I’ve also thought that the worst outcome in these cases would be Google’s decision to use its massive cash reserves to settle all the cases. For that would help set a precedent that might seal its (and perhaps a few other high-market-capped search engines) dominance over the field. Who else would have the cash reserves to compete in the search engine market, given the huge barriers to entry created by licensing fees?
Exactly right! I would also suggest that settlements would prevent a reinvigorating interpretation of indexing as fair use. That might be the judicial decision in these cases. If the cases came out the other way, as Jessica Litman says in the CNET article, Google truly would be faced with going out of business. Imagine the uproar if the very concept of a search engine were found illegal. Search has become so central to the functioning of the web (as discussed exhaustively here and here). I believe the resulting outcry would rouse Congress to action. Surely, the legislature could not resist galloping in proudly like the cavalry to “save the search engine” — indeed, to “save the web.” (Meanwhile, those of you holding all that overpriced Google stock might see it take a dive in the midst of the uncertainty!)
So, not only would settlements lock in Google as the super-dominant player as Pasquale says (and as many techies have begun to fear anyway), it also would short-circuit the movement of the law to a reasonable accommodation of search technology. To be sure, that movement is slow, indirect, and sometimes fumbling, but it is happening. The Perfect 10 appeal (which Tim discussed here) is one place where the issues will be teed up fairly soon. Yet given the risks inherent in waiting around for courts and then possibly Congress, I would not be surprised if Google indeed chose to settle. And then the litigation would disappear and Congress would go back to its many other worries.
In the comments, Pasquale also wonders about parallel situations where a pattern of settlements effectively creates law:
It would be an interesting empirical study…perhaps one could look at a large industry that decided to keep suing small players, when its legal right to do so was in doubt. It might slowly manage to create a general social expectation that it is indeed entitled to what it had managed to badger people into giving up via settlement.
Again, exactly right. And I have an example (discussed in the Berkman Center’s Digital Learning white paper that should be coming out this week!). Back in the early 1980s, the publishers sued NYU over photocopying for classroom use. Remember, the fair use provision of the copyright statute specifically names “multiple copies for classroom use” as an example of a fair use. Yet NYU settled, and as part of the deal accepted an internal copyright policy that sets extremely stringent limits on the ability to copy content for classroom use. After that, the other colleges and universities toppled like dominoes, so an estimated 80% of schools now impose these policies requiring somewhat arbitary numerical word limits, rules about frequency and “spontaneity” of copying, and more. Without any act by a judge or Congress, the general practice is just about what the publishers would want. (There are also indications that the publishers are now considering the same strategy to limit digital distribution of educational content like e-reserves.)
Settlements may be great for the parties, but they can be very damaging to the law, as well as to market competition.