Federal court says digital copying is not fair use

In a case testing the outer limits of digitization of copyrighted works, a federal appeals in New York has affirmed a trial judge’s ruling that Internet Archive infringed the copyright of four publishing houses when it scanned print copies of books and made them widely available in digital format without permission and without paying licensing fees.

The United States Court of Appeals for the Second Circuit last week rejected Internet Archive’s argument that its scanning program was protected by the fair use provisions of U.S. copyright law, concluding that each of the statutory factors in the fair use section actually favored the book publishers and that, in the final analysis, the “defense of fair use fails as a matter of law.”¹

The case focused on the decision by Internet Archive (IA) to acquire print copies of millions of books still under copyright protection, scan them into digital form, and then make the digital ebooks available to IA website users for free. That action was challenged by book publishers who argued that there were two distinct products: the physical books, sold on a one-time basis; and electronic or digital books, licensed by the publishers for a fee and for a limited time or limited number of times the digital book could be borrowed. The case thus posed the legal question, according to the Circuit Court of Appeals:

Is it “fair use” for a nonprofit organization to scan copyright-protected print books in their entirety, and distribute those digital copies online, in full, for free, subject to a one-to-one owned-to-loaned ratio between its print copies and the digital copies it makes available at any given time, all without authorization from the copyright-holding publishers or authors?²

The Court’s one-word answer to the question: No.³

Essentially, IA defended its actions on the grounds that the digital copy of the print book was merely a substitute for the print version it (or a member library) already owned. According to the Court, “IA hosts over 3.2 million digital copies of copyrighted books on its website. Its 5.9 million users effectuate about 70,000 book ‘borrows’ a day-approximately 25 million per year.” But, the Court noted: “Critically, IA and its users lack permission from copyright holders … They do not license these materials from publishers, nor do they otherwise compensate authors in connection with the digitization and distribution of their works.”⁴

The book publishers, in turn, argued that only the copyright holder had the exclusive right, under the federal copyright law, to make and distribute additional copies of the books, including in digital form.

The Court reviewed the statutory fair use factors, and agreed with the book publishers.

First, it rejected IA’s argument that its scanning program was transformative under the law, a test that requires the use of copyrighted materials to do “something more than repackage or republish the original copyrighted work.”⁵ To the contrary, the Court held, “IA’s digital books serve the same exact purpose as the originals: making authors’ works available to read. IA’s Free Digital Library is meant to-and does-substitute for the original Works.”⁶ It accepted IA’s argument that its use wasn’t commercial, but said “the nonprofit character of IA’s use is not conclusive” — and since the work wasn’t transformative, the first prong of the fair use test (“the purpose and character of the use”) favored the publishers.⁷

The Court then said the second factor (“the nature of the copyrighted work”) also favored the publishers since the works “represent(ed) the authors’ original expressions of those facts and ideas”⁸. The third factor (“the amount and substantiality of the portion used”) went for the publishers as well since entire works were copied.⁹

The final fair use factor (“the effect of the use upon the potential market for or value of the copyrighted work”) was also decided for the publishers because — the Court said — it would effectively destroy the market for ebooks: “Were we to approve IA’s use of the Works, there would be little reason for consumers or libraries to pay Publishers for content they could access for free on IA’s website.”¹⁰ The Court also rejected the argument that unlimited scanned access was a public benefit: “True, libraries and consumers may reap some short-term benefits from access to free digital books, but what are the long-term consequences? If authors and creators knew that their original works could be copied and disseminated for free, there would be little motivation to produce new works. And a dearth of creative activity would undoubtedly negatively impact the public. It is this reality that the Copyright Act seeks to avoid.”¹¹

So… from a genealogist’s viewpoint… where does this leave things?

The bottom line is a clear rule of law: making an ebook from a copyrighted book is a no-no. It’s not transformative, it’s not a fair use. Having rights to loan out a physical book doesn’t mean the book’s owner has the right to make an ebook copy and loan that out too — or even in place of the physical book. The message from both the trial and appeals courts is clear: you want to make an ebook available, you buy an ebook license.

What’s still up in the air is the matter of the penalty for the infringement found here. IA had asked the trial court to remit any award of damages under a provision of federal copyright law allowing statutory damages to be remitted in certain cases.¹² That court concluded that any decision on damages was premature — but the issue is now squarely back in the hands of the trial court with the decision on appeal going against IA.

This is of concern because IA is an essential resource for all of those out-of-copyright materials and books it makes available, and it’s the repository of choice for many records, including those acquired by the Reclaim the Records folks.¹³

We can only hope it won’t be crippled, or even destroyed, by a damage judgment.¹⁴

Cite/link to this post: Judy G. Russell, “Internet Archive loses copyright appeal,” The Legal Genealogist (https://www.legalgenealogist.com/blog : posted 9 Sep 2024).

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