December 4, 2024
AAP Celebrates Final Victory in Infringement Case Against Internet Archive
Plaintiffs Hachette Book Group, HarperCollins Publishers, John Wiley & Sons, and Penguin Random House Achieve Decisive Ruling for Authors’ Rights and Digital Markets
Court Dismantles “Controlled Digital Lending” Theory as a Distortion of Well-Established Law
Today, the Association of American Publishers announced the final resolution of Hachette Book Group v. Internet Archive, after Internet Archive declined to file a cert petition with the U.S. Supreme Court by the December 3, 2024 deadline. We are pleased that the Second Circuit’s September 4, 2024 opinion stands as the eloquent legal ending to this case, as it draws extensively on Supreme Court precedent and will be broadly impactful to other controversies, including artificial intelligence cases.
Maria A. Pallante, President and CEO of the Association of American Publishers, offers the following statement on behalf of AAP’s Board of Directors:
“After five years of litigation, we are thrilled to see this important case rest with the decisive opinion of the Second Circuit, which leaves no room for arguments that ‘controlled digital lending’ is anything more than infringement, whether performed by commercial or noncommercial actors, or aimed at authorship that is creative or factual in nature. As the Court recognized, the public interest—and the progress of art and science that is the mandate of the Constitution’s copyright clause—is served best when authors and their publisher licensees can decide the terms on which they make their works available. We are indebted to Hachette, HarperCollins, Penguin Random House, Wiley, their authors, and the many amici in this case who stood up for copyright, without which we would be a less inspired and less informed society.”
Focus of Case
The primary focus of the case was Internet Archive’s “Open Library,” an unlicensed, global distribution platform. After scanning millions of print books with abandonment—digital files that the court easily found constituted market substitute ebooks—Internet Archive proceeded to “lend” the copies worldwide without any consent or payment to authors or publishers. It sought to justify its end-run around the publishers’ markets, including their substantial ebook markets with U.S. public libraries, by presenting a radical theory that IA or its partner libraries could make and distribute unlicensed digital copies if they retained a copy of the print book for each digital “borrow.”
Moreover, Internet Archive loudly encouraged thousands of libraries to stop licensing ebooks and instead use its platform. The Court fully grasped the slippery slope and catastrophic impact of such conduct if other actors were to adopt Internet Archive’s conduct.
Amici Concerns
In support of the publishers, numerous legal experts and creator organizations—including briefs led by the Authors Guild and former Members of Congress— filed friend-of-the-court briefs, many of which made the point that Internet Archive cannot rewrite to its own advantage the laws that Congress alone has power to enact. The International Publishers Association and other global organizations also argued that there is an existential danger from Internet Archive’s efforts to assemble an unlawful digital corpus in which millions of literary works and other creative content are now vulnerable to piracy, including by AI developers.
Infringement Finding
Unsurprisingly, the Court concluded that Internet Archive’s theory of “controlled digital lending” lacks any legal authority, harms authors (who have the right to set the terms for each format of a work), and usurps the value of publishers’ markets in contravention of the Copyright Act. “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,” the Court said. “And a dearth of creativity would undoubtedly negatively impact the public.”
Ultimately, the Court concluded that digitizing physical copies of written work is not transformative, because it merely transforms the material object embodying the expression, not the expression itself. “The Copyright Act protects authors’ works in whatever format they are produced,” the Court said. Nor is an infringer free to mask or nullify its infringement—for example by asserting an “owned-to-loaned” ratio of physical to digital copies—the Court underscored.
A minor part of the case was Internet Archive’s self-branded “National Emergency Library (NEL),” which the District Court dispensed with in one sentence while wholly dismantling the underlying controlled digital lending theory. NEL was yet another unlicensed operation on top of Open Library that lacked even the pretense of ratios and sought to use the pandemic as a justification. In fact, while physical library buildings were shuttered, licensed digital checkouts were thriving, resulting in record breaking lending to patrons in the comfort of their own homes. These licensed digital checkouts continue to grow today.
Legal Result
With this case concluded, publishers have achieved a decisive and broadly applicable victory for authors’ rights and digital markets, an outcome that was our foremost, principled objective. In addition, Internet Archive is bound by a sweeping permanent injunction and must make a payment to AAP, which funded the action, the amount of which is confidential under the terms of a Court-approved, negotiated consent judgment between plaintiffs and Internet Archive. We are, however, permitted to disclose that “AAP’s significant attorney’s fees and costs incurred in the action since 2020” will be “substantially compensated.”
The publishers and AAP were represented in this case by the law firms of Davis Wright Tremaine and Oppenheim + Zebrak.
Second Circuit opinion available here.