Publishers Get One Step Closer To Killing Libraries

Last Monday was the day of the oral arguments in the Big Publishers’ lawsuit against libraries in the form of the Internet Archive. As we noted mid-week, publishers won’t quit until libraries are dead. And they got one step closer to that goal on Friday, when Judge John Koetl wasted no time in rejecting every single one of the Internet Archive’s arguments.

The fact that the ruling came out on the Friday after the Monday oral arguments suggests pretty strongly that Judge Koeltl had his mind made up pretty quickly and was ready to kill a library with little delay. Of course, as we noted just last Wednesday, whoever lost at this stage was going to appeal, and the really important stuff was absolutely going to happen at the 2nd Circuit appeals court. It’s just that now the Internet Archives, and a bunch of important copyright concepts, are already starting to be knocked down a few levels.

I’ve heard from multiple people claiming that of course the Internet Archive was going to lose, because it was scanning books (!!) and lending them out and how could that be legal? But, the answer, as we explained multiple times, is that every piece of this copyright puzzle had already been deemed legal.

And the Internet Archive didn’t just jump into this without any thought. Two of the most well known legal scholars regarding copyright and libraries, David Hansen and Kyle Courtney, had written a white paper detailing exactly how and why the approach the Internet Archive took with Controlled Digital Lending easily fit within the existing contours and precedents of copyright law.

But, as we and others have discussed for ages, in the copyright world, there’s a long history of courts ignoring what the law actually says and just coming up with some way to say something is infringement if it feels wrong to them. And that’s what happened here.

A key part of the ruling, as in a large percentage of cases that are about fair use, is looking at whether or not the use of the copy is “transformative.” Judge Koeltl is 100% positive it is not transformative.

There is nothing transformative about IA’s copying and unauthorized lending of the Works in Suit.7 IA does not reproduce the Works in Suit to provide criticism, commentary, or information about them. See 17 U.S.C. § 107. IA’s ebooks do not “add[] something new, with a further purpose or different character, altering the [originals] with new expression, meaning or message.” Campbell, 510 U.S. at 579. IA simply scans the Works in Suit to become ebooks and lends them to users of its Website for free. But a copyright holder holds the “exclusive[] right” to prepare, display, and distribute “derivative works based upon the copyrighted work.”

But… there’s a lot more to “transformative” use than simply adding something new or altering the meaning. In many cases, fair use is found in cases where you’re copying the exact same content, but for a different purpose, and the Internet Archive’s usage here seems pretty clearly transformative in that it’s changing the way the book can be consumed to make it easier for libraries to lend it out and patrons to read it. That is, the “transformation” is in the way the book can be lent, not the content of the book.

I know many people find this strange (and the judge did here as well) saying things like “but it’s the whole work.” Or “the use is the same because it’s still just reading the book.” But the Supreme Court already said, quite clearly, that such situations can be fair use, such as in the Sony v. Universal case that decided VCRs were legal, and that time shifting TV shows was clear fair use. In that ruling, they even cite Congress noting that “making a copy of a copyright work for… convenience” can be considered fair use.

Unfortunately, Judge Koeltl effectively chops away a huge part of the Sony ruling in insisting that this is somehow different.

But Sony is plainly inapposite. IA is not comparable to the parties in Sony — either to Sony, the alleged contributory copyright infringer, or to the home viewers who used the Betamax machine for the noncommercial, nonprofit activity of watching television programs at home. Unlike Sony, which only sold the machines, IA scans a massive number of copies of books and makes them available to patrons rather than purchasing ebook licenses from the Publishers. IA is also unlike the home viewers in Sony, who engaged in the “noncommercial, nonprofit activity” of viewing at a more convenient time television programs that they had the right to view for free at the time they were originally broadcast. 464 U.S. at 449. The home viewers were not accused of making their television programs available to the general public. Although IA has the right to lend print books it lawfully acquired, it does not have the right to scan those books and lend the digital copies en masse.

But note what the Judge did here. Rather than rely on the text of what the Supreme Court actually said in Sony, he insists that he won’t apply the rules of Sony because the parties are different. But if the basic concepts and actions are covered by the Sony ruling, it seems silly to ignore them here as the judge did.

And the differences highlighted by the court here have no bearing on the actual issues and the specifics of fair use and the law. I mean, first of all, the fact that Koeltl claims that the Internet Archive is not engaged in “noncommercial, nonprofit activity” is just weird. The Internet Archive is absolutely engaged in noncommerical, nonprofit activity.

The other distinctions are meaningless as well. No, IA is not building devices for people to buy, but in many ways IA’s position here should be seen as stronger than Sony’s because Sony actually was a commercial operation, and IA is literally acting as a library, increasing the convenience for its patrons, and doing so in a manner that is identical to lending out physical books. Sony created a machine, Betamax, that copied TV shows and allowed those who bought those machines to watch the show at a more convenient time. IA created a machine that copies books, and allows library patrons to access those books in a more convenient way.

Also, the Betamax (and VCR) were just as “available to the general public” as the Internet Archive is. The idea that they are substantially different is just… weird. And strikes me as pretty clearly wrong.

There’s another precedential oddity in the ruling. It relies pretty heavily on the somewhat terrible fair use ruling in the 2nd Circuit in the Warhol Foundation v. Goldsmith case. That case was so terrible that we (at the Copia Institute) weighed in with the Supreme Court to let them know how problematic it was, and the Supreme Court is still sitting on a decision in that case.

Which means the Supreme Court is soon to rule on it, and that could very much change or obliterate the case that Judge Koeltl leans on heavily for his ruling.

Here, Judge Koeltl repeatedly goes back to the Warhol well to make various arguments, especially around the question of the fourth fair use factor: the effect on the market. To me, this clearly weighs towards fair use, because it’s no different than a regular library. Libraries are allowed to buy (or receive donated) books and lend them out. That’s all the Open Library does here. So to argue there’s a negative impact on the market, the publishers rely on the fact that they’ve been able to twist and bend copyright law so much that they’ve created a new, extortionate market in ebook “licenses,” and then play all sorts of games to force people to buy the books rather than check them out of the library.

Judge Koeltl seems particularly worried about how much damage this could do this artificially inflated market:

It is equally clear that if IA’s conduct “becomes widespread, it will adversely affect the potential market for the” Works in Suit. Andy Warhol Found., 11 F.4th at 48. IA could expand the Open Libraries project far beyond the current contributing partners, allowing new partners to contribute many more concurrent copies of the Works in Suit to increase the loan count. New organizations like IA also could emerge to perform similar functions, further diverting potential readers and libraries from accessing authorized library ebooks from the Publishers. This plainly risks expanded future displacement of the Publishers’ potential revenues.

But go back and read that paragraph again, and replace the key words to read that if libraries become widespread, it will adversely affect the potential market for buying books in bookstores… because libraries would be “diverting potential readers” from purchasing physical books, which “plainly risks expanded future displacement of the Publishers’ potential revenues.”

Again, the argument here is effectively that libraries themselves shouldn’t be allowed. And that seems like a problem?

Koeltl also falls into the ridiculous trap of saying that “you can’t compete with free” and that libraries will favor CDL-scanned books over licensed ones:

An accused infringer usurps an existing market “where the infringer’s target audience and the nature of the infringing content is the same as the original.” Cariou, 714 F.3d at 709; see also Andy Warhol Found., 11 F.4th at 50. That is the case here. For libraries that are entitled to partner with IA because they own print copies of books in IA’s collection, it is patently more desirable to offer IA’s bootleg ebooks than to pay for authorized ebook licenses. To state the obvious, “[i]t is difficult to compete with a product offered for free.” Sony BMG Music Ent. v. Tenenbaum, 672 F. Supp. 2d 217, 231 (D. Mass. 2009).

Except that’s literally wrong. The licensed ebooks have many features that the scanned ones don’t. And many people (myself included!) prefer to check out licensed ebooks from our local libraries rather than the CDL ones, because they’re more readable. My own library offers the ability to check out books from either one, and defaults to recommending the licensed ebooks, because they’re a better customer experience, which is how tons of products “compete with free” all the time.

I mean, not to be simplistic here, but the bottled water business in the US is an over $90 billion market for something most people can get for free (or effectively free) from the tap. That’s three times the size of the book publishing market. So, uh, maybe don’t say “it’s difficult to compete with free.” Other industries do it just fine. The publishers are just being lazy.

Besides, based on this interpretation of Warhol, basically anyone can destroy fair use by simply making up some new, crazy, ridiculously priced, highly restrictive license that covers the same space as the fair use alternative, and claim that the alternative destroys the “market” for this ridiculous license. That can’t be how fair use works.

Anyway, one hopes first that the Supreme Court rejects the terrible 2nd Circuit ruling in the Warhol Foundation case, and that this in turn forces Judge Koeltl to reconsider his argument. But given the pretzel he twisted himself into to ignore the Betamax case, it seems likely he’d still find against libraries like the Internet Archive.

Given that, it’s going to be important that the 2nd Circuit get this one right. As the Internet Archive’s Brewster Kahle said in a statement on the ruling:

“Libraries are more than the customer service departments for corporate database products. For democracy to thrive at global scale, libraries must be able to sustain their historic role in society—owning, preserving, and lending books.

This ruling is a blow for libraries, readers, and authors and we plan to appeal it.”

What happens next is going to be critical to the future of copyright online. Already people have pointed out how some of the verbiage in this ruling could have wide reaching impact on questions about copyright in generative AI products or many other kinds of fair use cases.

One hopes that the panel on the 2nd Circuit doesn’t breezily dismiss these issues like Judge Koeltl did.