From Publisher’s Weekly:
In an emphatic 47-page opinion, federal judge John G. Koeltl found the Internet Archive infringed the copyrights of four plaintiff publishers by scanning and lending their books under a legally contested practice known as CDL (controlled digital lending). And after three years of contentious legal wrangling, the case wasn’t even close.
“At bottom, IA’s fair use defense rests on the notion that lawfully acquiring a copyrighted print book entitles the recipient to make an unauthorized copy and distribute it in place of the print book, so long as it does not simultaneously lend the print book,” Koeltl wrote in a March 24 opinion granting the publisher plaintiffs’ motion for summary judgment and denying the Internet Archive’s cross-motion. “But no case or legal principle supports that notion. Every authority points in the other direction.”
The ruling comes just days after a March 20 hearing, during which the judge sounded deeply skeptical of the Internet Archive’s case. At the 90-minute hearing, Elizabeth McNamara, arguing for the plaintiff publishers, told the court that the concept of controlled digital was “built on a fallacy” and that the Internet Archive’s scanning and lending of library books was copyright infringement on a massive scale. Arguing for the Internet Archive, Joseph Gratz countered that CDL is a carefully considered practice and that “lending books by more efficient technological means” was “transformative” and therefore protected by fair use.
. . . .
But after three years of litigation Koeltl easily found for the publishers, holding that the Internet Archive’s scanning and lending clearly constituted a prima facie case of copyright infringement and that the Internet Archive’s fair use defense failed on the facts and the law.
All four factors of the fair use test, Koeltl ruled, strongly favored the publishers.
“The crux of IA’s first factor argument is that an organization has the right under fair use to make whatever copies of its print books are necessary to facilitate digital lending of that book,” Koeltl writes. “But there is no such right, which risks eviscerating the rights of authors and publishers to profit from the creation and dissemination of derivatives of their protected works. IA’s wholesale copying and unauthorized lending of digital copies of the Publishers’ print books does not transform the use of the books, and IA profits from exploiting the copyrighted material without paying the customary price. The first fair use factor strongly favors the Publishers.”
Specifically, Koeltl strongly rejected what is essentially the most important argument for fair use under the first factor (which deals with the nature of the use, commercial, nonprofit, education, etc.)—that the Internet Archive’s program is “transformative.”
“There is nothing transformative about IA’s copying and unauthorized lending of the Works in Suit,” the judge found. “IA does not reproduce the Works in Suit to provide criticism, commentary, or information about them. IA’s e-books do not ‘add something new, with a further purpose or different character, altering the with new expression, meaning or message.’ IA simply scans the Works in Suit to become e-books and lends them to users of its website for free.”
Furthermore, Koeltl also dispatched with what he called the Internet Archive’s “first sale argument under the guise of fair use” as part of his first factor analysis.
. . . .
“In ReDigi, the Court of Appeals plainly held that the first sale doctrine…does not include a right of reproduction, and that any broader scope of the first sale doctrine should be sought from Congress, not the courts,” Koeltl held, citing the landmark 2018 appeals court decision which held there was no resale right for digital works under section 109 of the Copyright Act because, unlike physical works, the digital market necessarily involves unauthorized copies. “Although [the first sale doctrine] entitles IA and its Partner Libraries to resell or lend their lawfully acquired print copies, unauthorized reproduction, which is at the heart of IA’s online library, is not protected.”
After a cursory review of the second and third fair use factors (the nature of the works used, and the amount of the works used), which also tilted strongly to the publishers, Koeltl turned to the all important fourth factor: market impact. And despite the IA’s claims that the plaintiff publishers were not financially harmed by the Internet Archive’s controlled digital lending activities, those claims, Koeltl held, failed on both the facts and the law.
“In this case, there is a ‘thriving e-book licensing market’ for libraries,” Koeltl writes (pointing out that in 2020 OverDrive counted more than 430 million checkouts; that Penguin Random House’s library e-book licenses generate $59 million annually; and that, from 2015-2020, HarperCollins earned $46.91 million). “IA supplants the Publishers’ place in this market. IA offers users complete e-book editions of the Works in Suit without IA’s having paid the Publishers a fee to license those e-books, and it gives libraries an alternative to buying e-book licenses from the Publishers.”
Koeltl dismissed expert testimony suggesting that publishers’ bottom lines were unharmed by the Internet Archive’s online library, holding that as a matter of law it “deprives the Publishers of revenues to which they are entitled as the copyright holders,” because libraries would be incentivized “to offer IA’s bootleg e-books” rather than to “pay for authorized e-book licenses.”
And crucially, the judge brushed aside the Internet Archive’s “public benefit” argument with a single paragraph. “IA argues that its digital lending makes it easier for patrons who live far from physical libraries to access books and that it supports research, scholarship, and cultural participation by making books widely accessible on the Internet,’ Koeltl writes. “But these alleged benefits cannot outweigh the market harm to the Publishers.”
. . . .
The victorious publishers and their supporters offered a different, blunt assessment of Koeltl’s decision.
“IA tried to justify its illegal creation and distribution of e-books under a legally absurd theory of fair use. Judge Koeltl saw through their rhetoric and false comparisons,” said Authors Guild CEO Mary Rasenberger.
“The publishing community is grateful to the Court for its unequivocal affirmation of the Copyright Act and respect for established precedent,” said Maria A. Pallante, President and CEO of the Association of American Publishers. “In rejecting arguments that would have pushed fair use to illogical markers, the Court has underscored the importance of authors, publishers, and creative markets in a global society. In celebrating the opinion, we also thank the thousands of public libraries across the country that serve their communities everyday through lawful e-book licenses. We hope the opinion will prove educational to the defendant and anyone else who finds public laws inconvenient to their own interests.”
Link to the rest at Publisher’s Weekly
PG says that when a decision comes within a few days following the end of a trial in Federal Court, you can conclude that it was a slam-dunk case.