit of its users. The providing of date storage or data processing services and equipment for an established price, whether for profit or otherwise, is not a charitable purpose or activity.

The fact that the particular users of data storage or data processing services may be charitable institutions that may benefit, in terms of cost, in obtaining information from a data storage or data processing organization below what would otherwise be involved, in terms of time and cost in obtaining like benefits, does not thereby make the supplier of such services and facilities a vicarious charitable institution merely because the facilities supplied are so immediate, intertwined and necessary to the efficient conduct of the users’ charitable activities.

…The subject real property is used to house, maintain and sell its computerized services and equipment to its member library organizations. Such services and facilities are not sold directly to the general public nor made available by OCLC directly to the public. Such sales are made only to member organizations having a contractual arrangement made with OCLC under which the member organizations agree and provide bibliographic data pertaining to their own library holdings of books and related materials and agree to pay a per transaction cost for use of OCLC’s data and system. OCLC does not offer or provide its services and facilities directly to the general public or offer or provide the same except upon a contractual arrangement and an obligation to pay therefor….

The evidence does indicate that OCLC has in fact produced a “profit” in the sense that it has accumulated operating revenues in excess of operating expenses although, by virtue of being a non-profit corporation, such profits are not directly distributable as such to its member organizations.

Although OCLC contends that the Commissioner’s findings of fact and conclusions of law are erroneous, upon review of the Commissioner’s findings and conclusions of law we find that they are reasonable and proper in all respects.

The Board of Tax Appeals finds and determines upon the record as a matter of law that all specifications of error are without merit.

IT IS ORDERED that the Commissioner of Tax Equalization’s final determination, rendered by Journal Entry, dated September 3, 1981, here involved, should be, and hereby is, affirmed.

The Ohio Supreme Court Decision

OCLC’s membership consists of one hundred eighty-four academic and public libraries in Ohio, and over two thousand six hundred libraries throughout North America. Its services are not directly available to the public at large. Members are charged a fee, and in return they receive terminal equipment for online access to OCLC’s computer facilities via dedicated telephone lines. OCLC further provides personnel and equipment in order to service and maintain its customers’ computer terminals and other associated computer hardware. The bibliographic holdings of member libraries are entered into the data base for access by all other member libraries, thus facilitating the location of books and materials held by member organizations, and simplifying procedures for inter-library book transfers.

OCLC also provides cataloging information to member libraries. For example, when a library purchases a book already owned by another member library, a search of OCLC’s data is made and, because the bibliographic record already exists in the data base, a catalogue record can be generated at a greatly reduced cost.

In addition to the aforementioned services, OCLC has engaged in research for companies, including Bank One of Columbus and Warner Amex QUBE, a cable television company. On one occasion, OCLC performed research for a telecomputing firm and, in return, was offered fifty percent of the firm’s stock for an additional price of one dollar.

The Commissioner of Tax Equalization (hereinafter “commissioner”) denied the exemption on the basis that OCLC is neither a “public college or academy” or “public institution of learning,” as those terms are employed under R.C. 5709.07, nor was the property found to be used “exclusively for charitable purposes” so as to entitle OCLC to an exemption under R.C. 5709.12. On appeal, the Board of Tax Appeals affirmed. In its appeal to this court, OCLC has abandoned its argument for an exemption as a public institution of learning in conjunction with R.C. 5709.07, and, as such, contests only the board’s determination that it failed to meet the qualifications for a charitable exemption under R.C. 5709.12.

Some excerpts from the legal reasoning in deciding the case:

OCLC submits that because it serves libraries, which in turn benefit the general public through the dissemination of knowledge for the edification and improvement of mankind, it qualifies as an institution furthering human knowledge and, therefore, is a charitable institution. This argument, however, simply constitutes an attempt by OCLC to obtain a vicarious charitable exemption by virtue of the activities of its customers.

In Joint Hospital Services v. Lindley (1977), we rejected a similar vicarious charitable exemption theory. In that case, a group of hospitals pooled their resources and established a laundry and linen service for their members, as well as for several other non-profit organizations.

As in the present case, the taxpayer relied upon the charitable status of its customers as the basis for seeking a charitable exemption. The court observed, however, that notwithstanding the charitable nature of the institutional customers who obtained the laundry and linen services, it is the charitable activities of the taxpayer seeking the exemption which must be considered when reviewing an application for a charitable exemption. Although a laudable purpose, the taxpayer’s laundry and linen service neither improved health nor alleviated illness and, accordingly, the exemption was denied.

So, too, in the instant cause, the record demonstrates that OCLC’s activities more closely resemble those of a publisher of library materials or a data base firm specializing in information retrieval, such as Lexis or the New York Times Information Bank, rather than that of a library. Although OCLC’s service may greatly enhance the ability of libraries to better serve the public, OCLC essentially offers a product to charitable institutions, for a fee exceeding its cost, and, as the board concluded, is not itself a charitable organization.

In addition, OCLC fails to address the effect that its commercial fee paying research endeavors have upon its status as an organization seeking a charitable exemption. … Such commercial research endeavors have previously been determined by this court to preclude the issuance of a charitable tax exemption. Moreover, although OCLC may have originated as a charitable organization upon its creation in 1967, the organization, which now operates throughout North America for any library willing to pay its fee, and which engages in fee paying research projects for the private gain of commercial industries, has since transcended the realm of a charitable institution.

For the foregoing reasons, the decision of the Board of Tax Appeals, being neither unreasonable nor unlawful, is affirmed.

The New Law

Section 5709.72. Library technology development exemption

All tangible and intangible personal property shall be exempt from taxation if the following conditions exist in the year for which exemption is sought:

1. The owner is a nonprofit corporation that is exempt from federal income taxes under the provisions of section 501(c)(3) of the Internal Revenue Code of 1954, as amended, and the owner’s primary purposes are conducting research and development in library technology and providing computerized or automated services to public, charitable, or educational libraries;
2. The property is used in any of the following:
   1. Furnishing services to libraries and to similar information resource agencies or institutions whose activities directly benefit libraries, provided at least eighty per cent of the owner’s revenues from furnishing those services are paid by libraries, agencies, and institutions that are public, charitable, or educational;
   2. Conducting research and development in technology specifically for use in libraries, the majority of which are public, charitable, or educational;
   3. Providing products, internal support, or auxiliary services related to activities described in divisions (B)(1) and (2) of this section.

Section 5709 of the Ohio Revised Code contains the various types of organizations exempt from reporting personal property for the purposes of taxation. The legislative history of how this section came to be added to the Ohio Revised Code is probably lost in the mists of time; we don’t know who proposed it or why.

The Link to the “SkyOCLC” Case

OCLC argues that because the Complaint alleges that OCLC has abused its tax-exempt status, the interests of the Ohio court are greater than the interests of this California Court. The purported reason given is that the court’s decision may have an impact on other Ohio nonprofit corporations. This Court, however, is not going to determine OCLC’s state or federal tax-exempt status nor would an Ohio court. Moreover, OCLC has not explained how any impact on other nonprofits involved in other unrelated activities would result whether this case is tried in California or Ohio. Nor has OCLC explained why a federal court decision will affect only nonprofits in Ohio. In fact, the Supreme Court of Ohio in 1984 determined that OCLC was engaged in commercial activities and upheld an Ohio Board of Tax Appeals’ decision denying OCLC an exemption from property taxes. See OCLC Online Computer Library Center, Inc. v. Kinney, 11 Ohio St. 3d 198, 464 N.E. 2d 572 (1984), 1984 Ohio LEXIS 1136…. Apparently, OCLC had the political clout in Ohio to have the Supreme Court’s decision nullified legislatively.

OCLC, in its response, gets in its two cents as well (emphasis added):⁶

OCLC established in its Motion that Ohio courts have a stronger interest in the issues raised by this lawsuit because, among other concerns, Plaintiffs have raised allegations that OCLC is improperly exercising its non-profit status. In response, Plaintiffs cite a 1984 Ohio Supreme Court case which found that OCLC was not exempt from real estate and property tax under then-enacted Ohio law. In reality, as a result of that lawsuit, the Ohio Legislature demonstrated that it was concerned with OCLC’s non-profit mission by creating for OCLC a statutory exemption from the property tax requirements. Indeed, the language of the statute reinforces OCLC’s argument that the State of Ohio has a particularly strong interest in OCLC’s tax-exempt mission…. Plaintiffs’ unsupported claim that the Ohio Legislature acted because OCLC improperly exercised “political clout in Ohio” is an unwarranted attack on the Ohio Legislature and its members. Surely, Plaintiffs are not suggesting that the judges in the Southern District of Ohio would be unable to adjudicate fairly a lawsuit brought by an out-of-state litigant, or that they would improperly favor OCLC.

A Brief History of the State Support of Libraries in Ohio

State Support

Beginning in 1933, public libraries in Ohio were supported almost entirely from revenues from the intangible personal property tax. This was a tax levied on individuals’ holdings of intangible assets – mainly stocks and bonds. Though the tax was state-imposed and applied uniformly throughout Ohio, it was collected locally. The revenue remained in the county of origin, where it was distributed to library systems in that county in accordance with “need.”

This system of library finance, unique in the United States, had several results. Some counties, because of large holdings of taxable intangible property or vigorous local tax enforcement efforts, realized great revenue. Others received very little. By the late 1960s some of Ohio’s largest library systems were justly renowned for the strength of their collections, the breadth and variety of services offered, and their qualified professional staffs. However, there were many areas of Ohio where public library service was virtually nonexistent. In Adams County, with a 1970 population of about 19,000, the public library consisted of two small local libraries that received a total of only $19,100.

Library and Local Government Support Fund

In 1983, the Ohio General Assembly repealed the intangible tax based on recommendations from a bi-partisan study of the state’s entire tax system.
Governor Richard Celeste then created the Public Library Financing and Support Committee, consisting of members of the House and Senate, public library directors, the dean of the Kent State University School of Library Science, teachers, and financial experts, to determine how the state should replace the intangible tax funding for public libraries.

This committee determined that the loss libraries experienced through the repeal of the intangible tax was equal to 6.3% of Ohio’s personal income tax revenue. Therefore, 6.3% of Ohio’s personal income tax receipts were earmarked for the [Library and Local Government Support Fund].

The Public Library Finance and Support Committee set forth two goals for the state’s library fund distribution plan: 1. To preserve excellence in existing service, and 2. To improve library service in under funded and underserved areas. To accomplish these goals, the distribution formula divides the LLGSF among all of the state’s 88 counties in two ways. First, the formula guarantees each county the amount of revenue received from the fund in the preceding year plus an adjustment for inflation. This part of the distribution is called the “guarantee share.” Second, if any money remains in the fund after paying each county’s guarantee share, then that remainder is distributed according to an “equalization ration.” The equalization aspect of the formula distributes the excess over the guarantee in inverse proportion to per capita funding levels among the counties – those counties which received less per capita in the guarantee share, receive more in the equalization share. Thus, over time, the distribution to counties begins to balance.

Footnotes

1. See this discussion of FriendFeed to get a sense of the frustration in trying to figure out the LexisNexis Academic Universe Terms and Conditions.
2. OCLC Online Computer Library Center, Inc., Appellant, vs. Robert R. Kinney, Commissioner of Tax Equalization, Appellee. CASE NO. 81-D-602 (REAL PROPERTY TAX) STATE OF OHIO — BOARD OF TAX APPEALS. 1983 Ohio Tax LEXIS 162. October 11, 1983.
3. For instance, the decision from the appellate court says:
   

   On February 3, 4, 5, and 8, 1982, a hearing was held for the purpose of permitting the parties hereto to provide additional evidence, as authorized by R.C. 5717.02. Both parties were represented by counsel. A transcript of such proceedings (pp. 1 – 730, comprising 4 volumes) was subsequently filed.

   …to which I say, “Wow! 730 pages of transcripts!”

4. OCLC ONLINE COMPUTER LIBRARY CENTER, INC., APPELLANT, v. KINNEY, COMMR., APPELLEE. No. 83-1713 Supreme Court of Ohio. 11 Ohio St. 3d 198; 464 N.E.2d 572; 1984 Ohio LEXIS 1136; 11 Ohio B. Rep. 509
5. SkyRiver Technology Solutions, LLC et al v. OCLC Online Computer Library Center, Inc., Document #20, page 13 line 21 through page 14 line 5
6. SkyRiver Technology Solutions, LLC et al v. OCLC Online Computer Library Center, Inc., Document #25, page 11 lines 6 through 24

On September 9th, OCLC filed its first substantial response with the court to the antitrust lawsuit file by SkyRiver and Innovative Interfaces. And in a motion where OCLC requests a change of venue from the Northern District of California to the Southern District of Ohio — something seemingly mundane — they certainly pulled no punches:

Through a lengthy recitation of inaccurate facts, Plaintiffs allege six claims against OCLC. In short, Plaintiffs allege that OCLC, a forty-year old non-profit entity, is making it difficult for Innovative and its one-year old sister-company, SkyRiver, to compete and gain market share in the ILL, ILS, and the online cataloging library world. Through a variety of uncited references in their Complaint to “prominent library-related internet blogs,” unnamed commentators, and unattributed articles and reports, as well as through creating an anti-OCLC website, Plaintiffs have levied a propaganda war on OCLC simply because Plaintiffs have been unable to compete successfully with OCLC’s membership base and bibliographic data which OCLC earned through forty years of dedicated service to its member libraries.SkyRiver Technology Solutions, LLC et al v. OCLC Online Computer Library Center, Inc. Filing: 16. Page 4. Retrieved from Justia Docs on 18-Sep-2010. (link added)

The question at hand seems to be a bit more than a propogada war between SkyRiver and OCLC. But the court is not yet at the meat of the matter.

The text accompanying the motion for change of venue, though, does not deal with the issues raised in the lawsuit. Instead, it requests the California court “transfer this action from this District to the Southern District of Ohio, Eastern Division, located in Columbus, Ohio.”

“Litigation should proceed where the case finds its center of gravity.” The “center of gravity” is determined by the location of key witnesses and documents. Here, the “center of gravity” is plainly the Southern District of Ohio, for these reasons:

• OCLC’s headquarters and virtually all of the key witnesses and documentary evidence are located in or near Central Ohio.
• OCLC has a relatively small presence in California, as compared to its much larger and longer-established presence in Ohio.
• OCLC made all decisions and actions operative to the allegations of Plaintiffs SkyRiver Technology Solutions, LLC (“SkyRiver”) and Innovative Interfaces, Inc. (“Innovative”) (collectively “Plaintiffs”) in Ohio.
• The State of California does not have an interest in this lawsuit beyond the fact that Plaintiffs are residents of California, whereas the State of Ohio has a great interest in this lawsuit because Plaintiffs have alleged that one of Ohio’s non-profit entities is abusing its non-profit status, an allegation that can impact other Ohio non-profit entities.

For these and other reasons discussed in more detail below, all parties and the Court will be better served by transferring this case to the Southern District of Ohio, Eastern Division. In making this Motion, OCLC reserves any defenses that it may have against Plaintiffs’ claims.SkyRiver Technology Solutions, LLC et al v. OCLC Online Computer Library Center, Inc. Filing: 16. Pages 1-2. Retrieved from Justia Docs on 18-Sep-2010. (Legal citations removed from text.)

The last point is probably the most interesting to the layperson watching this epic battle unfold. Pages 12 and 13 contain these statements:

The state of Ohio’s interest in adjudicating this matter within its borders also militates towards transferring this case. OCLC’s relevant policies and practices were developed and implemented in Ohio and the most important witnesses and evidence are located there.

Further, Plaintiffs have stated serious, albeit unfounded, allegations regarding OCLC’s non-profit status. Plaintiffs have stated that OCLC is “abusing its status as a tax exempt, non-profit entity and unfairly competes with for-profit companies, such as Innovative and SkyRiver, by using its non-profit status as leverage to monopolize the library services industry….” These baseless allegations could create serious implications for other Ohio non-profit entities, and Ohio courts have a greater interest in litigating these issues. While Ohio courts also have more experience applying Ohio’s laws, more importantly, they also have more experience with the routine customs and practices of non-profit entities in Ohio. In addition, the Ohio Attorney General has oversight over Ohio non-profit entities and would likewise have an interest in this lawsuit.

In contrast, California does not have an interest in litigating this action because none of the operative actions occurred in California. Though Plaintiffs asserted California state law claims, as explained below, Ohio courts will be equally skilled at applying and interpreting those laws.SkyRiver Technology Solutions, LLC et al v. OCLC Online Computer Library Center, Inc. Filing: 16. Pages 12-13. Retrieved from Justia Docs on 18-Sep-2010. (Legal citations removed from text.)

The question of OCLC’s tax exempt status is one that bubbles up on occasion. It would seem like OCLC’s legal team is willing to take this head on.

Accompaying the motion to transfer is a declaration by Bruce Crocco, Vice President, Library Services for the Americas for OCLC, and this is a more interesting document. It goes into the history of OCLC — its founding in 1967 on the Ohio State University campus, how OCLC revolutionized the production of paper cards for card catalogs and the movement into online catalogs, and the evolution of the WorldCat brand name.

Earlier this week, the judge in the case set this schedule for hearing from the parties on the motion:

This matter is set for a hearing on October 29, 2010 on Defendant OCLC Online Computer Library Center’s motion to transfer venue. The Court HEREBY ORDERS that an opposition to the motion shall be filed by no later than September 27, 2010 and a reply brief shall be filed by no later than October 4, 2010.

If the Court determines that the matter is suitable for resolution without oral argument, it will so advise the parties in advance of the hearing date. If the parties wish to modify this schedule, they may submit for the Court’s consideration a stipulation and proposed order demonstrating good cause for any modification requested.

To refresh your memory, the lawsuit was filed on July 28, 2010, and was assigned to Judge Jeffrey S. White on August 6, 2010. On August 12th, Judge White set a Case Management Conference for January 14, 2011, and on August 13th lawyers for OCLC filed a notice with their intent to request a change of venue. Stay tuned for an update as the case moves on…

Thursday will be a big day in the Google Book Search lawsuit settlement: the parties to the lawsuit, along with the objectors, supporters, and friends-of-the-court, will be in the courtroom of United States District Judge Denny Chin offering oral arguments in the final settlement/fairness hearing. In his order, Judge Chin recognized 26 parties that will speak for up to five minutes each on their positions in the settlement (21 in opposition, 5 in favor). The U.S. Department of Justice will also speak at the hearing. But I think we’re all eagerly awaiting to hear what the judge himself will say about the settlement agreement.

In the lead-up to the hearing, Associate Professor James Grimmelmann at the New York Law School has continued his efforts, along with the students from the Institute for Information Law and Policy at New York Law School, to make the documents and proceedings of the lawsuit accessible and understandable to non-lawyers. In the most recent court filings leading up to Thursday’s hearing are some interesting nuggets.

In his posting on the motion for attorneys fees, he notes that “counsel for the author sub-class are asking for the full $30 million in fees and reimbursement of their out-of-pocket costs.” The filing contains information about the number of hours and the billing rate for some of the lawyers working on the case. Some of the stuff is just really interesting, like one filing that included everything from 18 hours by a partner of a firm (who is also a law professor at NYU) at rate of $995/hour to an itemization of 51¢ for long distance calls by the firm related to the case. Whew!

More interesting to DLTJ readers would be Grimmelmann’s highlights of Dan Clancy’s declaration in support of the agreement. Dan Clancy is engineering director of the Google Book Search project, so he has a unique insight into the inner workings. Grimmlemann notes that Clancy states:

• To date, Google has Digitized over twelve million books, and intends to continue Digitizing books in the future.
• Google has received metadata from 48 libraries.
• Google pays approximately $2.5 million per year to license metadata from 21 commercial databases of information about books.
• Google has gathered 3.27 billion records about Books, and analyzed them to identify more than 174 million unique works.

The third bullet is interesting in that I think we can eliminate one of the “commercial databases” from the list. I can’t find it in my notes from ALA Midwinter, but I seem to recall hearing Jay Jordan (OCLC President) say something along the lines that OCLC was not receiving a monetary return from the sharing of bibliographic data with Google; the value OCLC gets for its membership comes from the links back to WorldCat from Google services. If I got this wrong, I hope someone from OCLC will call me out on it.

The last bullet is interesting, too: Google has identifying 174 million works in analyzing all of the sources of data coming into it. I tried to find some numbers in the descriptions of WorldCat to compare that to, but didn’t have any luck this evening. (There isn’t anything about statistics available on http://worldcat.org/?)

To Grimmelmann’s highlights I would add this statement that seems strangely out-of-place.

• Google has no interest in censorship. Indeed, Google’s mission is to organize the world’s information and make it universally accessible and useful.

Has anyone brought censorship into the discussion yet? Privacy for sure, but censorship?

Also:

• Google has developed algorithms to compare these numerous sources of metadata and identify the most accurate data about each book.

They certainly seem to have invested a lot of effort in this area. More info can be found in my summary of Kurt Groetsch’s presentation at ALA Midwinter 2010.

Late, late in the day last Friday, the principle parties in the Google Book Search case submitted a revised settlement agreement agreement to the court. This post takes a look at the changes to the settlement from a library perspective. To keep this manageable, I’m not including discussion of library-oriented elements that haven’t changed; to read more about that I recommend the ALA/ACRL/ARL paper and/or previous posts on DLTJ. I’m also not including discussion on some aspects of the legal impact of the settlement (the appropriateness of setting policy via class action, the antitrust considerations of Google’s sole license to unclaimed works, etc.); for that I encourage browsing the writings of James Grimmelmann (any posting of his prefaced with “GBS” in the title). I will link off to some of the library-oriented discussion pieces of Grimmelmann and others in this post. If you really want the in-depth view of the settlement and the surrounding discussion, visit The Public Index, a website devoted to chronicling and commenting on aspects of the settlement.

How We Got Here

The Amended Settlement

• Notice begins: Monday, December 14, 2009.
• Opt-out/objection/amicus deadline: Thursday, January 28, 2010 (45 days later).
• DOJ files its response: Thursday, February 4, 2010 (7 days later).
• Plaintiffs move for final approval: Thursday, February 11, 2010 (7 days later).
• Final fairness hearing: Thursday, February 18, 2010 (7 days later).

Described below are the changes that are likely of interest or have some effect on libraries or the library world in general (plus some really odd stuff at the end). In the case where section numbers are listed, they refer to the numbered sections of the amended settlement. Capitalized words/phrases have defined meanings in the settlement agreement or associated documents; if you are really curious, you can look them up there.

It is also important to note what hasn’t changed. The terms of institutional subscriptions in the amended settlement agreement are essentially identical¹ to the terms specified in the original agreement. ² Nor is there a change to the number of terminals granted to a higher education institution. (The number of terminals to public libraries is now more flexible; see below.)

Definition of Book

Also, in §2.2 (“Authorization of Google, Fully Participating Libraries and Cooperating Libraries”) we see the explicit exclusion of microform-format materials from inclusion in what can be scanned from libraries. Previously, microform materials were explicitly included. I wonder if the change might be because the act of microforming a book creates copyright rights for that microformed derivative. The area of rights is already so complicated, the lawyers might have been looking to trim down their troubles.

Definition of Periodical

Definition of “Institutional Consortium” Changed

Number of Public Access Terminals

Privacy

Changes to “Additional Revenue Models”

Disposition of Unclaimed Funds

In the case of the former, after six years and in every year afterwards up to 25% of the unclaimed funds from unclaimed books can be used by the Registry to attempt to locate Rightsholders (§6.3.a.i). After 10 years, the remaining funds from unclaimed books will be given to not-for-profit “entities that advance literacy, freedom of expression, and/or education” in the U.S., Canada, the U.K. and Australia.

Inclusion of Creative Commons Licenses

Tightening Up Timings

Quickies

• Rightsholders can now specify minimum and maximum pricing for the title-by-title consumer purchase option. (§4.2.c.i)
• The Pricing Algorithm is now unilaterally set by Google; it used to be based on common agreement between Google and the Registry. (§4.2.c.ii.2) There is still a way for the Registry to check up on the results of the algorithm. (§4.2.c.ii.3)
• Rightsholders can now renegotiate the 70%/30% revenue split specified in the settlement agreement. (§4.5.iii)
• The secret Right-to-Terminate Agreement (Article 16 of the old agreement) is omitted entirely in the amended agreement.

Small and Odd Stuff

Footnotes

1. with the exception of adding the word “amended” in front of “settlement agreement” and other such editorial modifications.
2. It should be noted, though, in the amended agreement between Google and the University of Michigan there are guidelines for handling disputes in the pricing of institutional subscriptions.
3. Noted by Danny Sullivan of Search Engine Land in his summary of the conference call.

Late today comes word that the plaintiffs (authors and publishers) and defendant (Google) have asked the court to postpone the settlement fairness hearing originally scheduled for October 7th. According to the memo from the parties supporting the request, the spark for this comes from the U.S. Department of Justice’s “Statement of Interest” regarding the settlement:

It is because the parties wish to work with the [Antitrust Division of the United States Department of Justice] to the fullest extent possible that they have engaged, and plan to continue to engage, in negotiations in an effort to address and resolve the concerns expressed in the U.S. Statement of Interest. The parties are committed to rapidly advancing the discussions with the DOJ. Nevertheless, it is clear that the complex issues raised in the U.S. Statement of Interest preclude submission of an amended settlement agreement by October 7.

No word yet from Judge Chin on whether he will accept the motion, but commentators say that he will likely do so.

James Grimmelmann, Associate Professor at New York Law School and the lead behind “The Public Index” site chronicling and commenting on the settlement, had these initial reactions to the request:

• It’s interesting that they haven’t withdrawn the motion for settlement approval, only asked for a delay in the hearing. (Leaving the door open to try again with the current settlement if negotiations fail?)
• Since last October, the settling parties have been saying that renegotiation would kill the settlement, since the original round was so contentious. Looks like the DoJ successfully called that bluff.
• I may be misreading the motion, but they seem to think that they couldn’t have new text ready by October 7, but may be able to have it by November 6. Or at least, they’ll commit to a schedule then.
• People have already made travel plans to come to New York and may not like the rescheduling. But the original purpose of the hearing—a debate over whether to approve the settlement as is—is now all but moot.
• I have a hard time seeing Judge Chin denying the motion. I could be wrong, but pretty much everyone is now telling him to wait. Trial judges don’t like to force an issue if there’s a chance it could go away by mutual agreement.

According to the memorandum supporting the motion, lawyers for the plaintiffs and defendant met with DoJ on Thursday with a commitment to adjusting the settlement followed by DoJ’s formal filing of the Statement of Interest on Friday. This effort was reported yesterday in an article in the New York Times. By mid-day today the processed had reached the point where they wanted to ask for the postponement. To the extent that the DoJ concerns overlap with the 400-some-odd documents filed with the court (both in support and in objection to the settlement), some of them may be rendered moot. (Or, in the poetry of legal filings, “The interests of class members and of judicial economy will not be well served by holding a hearing on the present Settlement Agreement.” Judicial economy? Sheesh.)

Originally via the Open Content Alliance blog, with additional information from James Grimmelmann’s blog.