Google is Done Paying Silicon Valley's Legal Bills | Hacker News Reader

Google is Done Paying Silicon Valley's Legal Bills

eff.org

46 pointspeter12331 comments

Little story about Henry Ford. Every grade school American History textbook mentions how Mr. Ford raised the wages of his factory workers above market value, so they could afford to buy the cars they produced. Little known fact: Ford was then sued by the shareholders for breach of fiduciary responsibility. He lost.

Google is a publicly traded company. Its CEO and board are bound by law to seek the greatest returns possible for shareholders. If they don't seek the highest returns, they can be sued. They have decided that it is no longer in the monetary interest of Google to subsidize legal costs for an entire industry.

Interesting. Can you use this same reasoning (bound by law to maximize shareholder value) to sue corporations for not operating in developing countries where they can take advantage of lower wages, cheaper labor, no unions, etc? Think GM or something.

That's a little different because a company could argue that moving operations offshore would hurt sales. If a company was already operating offshore, and they turned down an offer to move to another, cheaper location, then you'd probably have a case.

Doesn't this apply less to Google because of the way in which they went public?

I find it interesting that many believe a company's "CEO and board are bound by law to seek the greatest returns possible for shareholders" is actual law. Is it? What is this law? Companies are state entities, not federal ones. So the only federal law would be SEC stuff, right? I find it hard to believe that all 50 states have the same law.

IANAL, I would appreciate someone pointing me the law or court decisions that have made this to be.

Two relevant Wikipedia links:

http://en.wikipedia.org/wiki/Fiduciary http://en.wikipedia.org/wiki/Board_of_directors

Summary of fiduciary duty as I understand it (IANAL):

An agent has a responsibility to act in his or her client's best interest. An example is a trust, which is obligated to act in the financial best interests of the beneficiary. I believe a lawyer's duty to the client and a doctor's duty to the patient are similar. In the case of a board of directors, they have a legal responsibility to act in the best interest of the shareholders.

How would such a trial proceed, though? Would the judges then have to decide what course of action would have been the best for the company? And how could they ever prove that their opinions are correct? How could they prove that raising the wages would not benefit Ford in the long run?

So in effect one could buy really cheap managers who screw up and then sue them. Then one could get the "expertise" of the law courts for free to decide on the best action for a company.

About Henry Ford: Could you provide a citation for this? I'm not doubting you, but it's a really interesting point, and I'd like to dig deeper. (If not, I'll search the next time I have a chance...)

Sure. I'm getting it from Jared Diamond's book Collapse:

http://books.google.com/books?id=QyzHKSCYSmsC&pg=RA1-PA4...

Probably a good idea to check his source, but I can't find my hard copy at the moment.

Thanks!

There is no incentive for Google to take cases all the way through the court system just so they could set a precedent that helps the rest of us.

There's actually a disincentive for them to do that since precedents could help their competition and court cases have unexpected consequences.

There is no incentive for Google to take cases all the way through the court system just so they could set a precedent that helps the rest of us.

The article says that the proposed settlement over book indexing is for $125M. I have no idea if it costs that kind of money to obtain justice.

One thing made me very uncomfortable while reading the article:

the fact that one needs deep pockets to fight it out in the courts. When the amount of money one has significantly affects the outcome of a legal fight, what is the meaning of law? Isn't it how Microsoft gets away with pretty much anything?

I think this is more of a strategic decision. The opportunity is for google and only google to pay to scan all the books. This increases google's value, and competitors need to decide if it is worth it to them to spend the dough.

I think that the point the EFF article was trying to make: that Google is helping itself at the potential "expense" of others. But the EFF is an industry-wide advocacy body, so they have a vested interest in promoting the industry as a whole by helping to establish precedent, not just helping individual companies.

I'm not sure that this is any shift at all in Google's policies. It's probably that in all of these cases Google was trying to do maximize their own profits.

It probably just weighed the odds and decided, in those cases where it went to trial, that it was better to try to win the case than pay a huge settlement check. In the Author's Guild suit, they probably realized they had little chance of winning and the results of a loss would be incredibly costly.

It's a mistake to assume a corporation is (or should be) trying to fight for innovation rather than to maximize their own profit. Google may try to avoid evil, but they're not moral crusaders either.

don't be evil?

Doesn't mean to be completely altruistic.

it's not about being altruistic.. but about standing up for principles instead of capitulating to legal extortions. Too often what's 'right' or 'wrong' is determined by legal budgets rather than merits of the arguments.

plus, getting the right foundations of internet laws set will help google in the long run. Any settlement would just open Google up for legal extortions from places they wouldn't have imagined.

Who ever said that Google should be able to digitize copyrighted works and display them for free? They probably settled because they knew they were legally in the wrong.

Rights holders suing to legitimately protect their IP is not extortion.

From my understanding, you are wrong about the use of the scanning. Google didn't want to scan books so that users could then read them, it was scanning them to index them for a book search. So someone could search for books that contained certain text instead of just searching by title, author, etc.

I'm not sure why you think indexing books for searches is equivalent to "digitize copyrighted works and display them for free".

Unless I am mistaken about this?

Well, they had to digitize them (presumably using OCR) so you can search them, which they did without permission from the rights holders. They then displayed (and still do) chunks of the books for free, again without permission from rights holders. I have read multiple pages of my book there.

That seems to me just as much a violation of copyright law as having Daily Show clips on Red Lasso was. They're certainly not exempted as a service provider under the DMCA when they're uploading the content themselves.

As an author, I'm not opposed to this if I'm given the right to opt out, and I'm compensated for any sort of AdWords type stuff run along side it. But many authors will be, and Google didn't ask us or give us a way to opt out.

For me personally, I think it benefits me to have sections of my book there, so I'm happy about it. But I can certainly see why some authors wouldn't care for that at all, and it's not up to Google to decide how those rights holders' property can be used.

I talked to a former attorney who is now a literary agent (and who therefore may be biased) back when the suit first appeared and he said it was pretty much an open and shut case and that it was just a question of how much Google was going to lose.

Several things:

1. You can opt-out, unless I'm misreading this: http://books.google.com/googlebooks/publisher_library.html#o...

2. How is this any different than web search? Google indexes the contents of websites and displays a snippet of relevant content based on what you search. What makes book search different from a legal perspective?

3. I highly doubt that Google would have continued to pursue this course of action if it was as open-and-shut as the attorney you quoted seemed to think.

1) Was that there before the suit was initiated? It's possible everything the Authors' Guild (of which I'm a member) sent me is misleading, but they certainly indicated it was not possible for most authors to have their works removed. Regardless, there's the question of whether authors should have to opt out. Clearly you can't just start giving away Beatles records or songs or even clips of songs until Paul McCartney asks you nicely to stop. Why should it be any different for writing?

2) I don't know, but clearly uploading clips of The Daily Show is illegal, and Google most certainly can't get away with that. Hell, they might not even get away with hosting a service to which other people upload clips of The Daily Show. Books would seem to be more like that, since they are copyrighted works that aren't publicly available for free on the web already, and instead must be actively uploaded.

3) You're right, they wouldn't and that's why they didn't. They settled the first suit that came along and paid $125 million plus ongoing royalties because they realized they were going to lose.

this isn't evil. there's a very real chance that google will lose the suit if they take it all the way, so settling at least buys them the ability to go forward with their book indexing project and protects them from a potentially very large legal liability. it's not like google set out to strike an exclusive-right-to-copy deal.

Also it's worth mentioning that the plaintiffs are fearful of ending up with a bad precedent for their side, so they often settle on good terms for Google...

I don't understand why this is any different than web search, which has repeatedly won in court. Can someone explain it to me?

I think part of the difference is that robots.txt was established early enough to become a de facto standard way to opt out of automated indexing. There is no equivalent system for print, where the convention is that everything is fully protected by copyright by default.

Another difference is that automated indexing has become inherent to web publishing, so much that people publish with the expection that Google will index their pages. Book authors, on the other hand, publish with the expectation that their works are not indexed in this fashion.

$#%&.

This is pure linkbait.

What high-profile cases has Google won (not settled)? I can't think of any off the top of my head.

Most of the cases are important in setting precedents though the plaintiffs weren't big names like Viacom:

Perfect 10 v. Google - A porn site sued them over creating thumbnails of their images for image search. Google won, and set an important fair use precedent.

Geico v. Google - Geico sued over Google allowing competitors to buy keywords on Geico's trademark. Google won - this mostly affects keyword advertising.

Field v. Google - Writer sued Google for caching a page with his work. Google won.

There are others...

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