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Internet Archive Digital Lending Not Fair Use, 2nd Cir. Says (1) | Bloomberg Law

The appeals court found the lower court’s ruling erred in its analysis of the first factor—the nature of Internet Archive’s use—by finding it commercial. Internet Archives is a non-profit and lends the books for free, which isn’t undermined by the fact that it solicits donations “to keep the lights on,” Robinson wrote. The distinction separated the court’s opinion from 2018 Second Circuit precedents Fox News Networks v. TVEyes and Capitol Records v. Redigi, where access to searchable television clips and one-for-one digital music file copying were commercially sold.

But transformativeness is the “central” question in the first factor, Robinson said, and finding the copying of full books transformative could “eviscerate copyright owners’ right to make derivatives, Robinson said. Internet Archive claimed its improved content-delivery efficiency was transformative. The TVEyes opinion credited the utility of TVEyes search function, allowing subscribers to quickly find clips rather than monitor days of programming, as “somewhat transformative.” But fair use was still rejected, Robinson said, and publisher ebooks offered as much utility as Internet Archive’s scanned copies.

Internet Archive argued the district court should have found the fourth factor—effect on the market for the books—should favor fair use as it provided data showing no harm to the books sales. But two separate analyses contained critical flaws, Robinson said. One said they failed to put the rate at which ebooks books at issue were checked out from licensed digital libraries into broader context of overall trends. Another only examined effects of print sales rankings—which didn’t incorporate ebook sales or revenue, she said.

Robinson also noted that the Internet Archive touted its CDL system to libraries as an alternative to buying more books or licenses. While publishers didn’t produce data demonstrating an impact of the Internet Archive’s lending, courts “routinely rely on such logical inferences” as the notion that free digital copies would displace ebooks, she said.

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