Tag: Controlled Digital Lending

End of the Line for Controlled Digital Lending Theory

controlled digital lending

IA asks this Court to bless the large scale copying and distribution of copyrighted books without permission from or payment to the Publishers or authors.

The Second Circuit Court of Appeals yesterday affirmed that Internet Archive’s digital book lending model controlled digital lending (CDL) is not permitted by copyright law, including under the fair use exception. The outcome is a big deal and, at the same time, is not really big news. Copyright watchers grounded in what the law is (rather than what they wish it to be) were likely relieved but not surprised that the appeals court upheld a judgment, which the lower court originally issued just four days after oral arguments.

The lawsuit Hachette et al. v. Internet Archive was triggered by IA’s so-called National Emergency Library (NEL), an alleged response to the COVID shutdown whereby it arbitrarily made over one million digital books available without any kind of restriction. Because IA had no basis on which to claim it was responding to an “emergency” need, I maintain the NEL itself was a stunt designed to provoke litigation and take Brewster Kahle and friends’ copyright theories out for a ride. And as of yesterday, that ride is probably over.

Specifically, IA and a small group of academics hoped to prove that controlled digital lending is permitted by fair use. CDL is based on the theory that a library is permitted to make its own digital copy of a physical book in its collection and to loan either the digital or the physical copy to one reader at a time—and to then apply the scheme for as many physical copies as the library owns. Further, IA expanded the concept to create its Open Library by “partnering” with various libraries around the country to effectively count the physical copies on all those shelves and increase the number of readers to which the digital copies would be loaned.

The Second Circuit affirmed not only that the Open Library model is not permitted but that the CDL practice is not a fair use—even if it were limited to the physical books in IA’s possession. With the one distinction that the circuit court reversed the lower court’s finding that IA’s purpose is “commercial” under fair use factor one, IA lost resoundingly on all four fair use factors.

In short, CDL is not transformative under factor one because its purpose is no different than the legal eBook lending models offered by publishers. This finding informs factor four. Because the purpose of the use is not transformative, the CDL scheme amounts to a market substitute and is, therefore, a potential market harm. Factors two (nature of the works used) and three (amount of the works copied) barely warrant discussion. The books in suit are expressive in nature, which favors the plaintiff; and IA does not dispute that it copied and made whole books available. Copying whole works may be permissible, but only possibly if the use is transformative.

Since before this suit began, IA has claimed to be a champion for all libraries, even going so far as to assert that CDL is simply doing what all libraries do—i.e., to “buy books and loan books.” But that rhetoric, conveniently facile for the media, obfuscated the more complex truth that IA, its colleagues, and supporting amici were pushing a theory with no foundation in law. CDL is a self-indulgent thought experiment for a handful of academics and activists with no skin in the game of creating literary works. And IA’s claim to be acting like any other library was simply untrue.

To those who believe the law should be different to facilitate IA’s alleged social benefit, I have considered the intent of CDL (and the alleged burden of eBook licensing) and find no evidence to support the claim that CDL fulfils an unmet need. In fact, as stated in past posts, Kahle’s dream of digitizing everything and making it all freely available is not only harmful to future authorship but is a threat to local libraries. Further, it bears repeating that the publishers in this case represent thousands of authors, while IA represents the interests of no authors.

I get why even creators are often persuaded by Internet Archive’s claims. After all, creators tend to love libraries and are instinctively wary of corporations, including publishers. But to put this in contemporary context, IA’s mass digitization and “lending” scheme, which would harm future authorship, is hardly much better than AI’s mass digitization and “training” scheme, which would also harm future authorship. (See what I did with the letters there?) Mass copying and distribution of protected works should always be viewed skeptically because the purpose is rarely transformative and non-threatening to creators. As the court states in yesterday’s judgment:

Within the framework of the Copyright Act, IA’s argument regarding the public interest is shortsighted. True, libraries and consumers may reap some short-term benefits from access to free digital books, but what are the long-term consequences? If authors and creators knew that their original works could be copied and disseminated for free, there would be little motivation to produce new works. And a dearth of creative activity would undoubtedly negatively impact the public. It is this reality that the Copyright Act seeks to avoid.

Controlled Digital Lending is a Dubious Proposal in Every Sense

On March 24, the court in Hachette et al. v. Internet Archive wholly rejected IA’s fair use defense constructed on the theory called Controlled Digital Lending (CDL). Prior to and since that ruling, various parties have tried to characterize this case as an attack by the publishers against the core function of libraries, alleging that libraries either already depend, or will come to depend, on CDL to meet the needs of communities in the digital age.

It is easy to promote a message that says Library good. Publisher bad. And I get why various people, including policymakers and librarians, might respond to the slogan. But the populist message obscures what a convoluted, if not insidious, proposal CDL truly is. While it may be true that select libraries engage in limited activities, long exempted by statute, which certain vested interests now describe as akin to CDL, it is erroneous to suggest that CDL, as envisioned by its proponents, is inherent to library operations. On the contrary, it is a complicated and expensive proposal—even if it were legal.

The CDL theory, based on ideas first proposed by Professor Michelle Wu (Georgetown University), is fleshed out and advocated in a 2018 white paper written by Kyle Courtney (Library Futures Chair) and David R. Hansen (Authors Alliance Executive Director). According to their reading of the fair use doctrine in conjunction with first sale doctrine,[1] Courtney and Hansen argue that libraries are legally permitted to erect their own ebook lending models by digitizing and then loaning digital books based on the number of legally obtained physical copies in the collection.

On its face, the concept sounds fair-minded and progressive—hypothetically adding new digital access while allowing the library to bypass (i.e., not pay for) current ebook licensing/lending regimes like OverDrive. And according to the theory, CDL will not disrupt the authors’ interests because it purports to maintain, rather than alter, longstanding copyright doctrine. Who wouldn’t endorse that from the sound of it? Candidly, someone who is not well-versed in copyright law or contemplating the practical implications of the CDL model.

Sparing readers a detailed breakdown of the legal constructs in the 42-page white paper, suffice to say, the keystone argument—a fair use defense riding on the first sale doctrine—was unequivocally rejected by the court in Hachette last month because the central points had already been made and rejected by this same circuit in contemporary cases.[2] In fact, CDL proponents may not be thrilled that Internet Archive was the first (and perhaps the last) institution to represent their theory in court because, even with millions in revenue, IA failed to implement the “controlled” part of the model.[3]

This begs an important question for libraries: if IA is their Galahad in the quest for CDL, why does it fail operationally to implement the model? That the underlying legal theory would fail was hardly in doubt, and this alone should doom CDL as a consideration for any library. But it is further notable that, even if CDL were legal in some form, implementing it would likely be more costly than the current ebook lending regime the library would be circumventing.

CDL Would Not be Free or Liability Free

Launching a CDL model, as set forth in the white paper, implies considerable expense, requiring either a library-developed system or paying to use a system developed by a third party. Presumably, the CDL folks imagined that Internet Archive would be that third party, but as that organization failed to adhere to the controls in the model, this should prompt librarians to consider what it would cost to adopt “real” CDL, and for what purpose.

Without addressing the practical implications of a holistic, auditable CDL system, proponents appear to recommend that libraries invest substantial resources in a new, complex model to manage physical and digital book lending and then wait to see if it gets sued. Because, astoundingly, the white paper contains a whole section advising libraries as to how they might limit risk when implementing CDL. It must be nice to sit in an office at an elite law school, devise a hypothesis that some proscribed conduct is “legal,” and then suggest somebody else try it to find out. And all this fuss, cost, and opportunity cost is to circumvent existing models that make ebooks available for about a dollar or less per loan?

The Future of Libraries is Not About eBooks

Finally, it cannot be ignored that the sustainability of libraries does not lie in providing more access to digital books and other materials via websites. Libraries are physical spaces that play important and diverse roles in each community, and their future depends on maintaining relevance as physical spaces operated by professionals with certain skills and sensitivities to local needs. Whether that means story time for children or hosting career counselors for adults or a thousand other initiatives, digital book lending is not a community connecting activity any more than shopping on Amazon is a social experience.

If ebook loans become too prominent a feature of a library system, those physical spaces and professional librarians will no longer be needed (i.e., funded). And in case it isn’t obvious by now, digital platforms tend to swallow independent institutions. Much like internet consolidation has nearly exterminated the local and independent newspaper, a similar consolidation of reading material into a more centralized, globally accessible network (as envisioned by Internet Archive’s Brewster Kahle) would be fatal to the local library as a lending institution.

Libraries should spend their limited resources on building and maintaining personal relationships with communities rather than waste time with complicated and erroneous workarounds to copyright rights. Frankly, the well-funded academics and organizations peddling CDL would do more good for libraries if they just hosted a damn bake sale.

[1] Specifically, the paper argues that factor one of the fair use test favors CDL because its “purpose” is to fulfill the intent of the first sale doctrine—and then, they argue this is further bolstered because libraries are not commercial entities.

[2] e.g., ReDigi, TVEyes.

[3] For instance, the CDL paper does not envision an unaccountable system whereby physical books are stored in shipping containers as the basis for digital copy loans. Internet Archive does this.

Photo by: JackF

Brief in Defense of CDL Indicts Internet Archive and CDL

Among the amici who filed briefs in Hachette v. Internet Archive is former law professor and library director Michelle Wu, who, as the brief states, “…is recognized by many as the originator of the legal theory underlying controlled digital lending (“CDL”) ….” With her brief, Wu seeks to defend CDL as a doctrine and asks the court to limit its considerations to the facts related solely to IA’s conduct and to reject what she calls the publishers’ overbroad “attack” on CDL itself. She states:

CDL takes many forms. Many libraries around the United States offer works through CDL subject to their own individual platforms and practices. The arguments offered by Plaintiffs in support of their motion for summary judgment are a broad-based attack on all of them, shoehorning the very concept of CDL into a dispute about the Internet Archive’s individual implementation of it.

Before addressing the arguments presented in the brief, it is noteworthy that if Ms. Wu would have CDL inoculated against the conduct of Internet Archive, she and her colleagues have had ample time to distance themselves and the legal theory from IA’s founder and avowed anti-copyright crusader Brewster Kahle. Because one year after IA engaged in the infringing conduct that triggered the publishers’ litigation (March 2020), Wu was a key member in a Public Knowledge-hosted panel with Kahle (March 2021), entitled Burying Information – Big Tech & Access to Information.

Promoted in the wake of the January 6th insurrection as a remedy to misinformation, the panel blamed copyright law for contributing to the perils of widespread ignorance and conspiracy theories threatening democracy. Specifically, Wu et al. touted CDL as a necessary alternative to ebook library licensing on the grounds that this licensing is somehow keeping knowledge away from the very people who need it. Further, nobody on the panel disputed Kahle’s allegations that the publishers’ suit against IA was an attack on CDL and libraries in general.

So, in addition to the fact that it seems hypocritical for Wu to now ask the court to distinguish the underlying theory of CDL from the conduct and agenda of IA, it is no surprise that the arguments she presents echo the same general complaints against copyright rights articulated in that panel discussion. For instance, Wu reprises the theme that libraries are sentinels against the tide of rampant mis- and disinformation in the digital age—and repeats the claim that CDL is integral to that mission. “CDL is an essential pillar of countering misinformation by making library materials accessible, relevant, and competitive,” the brief states.

Even if that premise were not magical thinking (because lack of access is not the cause of the dangerously misinformed), Wu paints with too broad a brush in defense of her theory that CDL is inherently legal. Aside from the fact that there is no evidence that all the access to all the books in the world will disburse the fact-immune hoards from laying siege to reason,[1] Wu’s faith in the contrary belies a general prejudice against copyright law in lieu of articulating a concise argument for the narrow opinion she claims to want from the court.

Moreover, Wu may be blind to the fatal flaw in her central argument when she says that “many libraries” use CDL in different ways to achieve a variety of purposes. The problem with her list of general examples (e.g., CDL for preservation, serving readers with disabilities, etc.) is twofold. First, many of the examples stated or implied are activities exempted for libraries by statute. Second, the possibility that certain activities of several libraries may be allowed by fair use undermines the broad sweep of Wu’s defense by emphasizing that fair use is a fact-intensive, case-by-case consideration.

Finally, and perhaps most importantly, a fair use defense does not turn on a particular method of copying or making a work available. The CDL theory asserts that it is legal for a library to essentially make its own ebooks from the printed books in its collection, as long as it never loans more electronic copies than it owns physical copies that were legally obtained. Wu’s brief impliedly acknowledges that Internet Archive did not adhere to the “controlled” part of CDL, but in seeking to rescue “real CDL,” the brief is tellingly overstuffed with allegations that, even if true, are not applicable to a question of fair use.

For instance, Wu refers to budgetary constraints of libraries and the supposedly onerous cost of ebook licensing by publishers. But even if this allegation were valid for most libraries—and it does not appear to be—it would say nothing about whether a library’s version of CDL would fall under the fair use exception. On the contrary, Wu’s complaint about existing ebook licensing effectively acknowledges that CDL is a means of bypassing that licensing model and implies that this is justified by cost.

This argument is barely distinguishable from familiar rationalizations for large-scale piracy, which any court should find unpersuasive in general and should find meaningless as a fair use question. The amount of a licensing fee demanded for any work is immaterial to the question of whether a user who avoids paying the license is making a fair use. Wu’s attention to the cost of ebook licensing seems meant to distract from the reality that, even with the controls in force as prescribed by the CDL theory, the model displaces the authors’ right to license ebooks on their terms to libraries. And this market substitute consideration should ultimately doom a fair use defense on all four factors.

This consideration would be unaffected, even if ebook licenses were shown to be onerous because such a complaint, if valid, would properly sound in antitrust law or consumer protection or be argued before Congress seeking a new library-based exemption in the Copyright Act.[2] But because allegations of burdensome pricing models are not properly addressed by fair use, this suggests, again, that Wu and her colleagues defending CDL are admitting that the model is a market substitute and believe that it should be based on their own ideological reasoning

Several aspects of Internet Archive’s operation, including the activities at issue in this litigation, disqualify the entity from statutory exemptions accorded to libraries in Section 108 of the Copyright Act. Inasmuch as IA tries to stand in the shoes of real libraries, this is a PR message for social media but one without a foundation in law. And because IA is not a real library, a finding that its conduct is legal would only further embolden any commercial enterprise to engage in mass, unlicensed digitization and distribution of ebooks and other works.

By contrast, Wu’s insinuation of difficulties for legit libraries engaged in “many forms” of CDL are either unfounded or, perhaps, they inadvertently implicate some of those libraries in infringing conduct. Either way, facts pertaining to the operation of some number of unnamed libraries are not before the court in this case, and only a detailed accounting of those facts, library-by-library could have any legal bearing on those activities. As such, we must conclude that Wu and her colleagues simply want the courts to find that CDL is automatically fair use, and this would be doctrinally absurd. Because the courts are well aware that no conduct is automatically fair use. Not even for libraries.

[1] As noted in my post about that panel, the entire Western canon is more widely and freely available than at any time in history.

[2] In fact, the state ebook licensing laws for libraries have largely been premised on consumer protection and still failed, thus far, as unconstitutional state compulsory licenses.

Photo by: nito