August 29, 2023 saw the release of a rather surprising decision regarding the Copyright Acts’ requirement that books published in the U.S. provide the Library of Congress with two copies of the work. 1 Surprising in the fact that the deposit requirement has a long history in the Copyright Act and the requirement had not been challenged despite being on the books for some 40 years. Also surprising in the fact that the Court of Appeals for the District Columbia found the deposit requirement as enforced by the Copyright Office to be an unconstitutional taking under the 5th Amendment to the Constitution. The District Court had reached the opposite conclusion.
The ruling has generated some confusion in the intellectual property realm in that there are two different deposit requirements contained in two different sections of the Copyright Act. This ruling only applies to Section 407, where the deposit requirements apply to works published in the U.S. but not registered for copyright protection.
The facts of the case, Valancourt Books, LLC v. Garland 2 are uncomplicated and not in dispute.
“Valancourt is an independent press that publishes rare and out-of-print fiction… Valancourt prints copies of its books ‘on-demand,’ i.e., in response to a specific order or request. Although Valancourt has never deposited its works under Section 407—nor registered them under Section 408, a separate provision of copyright law governing copyright registration,…Valancourt places copyright notices in its books.
In June 2018, Valancourt received a letter from the Copyright Office setting forth a demand under Section 407 for ‘one complete copy’ of 341 books published by Valancourt ‘for the use or disposition of the Library of Congress.’ (citation omitted) True to the statute’s terms, the Office explained that failure to comply would make Valancourt liable for a fine of up to $250 per work and the total retail price of the copies demanded, as well as an additional fine of $2,500 for a willful and repeated failure to comply. The Office clarified that Valancourt’s obligation to deposit works under Section 407 ‘exists regardless of whether copyright registration [pursuant to Section 408] is sought.’
Valancourt responded to the Copyright Office’s demand the next day. It estimated that compliance with the demand would cost over $2,500, and advised that, as a ‘very small publisher,’ it could not afford that sum. (citation omitted) Valancourt also observed that some of its books contained material in the public domain and that it had already deposited some works through the Cataloging-in-Publication program, a separate program run by the Library of Congress. Valancourt requested that the Copyright Office withdraw its demand and offered to sell copies of any of the listed titles to the government at cost with no markup.
The Copyright Office responded in August 2018, maintaining its position that Valancourt was obligated to deposit books pursuant to Section 407…In August 2018, Valancourt brought this action against the Attorney General and the Register of Copyrights. Valancourt sought a declaration that the application of Section 407 is unconstitutional under the First and Fifth Amendments, as well as an injunction against the provision’s enforcement.” 3
In reversing the lower Court ruling, the Court honed in on the fact that Valancourt would receive no benefit from the Copyright Office, other than avoiding the fine, in depositing the requested copies. The Copyright Office was merely demanding that Valancourt give up its personal property for the benefit of the Government. Indeed, Section 407 states that “[n]either the deposit requirements of the subsection nor the acquisition provisions of subsection (e) are conditions of copyright protection.” Since copyright protection is automatic upon fixation, 4 and registration is not required for copyright protection, 5 no corresponding benefit, or compensation flows from the Copyright Office to Valancourt. This is the essence of an unconstitutional taking.
“In urging us to view mandatory deposit as part of a voluntary exchange, the government cites the many benefits that copyright confers upon authors. But authors obtain those benefits upon fixation, and mandatory deposit grants no additional benefits. Tellingly, the government cannot point to a single incremental benefit that copyright owners receive for depositing works pursuant to Section 407. That provision then cannot represent a voluntary exchange for a benefit—there is no benefit at all.” 6
This is unlike section 408, which also requires the deposit of copies. Section 408 confers several benefits for timely registration, including the ability to file suit for infringement and the ability to request statutory damages and attorneys fees.
The deposit requirement has a long history dating back to when the Copyright Act required registration as a condition of copyright protection. The idea then, as it remains today, is that the Library of Congress should have a copy of every book ever published in the U.S. Such is the reason underlying Section 407, requiring under penalty of a fine, the deposit of physical copies of a book published in the U.S., even though registration is not made.
The Copyright Office tried to further evade the “takings” nature of 407 by arguing that Valancourt could have “abandoned” its claim to copyright protection, and thus avoid the fine. The Court is unconvinced:
“The statute itself gives no indication of any abandonment option or how to effectuate it. Nothing in Section 407’s terms would suggest to a copyright owner that she can avoid its requirements by informing the Copyright Office that she would prefer to abandon her copyright rather than deposit copies of copyrighted works. Rather, the statute states that a copyright owner ‘shall’ make a deposit and prescribes fines for failing to comply with a deposit demand from the Copyright Office. (citation omitted) The statute then makes clear that mandatory deposit is not a ‘condition[ ] of copyright protection.’ Id. § 407(a). To deduce that one could avoid mandatory deposit by disavowing copyright protection would require a copyright owner to infer essentially the opposite of what the statute states.” 7
The Court further notes that to register a notice of abandonment would cost $125. Hard to see how this might benefit Valancourt. And in simpler terms, to require abandonment, or paying the fine is a “formality” to obtain copyright protection, which is prohibited by Article 5 of the Berne Convention.
So, the deposit requirement of 407 is an unconstitutional taking under the 5th Amendment. The deposit requirement of 408, as it confers additional benefits to the registrant, and being wholly permissive, is not.
Left unresolved is the issue of electronic copies. After the commencement of the litigation, the Copyright Office offered to accept electronic copies of the works at issue.
“After Valancourt filed its complaint challenging the Copyright Office’s demand for physical copies of copyrighted works, the Office offered to accept electronic copies in lieu of physical copies. That offer did not moot Valancourt’s challenge to the demand for physical copies. A party’s voluntary cessation of challenged conduct does not moot the challenge unless it is ‘absolutely clear’ that the challenged conduct will not recur after the litigation… As for the Office’s offer to accept electronic copies as an alternative, Valancourt advised the district court that the court ‘need not address’ whether electronic copies constitute property subject to the Takings Clause because, regardless of the Office’s offer, Valancourt would still need to deposit physical copies of certain books for which it cannot produce electronic copies… Because neither party appears to ask us to reach the question, and because the presentation of the case does not require us to do so, we will not proceed to evaluate the constitutionality of Section 407 as enforced through electronic copies.” 8
Even though unresolved, the question of if 407 can be satisfied through electronic copies remains live, as the reasoning applied to 408 does not seems dispositive. The Copyright Office did not change its policy, it only offered it as a means to terminate the litigation. Even an electronic copy would cost something to produce, it remains to be seen if this cost would be substantial enough to run afoul of the 5th Amendment, especially where there is no corresponding benefit to the copyright owner.