Not long after Google announced in December 2004 that it would include in its search database the full text of books from a number of leading research libraries, two lawsuits—structured as class actions—were filed by a group representing mostly trade authors and a major publisher. One of the key issues was whether Google’s project was defensible as fair use.
After several years of discussion, a proposed settlement was reached. It would have allowed Google to continue scanning copyrighted books into its search index and displaying the text to its users in exchange for the payment of license fees to copyright holders. The proposed display rules were contingent on whether a book was still in print. Additionally, rightsholders could opt out of the settlement either entirely, by requesting the removal of protected books, or partially, by modifying the default display rules.
The proposed settlement came under intense scrutiny and criticism. A number of foreign rightsholders, and even foreign governments, opposed the deal.
As a result, the settlement was amended significantly. One of the main differences between the original and amended settlements was the treatment of foreign rightsholders. While the original settlement applied to rightsholders in all countries, the amended agreement would only apply to foreign books published in Australia, Canada, or the United Kingdom, or registered with the United States Copyright Office as of January 5, 2009.
Conformity with international treaties and agreements to which the United States is party, in particular the Berne Convention and the World Trade Organization (WTO) Agreement on Trade- Related Aspects of Intellectual Property Rights (TRIPS), has not been a major part of the discussions surrounding the proposed settlement but it is important because incompatibility with TRIPS might trigger a dispute-settlement case against the United States at the WTO and lead— should the United States lose the case partially or entirely—to trade-based retaliation. To mention two examples, in 2000 a WTO panel found that § 110(5)(B) of the Copyright Act was incompatible with Article 13 of the TRIPS Agreement (the so-called three-step test). As of this writing, the panel report has not been implemented, perhaps in part because a binding arbitration report determined that the level of injury caused by the exemption was extremely low. In a more recent case, failure by the United States to implement a panel report that found part of the cotton subsidies paid to U.S. farmers incompatible with WTO rules may lead to the removal of intellectual property protection for U.S. goods in Brazil.
The unprecedented nature of the Google case, however, is that the incompatibility would not result from typical trade measures adopted by legislation or regulation but rather by a court decision. Generally, court decisions are immune (as a practical matter) from WTO review owing to their inter partes nature—that is, they are not measures or requirements of general application. The application of class action procedures, however, that would include a large number of foreign intellectual property holders as part of the covered classes, may open the Settlement to WTO scrutiny.
International treaties may also be relevant directly in the domestic context. First and foremost, they may be invoked when the interpretation of a U.S. statute is unclear, in which case the interpretation most likely to comport with U. S. international obligations should be favored. Second, a treaty such as the Berne Convention may be directly applicable (“self-executing”).
In applying TRIPS to the Google Book Settlement, the first question that comes to mind is whether the Original and/or the Amended Settlement constitute a prohibited formality under the Berne Convention, and thus also the TRIPS Agreement. The Amended Agreement—because it treats rightsholders in three foreign countries differently—raises two related questions, namely (a) whether the national treatment principle is violated, and (b) whether the proposed settlement is compatible with the most-favored nation clause. Let us sequentially consider both questions.