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Magazines > Information Today > January/February 2014

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Information Today
Vol. 31 No. 1 — Jan/Feb 2014
FEATURE
From Chaos Come Answers to Legal Questions
by George H. Pike


The law is full of questions that oftentimes do not have straightforward answers. Even something as seemingly straightforward as a fender bender can raise questions such as these: How much was the damage? Did the person who was hit contribute in any way to the accident, perhaps by unnecessarily braking? Was anyone else involved? As legal issues get more complex, the questions become more complicated and the answers even less clear. At what point does a digitization project become fair use? How do financing agreements play out in a bankruptcy? How are intellectual property assets valued in a bankruptcy? What right does government have to access telephone and internet metadata?

Litigation as ‘Chaos’

For many of these questions, the law looks to the courts for resolution. Litigation is a complex, time-consuming, multilevel, and expensive process—a colleague of mine once referred to it simply as “chaos”—but it is also a necessary and valuable tool to provide specific answers to specific questions. In addition, under the U.S. legal system, a court decision in one case becomes a “precedent” that can guide future cases that raise similar issues.

In any given year there are a number of lawsuits that impact the information industry, and this year is no exception. From major copyright and patent decisions to corporate bankruptcies, antitrust litigation, and questions about the National Security Agency (NSA) and privacy rights, the courts remain a busy place.

Google Books

The (probable) resolution of the long-standing Authors Guild versus Google Books litigation is one of the highlights of the year. In November 2013, a federal court in New York ruled that Google’s program of scanning books from public and academic libraries, creating a database of such books, providing a copy of the digital book to the source library, and presenting “snippets” of the books in response to searches was a permitted use of copyrighted materials under copyright’s Fair Use Doctrine. (Disclosure: Northwestern University, where I work as director of the Law School Library, is one of the participating libraries in the Google Books program.) The court determined that the project provided “significant public benefits” and was an “invaluable research tool.”

The court relied heavily on the Fair Use Doctrine to support its decision. This principal of copyright law, found at Title 17, Section 107 of the United States Code (available online at law.cornell.edu/uscode), al-lows the use of copyrighted works for selected “transformative” purposes. The court found that Google’s project was such a transformative purpose in that the use of the books was primarily as a searchable index to the books, ra-ther than the books themselves. Due to several limitations of access to full text, the court also found that the project did not serve as a market replacement for the books, which further supports a finding of fair use.

HathiTrust

The Google Books decision comes on the heels of an earlier decision in a similar case involving HathiTrust, which is a collaboration among several of the university libraries participating in Google Books that serves as a repository for the Google-scanned copies provided to the libraries. As with Google, HathiTrust was sued by the Authors Guild for copyright infringement. In October 2012, a court found that HathiTrust’s activities were a fair use.

The Authors Guild appealed the HathiTrust case, and it is now expressing an intention to appeal the Google Books case. Decisions of appellate courts are generally considered to have stronger precedent value than trial court decisions. The court that would hear an appeal of the Google Books decision is the same one that is shortly expected to decide the HathiTrust appeal. This same court had previously suggested that Google would have a strong fair use defense in the Google Books case—although that suggestion was made as an aside (known in legal parlance as “dictum”) in an earlier part of the lawsuit involving a procedural question. Put it all together and many commentators are speculating that the court will likely confirm HathiTrust’s fair use holding, which will make any appeal of the Google Books decision an uphill battle.

One final point in the Google Books case is what Google did not get, which is the right to develop and market a full-text database of its scanned books. That was a central element of a proposed settlement of the case more than 2 years ago. While the court’s decision found that “snippets” and restricted use of full text were fair uses, it’s equally clear that a full-text database is probably not fair. If that was Google’s ultimate goal, the Google Books decision falls short.

Cengage Learning

Another significant legal matter still playing out is the Chapter 11 bankruptcy filing of Cengage Learning, filed during the summer of 2013. The bankruptcy arose out of the purchase of Cengage in 2007 by a private equity group. Approximately two-thirds of the purchase price was borrowed money that was expected to be paid back by ongoing cash flow. However, due primarily to the economic downturn in 2008 and the changing markets of the publishing industry, the debt was increasingly difficult to repay.

By filing a Chapter 11 bankruptcy, Cengage remains in business while negotiating with its creditors to reorganize its debt. Cengage had already been negotiating with its creditors prior to the bankruptcy filing, with those negotiations continuing after the filing had taken place. Over the course of the summer and fall, media reports indicated some level of bickering among the creditors, particularly because one of the major creditors is also a part owner of the company.

Squabble Over Copyrights

Another squabble has emerged among the creditors over tapping into the asset value of more than 15,000 copyrights held by Cengage, which are worth millions of dollars. In any bankruptcy, creditors often have different status levels and rights to available assets. Based on recent media reports, disagreements still exist over which creditors have the rights to the assets represented by the copyrights. Notwithstanding the quarrels, Cengage is expected to emerge from bankruptcy in the spring or summer of 2014. That said, Cengage’s future depends on its ability to adapt to the new marketplace.

NSA Surveillance

It’s been hard to ignore the privacy issues raised by the revelation of several NSA surveillance programs. These programs collected vast amounts of telephone and internet metadata including phone numbers, time and duration of phone calls, email contact information, and internet connection logs. The NSA claimed that its programs were authorized by the USA PATRIOT Act and approved by the Foreign Intelligence Surveillance Court (FISC)—a federal court that operates in secret. The NSA also asserts that while it is collecting the records, this is different from actually accessing the records. They claim that they only access the records when there is an “articulable suspicion” that the data is associated with a “terrorist organization.”

While the NSA’s programs have been heavily discussed in the courts of public and political opinion, they are also being challenged in the courts of law. ProPublica (propublica.org), an independent, nonprofit, public interest website, maintains an NSA Surveillance Lawsuit Tracker that reports at least 14 new legal proceedings targeting the NSA programs. Several of the proceedings are lawsuits against the agency and/or the Obama administration for privacy and other rights violations. These suits have generally been filed by telephone or internet customers whose data has been collected. Other proceedings have taken the form of motions to the FISC to release its decisions or to allow the targeted telephone and internet companies to release data. One motion was rejected by the Supreme Court, and the other suits and motions are making their way through their respective courts.

Apple and Georgia State

These are not the only ongoing lawsuits impacting the information industry. Apple has filed an appeal of the finding that its ebook pricing practices and “agency model” agreements violated state and federal antitrust laws. Another appeals court heard oral arguments in November 2013 in a case brought by several academic publishers against Georgia State University (GSU) over its electronic course reserves, course web, and other digital uses of copyrighted works. A 2012 decision finding that GSU’s practices were protected by fair use was widely welcomed in the academic community. However, at least one commentator, Kevin Smith blogging for Scholarly Communications @ Duke, expressed concern that the appellate court might be more skeptical of GSU’s practices. (Smith’s commentary is available online at blogs.library.duke.edu/scholcomm/2013/11/20/a-discouraging-day-in-court-for-gsu.)

Google remains constantly in court with a number of continuing concerns about its search and privacy practices, including a recent lawsuit alleging that its practice of data mining Gmail messages for advertising and other purposes violates wiretap laws. And on the heels of 2013’s landmark first sale decision in the Kirtsaeng v. John Wiley case, the Supreme Court expects to decide two cases involving the payment of attorney’s fees in patent cases. These fees are often a double-edged sword, discouraging the filing of frivolous lawsuits (one such case involves allegedly frivolous lawsuits filed by a purported patent troll), but they also can discourage suits by small inventors against large corporations.

So once again, we’re looking at a year of questions and—with some optimism—the courts providing answers.


George H. Pike is the director of the Pritzker Legal Research Center at Northwestern University School of Law. Send your comments about this article to itletters@infotoday.com.
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