IP Intelligence

Home | IP Intelligence

The Second Circuit Court of Appeals has delivered a resounding reaffirmation of fair use principles in the latest decision to go against the Authors Guild in its longstanding battle against book digitization.  The unanimous opinion of the three-judge panel in <i>Authors Guild, Inc. v. HathiTrust</i>, No. 12-4547-cv (2d Cir. June 10, 2014) affirmed nearly all of an October 2012 district court ruling that a book scanning project of a consortium of universities called HathiTrust was protected by the fair use doctrine.

HathiTrust works with Google to digitize the books held in the member institutions’ libraries.  The scanned books are hosted by the HathiTrust Digital Library (“HDL”), which allows the public to search for particular terms in the database.  Unless the copyright owner allows broader use, the search results only show the frequency and page numbers on which the search terms appear.  HDL also allows people who can demonstrate that they are unable to read a work in print to access full copies of copyrighted works.  The third feature of HDL at issue is that it preserves the books in order to permit member institutions to create a replacement copy of a copyrighted work if the institution already owned an original copy that was lost, stolen or destroyed and unavailable at a “fair” price.

The Authors Guild sued HathiTrust for copyright infringement in 2011, and was later joined by several other groups representing authors (collectively, the “Authors”).  The Second Circuit spent little time in affirming the district court’s finding that the Authors Guild, the Australian Society for Authors Limited and the Writers’ Union of Canada did not have standing to assert copyright claims of its members based on a straightforward application of section 501 of the Copyright Act.  The Court did find, however, that four other authors’ groups did have standing on the basis that foreign law conferred on them exclusive rights to assert copyright claims of their foreign members.

Turning to the issues of book digitization, the Court applied the four fair use factors to each of the disputed features of HDL.  In examining HDL’s full‐text searchable database, the Court found that it was “a quintessentially transformative use,” and, indeed, that it “adds a great deal more to the copyrighted works at issue than” other transformative uses approved by the Second Circuit.  The Court did, however, take issue with the district court’s implication that a use may become transformative by “making an invaluable contribution to the progress of science and cultivation of the arts,” noting that a transformative use is one “that serves a new and different function from the original work and is not a substitute for it.”  Nevertheless, the Court affirmed the fair use finding below because HDL’s copying of the entire work was reasonably necessary to enable the full-search functionality—swiftly disposing of the Authors’ argument that copying the works on secondary servers and back-up tapes was excessive—and the database did not serve as a substitute for the original copyrighted works such that it affected their market or value.  The Second Circuit rejected the Authors’ market-harm arguments in no uncertain terms, finding the risk of a data breach enabling worldwide distribution of the works to be too speculative to be a cognizable injury (particularly in the face of “essentially unrebutted” evidence of HDL’s extensive security procedures) and the lost licensing revenue argument to be irrelevant where, as here, the transformative use does not serve as a substitute for the original work.

Although the Court did not find that the accessibility feature offered by the HDL was a transformative use because the purpose of making text available for reading or listening is unchanged from the original copyrighted work, it nevertheless found it was a fair use by citing to the legislative history of the Copyright Act.  The Second Circuit quoted extensively from the House Committee Report that accompanied the Copyright Act, which noted that there was little to no market for books accessible to the print disabled, and in light of this, making a single copy of a copyrighted work accessible to blind persons “would properly be considered a fair use under section 107.”

Finally, the Court vacated the district court’s judgment as to the preservation feature of the HDL and remanded.  Given the application of section 501, the Court did not believe that the record showed that plaintiffs owned any copyrighted works that would potentially be subject to copying and replacement by any of the member institutions. The district court is left to determine whether the Authors have standing to pursue claims with respect to the preservation feature of the HDL.

While this decision is an unqualified victory for proponents of the fair use doctrine, there are intriguing portions that may telegraph the Court’s thinking with respect to the Authors Guild’s separate appeal of a district court ruling that Google’s Google Books project was protected by fair use.  The district court there based much of its fair use conclusions on its finding that Google Books made invaluable contributions to education and culture.  The Second Circuit’s strong language here regarding transformative use and that it must serve a new and different function from the original work may signal that the Court will find that the fair use factors do not align in favor of a project that allows users to access actual portions of copyrighted works rather than just the frequency of search terms within the work.

Second Circuit Finds That, Once Again, Book Scanning Is Fair Use