A US appeals court has sided with four major book publishers in a closely watched copyright infringement case concerning digital book lending.

On 4 September, The US Court of Appeals for the Second Circuit affirmed a district court decision from March 2023, finding that the not-for-profit ebook publisher Internet Archive had infringed the copyright of some 127 books published by leading US publishers Hachette Book Group, HarperCollins, John Wiley & Sons and Penguin Random House. This means that thousands of books will now be unavailable for digital lending from its site.

Internet Archive was sued by the publishers in 2020 for making digital copies of copyright-protected print books in their entirety and distributing them online for free as part of its “Free Digital Library” service. The works in suit included titles from Sylvia Plath, JD Salinger, Toni Morrison and Malcolm Gladwell. 

Following the District Court’s decision finding it guilty of copyright infringement, Internet Access had argued to the Second Circuit that its lending practices were “fair use”. But in its latest opinion delivered by circuit judge Beth Robinson, it said “[a]pplying the relevant provisions of the Copyright Act, as well as binding Supreme Court and Second Circuit precedent, we conclude the answer is no”.

The court analysed the four factors to determine fair use. It found that Internet Archive’s use of the works was not transformative, rather it “creates digital copies of the works and distributes those copies to its users in full, for free. Its digital copies do not provide criticism, commentary or information about the originals”.

The court said that the ebook lender had asked it to “bless the large scale copying and distribution of copyrighted books without permission from or payment to the publishers or authors. Such a holding would allow for wide-scale copying that deprives creators of compensation and diminishes the incentive to produce new works”.

The court did conclude, contrary to the District Court, that Internet Archive’s use of the works was not commercial in nature. It is “undisputed” that Internet Archive is a nonprofit entity and that it distributes its digital books for free, the court found, but noted that it must solicit some funds to “keep the lights on”.

Maria Pallante, president and CEO of the Association of American Publishers, said that the court “rejects the defendant’s self-crafted theory of ‘controlled digital lending’, irrespective of whether the actor is commercial or noncommercial, noting that the ecosystem that makes books possible in fact depends on an enforceable Copyright Act”.

She added: “If there was any doubt, the court makes clear that under fair use jurisprudence there is nothing transformative about converting entire works into new formats without permission or appropriating the value of derivative works that are a key part of the author’s copyright bundle.”

Responding to the opinion, Internet Archive commented that it was “disappointed” but that it was “reviewing the court’s opinion and will continue to defend the rights of libraries to own, lend and preserve books”.

Internet Archive hosts more than 3.2 million digital copies of copyrighted books on its website. Its 5.9 million users effect about 70,000 book “borrows” a day – approximately 25 million per year.

Other than a period in 2020, Internet Archive has maintained a one-to-one owned-to-loaned ratio for its digital books. Initially, it allowed only as many concurrent “checkouts” of a digital book as it has physical copies in its possession. Subsequently, Internet Archive expanded its Free Digital Library to include other libraries, thereby counting the number of physical copies of a book possessed by those libraries toward the total number of digital copies it makes available at any given time – an approach to which the publishers objected.

The library ebook industry is thriving. At first, publishers offered ebook licences to libraries on a perpetual basis, allowing them to lend ebooks in a similar manner to print books, though without the same concerns for wear and tear. Although Hachette, Penguin and HarperCollins still offer perpetual licences to academic libraries, they stopped offering perpetual licences to public libraries in 2019, 2018 and 2011 respectively.