HACHETTE BOOK GROUP, INC., ET AL., v. INTERNET ARCHIVE, ET AL.
UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK
March 24, 2023
JOHN G. KOELTL, District Judge
JOHN G. KOELTL, District Judge:
The plaintiffs in this action, four book publishers, allege that the defendant, an organization whose professed mission is to provide universal access to all knowledge, infringed the plaintiffs’ copyrights in 127 books (the “Works in Suit“) by scanning print copies of the Works in Suit and lending the digital copies to users of the defendant‘s website without the plaintiffs’ permission. The defendant contends that it is not liable for copyright infringement because it makes fair use of the Works in Suit. See
I.
A.
The following facts are undisputed unless otherwise noted.
The plaintiffs — Hachette Book Group, Inc. (“Hachette“), HarperCollins Publishers LLC (“HarperCollins“), John Wiley & Sons., Inc. (“Wiley“), and Penguin Random House LLC (“Penguin“) (together, the “Publishers“) — are four of the leading book publishers in the United States. Pls.’ 56.1, ECF No. 113, ¶ 1. They obtain from authors the exclusive rights to publish books in print and digital formats, including electronic copies of books, or “ebooks.” Id. ¶¶ 63-68. Publishers and authors generally are paid for sales of each format in which a book is published. Id. ¶ 65.
The defendant, Internet Archive (“IA“), is a non-profit organization dedicated to providing “universal access to all knowledge.” Def.‘s 56.1, ECF No. 98, ¶¶ 1-2. Brewster Kahle, IA‘s Chairman, founded the organization in 1996. Pls.’ 56.1 ¶ 216. One of IA‘s first projects was to document the history of the Internet by archiving every public webpage on the World Wide Web through IA‘s “Wayback Machine.” Def.‘s 56.1 ¶ 5. IA also works with libraries, museums, universities, and the public to preserve and offer free online access to texts, audio, moving images, software, and other cultural artifacts. Id. ¶ 6. This dispute concerns the way libraries lend ebooks. Public and academic libraries in the United States spend billions of dollars each year obtaining print books and ebooks for their patrons to borrow for free. Pls.’ 56.1 ¶ 113. Libraries usually buy their print books from publishers or wholesalers. Id. ¶ 114. Copies of ebooks, however, are typically not bought but licensed to libraries from publishers through distributors called “aggregators.” Id. ¶ 117. The Publishers task aggregators with ensuring that a library lends its ebooks only to the library‘s members. Id. ¶¶ 123, 125. The Publishers also require aggregators to employ approved “digital rights management” (“DRM“) software and other security measures to prevent unauthorized copying or distribution of ebook files. Id. ¶ 126. Demand for library ebooks has increased over the past decade. In 2012, OverDrive, the largest aggregator, processed 70 million digital checkouts of ebooks and audiobooks; by 2020, that number had risen to 430 million. Id. ¶¶ 119, 164.
The Publishers use several licensing models to profit from the distribution of
IA offers readers a different way to read ebooks online for free. Over the past decade, IA has scanned millions of print books and made the resulting ebooks publicly available on its archive.org and openlibrary.org websites (together, the “Website“). Id. ¶¶ 7, 236; Def.‘s 56.1 ¶ 12. IA‘s basic modus operandi is to acquire print books directly or indirectly, digitally scan them, and distribute the digital copies while retaining the print copies in storage. The Open Library of Richmond (the “Open Library“), another non-profit organization run by Brewster Kahle, 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. Pls.’ 56.1 ¶¶ 313-314, 317, 322, 338. 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.” Id. ¶¶ 281-283. After scanning, the print books are stored in double-stacked shipping containers and are not circulated. Id. ¶¶ 310-312; Def.‘s 56.1 ¶ 23.
IA‘s Website includes millions of public domain ebooks that users can download for free and read without restrictions. Def.‘s 56.1 ¶¶ 158, 160. Relevant to this action, however, the Website also includes 3.6 million books protected by valid copyrights, including 33,000 of the Publishers’ titles and all of the Works in Suit. Pls.’ 56.1 ¶¶ 14, 240; Def.‘s 56.1 ¶ 160. The Publishers did not authorize IA to create digital copies of the Works in Suit or to distribute those unauthorized ebook editions on IA‘s Website. Pls.’ 56.1 ¶ 243.
IA does not make its ebook copies of copyright-protected works available for mass download. Instead, it professes to perform the traditional function of a library by lending only limited numbers of these works at a time through “Controlled Digital Lending,” or “CDL.” Def.‘s 56.1 ¶ 11. CDL‘s central tenet, according to a September 2018 Statement and White Paper by a group of librarians, is that an entity that owns a physical book can scan that book and “circulate [the] digitized title in place of [the] physical one in a controlled manner.” Pls.’ 56.1 ¶ 436. CDL‘s most critical component is a one-to-one “owned to loaned ratio.” Id. Thus, a library
Under IA‘s implementation of CDL, two factors determine the number of digital copies of a book that can be borrowed at any time from IA‘s Website. Id. ¶ 50. First, IA makes available one digital copy for each non-circulating print book it keeps in storage. Id. ¶ 51. Second, IA partners with libraries to “contribute” the number of their print copies of the book toward the number of lendable copies on IA‘s Website. Id. ¶ 52. Even if a partner library has multiple copies of a book, IA counts only one additional copy per library. Id. For example, if IA owns one non-circulating print copy of Laura Ingalls Wilder‘s Little House on the Prairie (1932), and three partner libraries each contribute a copy of the book, IA would lend its digital copy of Little House on the Prairie to up to four patrons at a time. Id. ¶ 53.2
Around 2018, IA began expanding significantly its lending capacity of copyright-protected works through the “Open Libraries” project. Pls.’ 56.1 ¶ 355. 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.” Id. ¶ 363. 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. Id. ¶ 365. 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. Id. ¶ 367. As of late 2021, 62 Partner Libraries, including 13 public libraries, had contributed books through IA‘s overlap analysis. Id. ¶ 392. IA encourages Partner Libraries to populate their websites with links to IA‘s Website. Id. ¶¶ 393-396.
Anyone can become a patron of IA, and borrow up to ten ebooks at a time for up to fourteen days each, by submitting a valid email address. Def.‘s 56.1 ¶¶ 25-26. IA never charges patrons fees for any service, including borrowing books. Id. ¶ 25. The Website has titles in popular categories, including Romance, Thrillers, “Books we Love,” and “Trending Books.” Pls.’ 56.1 ¶¶ 514-516. Patrons can read books they have checked out on IA‘s BookReader web browser platform, or they can download a “High Quality” encrypted PDF or ePub version of the ebook.3 Id. ¶¶ 207-209, 277; Def.‘s 56.1 ¶¶ 32, 34. IA secures its downloadable
In March 2020, the Covid-19 pandemic closed libraries nationwide and, by IA‘s estimation, took 650 million print books out of circulation. Def.‘s 56.1 ¶ 70. Judging itself “uniquely positioned to be able to address this problem quickly and efficiently,” on March 24, 2020, IA launched what it called the National Emergency Library (“NEL“), intending it to “run through
June 30, 2020, or the end of the US national emergency, whichever is later.” Id. ¶¶ 72, 74. During the NEL, IA lifted the technical controls enforcing its one-to-one owned-to-loaned ratio and allowed up to ten thousand patrons at a time to borrow each ebook on the Website. Pls.’ 56.1 ¶¶ 542-543, 547. IA ended the NEL on June 16, 2020, shortly after this action was filed, and returned to its “traditional controlled digital lending,” which remains in effect. Id. ¶ 571; Def.‘s 56.1 ¶ 96.
In the two years after the NEL, IA‘s user base increased from 2.6 million to about 6 million. Pls.’ 56.1 ¶¶ 248, 250. As of 2022, IA hosts about 70,000 daily ebook “borrows.” Id. ¶ 249.
B.
The Publishers filed this action on June 1, 2020, alleging that IA infringed their copyrights in the 127 Works in Suit. Compl. ¶ 2. The Works in Suit are a range of published fiction and non-fiction works, including William Golding‘s Lord of the Flies (1954), Toni Morrison‘s The Bluest Eye (1970), Zora Neale Hurston‘s Their Eyes Were Watching God (1937), young adult novels by Daniel Handler (pen name Lemony Snicket), and Patrick Lencioni‘s best-selling management books. Pls.’ 56.1 ¶ 199; see also ECF No. 1, Ex. A (listing the Works in Suit). The author of each Work in Suit assigned to one of the Publishers the exclusive rights to publish the Work in print and ebook form. Id. ¶ 33. All the Works in Suit are available as authorized ebooks that may be purchased by retail customers or licensed to libraries. Id. ¶ 201.
On July 28, 2020, IA answered the Complaint, principally asserting a defense of “fair use” with respect to its lending of the Works in Suit through IA‘s online library generally and during the NEL specifically. Answer, ECF No. 33, at 24. After extensive discovery, the parties now cross-move for summary judgment on IA‘s liability for copyright infringement. See ECF Nos. 87, 97.
II.
The standard for granting summary judgment is well established. “The Court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.”
In determining whether summary judgment is appropriate, the Court must resolve all ambiguities and draw all reasonable inferences against the moving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). If the moving party meets its burden, the nonmoving party must produce evidence in the record and “may not rely simply on conclusory statements or on contentions that the affidavits supporting the motion are not credible.” Ying Jing Gan v. City of New York, 996 F.2d 522, 532 (2d Cir. 1993). When there are cross motions for summary judgment, the Court must assess each of the motions and determine
whether either party is entitled to judgment as a matter of law. Admiral Indem. Co. v. Travelers Cas. & Sur. Co. of Am., 881 F. Supp. 2d 570, 574 (S.D.N.Y. 2012).
III.
The Constitution empowers Congress to enact copyright laws “[t]o promote the Progress of Science and useful Arts.”
The Publishers have established a prima facie case of copyright infringement. First, the Publishers hold exclusive publishing rights in the Works in Suit pursuant to
IA argues, however, that this infringement is excused by the doctrine of fair use. This doctrine allows some unauthorized uses of copyrighted works “to fulfill copyright‘s very purpose, ‘[t]o promote the Progress of Science and useful Arts.‘” Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 575 (1994). While rooted in the common law, fair use is a statutory exception to copyright infringement. The Copyright Act of 1976 provides that “the fair use of a copyrighted work” for “purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research, is not an infringement of copyright.”
“In determining whether the use made of a work in any particular case is a fair use,” the Copyright Act directs courts to consider the following factors:
- the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;
- the nature of the copyrighted work;
- the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and
- the effect of the use upon the potential market for or value of the copyrighted work.
The four factors are not exclusive, but each must be considered in a “case-by-case analysis,” with the results “weighed together[] in light of the purposes of copyright.” Fox News Network, LLC v. TVEyes, Inc., 883 F.3d 169, 176 (2d Cir. 2018). Fair use presents a mixed question of law and fact and may be resolved on summary judgment where, as here, the material facts are undisputed. Harper & Row Publishers, Inc. v. Nation Enters., 471 U.S. 539, 560 (1985). Because fair use is an affirmative defense, the party asserting fair use bears the burden of proof. TVEyes, 883 F.3d at 176.6
The first fair use factor addresses “the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes.”
secondary work is ‘transformative,’ as well as whether it is commercial.” Andy Warhol Found. for the Visual Arts, Inc. v. Goldsmith, 11 F.4th 26, 37 (2d Cir. 2021), cert. granted, 142 S. Ct. 1412 (2022).
1.
In this Circuit, consideration of the first factor focuses chiefly on the degree to which the secondary use is “transformative.” Id. A transformative use “adds something new, with a further purpose or different character, altering the first with new expression, meaning, or message, rather than merely superseding the original work.” Capitol Recs., LLC v. ReDigi Inc., 910 F.3d 649, 660 (2d Cir. 2018). A secondary use also may be transformative if it “expands [the] utility” of the original work. TVEyes, 883 F.3d at 176. “Although transformative use is not absolutely necessary for a finding of fair use, transformative works lie at the heart of the fair use doctrine, and a use of copyrighted material that merely repackages or republishes the original is unlikely to be deemed a fair use.” Id. at 176-77.
There is nothing transformative about IA‘s copying and unauthorized lending of the Works in Suit.7 IA does not reproduce the Works in Suit to provide criticism, commentary, or information about them. See
*2-4 (D. Ariz. May 11, 2015) (service that made complete copies of copyrighted print works and published them online was not transformative because republication did “not imbue the Works with new expression or meaning“).8
is drawn.” Id. at 97. Importantly, the database did not “allow users to view any portion of the books they [were] searching” and therefore, unlike IA‘s Website, “d[id] not add into circulation any new, human-readable copies of any books” or “merely repackage or republish the originals.” Id.
Google Books similarly found transformative use in Google‘s scanning of copyrighted books to create a database that included a “snippet view” search function that allowed readers to view a few lines of text containing searched-for terms. Google Books, 804 F.3d at 208. The snippet view showed the searcher “just enough context surrounding the searched term” to help the searcher evaluate whether the book fell within the scope of the searcher‘s interest “without revealing so much as to threaten the author‘s copyright interests.” Id. at 208, 216. But the Court of Appeals cautioned that “[i]f Plaintiffs’ claim were based on Google‘s converting their books into a digitized form and making that digitized version accessible to the public,” precisely what the Publishers allege in this case, the “claim [for copyright infringement] would be strong.” Id. at 225. If HathiTrust and Google Books demarcated the boundaries of fair use, this case shows what conduct remains squarely beyond fair use.
Asked at oral argument on the current motions for its best authority on the first fair use factor, IA directed the Court to
a second holding in HathiTrust: that fair use allowed the defendant to provide “print-disabled patrons with versions of all the works contained in its digital archive in formats accessible to them.” 755 F.3d at 101. But HathiTrust‘s endorsement of this distribution of complete ebooks was carefully limited to print-disabled readers. See id. at 102 (relying on the Supreme Court‘s and Congress’ endorsement of “[m]aking the copy of a copyrighted work for the convenience of a blind person” as an example of fair use); see also
HathiTrust reiterated that outside this context, when a defendant “recasts copyrighted works into new formats,” it appears to “creat[e] derivative works over which the author ordinarily maintains control.” 755 F.3d at 101. IA‘s ebooks are available to the general public, not only to the print-disabled. HathiTrust‘s second holding therefore does not begin to support IA‘s copying and distribution of the Works in Suit.
The principal argument IA raised in its papers was that it expands the “utility” of the Works in Suit. See TVEyes, 883 F.3d at 176. By scanning print books and lending them one at a time over the Internet while retaining a copy of the print originals, IA claims that it performs the transformative
But IA distorts the way courts have treated utility-expanding transformative uses. IA does not expand the utility of the Works in Suit by “provid[ing] information about” them. ReDigi, 910 F.3d at 661. Creating a full-text searchable database “in a manner that [does] not allow users to read the texts,” as in HathiTrust, is an example of such a utility-expanding transformative use. Id. The same is true for copying protected work into a database to detect plagiarism, see A.V. ex rel. Vanderhye v. iParadigms, LLC, 562 F.3d 630, 639 (4th Cir. 2009), and displaying tiny, low-resolution “thumbnail” art reproductions that link to the websites containing the originals, see Perfect 10, Inc. v. Amazon.com, Inc., 508 F.3d 1146, 1165 (9th Cir. 2007); Kelly v. Arriba Soft Corp., 336 F.3d 811, 818-19 (9th Cir. 2003). Far from providing information about the Works in Suit, IA‘s ebooks merely replace those authorized by the Publishers.
Nor does IA expand the utility of the Works in Suit in the other way recognized in this Circuit: by using technology to “improv[e] the efficiency of delivering content” to “one entitled to receive the content” in a way that does not “unreasonably encroach[] on the commercial entitlements of the rights holder.” ReDigi, 910 F.3d at 661 (citing Sony Corp. of Am. v. Universal City Studios, Inc., 464 U.S. 417 (1984)); see also TVEyes, 883 F.3d at 177. IA relies heavily on Sony. Sony was accused of contributory copyright infringement based on its sale of Betamax machines to customers who could then copy programs to be viewed at a later time even though the customers could have viewed the programs for free when they were broadcast. 464 U.S. at 421, 448-55. The Supreme Court held that customers who used the Betamax machines to “time-shift” satisfied the first fair use factor, because “time-shifting for private home use” was a “noncommercial, nonprofit activity” and the Betamax machine “merely enable[d] a viewer to see such a work which he had been invited to witness in its entirety free of charge.” Id. at 449. IA argues that its digital lending is “at least as transformative as the use at issue in Sony,” because IA and its Partner Libraries already paid for print copies of the Works in Suit and because a patron who digitally borrows one of IA‘s ebooks is “the one person in the world who is then borrowing that particular . . . library book.” Def.‘s Memo., ECF No. 106, at 17-18.
But Sony is plainly inapposite. IA is not comparable to the parties in Sony -- either to Sony, the alleged contributory copyright infringer, or to the home viewers who used the Betamax machine for the noncommercial, nonprofit activity of watching television programs at home. Unlike Sony, which only sold the machines, IA scans a massive number of copies of books and makes them available to patrons rather than purchasing ebook licenses from the Publishers. IA is also unlike the home viewers in Sony, who engaged in the “noncommercial, nonprofit activity” of viewing at a more convenient time television programs that they had the right to view for free at the time they were originally broadcast. 464 U.S. at 449. The home viewers were not accused of making their television programs available to the general public. Although IA has the right to lend print books it lawfully acquired, it does not have the right to scan those books and lend the digital copies en masse. To hold otherwise would be to ignore the teaching of the Court of Appeals for the Second Circuit in Google Books that there would be a “strong” claim for copyright infringement if Google had distributed
Finally, IA argues that its digital lending is transformative because it “facilitates new and expanding interactions between library books and the web.” Def.‘s Memo. at 18. For example, “writers of Wikipedia articles” can “borrow books from the Internet Archive‘s collection, and then link from their article to a particular page” on IA‘s Website, and librarians can “curate, and make available online, collections of banned books.” Id.; see also Def.‘s 56.1 ¶¶ 60-65. But these purported uses are not transformative. “[A] use does not become transformative by making an invaluable contribution to the progress of science and cultivation of the arts.” HathiTrust, 755 F.3d at 96. Instead, “a transformative work is one that serves a new and different function from the original work and is not a substitute for it.” Id. IA offers no transformative use of the Works in Suit, which strongly suggests that the first fair use factor favors the Publishers.
2.
The first factor also directs courts to consider whether the secondary use “is of a commercial nature or is for nonprofit educational purposes.”
IA argues that its library is “wholly noncommercial” because IA is a non-profit organization that does not charge patrons to borrow books and because private reading is noncommercial in nature. Def.‘s Memo. at 16. However, IA‘s non-profit status and decision not to charge patrons are not dispositive. See Weissmann v. Freeman, 868 F.2d 1313, 1324 (2d Cir. 1989) (“The absence of a dollars and cents profit does not inevitably lead to a finding of fair use.“). “The crux of the profit/nonprofit distinction is not whether the sole motive of the use is monetary gain but whether the user stands to profit from exploitation of the copyrighted material without paying the customary price.” Harper & Row, 471 U.S. at 562.
IA exploits the Works in Suit without paying the customary price. IA uses its Website to attract new members, solicit donations, and bolster its standing in the library community. See Pls.’ 56.1 ¶¶ 379-388. Better World Books also pays IA whenever a patron buys a used book
It is “largely irrelevant” that an IA patron‘s private reading of an ebook provided by IA is noncommercial. See De Fontbrune v. Wofsy, 39 F.4th 1214, 1224 (9th Cir. 2022); see also Princeton Univ. Press v. Michigan Document Servs., Inc., 99 F.3d 1381, 1386 (6th Cir. 1996) (rejecting fair use defense where college-town copy shop copied portions of books and sold them to students in “coursepacks” intended for educational use). What matters is whether IA profited from copying the Works. And although the “commercial nature of a secondary use is of decreased importance when the use is sufficiently transformative such that the primary author should not reasonably expect to be compensated,” Andy Warhol Found., 11 F.4th at 44, this is far from that situation. The Publishers reasonably expect to be compensated for the reproduction of their copyrighted works, and IA stands to profit from its non-transformative exploitation of the Works in Suit. The commercial-noncommercial distinction, like the transformativeness inquiry, therefore counsels against a finding of fair use.
3.
IA makes a final argument that the first factor favors fair use because, according to IA, by reproducing and distributing only ebook editions of print books that were lawfully acquired, IA furthers the goals of copyright‘s “first sale” doctrine. This argument is without merit.
A “common-law doctrine with an impeccable historic pedigree,” Kirtsaeng v. John Wiley & Sons, Inc., 568 U.S. 519, 538 (2013), the first sale doctrine is codified at
Acknowledging this, IA refashions a first sale argument within its fair use analysis. IA argues that although ”
Moreover, the Court of Appeals has cautioned courts against relying on “the purported breadth of the first sale doctrine as originally articulated by the courts” in older cases, given
Nor does IA‘s promise not to lend simultaneously its lawfully acquired print copies and its unauthorized reproductions help its case. As an initial matter, IA has not kept its promise. 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. Pls.’ 56.1 ¶¶ 495-496. 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. Id. ¶¶ 494, 497. 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. Id. ¶ 498. IA admits it has never
Even full enforcement of a one-to-one owned-to-loaned ratio, however, would not excuse IA‘s reproduction of the Works in Suit. ReDigi is instructive. The defendant in that case created a computer program that allowed users to resell lawfully acquired digital music files. 910 F.3d at 652-54. ReDigi sought to ensure that its files never existed in more than one place at once by deleting the original file from the seller‘s computer once a copy was made on ReDigi‘s servers. See id. at 656. Echoing CDL‘s core principle -- that a physical book should not be in use at the same time as its digital copy -- ReDigi argued that, under the first sale doctrine, it did not unlawfully reproduce new copies but merely facilitated the transfer of copies lawfully acquired. Id. The Court of Appeals rejected this argument. It explained that the measures ReDigi took to avoid increasing the total number of copies in existence did “not rebut or nullify the fact that” ReDigi‘s program unquestionably created new copies of each work and involved unauthorized reproduction. Id. at 657. As the court explained, in language that applies equally to IA: “We are not free to disregard the terms of [
IA accepts that ReDigi forecloses any argument it might have under
***
The crux of IA‘s first factor argument is that an organization has the right under fair use to make whatever copies of its print books are necessary to facilitate digital lending of that book, so long as only one patron at a time can borrow the book for each copy that has been bought and paid for. See Oral Arg. Tr. 31:10-15. But there is no such right, which risks eviscerating the rights of authors and publishers to profit from the creation and dissemination of derivatives of their protected works. See
B.
The second fair use factor directs courts to consider “the nature of the copyrighted work.”
The second factor favors the Publishers. “[C]reative expression for public dissemination falls within the core of the copyright‘s protective purposes.” Campbell, 510 U.S. at 586. The Works in Suit are published works of fiction and non-fiction. The fiction books, as paradigmatic creative works, are close to the core of intended copyright protection. See, e.g., Am. Buddha, 2015 WL 11170727, at *5. But the Copyright Act also values and seeks to protect the non-fiction Works in Suit, which contain “subjective descriptions and portraits . . . whose power lies in the author‘s individualized expression,” Harper & Row, 471 U.S. at 563, and are “far removed from the . . . factual or descriptive work more amenable to fair use,” MP3.com, 92 F. Supp. 2d at 351; cf. Nihon Keizai Shimbun, Inc. v. Comline Bus. Data, Inc., 166 F.3d 65, 72-73 (2d Cir. 1999) (explaining that “predominantly factual news articles” are “less close to the core than more fictional pieces” or pieces whose “expressive elements” are “dominant features of the works“).
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.” Def.‘s Memo. at 22 (citing Harper & Row, 471 U.S. at 562). IA is correct that the unpublished nature of a work tends to negate a defense of fair use. Harper & Row, 471 U.S. at 554. 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.” Dr. Seuss Enters., L.P. v. ComicMix LLC, 983 F.3d 443, 456 (9th Cir. 2020). Published works do not lose copyright protection after five years.
Finally, although the second factor is not “likely to help much in separating the fair use sheep from the infringing goats” in cases involving transformative copying, Campbell, 510 U.S. at 586, IA has not made transformative use of the Works in Suit. IA has simply copied the Works in Suit wholesale and made the copies available for lending. That this dispute involves original works close to the core of copyright protection further counsels against a finding of fair use.
C.
Under the third fair use factor, courts consider “the amount and substantiality of the portion used in relation to the copyrighted work as a whole.”
It is true that copying an entire work is sometimes necessary to make a fair use of the work. Bill Graham Archives v. Dorling Kindersley Ltd., 448 F.3d 605, 613 (2d Cir. 2006). In Google Books and HathiTrust, for example, it was “reasonably necessary” for the defendants “to make use of the entirety of the works in order to enable” the transformative uses of portions of the underlying works. See Google Books, 804 F.3d at 221; HathiTrust, 755 F.3d at 98. 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.
D.
The fourth fair use factor is “the effect of the [copying] use upon the potential market for or value of the copyrighted work[s].”
Like the other three factors, the fourth factor strongly favors the Publishers. “[A] copyright holder is entitled to demand a royalty for licensing others to use its copyrighted work,” and “the impact on potential licensing revenues is a proper subject for consideration in assessing the fourth factor.” TVEyes, 883 F.3d at 180. In this case, there is a “thriving ebook licensing market for libraries” in which the Publishers earn a fee whenever a library obtains one of their licensed ebooks from an aggregator like OverDrive. Pls.’ 56.1 ¶¶ 577-578. This market generates at least tens of millions of dollars a year for the Publishers. Id. ¶¶ 170, 172. And IA supplants the Publishers’ place in this market. IA offers users complete ebook editions of the Works in Suit without IA‘s having paid the Publishers a fee to license those ebooks, and it gives libraries an alternative to buying ebook licenses from the Publishers. Indeed, IA pitches the Open Libraries project to libraries in part as a way to help libraries avoid paying for licenses. See Pls.’ 56.1 ¶ 383 (presentation IA gave to libraries asserting that pairing with IA means that “You Don‘t Have to Buy It Again!“); id. ¶ 382 (different presentation promising that the Open Libraries project “ensures that a library will not have to buy the same content over and over, simply because of a change in format“). IA thus “brings to the marketplace a competing substitute” for library ebook editions of the Works in Suit, “usurp[ing] a market that properly belong[ed] to the copyright-holder.” TVEyes, 883 F.3d at 179.
It is equally clear that if IA‘s conduct “becomes widespread, it will adversely affect the potential market for the” Works in Suit. Andy Warhol Found., 11 F.4th at 48. IA could expand the Open Libraries project far beyond the current contributing partners, allowing new partners to contribute many more concurrent copies of the Works in Suit to increase the loan count. New organizations like IA also could emerge to perform similar functions, further diverting potential readers and libraries from accessing authorized library ebooks from the Publishers. This plainly risks expanded future displacement of the Publishers’ potential revenues. See, e.g., Gregory, 689 F.3d at 65 (“If anyone could freely access the Works, electronically or
IA argues that it does not compete in the library ebook market because it only offers libraries a way to “lend a copy the library owns,” while library ebook licenses “are not tied to what print books the library owns or what the library does with them.” Def.‘s Memo. at 30. But IA‘s free library ebook model need not mimic the Publishers’ licensing schemes in every respect to provide a significantly competing substitute. An accused infringer usurps an existing market “where the infringer‘s target audience and the nature of the infringing content is the same as the original.” Cariou, 714 F.3d at 709; see also Andy Warhol Found., 11 F.4th at 50. That is the case here. 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.” Sony BMG Music Ent. v. Tenenbaum, 672 F. Supp. 2d 217, 231 (D. Mass. 2009).
Equally unavailing is IA‘s reliance on various metrics that allegedly demonstrate that its online library has not harmed, or is not likely to harm, the Publishers’ financial bottom lines. IA‘s experts observed that print sales of the Works in Suit and general demand for library ebooks did not decrease while the Works in Suit were available on IA‘s Website; that Amazon rankings for the Works in Suit improved when IA‘s digital lending skyrocketed (and government lockdowns were in full effect) at the beginning of the Covid-19 pandemic; and that, despite the removal of the Works in Suit from IA‘s library in June 2020, OverDrive checkouts of the Works in Suit did not increase. See Pls.’ 56.1 ¶¶ 121-122, 138, 140-141, 150. IA attributes these outcomes to the “discovery” effect of its book lending: Patrons decide they enjoy the books they have borrowed through IA enough to purchase those books and recommend
But these metrics do not begin to meet IA‘s burden to show a lack of market harm. Taking them at face value, they show at best that the presence of the Works in Suit in IA‘s online library correlated, however weakly, with positive financial indicators for the Publishers in other areas. They do not show that IA‘s conduct caused these benefits to the Publishers. In any event, IA cannot offset the harm it inflicts on the Publishers’ library ebook revenues, see, e.g., Andy Warhol Found., 11 F.4th at 48; TVEyes, 883 F.3d at 180, by pointing to other asserted benefits to the Publishers in other markets. Nor could those asserted benefits tip the scales in favor of fair use when the other factors point so strongly against fair use. See, e.g., Campbell, 510 U.S. at 590 n.21 (“Even favorable evidence, without more, is no guarantee of fairness. Judge Leval gives the example of the film producer‘s appropriation of a composer‘s previously unknown song that turns the song into a commercial success; the boon to the song does not make the film‘s simple copying fair.” (citing Pierre Leval, Toward a Fair Use Standard, 103 Harv. L. Rev. 1105, 1124 n.84 (1990)). Ultimately, the question under the fourth factor is whether the infringing use “pose[s] cognizable harm” in the relevant market, in this case the market for authorized library ebook licenses. See Andy Warhol Found., 11 F.4th at 51. That harm here is evident.
It is also irrelevant to assessing market harm in this case that IA and its Partner Libraries once purchased print copies of all the Works in Suit. The Publishers do not price print books with the expectation that they will be distributed in both print and digital formats, Pls.’ 56.1 ¶ 92, and “[a]ny allegedly positive impact of [a] defendant‘s activities on [the] plaintiffs’ prior market in no way frees [the] defendant to usurp a further market that derives from the reproduction of the plaintiffs’ copyrighted works.” MP3.com, 92 F. Supp. 2d at 352; see also Infinity Broadcast, 150 F.3d at 111. The Publishers are entitled to revenue from all formats of the Works in Suit, regardless whether IA lawfully acquired the Works in print first.
Finally, the Court must consider “the public benefits [IA‘s] copying will likely produce.” Andy Warhol Found., 11 F.4th at 50. IA argues that its digital lending makes it easier for patrons who live far from physical libraries to access books and that it supports research, scholarship, and cultural participation by making books widely accessible on the Internet. But these alleged benefits cannot outweigh the market harm to the Publishers. “Any copyright infringer may claim to benefit the public by increasing public access to the copyrighted work.” Harper & Row, 471 U.S. at 569. It is clear that IA‘s distribution of ebook copies of the Works in Suit without a license deprives the Publishers of revenues to which they are entitled as the copyright holders. See TVEyes, 883 F.3d at 179. The fourth factor therefore strongly favors the Publishers.
E.
Each enumerated fair use factor favors the Publishers, and although these
IV.
IA also argues that it made fair use of the Publishers’ copyrights during the National Emergency Library. The analysis above applies even more forcefully to the NEL, during which IA amplified its unauthorized lending of ebook versions of the Works in Suit by lifting the one-to-one owned-to-loaned ratio. IA‘s defense of fair use with respect to the NEL therefore also fails.
V.
Finally, IA asks that statutory damages be remitted if the Court rejects IA‘s fair use defense. See Def.‘s Memo. at 35-36.
CONCLUSION
The Court has considered all of the parties’ arguments. To the extent not specifically addressed above, the arguments are either moot or without merit. For the foregoing reasons, the plaintiffs’ motion for summary judgment is granted and the defendants’ motion for summary judgment is denied. The parties should submit their respective proposals (or preferably a joint proposal) for the appropriate procedure to determine the judgment to be entered in this case. The submission or submissions should be made within fourteen (14) days of the date of this Opinion and Order. The Clerk is respectfully directed to close all pending motions.
SO ORDERED.
Dated: New York, New York
March 24, 2023
John G. Koeltl
United States District Judge