On Tuesday, US Judge Denny Chin rejected a settlement agreement between Google, the Association of American Publishers, and the Authors Guild for a 2005 lawsuit over the search giant’s full-text scanning and displays of copyrighted books. While Judge Chin’s decision makes the precise future of Google Books unclear for now, the issues it raises are already being felt by journalists, newspapers, and media creators of all stripes who are currently grappling with Google abroad.

Currently, the United Kingdom and European Union do not have a US-style fair use exception for copyright — at least nothing as remotely as permissive as the United States. In British and European libraries, Google’s policy is to scan only out-of-copyright books. And in countries like Belgium, Google is not permitted to make search results from newspapers available in its Google News search results unless papers’ publishers request to be included — exactly the “opt-in” remedy Judge Chin proposed in the Google Books settlement.

Google is actively working to combat Europe’s copyright restrictions on its businesses, through both legislation and the courts. Meanwhile, both Google and its opponents base their arguments — whether legal or practical — on a particular interpretation of United States copyright law and its effect on business development. Judge Chin’s decision suggests that US IP law can’t be so easily characterized. Indeed, it offers all parties, both here and abroad, routes to different kinds of settlements altogether.

In the UK, a government-appointed commission led by former newspaper editor and current Cardiff University journalism professor Ian Hargreaves is completing a report examining British copyright law. The commission, charged as it is with the specific goal of enabling new digital businesses, is widely expected to recommend an overhaul of existing IP rights. When launching the review, Prime Minister David Cameron justified it by noting that Google’s founders had told him that Google could never have launched in the UK because of its stricter copyright laws.

On March 18, just days before the Chin decision, Google submitted the following (excerpted) brief to the Hargreaves commission:

Without a robust fair use doctrine and well-balanced limitations for intermediaries, many of the online platforms for creativity and research that we take for granted today might never have made it off the ground.

The law must not create a culture of ‘permission first, innovation later’ for technology innovators. Such a culture threatens to chill socially beneficial innovation that helps content owners, creators and consumers alike.

We do not believe that (the EU’s) closed list of (22) exceptions (to copyright limits) is as conducive to innovation as the more flexible, technology-neutral approach embodied within the US copyright regime. The numbers of occasions when innovators might want to use copyrighted material to generate new products in ways that the closed list of EU exceptions did not antitipcate is only likely to increase.

The US system, with its inherent flexibility, is a better way to ensure new and untested innovations are not killed before they even get off the ground. Digital and internet technology requires constant, continuous copying on a global scale and often of vast quantities.

Many other UK media groups have filed responses arguing against changing copyright law, including the British Association of Journalists [pdf] and News Corporation (currently engaged in its own controversial acquisition of Sky News’s BSkyB), whose brief claims that local culture and educational investment matter more than loosened IP law [pdf]:

Silicon Valley is often cited as an example of a success story in discussing innovation. This is understandable: the majority of large dot-com start-ups are clustered in the West Coast of the USA. Nevertheless, such comparatively localised success is unlikely to be connected to the IP framework, which is part of US federal law. It is more likely that it is Silicon Valley’s cluster of universities which attracts both entrepreneurs and, crucially, investors. We are not aware that venture capitalists have ever perceived IP as a significant deterrent to investment, and the fact that Google started in Silicon Valley, in preference to either the UK – or indeed New York – is testament to the particular investment culture there rather than the IP framework.

Indeed, critics see the charge to overhaul British copyright law as led almost entirely by the Cameron-led government and Google. The Telegraph’s Jeremy Warner wrote a scathing op-ed titled “Intellectual Property reform cannot be dictated by Google,” accusing the PM of having “watched [The] Social Network once too often” and having “fall[en] victim to the ‘all content is free’ lobby,” while noting that the last review of IP law, led by Financial Times editor Andrew Gowers, had been completed as recently as 2006.

Cameron has also transferred responsibility for implementing the recommendations of the review from its commissioner, Business Innovation & Skills (BIS) secretary Vince Cable (a Liberal Democrat), to Conservative secretary of state Jeremy Hunt, who heads up the Department for Culture, Media & Sport. The department’s portfolio includes British historical sites, planning for the 2012 Olympics — and now all media and telecommunications policy.

Meanwhile, Google is also appealing a 2007 decision in Belgium that disallowed its use of search results from newspapers. Google was compelled to pay 25,000 euros for each day that links to articles and images from the newspapers were stored in its cached search results. The papers are currently seeking an additional 49.1 million euros in compensation for the period prior to the decision.

Google’s hope, according to its attorneys, is to take its appeal of the Belgium case to the EU’s Court of Justice. A favorable decision there would allow Google to operate freely to index newspapers and other information in every country in Europe. A negative decision, Google contends, might make indexing and search operations disappear altogether.

An important if easily overlooked part of Judge Chin’s decision in the Google Books case is the effect of its decision on foreign authors. As he writes in his ruling, many foreign publishers have actually registered their books with the US Copyright Office to ensure their coverage under US law. As a result, “France and Germany, as well as many authors and publishers from countries such as Austria, Belgium, India, Israel, Italy, Japan, New Zealand, Spain, Sweden, Switzerland, and the United Kingdom continue to object to the [settlement agreement], even with the revisions.”

Japan’s P.E.N. Club, a literary group, expressed the general objection, arguing that the agreement would give Google “an almost insurmountable market advantage worldwide in the world of digital book publishing, while granting it a monopoly at home in the United States and other English-speaking countries.”

Google responds that “this case is about United States copyright interests. It’s about uses of works in the United States.” And the implications for international copyright law of the settlement, Chin argues, demand that the relevant issues be determined by Congress, not by a legal settlement between interested parties in the US alone. Yet the political process in the UK and extracted legal process in the EU hardly seem like models either. The temptation is always to come to a decision that results in a favorable business decision for multiple parties, rather than grappling with the issues of fair use and the public good that are necessarily implicated. Let’s hope the Chin decision leads to a substantive reboot where those issues are once again first on the table.

Image by Aray Chen used under a Creative Commons license.