On Friday, Judge G. Koeltl released a strongly worded summary judgment ruling in the case about the Internet Archive’s “controlled digital lending” (CDL) initiatives. The legal theory behind this CDL is that a library can digitize a print book and loan out the digitized version so long as it sequesters the print copy. The Internet Archive (IA) did this on a global scale, enabling anyone with an email address to have a virtual library card, and then lifting what controls it had established in the early days of the pandemic. Publishers by and large do not accept this legal theory, at least as practiced by the Internet Archive, and several filed suit. In the case, Judge Koeltl ruled firmly against the Internet Archive’s assertions of fair use, writing that “What fair use does not allow… is the mass reproduction and distribution of complete copyrighted works in a way that does not transform those works and that creates directly competing substitutes for the originals. Because that is what IA has done with respect to the Works in Suit, its defense of fair use fails as a matter of law.” The Internet Archive has said that it will appeal the ruling.
In this post, you will find reflections from several of our Chefs. What are your thoughts?
I’ve always been very leery of library behaviors that we call “loaning” that in fact constitute creating copies. (I have yet to encounter an e-model for interlibrary loan that sounds to me like it’s entirely on the side of the copyright angels.) That said, until the Hachette v IA decision I had only a high-level understanding of the way that IA implemented CDL, and from what I understood, it actually sounded pretty okay to me; although it clearly involved the creation of new (and unauthorized) copies, it also seemed to involve taking the original copy out of circulation while the newly-created one circulated, thus avoiding the negative market effects of copy proliferation and more or less replicating the conditions that underlie the logic of the first sale doctrine. But after reading Judge Koeltl’s ruling, with its detailed explanation of how IA actually does CDL, I was left baffled as to how anyone might have thought that IA’s practices would stand up to serious legal scrutiny.
I was also startled to learn about the degree to which CDL leads to commercial transactions for IA, and thought the following language from Judge Koeltl’s ruling was particularly trenchant:
“IA exploits the Works in Suit without paying the customary price. IA uses its Website to attract new members, solicit donations, and bolster its standing in the library community. Better World Books also pays IA whenever a patron buys a used book from BWB after clicking on the ‘Purchase at Better World Books’ button that appears on the top of webpages for ebooks on the Website. IA receives these benefits as a direct result of offering the Publishers’ books in ebook form without obtaining a license.”
Furthermore, the judge quoted IA’s Director of Finance as testifying that “every single page of the Archive is monetized.” I’m no attorney, but I found the logic of Judge Koeltl’s ruling pretty persuasive. I’ll be very interested to see what happens on appeal.
Lisa Janicke Hinchliffe
Keep Calm and Carry On. Though over-memed, that’s my non-legal advice to librarians who have been carefully developing CDL programs of service these past many years in light of the summary judgment against the Internet Archive last Friday.
There is a real possibility that this judgment could have a chilling effect on library CDL services and it would be a real disappointment if libraries failed to distinguish clearly the nature of their offerings relative to the practices of the Internet Archive. We need to keep front of mind that this case is only what this case is about. The case isn’t about libraries being able to loan print books, to offer ebooks to patrons, to provide access to people with print-disabilities, to preserve cultural heritage, or any of the over-wrought claims one can easily find with a quick search of Twitter. I mean, sure, the Internet Archive has found itself facing a ruling it didn’t want and perhaps didn’t expect. But, no library that I know of has a CDL program of mass digitizing its entire collection and then loaning those digital items to anyone on the planet with an email account.
Exercising fair use — as an individual or an organization — is always a matter of risk assessment. Librarians know this. The Internet Archive presumably knows this too and went all-in on that risk. Librarians also know that Section 108 of the copyright law enables libraries to develop programs of service in ways not available to all other types of organizations. The Internet Archive, for example, only proffered a fair use (Section 107) defense of its CDL program and did not invoke Section 108.
Of course it will be responsible practice for a library to review the analysis underlying whatever CDL program that library has in place in place or is considering in light of this ruling; however, there’s no reason to panic or immediately halt a library’s CDL program just because the Internet Archive’s CDL program was found to be infringing.
It is sinful how good I feel that the Internet Archive has taken a drubbing in the courts. One could have wished for a broader decision, but the courts do what the courts do. But this is a small victory for the good guys, and we should all bask in that.
I don’t want to get into the legal issues involved, about which I am no expert. What I find so surprising is the failed promise of IA. At the outset it sounded like such a good idea, and the tech it brought to the world of content was truly amazing. But then, for some unknown reason IA determined to become an activist organization, with copyright as its target. This is akin to the medical practice of curing the disease by killing the patient.
What is so disturbing about this is how unnecessary it all was. All IA had to do was ask permission. That’s it; nothing more than that. Of course, had they done that, some publishers, perhaps all, would have declined to participate. And isn’t that exactly the point? IA had done nothing to entice the publishers to participate; it was a simple land grab.
Had IA asked permission, it would have initiated an interesting conversation. What would entice the publishers? Payment? Access to data? Digitizing copies and handing copies back to publishers for them to do with as they pleased? Opening a commercial site or a site that linked to a commercial site to enhance monetization? There are as many ways to structure deals as there are stars in the sky, but IA demonstrated no imagination and chose instead to take someone else’s property. Publications are not public goods.
There is much to unpack in this case for a lawyer, so I will limit my remarks to two concepts as they relate to “controlled digital lending” (CDL); (1) the importance of market harm in the fair use analysis, and (2) how statutory damages may apply to this and subsequent cases.
Fair use and market harm. CDL is a concept created and promoted by lawyers active in library lobbying and policy. In litigation, however, precedent is more important than theory and, despite advocacy efforts to the contrary, Defendants cited no direct precedent for characterizing CDL as fair use.
While fair use is fact dependent, one fact usually defeats a fair use defense; the existence of a market that is cannibalized by the use. This is particularly true in this case because, as Judge Koeltl noted, “it is clear that IA’s distribution of ebook copies of the Works in Suit without a license deprives the Publishers of revenues to which they are entitled as the copyright holders.” Indeed, even cases cited by Internet Archive show the strong correlation between market harm and infringement. For example, and to select only a few, we have Google Books (“Those arrangements allow or would have allowed public users to read substantial portions of the book, Such access would most likely constitute copyright infringement if not licensed by the rights holders.”), Redigi (“When a secondary use competes in the rightsholder’s market as an effective substitute for the original, it impedes the purpose of copyright”), and TvEyes (“The impact on potential licensing revenues is a proper subject for consideration in assessing the fourth factor.”). Judge Koeltl makes it clear that this remains the rule.
Damages. Moving on to damages, this next phase will be really interesting. The Copyright Act provides for statutory damages of $750 to $30,000 per work infringed, which can be increased by the court with a willfulness finding to $150,000 per work. Innocent infringement, which can reduce statutory damages, is not available when the work infringed has a copyright notice, as books typically do. Given the inability of Internet Archive to provide legal support for CDL, and given Judge Koeltl’s strong written opinion (combined with his apparent frustration during oral argument), willfulness can easily be found.
Here, summary judgment was granted for 127 books. At the relatively lower end, $10,000 in damages per work would be $1,270,000. At $30,000 – the high end of non-willful infringement — we have $3,800,000. Mid-range willfulness of $75,000 per work would be $9,575,000. These are big numbers, but they only relate to the 127 works and don’t account for the remaining 3.6 million in-copyright works made available by the Internet Archive, 70,000 of which were “loaned” on a daily basis. Having had its day in court and lost on summary judgment, should the owners of the millions of other works included in the Internet Archives CDL offering chose to sue it now, the path to a large recovery is much easier. Under certain legal concepts, these future lawsuits might not even require relitigating liability.
Lastly, with big damages looming, we need to ask who else has potential liability. In copyright cases, one can “pierce the corporate veil,” for example to find personal liability against individuals who were responsible for the infringement at a corporation or non-profit entity. The complaint in this case raised claims against “Does 1-5” and expressly disclaimed “any public, university, or academic libraries.” With statutory damages on the horizon, will the next plaintiffs claim against people who “donated” those plaintiffs’ books into the CDL scheme? And while publishers may be loath to sue libraries, there are plenty of record companies and film studios whose works were subject to CDL who might not feel the same way.
With the high level of damages that may be awarded against the Internet Archive and its fellow travelers, of course an appeal will be filed.
Mostly, the Hachette v. Internet Archive case makes me sad. As I wrote here back in 2020, the magnificence of Internet Archive’s contribution in making scarce, out of print work available is hard to overstate. And remains confoundingly at odds with what they asserted with CDL and the National Emergency Library, though I understand that its founders and team assert that it is a logical extension of their original vision.
Setting the legalities aside for a moment, it’s actually the community commitment that IA has claimed for itself here that is so illogical and that for me remains the heart of the issue. I admire and respect (and like) many of the folks who have vociferously argued IA’s case, on behalf of libraries and readers and the preservation of knowledge. And I admire and respect any argument on those grounds – libraries are one of humanity’s greatest collective endeavors – but I can’t get my head around how wrong-headed this is.
Should we have free access to any and all human creations, art, text, music, technology and otherwise? Well, sure. But there are so many things that society should be able to share freely – health care and clean water come immediately to mind – but we have not been able to organize ourselves collectively to do that and at the same time reasonably compensate the people on whose labor those products and services depend. We can no more easily make knowledge free than we can easily make water free, because it depends on a complex set of operations, some of them highly expert, to create and deliver it.
Roger C. Schonfeld
The oral arguments and decision in this case last week have had me reflecting on other major copyright cases in our sector during my career, including the Google Books case and the Georgia State case. The internet has enabled us to license materials more efficiently than ever before, for example as consumers through Kindle or as organizations through OverDrive. But digital formats have simultaneously empowered copyright holders to constrain the ability of libraries to perform traditional functions like lending and preservation.
In market segments where libraries have relatively more market power, for example scientific journals, libraries have successfully secured unlimited usage site-license models that enable far more liberal usage rights (as well as interlibrary sharing) than would have been possible from a single print subscription. But in other segments where their market power is minimal, for example trade books, streaming media, or trade publishing, libraries find themselves with far less ability to freely lend, or effectively preserve, the cultural record. State legislative efforts to shift the balance of power have not to date been successful.
Librarians are understandably frustrated by this state of affairs and have legitimate concerns about preservation and broad public access. They see too little support from the copyright industries in support of these societal goals.
With respect to the Internet Archive case, it is too soon to know how this saga will finally end. Based on the court’s judgment last week, which many even-handed experts had anticipated, we may have seen the foreclosure of many flavors of “controlled digital lending.” While an appeals court could change all this, the judgment is a reminder that, while copyright can perhaps in some circumstances evolve through challenges to the existing order, such an approach does not always yield sustainable innovation.