In a Big Blow to Internet Archive, Appeals Court Says Online Lending Library Is Not Fair Use

The U.S. Court of Appeals for the Second Circuit ruled against the Internet Archive today, upholding an earlier ruling in the long-running Hachette v. Internet Archive copyright case.

For years, the IA scanned physical copies of library books and allowed people to check out digital versions through its Open Library project. It did so on a one-to-one basis. Meaning that checking out a digital copy would pull it from the “shelf” until someone returned it. In 2020, as the pandemic shut down libraries across the planet, it expanded its effort with the National Emergency Library program. Under the NEL, books were rented infinitely.

The publishing world didn’t react well to the NEL and the IA shut down the program two months after it launched. Then the publishers, including Hachette, HarperCollins, Penguin Random House, and Wiley sued. The court ruled in favor of the publishers in 2023 and the IA appealed.

“This appeal presents the following question: Is it ‘fair use’ for a nonprofit organization to scan copyright-protected print books in their entirety, and distribute those digital copies online, in full, for free, subject to a one-to-one owned-to-loaned ratio between its print copies and the digital
copies it makes available at any given time, all without authorization from the copyright-holding publishers or authors,” the judges wrote in the decision.

The court has decided it does not qualify for fair-use protections.

Libraries are big business for publishers and the IA messed with the money. “The library eBook lending market is thriving,” court records said. “Checkouts of eBooks on OverDrive by library patrons increased dramatically between 2010 and 2020. This surge in lending translates to greater profits for Publishers, some of whom find library eBook licenses occupying an increasing percentage of their overall eBook revenues. With more than 93% of public libraries participating in eBook lending, Publishers and their authors have tapped into a profitable, growing market.”

It’s a different story for libraries, who have to constantly haggle over the digital rights to lend books. “The result is regular renegotiation of eBook licenses that often come at a steeper price and for a shorter term than print copies of the same books,” the court said.

IA’s principal argument was that the method of sharing its works was transformative. The court didn’t find that persuasive. “We conclude that IA’s use of the Works is not transformative. IA creates digital copies of the Works and distributes those copies to its users in full, for free,” the court said. “Its digital copies do not provide criticism, commentary, or information about the originals…Instead, IA’s digital books serve the same exact purpose as the originals: making authors’ works available to read. IA’s Free Digital Library is meant to―and does―substitute for the original Works.”

Chris Freeland, the Internet Archive’s Director of Library Services, vowed to continue fighting for the preservation of books. “We are disappointed in today’s opinion about the Internet Archive’s digital lending of books that are available electronically elsewhere,” he said in a statement posted at the Archive. “We are reviewing the court’s opinion and will continue to defend the rights of libraries to own, lend, and preserve books.”

The court, for what it’s worth, called out the publishing industry for screwing over libraries in the court record. “On the one hand, eBook licensing fees may impose a burden on libraries and reduce access to creative work,” it said. “On the other hand, authors have a right to be compensated in connection with the copying and distribution of their original creation.”