The Class Action Loophole

Tim Wu is one of my favorite technology thinkers, and he’s a talented writer, so his take on the Google deal is a good read. But I also think it’s a good example of what’s wrong with a lot of analysis of the GBS deal.

The phrase “fair use” doesn’t appear once in the article. In case we’ve forgotten, this is a copyright infringement case. The dispute between Google and the plaintiffs is not about orphan works, online book sales, or the structure of the publishing industry. It’s about whether copyright’s fair use doctrine allows the creation of a book search engine that displays “snippets” of in-copyright books in search results. Google says yes. Some publishers and authors said no. Absent a settlement, a judge would have been asked to rule on that question.

In a rational world, the settlement of the case would focus on that same question. Instead, we got a settlement in which the underlying infringement claims are treated as an afterthought. Instead, the focus is on the creation of an elaborate new structure for selling books online. It’s as if Sony Pictures sued NBC for copyright infringement and then wound up with a “settlement” that focused mostly on Sony becoming a partner in GE’s light bulb business.

This would, of course, be completely crazy in an ordinary lawsuit between two companies. If Sony and GE want to go into the light bulb business together, they don’t need a judge’s help to do so. The only reason to bundle a business deal like that into a judicial settlement is if it gives you the power to do stuff you wouldn’t be able to do otherwise. Such as using the class action mechanism to bind thousands of copyright holders who wouldn’t consent otherwise.

I can understand why folks like Prof. Wu are excited about the opportunity this case creates. The orphan works problem is real, and the legislative process is long, tedious, and messy. The class action mechanism gives advocates of orphan works reform a kind of deus ex machina: dramatic reform without the kind of cynical horse-trading that normally comes with legislation. Moreover, because of the way the settlement process works, legal academics like Profs. Wu, Grimmelmann, and Picker probably have significantly more influence over the outcome of the process than they do over orphan works legislation in Congress. And I don’t necessarily regard that as a bad thing: if I had to pick three people to re-shape the publishing industry, they’d all be on my short list.

But we’re a democracy, not a nation ruled by enlightened philosopher kings. Wu warns the judge to “be careful not to open it up to so many parties that the whole thing explodes.” But if the whole thing will “explode” if it’s opened up “to so many parties,” that seems like a sign that some of those parties are getting short-changed. Which is precisely why we normally require that proposals affecting the rights of millions of people be drafted in public by Congress, not by private parties in a smoke-filled room. The class action mechanism offers legal academia a tantalizing loophole: a chance to achieve legislative ends through a comparatively clean and simple judicial process. But the fact that Congress is “open to so many parties” and responsive to their concerns is a feature, not a bug.