Five of the biggest publishers in the world, Hachette Book Group, HarperCollins Publishers, John Wiley & Sons, and Penguin Random House, are currently suing the Internet Archive in the US for lending digital scans of books in its collection on a one-copy-one-user basis. The Second Circuit Court of Appeals has now confirmed the ruling of the lower-instance court that the Internet Archives’ Open Library programme is not covered by fair use. The decision is not only disappointing for the many users around the world who rely on the Open Library to get access to information, it is also based on a number of problematic assumptions.
Hachette v. Internet Archive
The Internet Archive is probably best known for operating the Wayback Machine, a digital archive that preserves webpages, ensuring that web content doesn’t simply disappear when a website is changed or shut down. In addition, the US nonprofit has been running the Open Library since 2006 with the ambitious goal of making “all the published works of humankind available to everyone in the world.” The Open Library is administered under a “controlled digital lending” model. All of the books in its collection have been lawfully acquired through purchase or donation and only one copy of any given work, digital or physical, can be lent at the same time.
In 2020, amid the COVID pandemic, the Internet Archive launched the National Emergency Library and for a period of three months lifted the restrictions of controlled digital lending. During this period, Hachette et al. filed a lawsuit against the Archive, claiming “willful mass copyright infringement.” In their complaint, the group of publishers argued that the Open Library’s practice of scanning and making available books in its collection even on a one-copy-one-user basis is unsupported by fair use and harmful to the ebook market. Last year, the District Court of New York found in favour of the plaintiffs and ordered the Internet Archive to remove works that are commercially available as ebooks from the Open Library.
The Second Circuit decision
On September 4, the Second Circuit Court of Appeals largely upheld the lower court’s decision. This outcome did not come as a surprise to observers of US copyright litigation, as courts have adopted an increasingly narrow interpretation of fair use in recent years. It is nonetheless frustrating due to the impact on users and the flawed reasoning of the court.
The Court of Appeals rejected the Internet Archive’s fair use defence on all four factors:
- Transformativeness: The Court did not consider the use to qualify as transformative. It rebuffed the Archive’s argument that digitising books is making lending more efficient and allowing other uses not possible with physical books. Instead, the scans should be considered digital copies that “primarily supplant[s] the original works without adding meaningfully new or different features.”
- Nature of the copyrighted works: All of the books in the Open Library collection should be considered individual expressions of their authors and, thus, copyrighted works. The fact that non-fiction works are included does not favour the Archive.
- The amount and substantiality of the use: According to the Court, the Archive “makes unauthorized copies and distributes them in their entirety,” so this factor also goes to the publishers.
- The effect of the use on the potential market or the value of the works: Despite not bringing forward any evidence, the Court agrees with the publishers’ assessment of market harm. Scanned copies of books serve as competing substitutes for ebooks, likely depriving publishers of revenues if they are available for free.
The public interest mission of libraries
Mike Masnick provides a more thorough discussion of the court’s fair use analysis on techdirt, but what stands out as particularly problematic is the court’s lack of understanding, or disregard, for the value that libraries provide to society. The decision briefly addresses the potential “public benefit” of the Open Library only to dismiss it outright. Instead, without producing any evidence, it subscribes to the argument of publishers that the making available of books for free, even within the confines of a controlled digital lending programme, must automatically lead to lost sales.
This is not to deny that the shift to digital carries additional risks for publishers, which the Internet Archive was trying to mitigate through its controlled digital lending scheme. However, the court goes a step further in its conclusion arguing that “[i]f authors and creators knew that their original works could be copied and disseminated for free, there would be little motivation to produce new works” This calls into question the mandate of libraries altogether – to democratise knowledge by providing free access to books – and not just of the Open Library (for a similar assessment, see Molly White’s blog post).
Implications of the decision
The lawsuit already has a quantifiable negative impact on users of the Open Library. Earlier this year, the Internet Archive had to remove 500,000 books from the Open Library catalogue.
However, it is also important to note that the ruling only applies to the Internet Archive’s Open Library programme and only to books that are also commercially available as ebooks. It is possible that a narrower application of controlled digital lending can be considered fair use. The Internet Archive may appeal to the US Supreme Court, but it is unclear if the Supreme Court would take up the question and, if it does, whether it would arrive at a different conclusion given recent decisions.
It goes without saying that this decision has no significance for what is permissible in the EU. The Court of Justice of the European Union has already asserted the right of libraries to digitise and e-lend books, provided that libraries employ a model that is similar to traditional lending of paper books. However, these conditions need to be codified in the national laws of the member states. As a consequence, European institutions refrain from making available scanned books through controlled digital lending.
The e-lending business model
The decision highlights more general problems with the e-lending business model, not just in the US but also in the EU. The vast majority of ebooks are not sold, but licensed. By implication, libraries cannot simply buy ebooks to lend them, they have to enter into licensing agreements instead. Many publishers and aggregators use their dominant market position to impose restrictive licensing conditions and demand much higher prices for ebooks than for physical books.
Six issues stand out in particular:
- Licensing contracts expire and need to be renewed after a certain number of loans, in theory simulating the physical degradation of books, but leading to disproportionate prices overall.
- Many ebooks are only licensed to libraries after a windowing period to avoid competition during the market introduction of a book, leading to undue delays for library users.
- Libraries are often forced to purchase expensive subscription bundles of ebooks instead of having the free choice of which works to include in their catalogue.
- Many ebook licences require the tracking of usage data, raising concerns about reader surveillance and privacy.
- The erosion of ownership makes it harder for libraries to preserve works and build a permanent collection.
- It is unclear to what extent authors benefit from this model. Where a public lending right exists in the EU, it often does not cover e-lending.
Strengthening libraries in the digital environment
As COMMUNIA, we have developed proposals to strengthen the rights of libraries and library users in the digital environment in Europe.
In our Policy Paper #19, we propose to introduce an EU-wide exception for e-lending that should apply to both digital-born and digitised works in accordance with the requirements found in the CJEU case law. The EU legislator should also clarify that libraries have an ancillary right to digitise works in their collections.
In addition, in our Policy Paper #21, we develop a framework to address the issue of unfair licensing conditions by proposing what amounts to a right to license and own digital materials on fair terms. We believe that, at the very least, the EU legislator should consider making unfair licensing conditions unenforceable.
These proposals should be implemented as part of a broader legislative intervention to unlock the full potential of all European knowledge institutions, including libraries, but also universities and research institutions, a Digital Knowledge Act.
Disclaimer: The Internet Archive is a member of COMMUNIA.