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IP/Entertainment Case Law Updates

Hachette Book Group, Inc. v. Internet Archive

In case alleging copyright infringement stemming from online database’s reproduction and distribution of plaintiffs’ published books, district court grants summary judgment to plaintiffs and denies defendant’s cross-motion for summary judgment, finding that defendant infringed on plaintiffs’ copyrights and its conduct did not constitute fair use under 17 U.S.C. § 107.

Defendant Internet Archive (IA) is a nonprofit organization dedicated to providing “universal access to all knowledge.” IA had established a practice of acquiring print books, digitally scanning the contents of the books, and then distributing those digital copies via IA’s website while retaining the print books in storage and out of circulation. IA’s practice did not involve allowing unlimited downloads of the works it acquires—instead, IA maintained a practice of lending out only as many copies of a work as it owned in print. If IA owned three copies of Book A, it would loan out—in digital or print format—no more than three copies of Book A at any one time. IA boosted its lending capacity by partnering with libraries and allowing a further digital copy to be loaned out if a partner-library owned a physical copy of the book in question.

Plaintiffs are four leading book publishers that held exclusive rights to publish various books and that exploited those rights to distribute electronic copies (or “e-books”) of the books, including an established business of licensing e-books to libraries. Plaintiffs sued IA alleging that its reproduction and distribution of 127 different books—including titles such as Lord of the Flies, The Bluest Eye and Their Eyes Were Watching God—constituted copyright infringement. IA, in turn, pled a defense of “fair use” in regard to its lending of plaintiffs’ books through its online library. Following discovery, the parties cross-moved for summary judgment, with the central issue being whether IA’s practice constituted fair use.

The court devoted the bulk of its analysis to the first factor of the fair use test: the “purpose and character of the use,” or whether the infringer’s use was “transformative.” The court reasoned that there was “nothing transformative about IA’s copying and unauthorized lending” of plaintiffs’ books, given that IA did no more than scan the books in question and then provide them for free to users through its website. IA, for its part, argued that its practice transformed the source material by making the delivery of library books more efficient and convenient. But the court rejected the notion that the mere copying and distribution of a book, without more, could be transformative. The court also found that, while IA is a nonprofit entity and it does not charge users when they download digital copies of books through IA, IA’s use was commercial in nature because IA nevertheless derived both monetary and reputational benefits from its exploitation of plaintiffs’ books. Finally, the court declined to expand the “first sale” doctrine, which allows the lawful purchaser of a book to freely transfer its purchased copy to another, to also allow unauthorized digital reproductions of a purchased book. In line with Second Circuit precedent, the court found that IA did not have the right to reproduce plaintiffs’ books even if it took counterbalancing measures to limit circulation of its copies.

Turning to the second factor—“the nature of the copyrighted work”—the court found that this factor weighed against a finding of fair use because both the fiction and nonfiction works that IA infringed upon involved significant expressive elements, which is what the Copyright Act is designed to protect. The court also rejected IA’s argument that, because the subject works had been published more than five years prior to IA’s infringement, there should be a finding of fair use. As the court noted, “Published works do not lose copyright protection after five years.” And as for the third factor—“the amount and substantiality of the portion used in relation to the copyrighted work as a whole”—the court quickly found that it favored plaintiffs, given that IA copied the entirety of the books in question.

Finally, the court discussed the fourth factor: “the effect of the [copying] use upon the potential market for or value of the copyrighted work[s].” This final factor favored plaintiffs because IA’s practice of providing unauthorized digital copies to users for free directly supplanted plaintiffs’ e-book business, and specifically the regime that plaintiffs had established for licensing e-books to libraries. Moreover, were IA’s practice to be permitted to continue, it would risk further displacement of plaintiffs’ potential revenues from their e-book business. The court did not place stock in any of IA’s arguments, emphasizing that, regardless of whether IA’s practice had led to some positive ancillary effects for plaintiffs—or for patrons who did not live near a physical library—those effects did not excuse the harm being done to plaintiffs’ e-book business.

In sum, the court concluded that there was no basis in law for the notion that IA, or any entity, is permitted to purchase a book, make an unauthorized copy of that book and then distribute its unauthorized copy while keeping the lawfully purchased copy in reserve. The court denied IA’s motion for summary judgment based on the fair use doctrine and granted plaintiffs’ cross-motion for summary judgment.

Summary prepared by David Grossman and Edward Delman


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