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Lawmakers Probe Google Book Search

WASHINGTON -- Google's controversial digital book project saw another wave of public scrutiny this morning, this time in the form of a House Judiciary Committee hearing on the competitive implications of its landmark settlement with authors and publishers.

In an effort to blunt the charge that the settlement gives Google (NASDAQ: GOOG) exclusive access to digital works, David Drummond, the search giant's chief legal officer, announced at today's hearing that Google would license out-of-print works to any retailer. That would mean that Amazon (NASDAQ: AMZN), an opponent of the agreement, and others would be authorized to resell the books scanned by Google and covered under the settlement.

As it happens, Google's settlement agreement already provided resellers access to scanned books both in and out of print. So the olive branch Drummond offered at today's hearing, though presented as a concession, was not a modification of the terms of the settlement. Rather, it seemed aimed as a signal to lawmakers that the deal would do nothing to hinder competition.

"That's very generous of you," said Judiciary Committee Chairman John Conyers.

Google reached the settlement in question with the Authors Guild and Association of American Publishers last October, ending a long-simmering copyright infringement dispute over Google's book-scanning project.

That settlement is under separate reviews by a federal court in New York and the U.S. Justice Department. With two of the three branches of government already scrutinizing the deal, some lawmakers were left wondering why Congress was even concerning itself with the matter.

"We really at this point don't have a role to play," said Zoe Lofgren (D-Calif.).

But the larger copyright questions the settlement raises are under the purview of the Judiciary Committee. Among the most controversial is the settlement's treatment of so-called orphan works, books that are still under copyright but whose rights owners cannot be located.

Under the settlement, Google agreed to set up a registry for authors to claim their works, but books that remains unclaimed would automatically be included in the corpus of the Book Search product.

Critics charge that the orphan works provision would effectively rewrite copyright law, but only to the benefit of one party.

"If the proposed settlement were approved, Google would be the only entity in the world that could treat copyright on an opt-out basis," Paul Misener, Amazon's vice president of global public policy, told the panel this morning. "This is completely turning copyright on its head."

Amazon, which recently teamed up with the Internet Archive, Microsoft (NASDAQ: MSFT) and other groups to form the Open Book Alliance opposition coalition, has its own book-scanning project. Amazon has scanned about 3 million books to date, but Misener said that it negotiated licensing agreements with the authors and publishers.

"The difference is ... we first sought permission from the rights holders," Misener said. That means that orphan works are off limits to Amazon's project.

Google has always defended its scanning operations under the principle of fair use, claiming that scanning a book is similar to indexing a Web page. It only displays snippets of in-copyright books that aren't covered by the licensing agreements that it has brokered with about 30,000 publishers. But under the settlement, access would to orphan works would be broadened.

To date, Google has scanned about 10 million books, of which it estimates that no more than 20 percent could be considered orphan works.

"The orphan works problem is being exaggerated," Drummond said, arguing that the registry would give rights holders the incentive to come forward and claim their work. Under the settlement, Google agreed to give rights holders 63 percent of proceeds from digital book sales.

Paul Aiken, executive director of the Authors Guild, argued that orphan pose the biggest challenge in photography, where the rights holders are not readily apparent. Orphan works are something of a paper tiger in his group's settlement with Google, Aiken said, calling the agreement "a rare and productive truce in the copyright war."

Amazon's Misener sees it differently, arguing that the unique opt-out provision Google negotiated puts it an unfair competitive advantage.

"By definition orphans don't do any opting," he said.

From the committee's perspective, the issue touched a raw nerve.

"We probably wouldn't be here today if Congress had solved the orphan works problem," Lofgren said, referring to a failed effort to enact copyright reform in the previous session of Congress.

Critics have warned that the approval of the settlement would give Google a unique exemption to current copyright law.

"Key parts of the settlement are fundamentally at odds with the law," said Marybeth Peters, the register of copyrights at the U.S. Copyright Office. The orphan works provision would create orphan compulsory licenses, which she said "are the domain of Congress, not the courts."

"The settlement would alter the landscape of copyright law," she said.

Even Conyers, who said Google's Book Search project "represents, without exaggeration, one of the most innovative developments since the [printing] press," warned that it nonetheless raises troubling jurisdictional questions. He expressed concern that the court's approval of the settlement could preempt Congress' role in setting copyright law and policy.

Drummond claimed that the judge's ruling would be uniquely limited to Google's settlement with a class action, reiterating the company's support for orphan works legislation.

"There is absolutely nothing in the settlement that would impede orphan works legislation," Drummond said.