Internet Archive Copyright Loss Hits Library Digital Lending (1)

Four major book publishers’ copyright win over the Internet Archive and its digital lending system sends a warning shot to any libraries following their footsteps, attorneys say.

A Manhattan judge ruled late that the Internet Archive’s “controlled digital lending” (CDL) practice—which many brick and mortar libraries have also adopted—infringes the publishers’ copyrights and isn’t protected by fair use. The nonprofit had argued its system of scanning millions of books and temporarily lending each out to one borrower merely mimicked what libraries already do, didn’t hurt the market for the 127 books in suit, and constituted fair use.

Judge John G. Koeltl of the US District Court for the Southern District of New York rejected the Internet Archive’s position, writing in his opinion granting the publishers summary judgment that all four fair use factors favored the publishers and nothing in copyright law or precedent supported the practice.

The ruling hinged on a case-specific analysis, but the unwavering rebuke of the online repository likely bars similar practices by libraries, attorneys favoring both sides said. But practitioners diverged on whether the outcome threatens the concept of libraries in a digital age, or merely maintains the application of copyright law to prevent the destruction of markets for—and the incentive to produce—creative works.

Juliya M. Ziskina, who wrote a brief backing the Internet Archive for a pair of library groups, read the decision as “pretty specific to the controlled digital lending of the Internet Archive.” Others saw broader legal impact, and even Ziskina said it would likely have “a chilling effect” on libraries.

“It shouldn’t. But I unfortunately think that is going to be the effect unless we have more solid law in the appeal,” said Ziskina, who saw a lot that she found “incorrect” in the opinion. “I think other libraries don’t have a reason to be concerned right now. But it is a big blow.”

Backers of the publishers, meanwhile, saw the ruling as an emphatic rejection of the entire logic behind CDL. Attorney Jacqueline Charlesworth, who wrote a brief for copyright scholars backing the publishers, said the “very carefully thought-out and comprehensive opinion” by Koeltl “really discredits the theory, period.”

“There’s really no justification in copyright law for what they were doing. It was a risky move on their part. Now it’s very clear, hopefully, that no one would advise a library to do this,” the former Copyright Office general counsel said. “The mere fact that you’re a nonprofit doesn’t mean everything’s fair use.”

Hachette Book Group Inc., HarperCollins Publishers LLC, John Wiley & Sons Inc., and Penguin Random House LLC sued the Internet Archive in June 2020 amid the initial months of the Covid-19 pandemic. The lawsuit targeted both CDL and a temporary removal of restrictions on how many users could borrow a book during the pandemic lockdown—promoted as a way to access books with schools and libraries closed.

Despite the timing, the suit was brewing before the pandemic after a white paper on CDL that the Internet Archive published, Maria Pallante, CEO of of the Association of American Publishers, said. The rare flood of friend-of-the-court briefs to a district court overwhelmingly focused on CDL rather than the pandemic free-for-all.

Those briefs will all-but-certainly be updated to address Koeltl’s March 24 opinion during the appeal that the Internet Archive has already promised.

Commercial Nonprofit

Koeltl found that the Internet Archive’s scanning of the books into digital copies didn’t transform the books, that it constituted a commercial—though non-profit—use, that it used the whole work, and that the practice “brings to the marketplace a competing substitute” for ebooks.

Ziskina said the error by Koeltl that “really stuck out” was his determination that Internet Archive’s use was fully commercial. Koeltl said it exploits the books “to attract new members, solicit donations, and bolster its standing in the library community” without paying the customary price. Ziskina said expanding benefits that count as commercial so broadly has “some pretty negative implications for fair use.”

“That’s the point of fair use. Of course you’re going to benefit somehow,” Ziskina said.

Rachel Brooke Leswing of Authors Alliance, which backed the Internet Archive, said the “problem with the decision is it’s really broad.” Even if libraries distanced themselves from the Internet Archive’s allegedly commercial nature, the opinion’s holding on lack of transformation within the first factor would likely prove insurmountable.

“It’s definitely something I’m concerned about,” Leswing said of how libraries will react, adding that the Internet Archive losing all four factors could put other libraries using CDL on “shaky legal footing, one of many reasons we hope it will be reversed on appeal: so there’s a pathway forward for CDL.”

Courts often say market effect, the fourth factor, is the most important. The Internet Archive said no data supported the idea that its lending harmed the value of the works at issue, and Leswing said it was “impossible” for the Internet Archive to prove a negative as Koeltl required.

But Charlesworth said the burden was rightfully put on the defendant to show it wasn’t doing harm. She said case law only requires that the infringement represents a substitute on the market, and if CDL became commonplace it would logically harm the market.

“There’s a common sense element to it at the bottom,” she said. “If you’re offering something for free that other people are licensing, that’s going to be a problem.”

Withering or Flourishing?

The publishers say a tiny fraction of libraries currently use the practice—despite the Internet Archive’s urging—with most refraining out of copyright concerns, though Ziskina’s brief said the practice is spreading rapidly. In any case, the potential banning or sanctioning of the practice, carries implications for the future of libraries in an increasingly digital world.

Ziskina said the opinion’s logic “easily could be applied to libraries” themselves, and characterized the lawsuit as part of a broader historical push to make libraries obsolete.

“It really enforces that if libraries didn’t already exist, they wouldn’t be allowed to exist today,” Ziskina said. “They’ve been trying to do this for centuries.”

Leswing noted that while the 127 books in the suit were available as ebooks, millions of books in the Internet Archive’s digital collection don’t have licenses available. The Internet Archive has argued that libraries are now often forced to license ebooks on a temporary basis—if available—rather than acquiring permanent additions to their repositories. In short, supporters of CDL says it simply advances the premise of libraries to the digital age.

But Charlesworth said that doesn’t change that the law clearly puts CDL well outside the bounds of fair use. She said that’s crucial not just for publishers, but for authors—many with already modest incomes—whose work would be available for free nationwide with a click if CDL became pervasive.

“Libraries have to rethink how they’re going to serve their patrons: what value are they going to contribute,” Charlesworth said. “But stealing books is not the answer.”

AAP’s Pallante pushed back on the idea that libraries would be doomed without the ability to implement CDL. She said the ebook licensing concerns were overblown, as they represent just 11% of publisher revenues in 2022, compared with 75% for physical books and 9% audiobooks according to AAP data.

Meanwhile libraries, some of which she said support the suit, have robust legitimate ebook collections. More than 120 libraries reached a million digital checkouts of books in 2022 on varying licensing terms—some permanent—she said.

Pallante said she was “gratified” by such a “forceful and soundly reasoned decision” that had “no dicta that ‘unfortunately the court needed to rule this way,’ the kinds of points the losing side would like to hang on to.”

“Internet Archive was trying to get others to adopt their model. I think it’s clear now that anyone who tries to follow their lead does so at their peril,” Pallante said, adding the US Court of Appeals for the Second Circuit has rejected similar fair use arguments multiple times.

But Ziskina saw vulnerability in an opinion without “a lot of nuance” on a novel issue. She said “it’s important to keep perspective,” pointing to Second Circuit copyright fair use victories in cases involving Google Books and HathiTrust. She, and others, also noted that the case was bound for the Second Circuit regardless of how the district court ruled.

“This is just the beginning,” said Ziskina. “This is far from over.”

This case is Hachette Book Group Inc. v. Internet Archive, S.D.N.Y., No. 20-4160.