In a Swift Decision, Judge Eviscerates Internet Archive’s Scanning and Lending Program

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.

16 thoughts on “In a Swift Decision, Judge Eviscerates Internet Archive’s Scanning and Lending Program”

  1. Personally, I hope that a case eventually reaches SCOTUS on the subject of ebooks and copyright. I also hope that it is an “originalist” Court at the time.

    Why? When we reach the point at which the “fuddy-duddies” all die, and all books are only “licensed” to the reader, we will have a large part of Orwell’s dystopia established.

    Whether it is the works of Thomas Paine, or Karl Marx – when all copies of them can be removed from the public sphere by a few keystrokes to revoke the license – the main intent of copyright, to encourage the creation and wide dissemination of thought, will be forever lost.

    • You assume all books are DRM’ed.
      They aren’t.
      Not at Gutenberg, not at Baen, not at Amazon.

      And the books you list are readily available DRM-free from Gutenberg and other places. Here, pick your format:

      ePub,Kindle, Html, even plain text versions are free to download.

      DRM is primarily a security blanket for the BPHs and insecure authors that is readily removed if desired. Mostly it is ignored because consumers don’t care: whether the latest potboiler from Patterson’s book mill is DRM’ed or not makes no difference in their lives.

      The case you desire may come to pass but it won’t be initiated by users but rather by publishers looking to unmask the underground creators of the DeDRM tools, which, btw, only work for legally purchased content on licensed computers.

      If you are truly afeared of losing content arbitrarily, well there’s always pbooks. The trapubs prefer you go that route anyway.

      The status quo is imperfect but it is adequate.

    • W.O. – I agree with Felix.

      Regardless of the license terms or the revocation of an ebook license, if you can see/read the text on a computer, there will be hackers/civil libertarians who will figure out how to get a permanent electronic copy onto a personal computer or similar device.

      The licensing of ebooks (as well as any program you have installed on your personal computer/tablet, etc.) allows the publisher of the ebook to take legal action against groups like the Internet Archive that are engaged in the wholesale copying and distribution of ebooks without compensating the author/publisher for additional copies made of the original and violation of the author’s/publisher’s copyright to the works).

      The licensing of ebooks is an attempt to control ebook lending in the same manner as physical books are controlled in physical libraries. If the library purchases a single physical book, it can’t be checked out for reading by more than one person at a time. Yes, that borrower can allow others to read the physical book during the time it is lent, but the physical book can’t be read comfortably by more than one person at a time (children’s books of course can be read by a parent to a child or children sitting beside the parent, but that’s not thought to be a problem like the possibility of an ebook being read by several unrelated people in different locations simultaneously, something that’s not possible with a physical book.).

      • One can actually blame computer software licenses for this mess: Specifically, Autodesk and its cohorts that didn’t necessarily pioneer the “software license” (that’s buried in the 1950s but was made a default condition by the Boca Raton Behemoth) but made it easily enforceable…

        …for information-stored-on-computers that was directly useful and at the multidimensional (and hard!) intersection of copyright, patent, trade secret, and protection-of-capital-investment-and-rational-expectations law of the 1960s. Before any of:

        • The Copyright Act of 1976
        Feist (which ended the “sweat of the brow” theory of copyright protection in the US
        • The developing concept (primarily in Europe) of the so-called “sui generis database protection” right
        • Post-von-Neumann data models and processing
        • Computers (and software packages) costing less than two standard consumer-grade motor vehicles
        • Software to create other software that did not require the equivalent of a PhD to make it run without damaging the underlying system
        • Any intersection with the arts, and specifically with not-regulated-by-a-licensing-body data (accounting; civil engineering; architecture; etc.)

        This has ossified the legal presumption that what’s on a disk/thumb drive/website/tablet is just like what’s on 1950s-70s-era 12.7mm-wide-weighing-10kg tape reels frequently seen in the background in "science fiction"† that still “belong to” the manufacturer. This is a fundamental problem with the common law: It is not sensitive enough to changes in facts or context. (Civil law has its own, often related, problems.) And applying the precedents related to “unauthorized copying/selling of computer programs” to “ordinary stream-of-commerce access to static — that is, that is, not transformational — expression” Has Created Problems. (Primarily because none of the lawyers, judges, clerks, or others in the legal-doctrine-creating process understood the distinction between “process” and “product,” or even that for copyright matters there is a distinction, but that’s a rant for another time.)

        In short, the lawsuit asks the wrong questions and gets answers relevant to a specific subset of litigants that — for the broader universe of authors — is at best questionable. In this specific instance, I agree that the Kahle-bros deserved a swift judicial knee to very delicate portions of their (virtual) anatomies; my concern is that this decision:

        (a) Reifies “e-books are transferred as a license, not a sale, Because Reasons” as both the law and the customary practice of commercial publishing and of “indie publishing” that touches any part of the stream of commerce; and

        (b) Silences author preferences because they are “businesses” and therefore (as a matter of law) fully understand the entire range of what a publishing or distribution contract takes from them and gives to the transferee — even when those possibilities are known at the time of transfer only to the publisher/distributor (and most of the time not even then)

        Hard cases make bad law. Easy cases are usually even worse due to the overpowering odor of “precedent” in both common law and civil law.

        * * *

        † Dubious aside: The “tape drives” shown in film and TV are usually one-inch videotape reels, not actual computer tape drives. This metafictional conceit appears to have started out as last-gasp improvisation when IBM denied the right to show a real IBM 7070 in operation and snowballed until it became standard. And much cheaper than leasing a real computer for occasional background shots.

        • The key takeaway is that the ebook is a separate product from the pbook. Licensing vs sale of either being just a legalism.

          Ebook licensing may be a legacy of the software business but it isn’t the *only* game in town. Authors going through a middleman, be it tradpub, amazon, or whoever is the author’s *choice*. And it’s not even just Indie vs tradpub; there are other roads to “market” including a few online “libraries” where authors can put their books up for free (usually under Creative Commons) or they can distribute via their own online presence.

          Also, be careful about asking for a regime that treats ebooks like print with full first sale treatment. Because the technology exists to do so and it has been floated repeatedly as a replacement for licensing plus optional DRM. The tech is blockchain and few want it because it adds cost, it is intrusive, and it allows government and advertisers to keep track of every last purchase, gift, or loan everybody makes.

          Be careful what you ask for. You might get it. And nobody will enjoy it except the owners of the big server farms. And even they are reluctant.

          What we have is far from perfect but it is also far from the worst the IdiotPoliticians™ can inflict.

      • Also, a physical book has a de facto limit to how many times it can be checked out before falling apart. Ownership of the physical book is in theory in perpetuity, but in practice not really.

        I am deeply unimpressed by any discussion of the topic that pretends that there are no practical differences between an ebook and a physical book. I fully expect TechDirt will soon be fulminating over this ruling, while pretending just this.

    • It has. Several times:

      New York Times Co. v. Tasini, 533 U.S. 483 (2001) (the footnotes are particularly instructive and relevant to the concept of “controlled digital lending”)

      Reed Elsevier, Inc. v. Muchnick, 559 U.S. 154 (2010)

      Kirtsaeng v. John Wiley & Sons, Inc., 568 U.S. 519 (2013) (reserving a tiny part of this issue because it wasn’t squarely presented at the Supreme Court — you have to look at it in the lower courts) (and here, I’d make a really bad joke about “they made their bed and now they have to lie in it,” but that would depend on knowing the actual history behind Kirtsaeng and the state of the law then that made Kirtsaeng’s victory inevitable)

      Of course, if it was an “originalist” court it would determine that mere publishers don’t have standing to sue, because the IP Clause provides for the rights to be granted only to Authors.

  2. There’s a place somewhere in the North of Norway where seeds have been collected and stored in the event some catastrophe strikes. I expect it will be much easier to store zillions of books, and then make a zillion mirror copies.

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