Free riding is the engine of productivity growth. People see something and copy it. Clothes, business methods, recipes. But there are also things that deliberately prevent free riding. Copyright, Patents that kind of thing. Unfortunately we’ve pursued the metaphor of property with intellectual property way too far. There is no doubt some case for restrictive rights when one creates intellectual output of value – but the base test of whether such rights are infringed should surely be whether the action causes damage. Alas it is not the case. And so all sorts of things that can often assist a copyright holder can’t be done without their permission. Why wouldn’t they provide that permission. Well they might not know that it won’t do them harm, or they may not have time to get a lawyer involved to consider the request. Or they may wish to make some money from the permission and a deal cannot be struck.
Anyway Google has been instrumental in prising open some of the worst excesses of copyright law (I think I have just mixed a metaphor – prising an excess doesn’t seem too good, but we’ll press on – it’s late). Until now Google has been a kind of well funded battering ram expanding the legitimate application of ‘free use’ permissions in copyright law through our very very expensive legal system. Then others were able to free ride on Google’s ‘bleeding edge’ free riding by using the precedents that their very flash lawyers were able to set.
Alas, it seems no more. Google has worked out a way to optimise its own free riding on others but to prevent free riding further down the food chain. As Fred von Lohmann explains
For most of the decade, Silicon Valley technology startups have assumed that Google would pay their legal bills. Not literally, mind you, but rather by taking on the big, high-profile cases about fair use, interoperability, and other digital intellectual property issues that would set precedents that all disruptive innovators could rely on.
Well, Google just put the Valley on notice that the free ride is over, which means more legal burdens for smaller technology companies that previously depended on Google clearing a path for them.
Late last month, Google announced a settlement in its lawsuit with book publishers and authors over its Google Book Search offering. At the heart of the dispute is the question of whether scanning copyrighted books in order to index them violates copyright law, as the publishers argued, or is permissible as a fair use, as Google argued. If approved by the court, the $125 million settlement would buy Google and only Google permission not just to scan books for indexing purposes, but also to expand Book Search to provide more access to the scanned books.
The Book Search case is just one of a series of high-stakes lawsuits that Google has taken up in the name of the disruptive innovation that fuels the Internet economy. Others include the billion-dollar suit brought by Viacom over copyrighted video clips appearing on YouTube, as well as cases brought by trademark owners attacking Google’s right to sell trademarks as keyword triggers for those “sponsored links” that appear when you use Google’s search engine. Google has also fought copyright owners to defend its search engine, news aggregation, image search and Web caching activities.
Google, assisted by its expensive, top-drawer legal team, has a track record of winning these precedent-setting Internet cases. And by winning, Google sets a precedent that other innovators can rely on, as well. In essence, Google’s legal investments have paid dividends for the entire Internet innovation economy.
Until now. By settling rather than taking the case all the way (many copyright experts thought Google had a good chance of winning), Google has solved its own copyright problem but not anyone else’s. Without a legal precedent about the copyright status of book scanning, future innovators are left to defend their own copyright lawsuits. In essence, Google has left its former copyright adversaries to maul any competitors that want to follow its lead.
Google will doubtless be considering the same endgame for the Viacom lawsuit against YouTube. If Google can strike a settlement with a large slice of the aggrieved copyright owners, then it solves the copyright problem for itself, while leaving it as a barrier to entry for YouTube’s competitors. . . .
For better or worse, it looks like tomorrow’s cutting-edge Internet law precedents are going to be left to smaller companies to set. That means smaller startups (and their venture capital backers) need to start planning strategically to pick up the slack left by Google’s gradual retreat from the field of battle. To put it bluntly, they need to set aside real money for litigation and find ways to cooperatively invest in the legal precedents that all of them collectively need.