Legal Update: Where the Lawsuits Are
By George H. Pike
Legal dramas have always been a popular television staple. From Perry Mason to L.A. Law to Boston Legal, these shows feature fast-moving, hard-driving lawyers who resolve their clients’ legal challenges in less than an hour.
Most of us know that the legal process takes more than an hour to complete. But even real programming such as Court TV or the O. J. Simpson trials don’t show the legal process at its most complex. While the Simpson trial continued for several weeks, the progression from start to finish was fairly clear-cut: The beginning (the Bronco chase), the middle (Johnny Cochran and Judge Lance Ito), and the end (acquittal) took place over a fairly limited time frame of just a few months.
But lawsuits involving business or commercial interests are often conducted over a period of years, not months. All three stages—beginning, middle, and end—are often very protracted. The parties to the lawsuit generally expect that kind of time frame. In some cases, the parties may even welcome it, or at least strategically plan for it. But for those outside the lawsuit whose interests may be affected by the outcome, the wait can become both confusing and frustrating.
Google and the VA
Several recent lawsuits have attracted the attention of the information industry. Google has been involved in a number of these suits, particularly the copyright challenge to Google Book Search (originally Google Print), as well as separate challenges to its use of thumbnail images and results ranking. Data breaches have led to litigation against the Department of Veterans Affairs (VA), ChoicePoint, and others. These lawsuits are often splashed on the front pages of industry and mass-media publications, blogged and commented on, then they disappear as time passes. But as media interest dies out, the lawsuits continue to work their way through the process, leaving many interested observers to wonder about the status of these cases.
All lawsuits, both the straightforward and the complex, begin the same way: A complaint is filed in court by the party (known as the plaintiff) who claims to have been legally injured by the actions of another party (the defendant). In May 2006, the VA announced that a laptop computer containing personal information on more than 26 million individuals had been stolen. By mid-June, three separate complaints had been filed in three separate federal courts against the VA seeking monetary damages and asking the court to require the VA to secure its information properly.
Complaint and Answer
Normally, the complaint is followed within a few weeks by the defendant’s answer. The answer will admit or deny the elements of the complaint and raise any defenses that the defendant might have, such as saying, “Yes, that is what happened, but it was not negligence.”
Because of the complex circumstances of the VA cases, no answers have yet been filed (as of this writing in late November). There was an initial question of whether the three cases should be consolidated into a single lawsuit. The VA initiated the consolidation request, wanting to defend one case in one location. The plaintiffs resisted, arguing that the three cases were relatively small in number and would not burden the VA. The plaintiffs also might have strategically considered that it was better to battle the VA on multiple fronts rather than on a single front. In November 2006, a court panel ordered the consolidation of cases and assigned them to the U.S. District Court for the District of Columbia.
The Google and VA cases were also filed as class-action lawsuits. The plaintiffs want to represent the “class” of everyone affected by the defendant’s actions. A class action is favored when large numbers of potential victims each have minimal damages, but all are caused by the same circumstances. In the VA case, each potential victim can claim no more than $1,000 in damages. For an individual, this is rarely enough to justify a lawsuit. But with 26 million potential victims in the class, the damage potential becomes $26 billion dollars. (Yes, that’s billion with a “b.”)
Usually the defendant would rather that each victim sue individually and not be considered a class. For example, the VA knows that very few of the 26 million potential victims will sue over $1,000, which will save them from the complexity, expense, and potential liability of a class-action lawsuit.
While the plaintiffs in the VA case have asked for class-action status, the court actually decides whether to grant it. Now that the case has been consolidated, the court will require the VA to answer the complaint formally and will take up the question of class-action status. Granting class-action status would add to the complexity of the case, but with the stakes being raised to a potential billion-dollar verdict, the motivation to find a settlement increases as well.
Google Book Search
The Google Book Search lawsuits, which have gone beyond the beginning phase, are now in the middle phase. Lawsuits were filed in fall 2005 by a group of publishers, The Author’s Guild (representing individual authors), and as a class action (representing all authors affected by Google). Answers were filed in late 2005, and the cases were consolidated in spring 2006.
Early in summer 2006, the case moved into the middle phase when the court established a calendar for discovery and motions. The discovery phase is when the parties to a lawsuit obtain information from each other and from third parties about the facts surrounding the suit. Through discovery, parties can obtain documents, interview witnesses, pose written questions, and take depositions, all with the goal of obtaining as much information as possible. While discovery benefits justice by exposing all relevant information and encouraging settlement, it has also been criticized as a time-consuming and expensive process that favors the deeper pocketed party.
The calendar for the Google Book Search cases lets discovery continue through November 2007. Even though the issues may seem clear—Google is not denying that it is scanning books that are copyrighted
—the details of Google’s use and technology, copyright ownership of the various works, and market impact all need to be explored in discovery.
2007 and 2008
Following the discovery phase, the court expects Google and the publishers/authors to file motions for summary judgment. These are requests to the court to accept the facts that are established by the discovery process and make a decision based on the legal principles at issue. Google will argue that even if it copied books without permission, the fair use doctrine allowed the copying to be done. The publishers and authors will counter, saying that fair use does not apply to these facts. The court’s calendar expects the summary judgment process to take place in the first half of 2008.
A summary judgment decision (aka a trial) might be considered the end of the case. But given the legal complexities and the amount at stake, the losing party is likely to appeal. A separate case involving Google and its use of thumbnail images is currently at this stage. Perfect 10, a publisher of an adult-oriented magazine and Web site, sued Google in November 2004, claiming that the use of thumbnail images by Google’s search engine was copyright infringement. Sixteen months later, a trial court agreed and ruled in favor of Perfect 10.
Google appealed to the 9th Circuit Court of Appeals, which heard the case in November 2006. A final decision may be expected in early 2007. Of course, that final decision could also be appealed to the U.S. Supreme Court, or the appeals court could send it back to the trial court for new action based on the appellate court’s interpretation of the law.
Microsoft Finally in Court
Three trips back and forth between the trial court and the appellate court have kept a class-action suit against Microsoft alive for nearly 7 years, with the trial only now beginning. In 2000, several Iowa residents filed a class-action lawsuit against Microsoft claiming that the company held a monopoly in its Windows operating systems. As a result, they claim that Microsoft overpriced its operating system and application software, which is a violation of Iowa state law. Microsoft responded that its products are fairly priced and accepted because of their price and quality.
Microsoft settled federal antitrust claims about its software bundling practices in the late 1990s. However, this case arises out of Iowa’s Competition Law and has moved slowly forward. Microsoft sought an early dismissal of the case, followed by a request to deny class-action status and a claim that the issues were already resolved by the federal lawsuit. The Iowa Supreme Court denied each of these procedural requests, and as of December 2006, a trial has finally begun. The highlight of the expected 6-month trial will be the in-court testimony of Bill Gates and Steve Balmer.
Litigation as Chaos
A colleague of mine once described the litigation process as chaos, suggesting that each step in the process is deliberately complicated to discourage pursuing litigation at all or to encourage settling litigation that has begun.
Some documents in the VA litigation indicated that settlement negotiations were already underway. Hearings before Congress on the VA and data security also may encourage the VA to settle, avoiding possibly worse legislation. Last spring, ChoicePoint entered into a settlement with the Federal Trade Commission (FTC) over its 2005 data breach. Since then, ChoicePoint has been working with the FTC to locate victims and compensate them for their losses. This could eventually provide a model for a VA settlement.
A settlement of the Google Book Search lawsuits seems less likely—at least at this time. Google has the deep pockets to fund its defense and the financial incentive to push for an outcome in its favor. Google’s Web page and blog also make it clear that it feels it has the better case. The authors/publishers may also feel that their livelihoods are at stake, but they may have a bit more motivation to settle if a licensing or other shared royalty system can be worked out.
Long-lived “digital” lawsuits such as these challenge the information industry mainly because the technology is changing so fast that the law has a difficult time keeping up. Most people thought that the issue of search engine “thumbnail” images was settled, but when Perfect 10 raised a new theory about thumbnails having a market value as downloadable cell phone wallpaper in its suit against Google, the issue came back. The academic community would love to have “digital” lawsuit decide the question of fair use rights and electronic course reserves/electronic class handouts, but no one wants to be sued, which is necessary to raise and resolve the issue.
The Google print case will very likely be a landmark decision on fair use—if it ultimately goes to trial rather than settles—because of the stakes and the amount of money and knowledge involved. A recent Supreme Court decision involving eBay and dealing with patent infringement is having an impact and may be a reason that patent reform efforts slowed down in Congress.
Accept the Status Quo
Until the courts make their final decisions or the cases are settled, we are still left with uncertainty and a process that is measured in years. The best course of action may be to accept the status quo, take advantage of Google Book Search and thumbnail images as long as they last, but keep a Plan B in mind, if necessary.