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Five US States Raise Objections To Google Settlement

By The Wall Street Journal

At least five state attorneys general have filed briefs raising concerns about Google Inc.'s (GOOG) proposed legal settlement with authors and publishers, adding to a wave of criticism lodged against the high-profile deal as it nears a public hearing.

Attorneys general from Missouri, Connecticut, Pennsylvania, Massachusetts and Washington have filed comments opposing the proposed settlement, arguing that its use of payments intended for copyright holders that can't be located is potentially unlawful.

In addition, Connecticut Attorney General Richard Blumenthal noted that his he is also interested in antitrust aspects of the deal.

A Google representative declined to comment.

Authors and publishers initially sued Google in federal court in New York in 2005, arguing that the Internet company was violating copyright by scanning and digitally publishing books without proper consent.

Under the terms of the settlement proposed late last year with the Authors Guild and Association of American Publishers, Google would pay $125 million, while earning the right to set up a vast, online trove of content. That's raised concerns among rivals and critics that Google will be handed too much influence over the nascent digital-books market.

Microsoft Corp. (MSFT) and Amazon.com Inc. (AMZN), among others, have criticized the settlement, as has the head of the U.S. Copyright Office.

A registry to be set up under the settlement would ultimately keep licensing payments intended for copyright holders that can't be located, after a certain number of years.

But in a brief filed jointly, the attorneys general of Pennsylvania, Massachusetts and Washington argue that such treatment of unclaimed payments would circumvent state unclaimed property laws, and could "constitute a misdemeanor which carries a penalty ranging from $1,000 to $10,000 and up to 12 months imprisonment."

Missouri Attorney General Chris Koster argued in his own legal brief that state law requires that "abandoned" property including the unclaimed payments be deposited with the state treasurer. Koster wrote that groups such as the American Society of Composers, Authors and Publishers regularly pay into state funds when copyright holders can't be found.

Connecticut's Blumenthal added that the settlement also appears to raise "objectionable issues" under antitrust and copyright laws. Connecticut's focus on the use of unclaimed payments to rights holders "should not be interpreted as assent or acceptance of any other feature of the settlement," the attorney general wrote.

The legal briefs filed by the attorneys general are among a number of last-minute arguments filed with the court prior to a "fairness hearing" scheduled for Oct. 7.

An opinion is also widely expected from the U.S. Justice Department about the antitrust aspects of the proposed settlement.

In an order filed Wednesday, U.S. District Judge Denny Chin wrote that the court has received "approximately four hundred submissions" related to the proposed settlement, both for and against it.

Chin wrote that due the number of submissions and "apparent public interest in the case," he is requiring that anyone who wishes to speak at the hearing submit a formal request by Sept. 21.

In testimony prepared for a Sept. 10 House Judiciary Committee hearing, Google Chief Legal Officer David Drummond argued that the settlement will expand public access to millions of books, while still providing copyright holders with proper compensation.