Introduction
The e-book market, currently valued at $17.20 billion, continues to expand rapidly, driven by key advantages such as accessibility, affordability, and shareability. This digital transformation has led to the rise of platforms like Amazon Kindle and Kobo Books, which allow users to purchase e-books, as well as free-access digital libraries like Project Gutenberg and the Internet Archive, offering a wealth of books, journals, and other digital content.
Among the emerging issues in this space is the concept of Controlled Digital Lending (CDL), which enables digital libraries to lend digital copies of physical books under carefully managed conditions. While CDL is designed to mimic the practices of traditional libraries, it often raises questions about copyright infringement, particularly when the balance between public benefit and copyright holders’ rights is disrupted. This was exemplified by the controversy surrounding the Internet Archive’s 2020 lending practices, which culminated in a lawsuit by four major publishers—Hachette, Penguin Random House, Wiley, and HarperCollins—who accused the Archive of copyright infringement. Both the U.S. District Court and the Second Circuit Court of Appeals ruled in favor of the publishers, finding that the Archive’s actions violated copyright law.
This article examines the legal implications of this decision through three lenses: the Second Circuit’s fair use analysis, the impact of the ruling on CDL practices, and the potential consequences for digital lending in India.
1. Legal Examination of the Second Circuit’s “Fair Use” Analysis
The key legal question in this case was whether the Internet Archive’s scanning and distribution of copyrighted books without the consent of the publishers or authors qualified as “fair use” under U.S. copyright law (17 U.S. Code § 107). The court applied the four-factor test codified in the law, arriving at the following conclusions:
A. Purpose and Character of the Use
The first factor considers whether the use is “transformative,” meaning it adds new expression, meaning, or purpose to the original work. In Campbell v. Acuff-Rose Music Inc., the U.S. Supreme Court emphasized the importance of transformation in assessing fair use. However, the Second Circuit ruled that the Internet Archive’s use of digital copies was not transformative.
The court reasoned that:
- The Archive’s digital lending did not add any commentary, criticism, or new information to the original works.
- The digital copies merely substituted the physical books, reducing users’ incentives to purchase the originals.
- Any efficiencies gained from the digital format were not distinct from the commercial e-books offered by publishers, thus failing to differentiate the Archive’s copies.
While the Archive’s use was non-commercial, the lack of transformation significantly weakened its fair use defense.
B. Nature of the Copyrighted Work
The second factor examines the nature of the copyrighted work, with greater leeway for fair use typically afforded to non-fiction or factual works. While the Internet Archive argued that the works in question were non-fiction, the court noted that even non-fiction books represent creative expressions of their authors. As such, this factor was also seen as favoring the publishers.
C. Amount and Substantiality of the Use
The third factor looks at how much of the work is used. In cases like Google Books and HathiTrust, the courts allowed full reproduction of books for transformative purposes such as search functionality or snippet views. However, the Internet Archive did not demonstrate any similar transformative purpose. The court concluded that copying entire books without significant alteration or added value weighed against fair use.
D. Effect on the Market for the Original Work
Perhaps the most critical factor, the fourth consideration assesses the impact of the use on the market for the original work. The court found that the Internet Archive’s free lending of digital books without proper licensing undermined the market for the original works, depriving publishers and authors of revenue. The court deemed the public benefit of increased access to books to be shortsighted and outweighed by the potential long-term harm to the publishing industry, which relies on economic incentives for authors to create new works.
The Second Circuit’s ruling reflects a broader trend in U.S. fair use jurisprudence, emphasizing the market harm caused by unlicensed reproduction over potential public benefits. The court’s rejection of the transformative use defense and its focus on economic impact highlights the need for digital libraries to be cautious in how they handle copyrighted materials.
2. Impact of the Ruling on CDL and Access to Information
A. Legal Boundaries for CDL Practices
The ruling against the Internet Archive has far-reaching consequences for CDL practices. CDL is intended to allow libraries to lend digital copies of physical books on a one-to-one basis—essentially, only one digital copy can be loaned for every physical copy owned. The Internet Archive’s National Emergency Library (NEL) initiative violated this core principle by lending out multiple digital copies of the same book simultaneously, which led to the lawsuit. The court’s decision sends a clear message that digital libraries must strictly adhere to CDL principles to avoid infringing copyright.
B. Implications for Public Access to Knowledge
One of the most significant impacts of the ruling is the potential reduction in public access to digital content. Following the court’s decision, the Internet Archive removed over 500,000 books from its Open Library, including many rare and older editions that are not available through commercial e-book platforms. This decision has raised concerns about the potential chilling effect on digital libraries, which play a vital role in providing access to literature and information, particularly for those who cannot afford to purchase books.
While the ruling does not directly invalidate CDL, it highlights the challenges faced by digital libraries in balancing the need to provide access to information with the legal requirement to protect copyright holders’ rights. The decision has sparked debate about the future of digital lending and whether copyright laws should be reformed to accommodate the growing demand for digital access to books and other media.
3. Digital Lending in India: Legal and Policy Implications
A. Current Framework for Digital Libraries in India
In India, digital libraries like the National Digital Library of India (NDLI) and eGyanKosh play a crucial role in promoting access to knowledge. However, Indian copyright law provides limited protection for digital reproduction. Under section 52(1)(a) of the Copyright Act, 1957, certain uses are considered “fair dealing,” but this exception is narrower than the fair use provisions in U.S. law. Moreover, section 52(1)(n) allows for electronic storage of works by non-commercial public libraries, but the scope of this protection is limited.
The Delhi University Photocopy case demonstrated the judiciary’s recognition of the importance of access to knowledge. However, the ruling left uncertainties regarding the legal status of digital lending. A similar case involving digital libraries could require a detailed examination of whether CDL principles align with Indian copyright law.
B. Potential Challenges for CDL in India
If a case similar to the Internet Archive lawsuit were to arise in India, courts would need to consider several factors, including the owned-to-loaned ratio, the extent of digital copying, and the purpose of the lending. Additionally, the fair dealing standard in section 52(1)(a) would likely need to be extended or clarified to cover digital lending practices.
The ongoing litigation against shadow libraries like SciHub and LibGen also illustrates the growing legal complexities surrounding access to copyrighted materials in the digital age. In the absence of clear legal protections for CDL, digital libraries in India face potential legal risks.
Conclusion: Balancing Copyright and Access in the Digital Age
The Second Circuit’s decision in the Internet Archive case underscores the tension between copyright law and public access to information in the digital age. While the ruling preserves the rights of copyright holders, it also raises important questions about how copyright law should evolve to accommodate the increasing demand for digital content.
Controlled Digital Lending, when carefully managed, offers a potential solution to this challenge, but legal frameworks must be developed to ensure that both the rights of authors and the needs of the public are addressed. As digital lending practices continue to evolve, policymakers, courts, and stakeholders must work together to strike a balance that promotes both creativity and access to knowledge in the digital era.
Authored by: Devika Gupta
Advocate and Founding Partner, Law Chamber of Devika Gupta
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