AAP Sues Maryland over eBook Licensing Law

“Remarkably, the Maryland Act subjects publishers to civil and criminal liability for attempting to exercise their exclusive rights in the very manner envisioned by the federal statute.” – Complaint in AAP v. Attorney General of the State of Maryland.

It is inherent to the exclusive rights of the Copyright Act that authors may decide the manner in which their works are made available. When, where, and at what price to release a novel, a motion picture, a record album, etc. to the public is implicitly the sole right of the copyright owner, and the case law is replete with affirmations of this principle. The Constitution empowers Congress to secure the rights vested in authors, and as of the Copyright Act of 1976, federal copyright law preempted common law copyrights to bring the U.S, under a uniform code in the interest of justice and administrative sanity.

Yet, at the urging of a handful of library associations, the State of Maryland was the first of several states to enact a law, which amounts to a state compulsory license on eBooks. Rhode Island and Massachusetts have similar bills in the works, and New York’s eBook library licensing bill only awaits the governor’s signature.

On December 9, the Association of American Publishers (AAP) filed suit against the Attorney General of the State of Maryland, seeking to bar enforcement of the Maryland Act, which would take effect on January 1. The lawsuit was inevitable. The Maryland Act is unconstitutional as a matter of law; it does not address a real problem as a matter of policy; and it is downright insidious as a tactical move in a broader strategy to weaken copyright law for all creators of works.

The mechanisms in the Maryland Act, which implicate exclusive copyright rights, include the requirements to:  1) make all eBooks available to libraries in the state simultaneously with making them available to the state’s consumer market; 2) allow state libraries to obtain unlimited eBook licenses; and 3) make eBook licenses available on “reasonable terms.”

The availability mandate reveals that these bills are predicates to more than eBooks because, for instance, libraries also lend motion pictures, whose producers often depend on windowing releases as part of their market strategy. The unlimited license provision elides the fact that a single eBook library license may serve dozens or hundreds of readers in contrast to a consumer’s purchase of a single eBook. And that omission conspires with the uncertainty that “reasonable terms” is undefined in the Maryland Act, which means the state would be setting terms, and therefore, supports the conclusion that this law amounts to a compulsory license.

The Maryland Act is Unconstitutional

Setting aside all other matters, I predicted in my last post on this topic that any federal court will likely hold that these bills are unconstitutional on the basis that the Copyright Act preempted the panoply of state copyright laws that existed prior to the 1976 Act. Jonathan Band, who lobbies for both the American Library Association (ALA) and the Computer and Communications Industry Association (CCIA), alleges that preemption does not exist here, saying that the Maryland Act only “regulates licensing terms” (akin to contracts), which is outside the scope of the exclusive rights secured by the federal copyright law. This is verbal legerdemain.

If a state enforces a law, under pain of civil and criminal penalty, dictating the terms by which a copyright owner may exercise his rights, then under the walks-like-a-duck doctrine, that is what we call a state imposed compulsory license. And because it is the sole purview of Congress to codify compulsory licenses in the federal copyright law, preemption clearly applies. Congress has never codified a compulsory license for literary works, and we should also note that the compulsory license for musical works is a relic of a bygone era doing considerable harm to songwriters in the digital market.

The eBook Bills Do Not Remedy a Problem

There is a reason why the library associations who have lobbied for these state bills, speak in generalities and platitudes like “being shut out of the marketplace of ideas.” Because they do not present real data to support a claim that these state bills serve an unmet need among the library-going public. Most of the publishers (certainly most of the majors represented by AAP), already release new titles to libraries concurrently with releases to the buying public. So, that’s not really a complaint.

If the libraries allege that eBook license fees are onerous, they should be required to support that claim with numbers while acknowledging that eBook lending is distinctive from eBook selling, and then demonstrate how their constituents are underserved as a result of current licensing models. As mentioned in other posts, the libraries may not want to go there because their own lending data do not reveal a public clamoring for works of history and literature which they otherwise cannot access. So, it’s easy for the library groups to lodge general complaints and plead for overreaching laws while the publishers’ more difficult task may entail making decisions about format, timing, or pricing to give a specific title its best shot in the market.

Further, as the AAP complaint states, “The Maryland Act is not a reasoned response to any broad concerns in the digital market. To the contrary, it appears that the state law is motivated by discontent with a single technology company that has at times refused to distribute to libraries the ebooks and audiobooks that it publishes. The Maryland Act’s legislative history and public statements by state legislators and public officials reveal some very specific concerns about this company, Amazon, which is not an AAP member.” [emphasis added]

Amazon behaving badly and making a mess for everyone else? Hardly a stretch, right? That company has exerted so much predatory influence across so many markets, including publishing, that it deserves its own antitrust division at the DOJ. But if the AAP complaint is based on an accurate read of the legislative background, it sounds like the parties lobbying for these bills and gaining the sympathies of legislators maybe using the word publisher, when what they really mean is Amazon. But, of course, we must remember that these state bills have very little to do with access to eBooks.

Weakening Copyright Law is the Goal

These eBook bills are not about addressing a narrowly defined problem faced by libraries. Libraries enjoy many carve-outs in the copyright law, and if they have sufficient evidence to argue for a new and specific exception vis-à-vis eBooks, then directly lobbying Congress for such a provision would be more honest and more efficient. But the agenda driving these bills is anything but narrow. Aside from the implications for other categories of works (like motion pictures mentioned above), the various interests backing the eBook library bills knew they would be litigated, and they probably know that they will probably lose.

We see this tactic employed in other areas of public policy all the time. When openly lobbying for legislative change in Congress may be untenable, one group or another devotes its resources to passing state laws, which are certain to be challenged in court, where even losing can be useful. Either some judge in the process writes a compelling dissent, or merely racking up a scorecard of court losses can become a foundation for appealing to Congress to amend federal law. The strategy itself is not inherently sinister. It depends on one’s view of the end justifying the means.

Here, the end is to chip away at copyright rights with the same strategy employed by those who seek to limit other constitutional rights until, for instance, the exclusive rights in copyright law are little more than a bundle of compulsory licenses for all categories of works. And as Chris Castle describes in his post on this topic, who ultimately benefits the most from such a regime? Google and Friends. And the irony there, as I have also discussed before, is that the library associations are woefully shortsighted. Amend the copyright law as they seem to envision, and a host of commercial tech ventures will not just devour the economic value of authorship but will also set fire to libraries without lighting a match.

Photo by: nito

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