Calling Yourself A “Library” Does Not Make You A Library, Calling Copyright Infringement “Controlled Digital Lending” Does Not Make It Legal

Stephen Carlisle March 30, 2023

March 24, 2023, saw the release of the District Court ruling in Hatchette Book Group v. Internet Archive, ¹ the long running battle between several book publishers and the Internet Archive over the practice of “Controlled Digital Lending.”

“Controlled Digital Lending” is quite frankly, a myth, designed to give the IA the patina of legitimacy as a self-stylized “library.” As this Court ruling makes clear, CDL is not legal and never has been.

“[N]o case or legal principle supports that notion. Every authority points in the other direction.” ²

Well, it doesn’t get much plainer than that.

In essence, the CDL theory works like this: the IA acquires a copy of a book. It then creates a digital copy of this book and “lends” the digital copy over the internet. Under the CDL theory, as long as the IA does not lend out more digital copies than it has physical copies, this is either (1) protected by the first sale doctrine under Section 109(a) of the Copyright Act, or (2) fair use under Section 107.

But the IA doesn’t stop there. The “Open Library of Richmond” run by Brewster Khale, the same person behind IA, “buys or accepts donations of print books, primarily from Better World Books (“BWB”), a for-profit used bookstore affiliated with IA and the Open Library (citation omitted).” ³

Hmm. I sense a pattern here.

“The Open Library then sends the books to IA scanning centers, where operators turn and photograph each page using a book-digitization device called a ‘Scribe.’ (citation omitted) After scanning, the print books are stored in double-stacked shipping containers and are not circulated.” ⁴

Let’s see here. A “library” that does not actually lend out the physical books in its possession? It just stores them in containers? How is that a “library”?

Not to mention the fact that all of these entities seem to be run by the same people.

But again, the IA doesn’t stop there.

“Around 2018, IA began expanding significantly its lending capacity of copyright-protected works through the ‘Open Libraries’ project. (citation omitted) Libraries now can ‘pool [ ] their physical collections’ with IA ‘in order to make more lendable copies of digital books available to their users and the world.’ (citation omitted) To participate, a Partner Library sends its catalogue to IA to run an ‘overlap analysis’ that compares ISBN numbers for the Partner Library’s physical holdings with IA’s digital holdings. (citation omitted) Whenever a book in the Partner Library’s catalogue matches an ebook on IA’s Website, IA increases by one the number of concurrent checkouts of that book allowed on the Website. (citation omitted). As of late 2021, 62 Partner Libraries, including 13 public libraries, had contributed books through IA’s overlap analysis. (citation omitted) IA encourages Partner Libraries to populate their websites with links to IA’s Website. (citation omitted)” ⁵

But under the theory of CDL, the digital copies should not exceed the number of copies in the collection, and “Partner Libraries” are supposed to remove the hard copies off its shelf when the IA lends its corresponding digital copy.

Not surprisingly, it didn’t really work that way.

“Although the Open Library’s print copies of the Works in Suit are non-circulating, IA concedes that it has no way of verifying whether Partner Libraries remove their physical copies from circulation after partnering with IA. (citation omitted) To the contrary, IA knows that some Partner Libraries do not remove the physical books from their shelves, and even if a Partner Library puts a physical book into a non-circulating reference collection, it could be read in the library while the ebook equivalent is checked out. (citation omitted)  IA also does not inform Partner Libraries when an ebook in its collection is checked out, and Partner Libraries do not tell IA when their physical copies are circulating.(citation omitted) IA admits it has never taken action against a Partner Library that did not suppress circulation properly.” ⁶

So, despite the fact that CDL was a fanciful notion created out of thin air, and unsupported by any law, it never really worked the way IA promised it would.

But none of this matters. Because the first step in controlled digital lending is to make an illegal copy.

The IA could have seen this coming because that was exactly the holding of the Second Circuit in Capitol Records LLC et al v. ReDigi. ⁷

Both the District Court and the Court of Appeals held that when the first step is to make an illegal copy, the first sale doctrine no longer applies. ⁸

The Court here holds:

“The first sale doctrine limits a copyright owner’s distribution right under § 106(3), but Section 109(a) ‘says nothing about the rights holder’s control under § 106(1) over reproduction of a copy or phonorecord.’ (citation omitted) Although Section 109 entitles IA and its Partner Libraries to resell or lend their lawfully acquired print copies of the Works in Suit, ‘unauthorized reproduction,’ which is at the heart of IA’s online library, ‘is not protected’ by § 109(a).” ⁹

So, the IA pivots and claims that CDL is (all together now) fair use. The Court takes a mere five pages to dismantle the IA’s fair use defense.

• As to factor one: “IA in no way transforms the use of the Works in Suit. It merely creates derivative ebooks that, when lent to the public, compete with those authorized by the Publishers. The promise of a one-to-one “owned-to-loaned ratio,” whether cast under Section 109 or fair use, is no defense…IA’s wholesale copying and unauthorized lending of digital copies of the Publishers’ print books does not transform the use of the books, and IA profits from exploiting the copyrighted material without paying the customary price. The first fair use factor strongly favors the Publishers.” ¹⁰
• As to factor two: “IA argues that because most of the Works in Suit were published more than five years before IA copied them, IA has not interfered with the authors’ ‘right to control the first public appearance of [their] expression.’(citation omitted). IA is correct that the unpublished nature of a work tends to negate a defense of fair use. (citation omitted) However, ‘the converse is not necessarily true; neither Harper & Row nor any principle of fair use counsels that the publication of the copyrighted work weighs in favor of fair use.’ (citation omitted). Published works do not lose copyright protection after five years.” ¹¹
• As to factor three: “In this case, however, IA copied the Works in Suit wholesale for no transformative purpose and created ebooks that, as explained below, competed directly with the licensed ebooks of the Works in Suit. IA’s wholesale copying therefore cannot be excused, and the third factor weighs strongly in the Publishers’ favor.” ¹²
• As to factor four: “The fourth factor necessarily relates to the first and third factors. The less transformative a secondary use is under the first factor, the more ‘likely it will supplant the commercial market for the original.’ (citation omitted) So too, the larger the amount of the original that is taken under the third factor, ‘the greater the likelihood that the secondary work might serve as an effectively competing substitute for the original’… For libraries that are entitled to partner with IA because they own print copies of books in IA’s collection, it is patently more desirable to offer IA’s bootleg ebooks than to pay for authorized ebook licenses. To state the obvious, ‘[i]t is difficult to compete with a product offered for free.’” ¹³

And the final nail in the IA coffin:

“At bottom, 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… What fair use does not allow, however, is the mass reproduction and distribution of complete copyrighted works in a way that does not transform those works and that creates directly competing substitutes for the originals. Because that is what IA has done with respect to the Works in Suit, its defense of fair use fails as a matter of law.” ¹⁴

Calling yourself a “library” as a way of generating sympathy and support (because who doesn’t love a library?) does not make you an actual library. Especially where you don’t actually lend out the books you own, preferring to keep them in a storage container.

Calling copyright infringement “Controlled Digital Lending” does not make it legal. Just as calling something “fair use” does not automatically make it so.