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Is CDL Dead? What the Internet Archive Ruling Means
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Posted On October 8, 2024
The Internet Archive’s Open Library project to provide for the lending of digital copies of library books was likely dealt a death blow when a federal appeals court determined that the project violated federal copyright law. On Sept. 4, 2024, the 2nd Circuit Court of Appeals issued its decision in the case of Hachette Book Group, Inc., HarperCollins Publishers, LLC, John Wiley & Sons, Inc., Penguin Random House, LLC v. Internet Archive, determining that the project, using the process of controlled digital lending (CDL), did not qualify under the fair use exception to copyright law and violated both publishers’ and authors’ copyrights in their works.

First Sale Doctrine

Libraries have long been in the business of purchasing physical copies of books, magazines, videos, and other materials and lending them out to their patrons for short-term use. This is permitted under federal copyright law’s first sale doctrine. Found in Title 17, section 109 of the U.S. Code, the first sale doctrine provides that once a physical copy of a copyrighted work—such as a book—is sold, the copyright holder has limited control over what the owner can do with that physical copy. The new owner can lend their copy, sell it, destroy it, etc. Libraries lend their copies to dozens of users who can read or watch the copyrighted content, and the copyright holder cannot earn additional income from the loans.

However, one thing the owner cannot do is make copies of the copyrighted content of the work. That remains an exclusive right of the copyright holder.

As publishing has moved to ebooks, databases, and other electronic resources, the first sale doctrine has become more problematic. The doctrine only applies to a physical item, not to an electronic item. In order to “share” an electronic item, a copy must be made, which is not permitted by first sale. Also, the physical item must be sold to the new owner, whereas most electronic resources are licensed. (Even a DVD or CD is subject to a license agreement covering the copyrighted movie or music.) Most ebook agreements with libraries are licenses that provide access to ebooks for a limited time or a limited number of borrows at a significant cost per book.

Controlled Digital Lending

The Internet Archive’s proposal was to provide an alternative to these agreements through CDL. CDL is based on a principle that mirrors the one-to-one lending of physical books. In a library loan, when one person has the book on loan, no one else has access to it until it is returned. The CDL scheme provides that participating libraries could scan physical copies of books, then remove those physical copies from circulation. The digital copies could then be lent out one at a time to library users and other subscribers. With the physical book unavailable and the digital copy maintaining a “one at a time” loan period the one-to-one lending tradition would be maintained.

However, the scanning of the physical books and the creation and lending of the digital copies are all outside the scope of the first sale doctrine. In response to the Internet Archive’s project, four major publishers—Hachette, HarperCollins, Wiley, and Penguin Random House—filed a copyright infringement lawsuit. The Internet Archive asserted that its project was a fair use of copyrighted materials and did not constitute infringement.

Infringement Affirmed

After initially losing its fair use defense in federal trial court in 2023, the Internet Archive appealed to the 2nd Circuit Court of Appeals. In a unanimous 64-page decision, the three-judge panel affirmed that the Open Library project infringed on the copyrights of a number of representative books published by the four publishers and that the fair use defense did not apply.

Fair use is one of the more complex issues in copyright law. Found in Title 17, section 107 of the U.S. Code, fair use provides that certain limited uses of copyrighted works are permitted for purposes such as “criticism, comment, news reporting, teaching, scholarship, or research.” As a legal issue, the courts will look at four specific factors as to whether a use is fair. These are 1) the purpose and character of the use, 2) the nature of the copyrighted work, 3) the amount of the work copied, and 4) the effect of the use on the market for the copyrighted work.

Four Factors

The appellate court found that none of the four factors favored a finding that Internet Archive’s project was a fair use under copyright law. The second and third factors were quickly addressed, in that many of the works were fictional or otherwise creative—which gets a higher degree of copyright protection than factual works—and that the entire works were being copied.

The first factor was the most challenging. Past courts, including the U.S. Supreme Court, have held that if the use of a work is “transformative,” it has a stronger fair use argument. “Transformative” has been defined as asking “whether the new work merely supplants the original … or instead adds something new, with a further purpose or different character, altering the [original] with new expression, meaning, or message.” The appeals court concluded that the project was not transformative, as it did not add any “meaningfully new or different features.” The CDL capability did not change that analysis. The court found that the Internet Archive’s project was primarily preparing copies and that its delivery of those copies on a one-to-one basis did not make it transformative.

Market Harm

The court also rejected multiple claims by the Internet Archive that its project would not cause the kind of market harm that the fourth factor contemplates. Notwithstanding expert testimony that suggested there was no harm to the publishers from a short period of unrestricted access to the Open Library during the COVID-19 pandemic, the court concluded that the potential for harm to both publishers and the authors who receive royalties from the publishers was too great.

The court acknowledged some short-term benefit to the public by the access that the Open Library provided, but pointed out that “[i]f authors and creators knew that their original works could be copied and disseminated for free, there would be little motivation to produce new works.” This, the court concluded, would “negatively impact the public.”

Having ruled against all four of the factors, the court found the Open Library project to be a matter of copyright infringement and affirmed the lower court’s decision and injunction preventing the Internet Archive from digitizing the publishers’ works and making them available through the Open Library project.

Is CDL Dead?

Does that mean CDL is dead as well? Mostly, but maybe not completely. The earlier trial court decision—affirmed by the appeals court—did make it clear that books and other materials that are in the public domain can be digitized and made available through CDL platforms. Works flow into the public domain after their copyrights expire, either 70 years after the death of the author or 95 years in the case of corporate-owned copyrights. CDL could also be used if licenses for reproduction rights could be negotiated.

‘Covered Books’

Additionally, there is language in the injunction implying that some out-of-print works may be eligible for digitization and CDL lending. The injunction applies to “Covered Books,” which it defines as books that the publishers own or have rights to and (emphasis mine) make “commercially available for sale or license.” This suggests that books that are in copyright but not commercially available for sale or license may have the potential for inclusion in a future CDL project. Whether anyone would want to test that possibility remains to be seen.

The Internet Archive may appeal the Sept. 4 decision to the U.S. Supreme Court or to the full panel of the 2nd Circuit Court of Appeals. However, both actions would face long odds, and the chances of success are slim.


George H. Pike is the director emeritus of the Pritzker Legal Research Center. Previously, Pike was director of the Law Library at the University of Pittsburgh School of Law, and held professional positions at the Lewis and Clark Law School and at the University of Idaho School of Law, and was a practicing attorney in Idaho Falls, Idaho. Pike received his B.A. from the College of Idaho, his law degree from the University of Idaho, and his M.L.S. from the University of Washington. He is a member of the American and Idaho State Bar Associations, the American Association of Law Libraries, and the American Intellectual Property Lawyers Association.

Email George H. Pike

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