Title 17, Section 407 of the U.S. Code requires that the copyright holder in a printed work or sound recording published in the United States “deposit, within three months after the date of such publication, two complete copies of the best edition… in the Copyright Office for the use or disposition of the Library of Congress.”

Failure to do so subjects the copyright holder to “a fine of not more than $250 for each work” as well as “the total retail price of the copies… demanded” and an additional “fine of $2,500… if such person willfully or repeatedly fails or refuses to comply” with the deposit requirement.

A few years ago, a small publisher called Valancourt Books sued the government, challenging the constitutionality of this requirement, and initially lost its suit. But last week the District of Columbia Court of Appeals reversed the district court’s decision.

As explained in the appellate court’s ruling, Valancourt is an independent publisher that largely publishes new editions of “rare and out-of-print fiction,” some of which is in the public domain. Valancourt “has never deposited its works under Section 407,” but does place “copyright notices in its books” since even its public-domain publications include significant annotations and other content enhancements. (The above and all subsequent text in quotation marks comes from the ruling.)

Pursuant to its rights under Section 407, in June 2018 the Copyright Office (CO) sent Valancourt a demand for copies of 341 of its titles. Valancourt responded that because it’s such a small operation, the cost of compliance would be prohibitive, and offered instead to sell copies to the government at a cost-recovery price. CO declined this offer, reiterating Valancourt’s obligation under the law, but now limiting the demand to those titles not in the public domain (reducing the number of titles affected to 240).

Valancourt subsequently brought suit against the Attorney General and the Register of Copyrights, arguing that “the application of Section 407 is unconstitutional under the First and Fifth Amendments” and seeking “an injunction against the provision’s enforcement.” In its suit, Valancourt contended that “Section 407’s application violates the First Amendment because it unlawfully burdens speech and is overbroad, and… also violates the Fifth Amendment because it represents an uncompensated taking of property.”

At this point, CO sent a confidential email communication to Valancourt, offering to settle the suit if Valancourt provided “the 240 requested titles in electronic format.” Valancourt declined the offer and continued with the suit.

In July 2021, the DC District Court ruled against Valancourt, finding that the deposit requirement “does not run afoul of the Takings Clause [of the Fifth Amendment] because it represents a voluntary exchange for federal copyright protection” (voluntary because Valancourt had chosen to place copyright notices in its books). It also rejected the First Amendment claim, finding that “Section 407 does not burden speech at all, and that, even if it were subject to First Amendment scrutiny, it would survive because it does not burden more speech than necessary.”

Valancourt appealed, and this is where things get interesting. Since the original finding against Valancourt’s First Amendent claim survived the appeal, I won’t discuss it further here. Instead I’m going to focus on the Fifth Amendment claim (related to “arbitrary taking of private property without due compensation”), on which the appeals court reversed the district court’s decision and found in favor of Valancourt.

First of all, the court found that CO’s offer to accept electronic copies in lieu of physical copies did not moot the complaint, since it would leave CO the option of demanding physical copies of Valancourt and others at a later time. For this and other reasons laid out in the ruling, the court continued with an evaluation of the constitutionality of CO’s original demand for physical copies.

After “review(ing) the district court’s grant of summary judgment to the government de novo,” the court “agree(d) with Valancourt that Section 407’s demand for physical copies of works, as applied by the Copyright Office here, represents an uncompensated taking of private property under the Takings Clause.”

Why did the court reach this conclusion? The ruling gives two primary reasons:

• The requirement pertains to physical objects that are the property of their owners and for which no compensation is offered.
• The demand does not involve “a voluntary exchange for a government benefit,” because copyright adheres to an original work the moment it’s encoded in a tangible medium – it is not conferred by CO in return for deposit.

To this second point, the language of the ruling is somewhat scathing: “Tellingly, the government cannot point to a single incremental benefit that copyright owners receive for depositing works pursuant to Section 407. That provision then cannot represent a voluntary exchange for a benefit — there is no benefit at all.”

Some readers will (as some online commentators have) argue that there is a real benefit to copyright holders that arises from deposit: when copyright holders deposit their works along with an application of registration and a filing fee (pursuant to Section 408), they gain the ability to “(bring) an infringement action” against those who breach their copyrights – an option only available when copyright is registered. But this is a benefit of copyright registration, not of deposit. In the words of the court, “mandatory deposit under Section 407 bears no relationship to that benefit, and the governmental nature of the benefit does not change that fact.”

It’s worth noting that this has not always been the case: for many years, deposit was required simply to obtain copyright under U.S. law. However, deposit stopped being a condition of copyright conferral with the Copyright Act of 1909, and stopped being a condition of copyright maintenance with the Copyright Act of 1976. (Furthermore, in order to bring U.S. law into compliance with the Berne Convention, in 1988 the U.S. stopped limiting copyright protection to works formally published with a copyright notice.)

Interestingly, one of the government’s arguments in defense of the deposit mandate was that “a copyright owner can readily disavow copyright protection and thereby avoid the deposit requirement.” But the court found that:

No statute, regulation, or guidance suggests that an author can readily disavow copyright protection and thereby avoid the associated deposit requirement… The statute itself gives no indication of any abandonment option or how to effectuate it. Nothing in Section 407’s terms would suggest to a copyright owner that she can avoid its requirements by informing the Copyright Office that she would prefer to abandon her copyright rather than deposit copies of copyrighted works. Rather, the statute states that a copyright owner “shall” make a deposit and prescribes fines for failing to comply with a deposit demand from the Copyright Office… To deduce that one could avoid mandatory deposit by disavowing copyright protection would require a copyright owner to infer essentially the opposite of what the statute states.

And the court found that the communications from CO to Valancourt carried the same clear message: deposit is required no matter what, and failure to make a timely deposit will result in significant monetary fines. Furthermore, the court found that “had the government wanted to make clear that copyright owners could avoid readily mandatory deposit by abandoning their copyright, it knew how to do so, as evidenced by other provisions in the Copyright Act and their corresponding regulations.”

The final government argument was that “Valancourt consented to the burdens of Section 407 by choosing to place copyright notices on its works.” But the court found that “nothing in the statute or the accompanying regulations suggests that a copyright owner agrees to deposit two copies of a work by using copyright notices.”

The bottom line now seems to be that CO can no longer require the deposit of two copies of all published works. Deposit can, it appears, continue to be a condition of copyright registration, but in light of this ruling it seems only a matter of time before that requirement is challenged as well. (Here, though, the government might have a stronger defense: for example, how can CO be required to formally register copyright in a work that it has not received and the actual existence of which it can’t independently verify?)

The implications of this ruling for the Library of Congress are potentially significant – if for no other reason than it will now have to purchase many of the books it once could rely on publishers and authors providing gratis. We can anticipate lots of discussion in the coming months, and possibly an appeal to the Supreme Court.