Publishers beat Internet Archive as judge rules e-book lending violates copyright

On Friday, a US district judge ruled in favor of book publishers suing the Internet Archive (IA) for copyright infringement. The IA's Open Library project--which partners with libraries to scan print books in their collections and offer them as lendable e-books--had no right to reproduce 127 of the publishers' books named in the suit, judge John Koeltl decided.

IA's so-called "controlled digital lending" practice "merely creates derivative e-books that, when lent to the public, compete with those [e-books] authorized by the publishers," Koeltl wrote in his opinion.

Publishers suing--Hachette, HarperCollins, Penguin Random House, and Wiley--had alleged that the Open Library provided a way for libraries to avoid paying e-book licensing fees that generate substantial revenue for publishers. These licensing fees are paid by aggregators like OverDrive and constitute a "thriving" market that IA "supplants," Koeltl wrote. Penguin's e-book licensing generates $59 million annually, for example.

IA did not dispute that it created an alternate path but disputed that it impacted publishers' e-book licensing. In 2021, IA partnered with 62 libraries, including 13 public libraries, specifically to provide an alternate path for digital lending without paying licensing fees, which are determined through contracts that must be renewed frequently and can be changed at publishers' whims. In court documents, IA argued that rather than cutting into publishers' library e-book licensing revenues, the Open Library helped promote books, and that practice ended up generating more licensing revenues for publishers in recent years, as thousands of IA borrowers widely recommended books they read. IA also argued that OverDrive checkouts did not increase when IA stopped lending the disputed books in the lawsuit.

These arguments failed, because Koeltl said that none of these "positive financial indicators" served as proof that publishers weren't harmed by IA's Open Library digital lending system.

Publishers are seeking statutory damages and have asked for a judgment that would directly declare that IA's copying constitutes clear infringement. Ars couldn't immediately reach the publishers' lawyer for comment.

IA has asked for statutory damages to be waived, but Koeltl said that request is premature. Now, IA plans to appeal, its director of open libraries, Chris Freeland, wrote in a blog entitled "the fight continues."

"We will be appealing the judgment and encourage everyone to come together as a community to support libraries against this attack by corporate publishers," Freeland wrote.

Why IA's fair use argument has so far failed

In his opinion, Koeltl held that book publishers obtain "exclusive rights to publish books in print and digital formats."

IA had argued that because libraries had already paid licensing fees for print copies, scanning those print copies and then limiting lending on print copies in a one-to-one ratio constituted a transformative fair use. The copying of the books was incidental, IA argued, and necessary to make print copies more accessible to library patrons.

This controlled digital lending, IA argued, "is especially helpful for patrons who live far from a brick-and-mortar library, patrons seeking a book not available from their local library, patrons with disabilities that make it difficult to hold or read print books, and patrons who want brief or spontaneous access to books and for whom it would not be worth a trip to a brick-and-mortar library."

But Koeltl said there was "nothing transformative" about IA's digital lending practices--which he decided "violated the publishers' reproduction" and "display rights"--in part because IA's "derivative works" were made available to the general public without providing "criticism, commentary, or information."

"IA distorts the way courts have treated utility-expanding transformative uses," Koeltl wrote. "Far from providing information about the Works in Suit, IA's e-books merely replace those authorized by the publishers."