### The Internet Archive’s Appeal Fails in Major Copyright Case: Consequences for Libraries and Digital Lending
The Internet Archive (IA), a nonprofit organization focused on safeguarding digital content and ensuring universal access to information, has faced a setback in its appeal regarding a crucial copyright case that could significantly affect libraries and digital lending practices. The Second Circuit Court of Appeals has recently supported a lower court’s decision that concluded the IA’s approach to controlled digital lending (CDL) breaches copyright law. This ruling has ignited a vigorous discussion about the future of libraries, the rights of authors and publishers, and public access to digital information.
#### The Lawsuit Against the Internet Archive
The conflict began when leading book publishers filed a lawsuit against the Internet Archive related to its Open Libraries Project, which included digitizing physical books and lending them as digital versions. The IA contended that its CDL system, permitting only one user to borrow each scanned e-book at a time, was equivalent to traditional library lending and constituted “transformative fair use” under copyright regulations. In contrast, the publishers asserted that the IA’s operations were an explicit infringement of their exclusive distribution and licensing rights.
In March 2023, a district court ruled in favor of the publishers, determining that the IA’s digital lending did not meet the criteria for transformative use and therefore lacked fair use protection. The IA pursued an appeal, but the Second Circuit has now endorsed the lower court’s findings, significantly hindering the nonprofit’s mission to offer free digital access to literature.
#### The Court’s Justifications
The appeals court’s ruling relied on several important considerations, including whether the IA’s digital versions of books were transformative, the potential economic harm to publishers, and whether the IA was benefitting financially from its digital lending practices.
1. **Transformative Use**: The court dismissed the IA’s claim that its digital lending constituted transformative use. Judge Beth Robinson, who wrote the opinion, explained that the IA’s digital replicas served the “same exact function as the originals”—making authors’ works accessible for reading. As the digital copies did not introduce “something new” or offer “commentary, criticism, or information about the originals,” the court concluded that the IA’s application was not transformative, weakening its fair use argument.
2. **Market Impact**: The court also evaluated the potential market impact on publishers. The publishers argued that the IA’s digital lending could “undermine the value” of their exclusive rights to create derivative works, such as e-books. The court concurred, pointing out that the IA’s digital versions directly competed with the publishers’ e-books and could result in a loss of income for authors. Although the publishers failed to provide statistical evidence of market harm, the court based its conclusion on “logical inferences.”
3. **Profit Incentive**: Interestingly, the court found in favor of the IA regarding claims that the nonprofit was gaining profit from its digital lending ventures. The appeals court refuted the publishers’ assertions that the IA profited by requesting donations or earning a minimal percentage from used books sold via referral links. Judge Robinson remarked that while the IA needs to raise funds for operation, it does not profit directly from its Free Digital Library, and characterizing it that way would be “misleading.”
#### Consequences for Libraries and Public Access
The court’s ruling carries significant ramifications for libraries, especially as they confront the complexities of digital lending in a progressively digital environment. The decision essentially prohibits the IA from distributing not just the specific works involved in the lawsuit but all books “available for electronic licensing.” This could restrict libraries’ ability to present free digital access to literature, particularly as publishers increasingly adopt licensing frameworks that compel libraries to pay for temporary access to e-books instead of owning them.
Supporters of the IA’s model argue that CDL is an essential resource for libraries to connect with patrons in the digital era, especially in underserved areas where access to physical books may be scarce. Meredith Rose, senior policy counsel for Public Knowledge, criticized the court’s decision, stating that it diminishes the capacity of libraries to fulfill their fundamental role of lending books to the public.
Lia Holland, a campaigns and communications director for Fight for the Future, echoed these concerns, asserting that the ruling delivers a “short-sighted and harmful blow” to libraries, diverse authors, and readers who depend on libraries for information access. Holland also raised issues regarding the privacy risks associated with e-book licensing models, which frequently require users to utilize applications that monitor their reading behaviors.
#### The Outlook for Digital Lending
The court’s verdict has sparked demands for legislative initiatives to safeguard the future of libraries and ensure their continued ability to lend books in the digital era. Rose proposed that the last hope for supporters of the IA may lie in appealing to Congress to revise copyright legislation to clarify the legality of CDL and reaffirm the rights of libraries to lend the books they possess, regardless of their format.
This case also prompts broader inquiries regarding the equilibrium between safeguarding the rights of copyright holders and facilitating public access to information.
