Last week, a Manhattan federal judge ruled in favor of four major publishing companies in their suit against the Internet Archive for scanning and lending digital copies of copyright protected books without permission.  Here is what you need to know:

Four major publishers – Hachette Book Group Inc., HarperCollins Publishers LLC, Penguin Random House LLC, and John Wiley & Sons Inc. – sued Internet Archive in June 2020 for unlawful use of 127 copyright protected books by scanning print copies of those books and lending digital copies to its users without any licensing agreements or payment to authors or publishers in the early days of COVID-19.

Internet Archive ("IA"), an organization whose professed mission is to provide universal, democratized access to knowledge, disputed the publisher’s allegations, explaining that it is merely bringing “traditional library lending into the digital age, allowing library books to be more effectively used to benefit the public that bought them.”

The parties filed dueling motions for summary judgment in July of 2022. The publishers argued that IA’s practice is clear copyright infringement on a mass-scale, while IA argued that its secondary use of the original books is lawful under the doctrine of fair use.

Fair use promotes freedom of expression by permitting unlicensed use – or “secondary use” – of copyright protected works in certain circumstances. To determine whether a secondary use of an original work is “fair use,” Second Circuit courts ask primarily whether the secondary use at issue is “transformative.” Andy Warhol Found. for the Visual Arts, Inc. v. Goldsmith, 11 F.4th 26, 37 (2d Cir. 2021), cert. granted, 142 S. Ct. 1412 (2022). Transformative use of an original work must do more than just repackage or republish the work – it must add something new, with a further purpose or different character. A secondary use may also be transformative if it expands the utility of the original work.

IA told the court in its brief that an organization has the right to make copies of its print book to facilitate the digital lending of that book, as long as only one person at a time can borrow the book for each copy purchased. According to IA, in exercising its right, it performs the transformative function of making the delivery of library books more efficient and convenient.

SDNY Judge Koeltl disagreed, stating that “there is no such right, which risks eviscerating the rights of authors and publishers to profit from the creation and dissemination of derivatives of their protected works.” Judge Koeltl's March 24, 2023 decision can be found here. Siding with the publishers, the court determined that there is nothing transformative about IA’a secondary use of the books. By merely scanning the original works to create e-books, IA’s secondary use neither provides criticism, commentary, or information, nor expands the utility of the original works. It is not excused by the doctrine of fair use.  IA’s practice is – as a matter of law – a violation of the publishers’ exclusive rights to prepare, display, and distribute derivate works based on their copyrighted works, the court held last Friday.

Internet Archive says that it plans to appeal the ruling.