Thursday, July 30, 2009

Exercise Caution Regarding Google Book Settlement

The time to fish or cut bait is approaching regarding opting out of the proposed Google book settlement. My July 28th entry, below, discusses the upcoming opt out period. This right of a copyright owner to be excluded from the Google class action settlement should be approached carefully and cautiously for two reasons.

First, failure to opt out may implicate the protection afforded by Section 201(e) of the Copyright Act. This section provides that no government body (other than a bankruptcy trustee) can take action to seize, expropriate, transfer or exercise ownership over a copyright interest that has not previously been transferred. In other words, if an author has not previously transferred an interest in the author's great American novel, song, or other work, then the IRS (plus any other government body, plus any general creditor) is prevented from seizing and exercising ownership over the work. But this protection only applies if the rights to the work have not been transferred voluntarily by the author. If the author fails to opt out of the Google book settlement, then it may be the case that the Court's approval of the book settlement is deemed to constitute a voluntary transfer of the author's distribution right to Google. In such an event, the protection of Section 201(e) may be lost. Is the IRS licking its chops right about now?

Secondly, the transfer of an author's distribution right to Google upon approval of the class action settlement can create an interesting impact on the right of termination under the Copyright Act. Presently, Section 203 of the Copyright Act permits termination of an author's transfer between the 35th to the 40th year following a transfer made after January 1, 1978. This absolute right to terminate transfers made after 1977 only applies to transfers made by the author. If the author of a work that is subject to the Google settlement is no longer living today, but if the author's heirs are living, then the transfer of the distribution right to Google pursuant to the settlement may not be terminable under Section 203 for works where authors are deceased on the date the settlement is approved. On the other hand, if an author of a work is not deceased when the settlement is approved, the author, or the author's heirs, may be able to exercise the right of termination between 35 to 40 years after the settlement is approved. Accordingly, the heir of a deceased author may want to carefully consider whether it makes sense to opt out.

The decision whether or not to opt out of the Google settlement is significant for at least these two reasons and perhaps more, depending on the nature of the author's rights. Care should be taken by both an author and an author's heirs relating to the upcoming opt out deadline. Failure to opt out means that an author and an author's heirs may be stuck with the Google settlement, and may be impacted by its negative effects, as suggested above.

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