December 3, 2024
The Second Circuit Court’s recent ruling in Hachette Book Group, Inc. v. Internet Archive addresses significant issues regarding copyright infringement and the boundaries of the fair use defense. This decision, issued on September 4, 2024, marks a pivotal moment in the intersection of copyright law, nonprofit operations, and digital lending.
The Internet Archive, a nonprofit organization that operates the Free Digital Library, digitized physical books and distributed these digital versions to the public for free, relying on a one-to-one owned-to-loaned ratio. This meant that the Archive allowed the same number of digital loans as physical copies it held. However, four major book publishers—Hachette Book Group, HarperCollins Publishers, John Wiley & Sons, and Penguin Random House—filed suit against the Internet Archive, claiming that this practice infringed their copyrights in 127 books.
The Internet Archive raised the defense of fair use under Section 107 of the Copyright Act. Fair use allows for limited use of copyrighted works without permission under certain conditions, such as criticism, commentary, teaching, or research. Judge John Koeltl of the Southern District of New York rejected application of the fair use defense, and the Second Circuit affirmed, stating that the Internet Archive’s digital lending was not transformative and did not qualify as fair use.
The Circuit Court’s analysis of the four fair use factors was critical in its decision. The first factor—the purpose and character of the use—typically focuses on whether the secondary use is transformative. The inquiry into transformative use "focuses on whether the new work merely supersedes the objects of the original creation, or whether and to what extent it's 'transformative,' altering the original with new expression, meaning, or message." The Court found that digitizing books without adding new expression, meaning, or message was not transformative. The Internet Archive’s digital copies served the same purpose as the original works: providing access to books for reading. The Court clarified that while some change in format from print to digital occurred, this did not alter the fundamental purpose of the original work.
The second factor—the nature of the copyrighted work—also weighed against the Internet Archive. The publishers’ works, comprising original fiction and nonfiction, were deemed close to the core of intended copyright protection.
The third factor—the amount and substantiality of the portion used—also weighed heavily against the Internet Archive. The Archive scanned and distributed entire books, rather than excerpts or portions, which further diminished the argument for fair use.
Finally, the fourth factor—the effect on the potential market for or value of the copyrighted work—was perhaps the most decisive. The Court concluded that the Internet Archive’s distribution of free digital books created a direct substitute for both the print and licensed e-book markets. This substitution deprived publishers and authors of revenue that was rightfully theirs under copyright law. The Court noted that the Archive’s digital lending was competitive with the publishers' existing licensed digital offerings, undermining the economic incentives inherent in copyright law.
The ruling represents a significant victory for book publishers and highlights the limited scope of fair use, particularly when a defendant distributes entire works in competition with those of the copyright holder. While the Internet Archive has signaled its disappointment and potential plans to appeal, the decision sends a clear message about the protection of intellectual property in the digital age.
Written by Aniyah Braveboy