By: Zachary Blinkinsop

The opening chapter: COVID-19 and the National Emergency Library.

With the COVID-19 lockdowns of early 2020 slamming library doors shut, students and researchers found themselves struggling to access critical educational materials. Libraries, like many institutions, scrambled to adapt to the unprecedented challenges posed by the pandemic. Many librarians responded by espousing the use of copyrighted materials in remote education and research. They cited the doctrine of fair use which protects certain unlicensed uses of copyrighted materials without permission from the rightsholder. Fair use can protect the use of copyrighted materials in a range of contexts, including in research, education, news reporting, and criticism.

The main character in today’s story, an online library, may have pushed the limits of fair use too far. Even before the pandemic, the Internet Archive ran a digital library in compliance with the principles of controlled digital lending. Controlled digital lending (CDL) is a novel legal framework that would permit libraries to digitize their physical books and to lend those digital copies in a manner analogous to traditional lending practices. Under the CDL framework, a library needs to maintain an “owned to loaned” ratio, lending only as many digital copies of an item as it legally owns. The legal theory of CDL had been largely untested, and legal scholars held a wide range of opinions about whether courts would broadly hold CDL to comport with fair use.

In March of 2020, the Internet Archive launched its National Emergency Library to support “emergency remote teaching, research activities, independent scholarship, and intellectual stimulation” while schools and libraries were closed due to the pandemic. It temporarily allowed multiple users to check out the same digital copy simultaneously, disregarding the “owned to loaned” ratio prescribed by the CDL framework. This sparked controversy.

The plot thickens: a lawsuit filed.

Publishers had already been taking aim at controlled digital lending programs. The Authors Guild argued that “copyright law does not support the practice of even true, traditional libraries offering unauthorized scans of books to its users on an e-lending basis…” The National Emergency Library’s flouting of CDL’s permissive framework crossed an implicit redline for publishers. In June of 2020, Hachette, HarperCollins, Wiley, and Penguin Random House sued the Internet Archive in the Southern District of New York for “willful mass copyright infringement.” In their complaint, publishers eviscerated the underpinnings of CDL, “the rules of which”, they wrote, “have been concocted from wholecloth and continue to get worse.”

In its response, the Internet Archive insisted that the National Emergency Library qualified under fair use as it offered a noncommercial, educational service to the public during a national emergency. It further maintained that a digital library should be treated like a traditional library: “Contrary to the publishers’ accusations, the Internet Archive and the hundreds of libraries and archives that support it are not pirates or thieves. They are librarians, striving to serve their patrons online just as they have done for centuries in the brick-and-mortar world.”

The future of controlled digital lending and the viability of online libraries was at stake in the case.

How does fair use apply to controlled digital lending?

Section 107 of the Copyright Act directs courts to consider four factors when evaluating a fair use defense to a claim of copyright infringement. A court must balance (1) the purpose of and character of the use, including whether it innovates in any way and whether it is for a commercial or non-profit purpose; (2) the nature of the copyrighted work; (3) the amount of the portion used in relation to the copyrighted work as a whole; and (4) the effect of the use upon the market value of the copyrighted work. Courts adjudicate fair use claims on a case-by-case basis; an activity that qualifies as fair use in one set of circumstances may not qualify under a different set of facts.

Capitol Records v. ReDigi, a case decided in 2013, foreshadowed the outcome of Hachette v. Internet Archive. ReDigi was a service that facilitated the resale of digital files originally purchased from the iTunes store. In that case, the court held that ReDigi’s resale of digital music files fell “well outside the fair use defense.” Running through the four-step test, the court found that (1) uploading and distributing digital files for sale does not add anything new to a copyrighted work; (2) copyright protections are intended to protect musical recordings; (3) transmitting a work in its entirety usually negates a fair use defense; and (4) ReDigi’s sales obviously undercut Capitol Records’ profits.

Although ReDigi’s marketplace was commercial in nature, an obvious difference from the nonprofit intent of the National Emergency Library, the other facts broadly aligned. The National Emergency Library arguably did not innovate the use of copyrighted books. Copyright protections clearly protect rightsholders’ interests in published books. The books offered through the National Emergency Library were transmitted in whole, and this arguably undercut the publishers’ profits from ebook sales.

An open-and-shut case? The Second Circuit enters the plot.

Judge John G. Koeltl held that the Internet Archive’s National Emergency Library failed all four factors of the fair use test. He wrote in his opinion that “IA’s fair use defense rests on the notion that lawfully acquiring a copyrighted print book entitles the recipient to make an unauthorized copy and distribute it in place of the print book, so long as it does not simultaneously lend the print book. But no case or legal principle supports that notion. Every authority points the other direction.” The opinion was a resounding victory for publishers.

The Internet Archive promised to continue fighting. The founder of the Internet Archive, Brewster Kahle, framed the case as a battle for free access to information within a wider war for global democracy: “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.”

On December 15, 2023, the Internet Archive filed its opening brief to the U.S. Court of Appeals for the Second Circuit. In the brief, the Internet Archive asks the Court to reverse the lower court’s decision and to hold that its controlled digital lending is fair use. The Internet Archive is arguing that the lower court erred in applying the four-factor test because the court “failed to grasp the key feature of controlled digital lending: the digital copy is available only to the one person entitled to borrow it at a time, just like lending a print book.” The Internet Archive says that the court’s misunderstanding particularly tainted its analysis of the first and fourth factors. For example, it argues that the court’s analysis of the fourth factor did not take into account expert testimony indicating that “lending is not a substitute for Publishers’ ebooks and has no effect on Publishers’ markets.”

The Second Circuit’s decision in this case will shape the future of controlled digital lending and the ongoing debate surrounding fair use and access to information in the digital era. Librarians, publishers, and legal scholars will be watching closely, waiting for the next major development in the application of free use to a rapidly evolving digital world.

Stay tuned for the next chapter in this story.