Controlled Digital Lending

Because it would muddy the core element of this question (Should we have any concerns with donating our discards to [Internet Archive]?), this answer is not going to address the various legal and regulatory requirements different libraries may have when it comes to disposing of discarded books.[1]

With that out of the way, we can dive right into the member’s concerns about liability “for contributing to potentially illegal activity.”

Internet Archive describes its work this way:

“Because we are a library, we pay special attention to books. Not everyone has access to a public or academic library with a good collection, so to provide universal access we need to provide digital versions of books. We began a program to digitize books in 2005 and today we scan 4,300 books per day in 18 locations around the world. Books published prior to 1927 are available for download, and hundreds of thousands of modern books can be borrowed through our Open Library site. One of the Internet Archive's missions is to serve people who have difficulty interacting with physical books, so most of our digitized books are available to people with print disabilities (learn about access here).”

As the member’s question alludes to, some of the content on the “Open Library” has brought accusations of copyright infringement, which Internet Archive has defended under the “controlled digital lending” theory of “fair use”.

The most notorious case is Hachette Book Grp. Inv. V. Internet Archive, decided by the U.S. District Court for the Southern District of New York on March 24, 2023, which found that when not limited to use for search functions or adaptive copies, certain scanning and (controlled digital) lending of books still protected by copyright is not defensible as “fair use.”

The decision was a blow to Internet Archive, which is committed to not only making content digitally available but to decoupling that access from the commercial exploitation of user identity. For an elegant an annotated discussion of this topic, review the amicus brief of Center for Democracy & Technology, Library Freedom Project, and Public Knowledge.[2]

The case is now being appealed, with allies showing up on both “sides.”

With all that going on, Internet Archive is still going strong and still accepting donations.[3] The question that this member asks is: if my organization donates our discarded hard copies to IA,[4] can we also get implicated in alleged infringement?

Bearing in mind that anyone can be sued by anyone for anything at any time, the answer is otherwise: no.

The basis for this answer is Section 109 of the Copyright Act, which provides that “the owner of a particular copy or phonorecord lawfully made under this title, or any person authorized by such owner, is entitled, without the authority of the copyright owner, to sell or otherwise dispose of the possession of that copy or phonorecord.”

This “first sale” doctrine, as it is referred to, does not cease to operate when a party knows or may know that the purchaser or recipient has been found to infringe copyright in the past. In addition, as the ruling in Hatchett points out, there are a number of legitimate uses Internet Archive can make of scanned versions of donated copies.

While it is true that there can be “joint liability” or “vicarious liability” for every person in a “chain of infringement,” providing copies in a manner covered by Section 109 (i.e. selling or donating a lawfully obtained copy) is not one of them.

On the topic of donating to Internet Archive, I will also say: because Internet Archive is attempting to break new legal ground,[5] supporting them is controversial in some circles,[6] while it is an almost sacred duty in some other circles. [7] So, aside from considerations of liability (which, so long as the donations are hard copies, will not pose a concern), it makes sense to review the status of the cases, and decide where your organization stands.

This is a great and important question, and it rests on an critical issue. 

With that in mind, before you delve into this answer, I encourage readers of “Ask the Lawyer!” to check out the CDL “Statement” on www.controlleddigitallending.org/statement.

[Small break.]

Okay.  Did you check it out? Interesting, right?  Now, on to the answer….

Controlled Digital Lending (“CDL” ) is an effort to assert the rights of content users—as opposed to those of content owners—in the next regime of copyright law. 

As described in the CDL “Statement”:

CDL enables a library to circulate a digitized title in place of a physical one in a controlled manner. Under this approach, a library may only loan simultaneously the number of copies that it has legitimately acquired, usually through purchase or donation. For example, if a library owns three copies of a title and digitizes one copy, it may use CDL to circulate one digital copy and two print, or three digital copies, or two digital copies and one print; in all cases, it could only circulate the same number of copies that it owned before digitization.[1]

Rallying librarians from an impressive array of institutions[2], CDL asserts an extension of current copyright doctrines and seeks to confirm rights critical to the world of information management. 

But although it is a hybrid argument of Fair Use and the First Sale Doctrine, CDL is not the law.  Rather, it is a concerted effort to influence—and perhaps become—the law. 

As I see it, CDL is also a deliberate and potentially powerful answer to the established trend of content providers using contract law to impose limitations on copyright’s “First Sale” doctrine.  Here are some examples of this trend:

• Terms for an “instructor’s copy” from an academic publisher barring re-sale or requiring the book be listed in the syllabus;
• A license for a DVD’s “downloadable copies,” requiring a user to verify that the are the owner of the original hard copy; 
• Textbooks that come with access codes for additional, but essential, digital content.

Because of the billions of dollars in revenue such contracts protect, the entertainment, publishing, and other IP industries will fight tooth and nail to not only resist CDL, but any extension of Fair Use and the First Sale doctrine.  Considering the lobbying power and commercial heft of these industries, the CDL position will need all the recruits and allies it can get.  It will be a showdown fought through usage, lawmaking, and most likely, law suits.

The CDL’s organizers know this might be hazardous combat.  Right in their “Statement” is the caution:

Because the following analysis is general, any library considering implementing controlled digital lending should consult a competent attorney to develop an appropriate program responsive to the specific needs of the institution and community.

This warning in the Statement is well-justified.  The stakes for generating infringing copies (which is what copyright owners will argue CDL digital copies are) and distributing them (which is what copyright owners will argue CDL-using libraries are doing) can be high, with the violator liable for damages and attorney’s fees, and stuck in a courtroom battle for years.

So what would a “competent attorney” advise their client to do in this case?  I don’t speak for all competent attorneys, but in a case like this, I would strongly advise an institution NOT to make “CDL” copies unless the action was part of a highly assessed, planned, and well-calculated strategic plan that considers the benefits and accepts the risks.

How does an institution do that?  Any institution seriously considering CDL should form a “CDL Committee” consisting of the institution’s librarian, risk manager/insurance liaison[3], a representative of the institution’s academic wing (if applicable), and an administrative decision maker (an officer of the institution).  The group should consult with (but not necessarily include) a lawyer. 

The group would assess what use their institution could make of CDL, get advice from the lawyer about those specific uses and the risks, check their insurance coverage, assess what is being done at peer institutions, and (perhaps most important) consider how this overall issue impacts their mission.  There would possibly be, at some of the bolder institutions, some acceptance of calculated risk.

If the group’s overall assessment leaned toward CDL, the committee could create a “CDL Assessment and Use Policy” to govern all its uses of CDL.  This way, the decision to use CDL would be rooted in the institution’s mission, while the process would be informed by the library’s assets and users’ needs.  This is critical because if the institution was ever sued for infringement, a good array of back-up material, showing a bona fide belief in Fair Use, and consistent with that of other participants’ in the CDL effort, could help them assert their position and limit financial damages.

With regard to the member’s particular scenario (trying to get more use out of an extensive collection of aging DVD’s), if I were the lawyer consulting with a committee, I would probably advise against that particular use for CDL.[4]  Unless the transmission is per section 110 of the Copyright Act, the risk of a suit for unlicensed transmission of a motion picture is just too high.  But I’d also want to assess each movie on a case-by-case basis.   While the combination of First Sale and Fair Use might not simply allow the restricted streaming, other solutions (a news exception, a license) might. 

I am sorry I cannot give a more definitive answer, but as the CDL organizers themselves point out, CDL is on uncertain ground.  The authors of the “Statement” don’t come right out and say it, but they are trying to fight fire with fire…offering a bold and critical counterpoint to the current copyright scheme through which rights owners tightly control digital dissemination of works in print. 

Libraries, these days, occupy ground zero of many of society’s struggles, and the next regime of IP law is one of those.  On the battlefield of intellectual property, troops are massing at the no-man’s land between digitization and the First Sale Doctrine.  Led by librarians, there is an army that hopes to not only hold the First Sale line, but officially extend it to a practice that is more convenient, green, and aligned with current technology: CDL. 

Does your library want to join that battle? Does it want to explore making select works available, under closely controlled circumstances, without requiring a person to pick up a hard copy?  By making a deliberate, well-planned decision to have a CDL policy, your institution can answer the famous question:

“There’s a war coming…are you sure you’re on the right side?” [5]