Publishers Land Killer Punch On Internet Archive In Book Copyright Court Battle

Analysis A federal judge rejected the Internet Archive's claim that it has a fair use right to lend out a digital copy of each printed book that it has purchased, raising the possibility of it facing huge damages for copyright infringement.

A week ago, Judge John Koeltl from the Southern District of New York heard oral arguments in Hachette v. Internet Archive, a lawsuit filed by four large publishers (Hachette Book Group, HarperCollins Publishers, John Wiley & Sons and Penguin Random House) that challenged the Internet Archive's Controlled Digital Lending (CDL) initiative.

The Internet Archive has been making digital copies of physical books that it acquires and lending those copies to online library patrons in a controlled manner – it circulates only as many digital books as it has actual copies. It is offering a digital proxy that stands in for the physical title.

Copying works protected by US copyright law may be excused if the copying falls under the fair use exemption.

The non-profit claims its book scanning and distribution qualifies as fair use because its digital lending scheme is "transformative" – which conveys a different meaning than the original – and non-commercial. These are among the factors considered when assessing whether the fair use defense can be applied.

It also asserts that the goals of the "first sale doctrine" – which allows the purchaser of a copyrighted work to sell, display or otherwise dispose of that particular copy without seeking permission from the copyright holder – support its controlled lending of digitized purchased books.

Judge Koeltl, however, found the Internet Archive's arguments wanting. In a decision [PDF] published on Friday, he wrote.

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"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, so long as only one patron at a time can borrow the book for each copy that has been bought and paid for," Koeltl opined.

"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 judge thus granted the publishers' motion [PDF] for summary judgment and rejected the Internet Archive's fair use defense, setting the stage for a possible injunction against the CDL initiative.

It isn't over yet

The New York court's judgment, however, looks like it may have to wait for an appeals court review. In a blog post, the Internet Archive said the initial decision is a blow to libraries and their patrons and promised to appeal.

"This decision impacts libraries across the US who rely on controlled digital lending to connect their patrons with books online," the organization said. "It hurts authors by saying that unfair licensing models are the only way their books can be read online. And it holds back access to information in the digital age, harming all readers, everywhere."

Internet Archive founder Brewster Kahle argues that libraries must be allowed to thrive in the digital age. But public libraries, typically starved of funds, may not be able to fully participate in the digital era if they are obligated to purchase electronic versions of physical books they've already purchased.

Tyler Ochoa, a professor in the law department at Santa Clara University in California, told The Register that the Internet Archive faces a significant legal fight.

"They have to hope the appeals court sees things differently," he said, "This forecloses the possibility of fair use for what they are attempting to do."

The publishers have identified 127 infringed works that they own and those alone could cost the Internet Archive more than half its 2019 budget of $36.7 million. Statutory damages if the court finds that infringement was willful can reach $150,000 per work. So in a worst case scenario, that's more than $19 million – and that's if none of the other 1.3 million titles in the Internet Archive's lending program are considered.

"Certainly, the plaintiffs can claim their lost revenue, whatever they would have charged for a license for each of those uses," said Ochoa. "As the alternative, they can seek statutory damages, a single award of damages per work infringed."

Ochoa expressed skepticism about the Internet Archive's arguments in light of the current state of copyright law.

"Their defense is largely based on an analogy to the first sale doctrine," he explained. "The sale doctrine says that once you've sold a physical object that has intellectual property embodied in it, then the copyright owner's control over that object ceases.

"So when you sell a book to a public library, the public library can lend it to anyone they want, without any further obligations to the copyright owner. And what they tried to do is extend that into the digital environment – to say that 'if we've bought a copy of the book, we should be able to digitize it, and lend our digital copy to anybody who wants it as long as we're not lending our physical copy at the same time.'"

As arguments go it might not hold water, he noted.

"And courts have rejected that defense repeatedly because there's no way for the copyright owner to guarantee that you're not lending the same physical copy at the same time. And the reproduction right is not one of the rights that are exhausted [under the first sale doctrine]. You're not allowed to make a reproduction of a copyrighted work without authorization unless it's a fair use."

Asked whether anyone in Congress has shown interest in changing copyright law to accommodate the Internet Archive's model, Ochoa said he doubts it.

"Congress looked at this issue in the 1990s," he explained. "There were proposals at that time for some sort of digital first sale doctrine. But the stakeholders couldn't agree on that as a defense. And it never got enacted at the time. I don't see any reasonable likelihood that that decision would be revisited." ®