Written by Tiana A. Bey

In Hachette Book Group, Inc. v. Internet Archive, No. 20-CV-4160 (JGK), 2023 WL 2623787 (S.D.N.Y. Mar. 24, 2023), Judge John G. Koeltl ruled that the “digital lending library” operated by Defendant Internet Archive (“IA”) infringed copyrights owned by the Plaintiffs in books that IA had reproduced and distributed to the public on the theory that it could run an “emergency library” during the pandemic. The court rejected IA’s defense that their conduct constituted fair use under Section 107 of the Copyright Act.

Plaintiffs are a consortium of U.S. publishers that hold the copyright in the 127 books at issue in the case. IA offered to “lend” to the public electronic versions of these books, among the millions they possess, including, for example, Janet Evanovich’s Foul Play (1989), William Golding’s Lord of the Flies (1954), Toni Morrison’s The Bluest Eye (1970), and Zora Neale Hurston’s Their Eyes Were Watching God (1937). IA justified this conduct by relying on so-called and legally untested “Controlled Digital Lending” (“CDL”), whereby the number of digital copies lent would not exceed the number of print copies owned. At the start of the COVID-19 pandemic, IA abandoned its CDL because the pandemic allegedly “took 650 million print books out of circulation,” and allowed up to ten-thousand users to borrow one eBook simultaneously. Plaintiffs sued for copyright infringement, and IA defended on the grounds of fair use.

Applying the four non-exclusive factors under Section 107, the district court rejected IA’s fair use defense and found copyright infringement. The first fair use factor focuses on the purpose and character of the use, and particularly whether the work is transformative. The court determined that converting an entire printed book into an eBook is non-transformative, rejecting the argument that “efficient and convenient” delivery was sufficient to establish an expanded utility of the original work. The court distinguished Authors Guild v. Google, Inc., 804 F.3d 202 (2d Cir. 2015) and Authors Guild, Inc. v. HathiTrust, 755 F.3d 87, 94 (2d Cir. 2014). In Google, the court permitted wholesale copying to provide snippets of books showing the context of a user’s search results. In HathiTrust, the court permitted wholesale copying to create a searchable database of books that displayed primarily bibliographical information about the book and the page numbers where search terms appeared; except, when it provided full copies to readers with disabilities.

A second inquiry under the first factor is whether a secondary work’s use is commercial. IA argued that its use was noncommercial because it is a nonprofit organization and its users did not exploit the works for profit. The district court disagreed, finding the use commercial because, among other reasons, IA exploited the works without paying the customary price to the Plaintiffs and used the works to attract new members, solicit donations, and bolster its standing in the library community. IA’s affiliate used bookstore also paid IA when patrons bought books using the bookstore’s link on IA’s website.

The Court quickly disposed of IA’s arguments on the second and third fair use factors, the nature of the copyrighted work and the amount and substantiality of the portion used in relation to the copyrighted work as a whole. As to the second factor, the court held that many of the original works were creative, tending to weigh against fair use, and that the original works’ published status did not weigh in IA’s favor. As to the third factor, the district court found that IA’s secondary works were entire copies of the original works.

Finally, the Court found that the fourth factor—the potential harm to the market—weighed heavily against fair use. Indeed, the infringing copies served as a substitute for the works and supplanted Plaintiffs’ existing library licensing market.  Moreover, IA’s model of lending had the potential to expand beyond its current library partnerships, increasing the number of infringing copies available. The court noted that failing to check IA’s conduct would provide an opening for “[n]ew organizations like IA” to emerge with similar lending service models, “further diverting potential readers and libraries from accessing authorized library ebooks from the Publishers.” Id. Finally, the court dismissed IA’s arguments that its conduct helped, rather than hindered, Plaintiffs’ market by driving IA patrons to buy the works from Plaintiffs after they read them on loan.  The Court further summarily rejected IA’s COVID-19 pandemic defense, holding its fair use analysis “applies even more forcefully” to IA’s lifting of its Controlled Digital Lending practice for three months, “during which IA amplified its unauthorized lending of ebook versions of the Works in Suit.” Id.

IA’s attempted fair use defense was another in a long line of cases seeking to justify unauthorized wholesale reproduction of a protected work and then transferring or disseminating copies of that work to the public. The Court confirmed that such a position has no place in copyright law and cannot be legislated through use of the courts.