Google settles books lawsuit

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By Erik Larson BLOOMBERG NEWS

Google Inc. will pay $125 million to settle two copyright lawsuits by publishers and authors over its book-scanning project, a "historic" deal that the company said will make millions of books searchable and printable online.

The owner of the most popular Internet search engine said the agreement will expand the Google Book program to let online readers search for and buy copyrighted and out-of-print books in total or page by page, and provide U.S. libraries with free access to the database.

"The tremendous wealth of knowledge that lies within the books of the world will now be at their fingertips," Google co-founder Sergey Brin said Tuesday in a statement, calling the accord "historic."

Google was sued in 2005 by the Authors Guild, Pearson PLC's Penguin unit, McGraw-Hill Cos., John Wiley & Sons Inc. and CBS Corp.'s Simon & Schuster subsidiary. They claimed the digitizing process infringed their copyrights on a massive scale. The project, which started in 2004, includes Harvard University, the New York Public Library and about 10,000 publishers.

The settlement is a "clear victory for copyright owners" and validates copyright law for online content, said Terence Ross, a lawyer at Gibson Dunn & Crutcher in Washington who teaches copyright law at George Mason Law School.

"It really opens the door to a whole new way to use copyrighted materials on the Internet," said Mr. Ross, who isn't involved in the case, and previously represented clients in trademark suits against Google. "We're at a time when views of copyright law seem to be in flux; this will remind people it still applies on the Internet."

Tuesday's deal, which must be approved by a judge in Manhattan, N.Y., federal court, ends the lawsuits and expands what users find online when they search for a book. Searches in the Google Book program currently generate about three or four lines of text from a work. The settlement will expand the results to several pages and let readers buy full access to the content, the parties said.

Google and its former publishing adversaries will use $34.5 million of the settlement fund to create a registry program to compensate rights holders, according to court papers. Another $45 million will be used to compensate authors whose works have already been scanned without permission, the parties said.

Authors and publishers will have final say on whether their copyrighted works may be used by the program, thus essentially allowing online purchases to compete with book sales, said David Drummond, Google's chief legal officer.

"We've built a lot of controls for authors and publishers," Mr. Drummond said Tuesday in a conference call. "If an author does not want his or her book to be in the program, they absolutely can opt out."

Under the deal, Google will keep 37 percent of revenue from online book sales and for advertisements that run next to previews of book pages, passing the remainder to the Books Registry, which will keep an administrative fee and leave the rest for the copyright holders to collect. Google won't share advertising that runs along search results that include links to book preview pages.

The division of revenue from a subscription program for universities will be similar, the parties said on the conference call. The companies said they haven't determined yet how to distribute revenue under the subscription program.

Google said the program will create a new market for out-of-print books. The company's measurement of readership may include the amount of time spent viewing a book, along with the genre and publication date, Mr. Drummond said.