Hachette Book Group, Inc. v. Internet Archive
23-1260 (2024)
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Rule of Law:
A nonprofit's unauthorized scanning and digital distribution of entire copyright-protected print books, even with a controlled one-to-one lending ratio, does not constitute fair use when the digital copies serve the same purpose as the originals and directly substitute for them in established markets for both print and licensed digital editions.
Facts:
- Hachette Book Group, Inc., HarperCollins Publishers L.L.C., John Wiley & Sons, Inc., and Penguin Random House LLC (Publishers) obtain exclusive rights from authors to publish works in multiple formats, including hardcover, paperback, and eBooks, profiting from sales and licenses in each format.
- Publishers invest significantly in developing new formats and markets for the digital age, including selling eBooks directly to consumers and licensing them to libraries under a one-copy, one-user model.
- Internet Archive (IA), a nonprofit organization with the stated mission to provide universal access to all knowledge, launched its "Free Digital Library" in 2011.
- IA partnered with the Open Library of Richmond and Better World Books (BWB) to acquire print books, which were then scanned and posted as full digital copies on IA's website for free access by account holders.
- Other than a period in 2020, IA maintained a "Controlled Digital Lending" (CDL) practice, allowing only as many concurrent digital checkouts as it had physical print copies, initially from its own collection and later expanded through the "Open Libraries Project" to include partner libraries' noncirculating print books.
- In 2020, due to the COVID-19 pandemic, IA launched the "National Emergency Library" (NEL), temporarily lifting its one-to-one ratio and allowing up to 10,000 concurrent users per digital book without regard to physical copies.
- IA marketed its lending services to libraries as a free alternative to Publishers' print books and eBook licenses, promoting it with phrases like "You Don’t Have to Buy it Again!".
- IA hosts over 3.2 million digital copies of copyrighted books, with 5.9 million users making about 25 million borrows per year, all without permission or compensation from copyright holders.
Procedural Posture:
- Hachette Book Group, Inc., HarperCollins Publishers L.L.C., John Wiley & Sons, Inc., and Penguin Random House LLC (Publishers) sued Internet Archive (IA) and five Doe defendants in the United States District Court for the Southern District of New York in 2020, alleging copyright infringement regarding 127 books.
- IA answered the complaint, denying infringement and asserting an affirmative defense of fair use under Section 107 of the Copyright Act.
- Following extensive discovery, the parties filed cross-motions for summary judgment.
- On March 24, 2023, the District Court for the Southern District of New York (Koeltl, J.) granted summary judgment to Publishers, concluding that Publishers established copyright infringement and that IA's fair use defense failed, applying the analysis "even more forcefully to the NEL."
- The district court entered judgment on August 11, 2023, including a permanent injunction barring IA from, among other things, distributing or reproducing Publishers’ copyrighted works, specifically limited to print books also "available for electronic licensing."
- IA, as the Defendant-Appellant, timely appealed this judgment to the United States Court of Appeals for the Second Circuit.
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Issue:
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?
Opinions:
Majority - Robinson, Circuit Judge
No, it is not fair use for Internet Archive to scan and distribute full digital copies of copyright-protected print books, even with a one-to-one lending ratio and a nonprofit mission, without authorization from the copyright holders. The court analyzed the four fair use factors under Section 107 of the Copyright Act. First, regarding the purpose and character of the use, the court found IA's use was not transformative. IA's digital copies serve the exact same purpose as the originals—making authors' works available to read—and directly substitute for them, rather than adding new expression, meaning, or message. Merely changing the format from print to digital is a derivative use, not a transformative one. The asserted efficiencies of digital lending do not render the use transformative, as they directly compete with Publishers' own eBook offerings. Although IA is a nonprofit and does not directly charge for its digital library, making its use non-commercial in nature, the lack of transformativeness meant this first factor ultimately favored Publishers. Second, concerning the nature of the copyrighted work, the court determined that the works in suit, including both fiction and nonfiction, are expressive and creative works, lying at the core of intended copyright protection. This factor therefore favored Publishers. Third, regarding the amount and substantiality of the portion used, IA copied the works in their entirety and made full digital copies available to the public. The court concluded this extensive copying was not necessary to achieve a transformative secondary purpose (which was absent) but rather served to substitute for Publishers' books, thus favoring Publishers. Fourth, regarding the effect of the use upon the potential market for or value of the copyrighted work, the court found that IA's Free Digital Library brings a competing substitute to the market for the Works in all formats. IA's marketing implicitly acknowledges this by promoting its free digital books as an alternative to purchasing or licensing. The court rejected IA's expert evidence purporting to show a lack of market harm, finding it unconvincing due to weak correlations and failure to account for other causal factors. Instead, the court relied on the "common-sense inference" that free, identical copies would significantly harm Publishers' established markets for consumer and licensed eBooks, and that widespread adoption of IA's practices would decimate these markets. While expanding access to knowledge offers public benefit, this is outweighed by the harm to authors' incentives to create new works, which is the ultimate goal of copyright law. Therefore, this factor strongly favored Publishers. Weighing all four factors, the court concluded that each favored the Publishers, and thus IA's fair use defense failed as a matter of law.
Analysis:
This case significantly reinforces the boundaries of the fair use doctrine in the context of digital libraries and controlled digital lending. It clarifies that merely digitizing and distributing entire copyrighted works, even by a nonprofit with a one-to-one lending model, is generally not transformative if the digital copies primarily serve the same purpose as the originals and directly compete with the copyright holder's established markets for derivative works (like eBooks). The ruling emphasizes the "centrality" of transformativeness in the first fair use factor and underscores the importance of potential market harm, particularly when a secondary use offers a free substitute for a copyrighted work, even if the secondary user is a nonprofit. This decision will likely limit the ability of other libraries and organizations to implement similar large-scale digital lending programs for commercially available books without obtaining proper licenses, thereby protecting the economic incentives of authors and publishers in the digital age.
