Case 1:20-cv-04160-JGK-OTW Document 188 Filed 03/24/23 Page 1 of 47



UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
───────────────────────────────
HACHETTE BOOK GROUP, INC.,
ET AL.,                                           20-cv-4160 (JGK)

                       Plaintiffs,                OPINION & ORDER

            - against -

INTERNET ARCHIVE, ET AL.,

                     Defendants.
 ───────────────────────────────
JOHN G. KOELTL, District Judge:

     The plaintiffs in this action, four book publishers, allege

that the defendant, an organization whose professed mission is to

provide universal access to all knowledge, infringed the

plaintiffs’ copyrights in 127 books (the “Works in Suit”) by

scanning print copies of the Works in Suit and lending the

digital copies to users of the defendant’s website without the

plaintiffs’ permission. The defendant contends that it is not

liable for copyright infringement because it makes fair use of

the Works in Suit. See 17 U.S.C. § 107. The parties now cross-

move for summary judgment. For the following reasons, the

plaintiffs’ motion for summary judgment is granted, and the

defendant’s motion for summary judgment is denied. 1




     1 The Complaint also names five John Doe defendants. ECF No. 1
(“Compl.”), ¶ 27. The cross-motions for summary judgment concern only
Internet Archive, the named defendant.
   Case 1:20-cv-04160-JGK-OTW Document 188 Filed 03/24/23 Page 2 of 47




                                  I.

                                  A.
     The following facts are undisputed unless otherwise noted.

     The plaintiffs -- Hachette Book Group, Inc. (“Hachette”),

HarperCollins Publishers LLC (“HarperCollins”), John Wiley &

Sons., Inc. (“Wiley”), and Penguin Random House LLC (“Penguin”)

(together, the “Publishers”) -- are four of the leading book

publishers in the United States. Pls.’ 56.1, ECF No. 113, ¶ 1.

They obtain from authors the exclusive rights to publish books in

print and digital formats, including electronic copies of books,

or “ebooks.” Id. ¶¶ 63-68. Publishers and authors generally are

paid for sales of each format in which a book is published.

Id. ¶ 65.

     The defendant, Internet Archive (“IA”), is a non-profit

organization dedicated to providing “universal access to all

knowledge.” Def.’s 56.1, ECF No. 98, ¶¶ 1-2. Brewster Kahle, IA’s

Chairman, founded the organization in 1996. Pls.’ 56.1 ¶ 216. One

of IA’s first projects was to document the history of the

Internet by archiving every public webpage on the World Wide Web

through IA’s “Wayback Machine.” Def.’s 56.1 ¶ 5. IA also works

with libraries, museums, universities, and the public to preserve

and offer free online access to texts, audio, moving images,

software, and other cultural artifacts. Id. ¶ 6.

                                   2
   Case 1:20-cv-04160-JGK-OTW Document 188 Filed 03/24/23 Page 3 of 47




     This dispute concerns the way libraries lend ebooks. Public

and academic libraries in the United States spend billions of

dollars each year obtaining print books and ebooks for their

patrons to borrow for free. Pls.’ 56.1 ¶ 113. Libraries usually

buy their print books from publishers or wholesalers. Id. ¶ 114.

Copies of ebooks, however, are typically not bought but licensed

to libraries from publishers through distributors called

“aggregators.” Id. ¶ 117. The Publishers task aggregators with

ensuring that a library lends its ebooks only to the library’s

members. Id. ¶¶ 123, 125. The Publishers also require aggregators

to employ approved “digital rights management” (“DRM”) software

and other security measures to prevent unauthorized copying or

distribution of ebook files. Id. ¶ 126. Demand for library ebooks

has increased over the past decade. In 2012, OverDrive, the

largest aggregator, processed 70 million digital checkouts of

ebooks and audiobooks; by 2020, that number had risen to 430

million. Id. ¶¶ 119, 164.

     The Publishers use several licensing models to profit from

the distribution of ebooks to libraries. Id. ¶¶ 120, 122. All

four Publishers offer a “one-copy, one-user” model: Libraries pay

a single fee for an ebook and patrons check out a copy of that

ebook successively, subject to community-based and DRM

restrictions. Id. ¶ 127. Each Publisher offers academic libraries

                                   3
   Case 1:20-cv-04160-JGK-OTW Document 188 Filed 03/24/23 Page 4 of 47




a perpetual term under this model, and Wiley grants perpetual

one-copy, one-user licenses to academic and public libraries

alike. Id. ¶¶ 130-132. Hachette and Penguin limit their one-copy,

one-user licenses for public libraries to one- or two-year terms,

during which there is no limit on the number of times an ebook

can be read and after which a library must purchase a new

license. Id. ¶¶ 134, 147. HarperCollins uses a “26-Circ Model,”

which allows libraries to circulate an ebook twenty-six times,

over any time period, before the license expires. Id. ¶¶ 135-140.

HarperCollins and Penguin also use a Pay-Per-Use model -- a one-

time circulation to a single patron at a significantly reduced

fee -- and Wiley has experimented with various subscription

models. Id. ¶¶ 141-146, 155, 191. The Publishers’ library expert

testified, and IA does not dispute, that this “thriving ebook

licensing market for libraries” has “increased in recent years”

and “is predicated on licensing revenues that are paid by

libraries to entities like OverDrive.” Id. ¶ 168. For example,

library ebook licenses generate around $59 million per year for

Penguin. Id. ¶ 170. Between 2015 and 2020, HarperCollins earned

$46.91 million from the American library ebook market. Id. ¶ 172.

     IA offers readers a different way to read ebooks online for

free. Over the past decade, IA has scanned millions of print

books and made the resulting ebooks publicly available on its

                                   4
   Case 1:20-cv-04160-JGK-OTW Document 188 Filed 03/24/23 Page 5 of 47




archive.org and openlibrary.org websites (together, the

“Website”). Id. ¶¶ 7, 236; Def.’s 56.1 ¶ 12. IA’s basic modus

operandi is to acquire print books directly or indirectly,

digitally scan them, and distribute the digital copies while

retaining the print copies in storage. The Open Library of

Richmond (the “Open Library”), another non-profit organization

run by Brewster Kahle, buys or accepts donations of print books,

primarily from Better World Books (“BWB”), a for-profit used

bookstore affiliated with IA and the Open Library. Pls.’

56.1 ¶¶ 313-314, 317, 322, 338. The Open Library then sends the

books to IA scanning centers, where operators turn and photograph

each page using a book-digitization device called a “Scribe.” Id.

¶¶ 281-283. After scanning, the print books are stored in double-

stacked shipping containers and are not circulated. Id. ¶¶ 310-

312; Def.’s 56.1 ¶ 23.

     IA’s Website includes millions of public domain ebooks that

users can download for free and read without restrictions. Def.’s

56.1 ¶¶ 158, 160. Relevant to this action, however, the Website

also includes 3.6 million books protected by valid copyrights,

including 33,000 of the Publishers’ titles and all of the Works

in Suit. Pls.’ 56.1 ¶¶ 14, 240; Def.’s 56.1 ¶ 160. The Publishers

did not authorize IA to create digital copies of the Works in



                                   5
   Case 1:20-cv-04160-JGK-OTW Document 188 Filed 03/24/23 Page 6 of 47




Suit or to distribute those unauthorized ebook editions on IA’s

Website. Pls.’ 56.1 ¶ 243.

     IA does not make its ebook copies of copyright-protected

works available for mass download. Instead, it professes to

perform the traditional function of a library by lending only

limited numbers of these works at a time through “Controlled

Digital Lending,” or “CDL.” Def.’s 56.1 ¶ 11. CDL’s central

tenet, according to a September 2018 Statement and White Paper by

a group of librarians, is that an entity that owns a physical

book can scan that book and “circulate [the] digitized title in

place of [the] physical one in a controlled manner.” Pls.’

56.1 ¶ 436. CDL’s most critical component is a one-to-one “owned

to loaned ratio.” Id. Thus, a library or organization that

practices CDL will seek to “only loan simultaneously the number

of copies that it has legitimately acquired.” Id. “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.” Id. According to IA, CDL is

especially helpful for patrons who live far from a brick-and-

mortar library, patrons seeking a book not available from their

local library, patrons with disabilities that make it difficult

                                   6
    Case 1:20-cv-04160-JGK-OTW Document 188 Filed 03/24/23 Page 7 of 47




to hold or read print books, and patrons who want brief or

spontaneous access to books and for whom it would not be worth a

trip to a brick-and-mortar library. Def.’s 56.1 ¶¶ 55-56.

     Under IA’s implementation of CDL, two factors determine the

number of digital copies of a book that can be borrowed at any

time from IA’s Website. Id. ¶ 50. First, IA makes available one

digital copy for each non-circulating print book it keeps in

storage. Id. ¶ 51. Second, IA partners with libraries to

“contribute” the number of their print copies of the book toward

the number of lendable copies on IA’s Website. Id. ¶ 52. Even if

a partner library has multiple copies of a book, IA counts only

one additional copy per library. Id. For example, if IA owns one

non-circulating print copy of Laura Ingalls Wilder’s Little

House on the Prairie (1932), and three partner libraries each

contribute a copy of the book, IA would lend its digital copy of

Little House on the Prairie to up to four patrons at a time.

Id. ¶ 53. 2




     2 IA, which also has scanning agreements with libraries, will only
lend ebooks scanned from print copies owned by IA or the Open Library.
Pls.’ 56.1 ¶¶ 293-294; Def.’s 56.1 ¶ 36. IA’s policy is also not to lend
books published within the previous five years, as a “belt-and-suspenders
accommodation to publishers.” Def.’s 56.1 ¶¶ 37-38. As a result of “human
error,” however, two Works in Suit published in 2019 were made available
for digital lending. Id. ¶ 49. Soon after IA realized the error, the titles
were removed. Id.
                                     7
   Case 1:20-cv-04160-JGK-OTW Document 188 Filed 03/24/23 Page 8 of 47




     Around 2018, IA began expanding significantly its lending

capacity of copyright-protected works through the “Open

Libraries” project. Pls.’ 56.1 ¶ 355. Libraries now can “pool[]

their physical collections” with IA “in order to make more

lendable copies of digital books available to their users and the

world.” Id. ¶ 363. To participate, a Partner Library sends its

catalogue to IA to run an “overlap analysis” that compares ISBN

numbers for the Partner Library’s physical holdings with IA’s

digital holdings. Id. ¶ 365. Whenever a book in the Partner

Library’s catalogue matches an ebook on IA’s Website, IA

increases by one the number of concurrent checkouts of that book

allowed on the Website. Id. ¶ 367. As of late 2021, 62 Partner

Libraries, including 13 public libraries, had contributed books

through IA’s overlap analysis. Id. ¶ 392. IA encourages Partner

Libraries to populate their websites with links to IA’s Website.

Id. ¶¶ 393-396.

     Anyone can become a patron of IA, and borrow up to ten

ebooks at a time for up to fourteen days each, by submitting a

valid email address. Def.’s 56.1 ¶¶ 25-26. IA never charges

patrons fees for any service, including borrowing books.

Id. ¶ 25. The Website has titles in popular categories, including

Romance, Thrillers, “Books we Love,” and “Trending Books.” Pls.’

56.1 ¶¶ 514-516. Patrons can read books they have checked out on

                                   8
   Case 1:20-cv-04160-JGK-OTW Document 188 Filed 03/24/23 Page 9 of 47




IA’s BookReader web browser platform, or they can download a

“High Quality” encrypted PDF or ePub version of the ebook. 3 Id. ¶¶

207-209, 277; Def.’s 56.1 ¶¶ 32, 34. IA secures its downloadable

versions with software that prevents the patron from copying,

accessing, or distributing the book after the loan period. Def.’s

56.1 ¶ 34. The BookReader application also has a “Read Aloud”

feature that converts the text to audio and plays it aloud. Pls.’

56.1 ¶ 276. After a book is checked out, a “Purchase at Better

World Books” button appears at the top of the browser window.

Id. ¶ 346. This button links to BWB’s website, where patrons can

buy a used print copy of the book. Id. ¶ 347. BWB pays IA

whenever someone buys a book after using the “Purchase at Better

World Books” link. Id. IA’s Website also includes a link to

“Donate” to IA. Id. ¶ 348.

     In March 2020, the Covid-19 pandemic closed libraries

nationwide and, by IA’s estimation, took 650 million print books

out of circulation. Def.’s 56.1 ¶ 70. Judging itself “uniquely

positioned to be able to address this problem quickly and

efficiently,” on March 24, 2020, IA launched what it called the

National Emergency Library (“NEL”), intending it to “run through




     3   PDF and ePub are file formats.
                                      9
   Case 1:20-cv-04160-JGK-OTW Document 188 Filed 03/24/23 Page 10 of 47




June 30, 2020, or the end of the US national emergency, whichever

is later.” Id. ¶¶ 72, 74. During the NEL, IA lifted the technical

controls enforcing its one-to-one owned-to-loaned ratio and

allowed up to ten thousand patrons at a time to borrow each ebook

on the Website. Pl.’s 56.1 ¶¶ 542-543, 547. IA ended the NEL on

June 16, 2020, shortly after this action was filed, and returned

to its “traditional controlled digital lending,” which remains in

effect. Id. ¶ 571; Def.’s 56.1 ¶ 96.

     In the two years after the NEL, IA’s user base increased

from 2.6 million to about 6 million. Pls.’ 56.1 ¶¶ 248, 250. As

of 2022, IA hosts about 70,000 daily ebook “borrows.” Id. ¶ 249.

                                  B.
     The Publishers filed this action on June 1, 2020, alleging

that IA infringed their copyrights in the 127 Works in Suit.

Compl. ¶ 2. The Works in Suit are a range of published fiction

and non-fiction works, including William Golding’s Lord of the

Flies (1954), Toni Morrison’s The Bluest Eye (1970), Zora Neale

Hurston’s Their Eyes Were Watching God (1937), young adult novels

by Daniel Handler (pen name Lemony Snicket), and Patrick

Lencioni’s best-selling management books. Pls.’ 56.1 ¶ 199; see

also ECF No. 1, Ex. A (listing the Works in Suit). The author of

each Work in Suit assigned to one of the Publishers the exclusive

rights to publish the Work in print and ebook form. Id. ¶ 33. All

                                   10
   Case 1:20-cv-04160-JGK-OTW Document 188 Filed 03/24/23 Page 11 of 47




the Works in Suit are available as authorized ebooks that may be

purchased by retail customers or licensed to libraries. Id.

¶ 201.

     On July 28, 2020, IA answered the Complaint, principally

asserting a defense of “fair use” with respect to its lending of

the Works in Suit through IA’s online library generally and

during the NEL specifically. Answer, ECF No. 33, at 24. After

extensive discovery, the parties now cross-move for summary

judgment on IA’s liability for copyright infringement. See ECF

Nos. 87, 97.

                                  II.

     The standard for granting summary judgment is well

established. “The Court shall grant summary judgment if the

movant shows that there is no genuine dispute as to any material

fact and the movant is entitled to judgment as a matter of law.”

Fed. R. Civ. P. 56(a); see also Celotex Corp. v. Catrett, 477

U.S. 317, 322-23 (1986). “[T]he trial court’s task at the summary

judgment motion stage of the litigation is carefully limited to

discerning whether there are any genuine issues of material fact

to be tried, not to deciding them. Its duty, in short, is

confined at this point to issue-finding; it does not extend to

issue-resolution.” Gallo v. Prudential Residential Servs., Ltd.

P’ship, 22 F.3d 1219, 1224 (2d Cir. 1994). The moving party bears

                                   11
   Case 1:20-cv-04160-JGK-OTW Document 188 Filed 03/24/23 Page 12 of 47




the initial burden of “informing the district court of the basis

of its motion” and identifying the matter that “it believes

demonstrate[s] the absence of a genuine issue of material fact.”

Celotex, 477 U.S. at 323. The substantive law governing the case

will identify those facts that are material and “[o]nly disputes

over facts that might affect the outcome of the suit under the

governing law will properly preclude the entry of summary

judgment.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248

(1986). 4

     In determining whether summary judgment is appropriate, the

Court must resolve all ambiguities and draw all reasonable

inferences against the moving party. Matsushita Elec. Indus. Co.

v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). If the moving

party meets its burden, the nonmoving party must produce evidence

in the record and “may not rely simply on conclusory statements

or on contentions that the affidavits supporting the motion are

not credible.” Ying Jing Gan v. City of New York, 996 F.2d 522,

532 (2d Cir. 1993). When there are cross motions for summary

judgment, the Court must assess each of the motions and determine




     4 Unless otherwise noted, this Opinion and Order omits all
alterations, citations, footnotes, and internal quotation marks in quoted
text.
                                    12
   Case 1:20-cv-04160-JGK-OTW Document 188 Filed 03/24/23 Page 13 of 47




whether either party is entitled to judgment as a matter of law.

Admiral Indem. Co. v. Travelers Cas. & Sur. Co. of Am., 881 F.

Supp. 2d 570, 574 (S.D.N.Y. 2012).

                                 III.

     The Constitution empowers Congress to enact copyright laws

“[t]o promote the Progress of Science and useful Arts.” U.S.

Const. art. I, § 8, cl. 8. “The Copyright Act furthers this core

purpose by granting authors a limited monopoly over (and thus the

opportunity to profit from) the dissemination of their original

works of authorship.” Authors Guild, Inc. v. HathiTrust, 755 F.3d

87, 95 (2d Cir. 2014). “The owner of a copyright has the

exclusive right to -- or to license others to -- [1] reproduce,

[2] perform publicly, [3] display publicly, [4] prepare

derivative works of, and [5] distribute copies of, his

copyrighted work.” Arista Records, LLC v. Doe 3, 604 F.3d 110,

117 (2d Cir. 2010) (citing 17 U.S.C. § 106). “To establish

copyright infringement, two elements must be proven: (1)

ownership of a valid copyright, and (2) copying of constituent

elements of the work that are original.” Williams v. Crichton, 84

F.3d 581, 587 (2d Cir. 1996). “The word ‘copying’ is shorthand

for the infringing of any of the copyright owner’s five exclusive

rights described in § 106.” Arista, 604 F.3d at 117.



                                   13
   Case 1:20-cv-04160-JGK-OTW Document 188 Filed 03/24/23 Page 14 of 47




     The Publishers have established a prima facie case of

copyright infringement. First, the Publishers hold exclusive

publishing rights in the Works in Suit pursuant to 17

U.S.C. § 106, and the Works were timely registered with the

Copyright Office. Pls.’ 56.1 ¶¶ 210-214. Second, IA copied the

entire Works in Suit without the Publishers’ permission. See

id. ¶¶ 242-245. Specifically, IA does not dispute that it

violated the Publishers’ reproduction rights, by creating copies

of the Works in Suit, 17 U.S.C. § 106(1); the Publishers’ rights

to prepare derivative works, by “recasting” the Publishers’ print

books into ebooks, id. § 106(2); the Publishers’ distribution

rights, by distributing ebook copies of the Works in Suit to IA’s

users, id. § 106(3); the Publishers’ public performance rights,

through the “read aloud” function on IA’s Website, id. § 106(4);

and the Publishers’ display rights, by showing the Works in Suit

to users through IA’s in-browser viewer, id. § 106(5). 5




     5 The Publishers also allege, and IA does not dispute, that IA
committed secondary copyright infringement by contributing to, inducing,
and vicariously causing direct infringement by users who obtained ebooks on
IA’s Website. Compl. ¶¶ 138-150; Pls.’ 56.1 ¶ 209; see also Metro-Goldwyn-
Mayer Studios Inc. v. Grokster, Ltd., 545 U.S. 913, 930 (2005) (“One
infringes contributorily by intentionally inducing or encouraging direct
infringement and infringes vicariously by profiting from direct
infringement while declining to exercise a right to stop or limit it.”).
                                    14
   Case 1:20-cv-04160-JGK-OTW Document 188 Filed 03/24/23 Page 15 of 47




     IA argues, however, that this infringement is excused by the

doctrine of fair use. This doctrine allows some unauthorized uses

of copyrighted works “to fulfill copyright’s very purpose, ‘[t]o

promote the Progress of Science and useful Arts.’” Campbell v.

Acuff-Rose Music, Inc., 510 U.S. 569, 575 (1994). While rooted in

the common law, fair use is a statutory exception to copyright

infringement. The Copyright Act of 1976 provides that “the fair

use of a copyrighted work” for “purposes such as criticism,

comment, news reporting, teaching (including multiple copies for

classroom use), scholarship, or research, is not an infringement

of copyright.” Id. § 107.

     “In determining whether the use made of a work in any

particular case is a fair use,” the Copyright Act directs courts

to consider the following factors:

          (1) the purpose and character of the use, including
          whether such use is of a commercial nature or is for
          nonprofit educational purposes;
          (2) the nature of the copyrighted work;
          (3) the amount and substantiality of the portion
          used in relation to the copyrighted work as a whole;
          and
          (4) the effect of the use upon the potential market
          for or value of the copyrighted work.
17 U.S.C. § 107.

     The four factors are not exclusive, but each must be

considered in a “case-by-case analysis,” with the results

“weighed together[] in light of the purposes of copyright.” Fox
                                15
   Case 1:20-cv-04160-JGK-OTW Document 188 Filed 03/24/23 Page 16 of 47




News Network, LLC v. TVEyes, Inc., 883 F.3d 169, 176 (2d Cir.

2018). Fair use presents a mixed question of law and fact and may

be resolved on summary judgment where, as here, the material

facts are undisputed. Harper & Row Publishers, Inc. v. Nation

Enters., 471 U.S. 539, 560 (1985). Because fair use is an

affirmative defense, the party asserting fair use bears the

burden of proof. TVEyes, 883 F.3d at 176. 6

                                   A.
     The first fair use factor addresses “the purpose and

character of the use, including whether such use is of a

commercial nature or is for nonprofit educational purposes.” 17

U.S.C. § 107(1). Courts “consider the extent to which the




     6 A separate provision of the Copyright Act gives “libraries and
archives” limited authorization to reproduce and distribute certain
copyrighted works without permission for preservation, replacement, and
research. 17 U.S.C. § 108. Section 108 does not define “library,” although
some legislative history suggests that Congress did not intend Section 108
to encompass “online digital ‘libraries’ . . . that exist only in the
virtual (rather than physical) sense.” S. Rep. No. 105-190, 62 (1998). It
is unnecessary to decide whether IA’s online library is protected under
Section 108, because IA does not justify its infringing acts under that
section. Nonetheless, the Publishers argue that the Court should not deem
IA’s conduct to be fair use under Section 107 because doing so “would
undermine the Congressional intent behind the limited exceptions” of
Section 108. Pls.’ Opp. to Def.’s Memo., ECF No. 169, at 8. This argument
wrongly entwines Sections 107 and 108. Section 108 “in [no] way affects the
right of fair use as provided by section 107.” 17 U.S.C. § 108(f)(4); cf.
HathiTrust, 755 F.3d at 94 n.4 (“[W]e do not construe § 108 as foreclosing
our analysis of the Libraries’ activities under fair use[.]”). Whether IA’s
conduct is fair use turns on an analysis of the Section 107 factors and any
other relevant factors and is not foreclosed by the existence of Section
108.
                                    16
   Case 1:20-cv-04160-JGK-OTW Document 188 Filed 03/24/23 Page 17 of 47




secondary work is ‘transformative,’ as well as whether it is

commercial.” Andy Warhol Found. for the Visual Arts, Inc. v.

Goldsmith, 11 F.4th 26, 37 (2d Cir. 2021), cert. granted, 142 S.

Ct. 1412 (2022).

                                  1.

     In this Circuit, consideration of the first factor focuses

chiefly on the degree to which the secondary use is

“transformative.” Id. A transformative use “adds something new,

with a further purpose or different character, altering the first

with new expression, meaning, or message, rather than merely

superseding the original work.” Capitol Recs., LLC v. ReDigi

Inc., 910 F.3d 649, 660 (2d Cir. 2018). A secondary use also may

be transformative if it “expands [the] utility” of the original

work. TVEyes, 883 F.3d at 176. “Although transformative use is

not absolutely necessary for a finding of fair use,

transformative works lie at the heart of the fair use doctrine,

and a use of copyrighted material that merely repackages or

republishes the original is unlikely to be deemed a fair use.”

Id. at 176-77.




                                   17
   Case 1:20-cv-04160-JGK-OTW Document 188 Filed 03/24/23 Page 18 of 47




     There is nothing transformative about IA’s copying and

unauthorized lending of the Works in Suit. 7 IA does not reproduce

the Works in Suit to provide criticism, commentary, or

information about them. See 17 U.S.C. § 107. IA’s ebooks do not

“add[] something new, with a further purpose or different

character, altering the [originals] with new expression, meaning

or message.” Campbell, 510 U.S. at 579. IA simply scans the Works

in Suit to become ebooks and lends them to users of its Website

for free. But a copyright holder holds the “exclusive[] right” to

prepare, display, and distribute “derivative works based upon the

copyrighted work.” 17 U.S.C. § 106. An ebook recast from a print

book is a paradigmatic example of a derivative work. Authors

Guild v. Google, Inc., 804 F.3d 202, 215 (2d Cir. 2015) (”Google

Books”) (citing 17 U.S.C. § 101). And although the changes

involved in preparing a derivative work “can be described as

transformations, they do not involve the kind of transformative

purpose that favors a fair use finding.” Id.; see also Penguin

Grp. (USA) v. Am. Buddha, No. 13-cv-2017, 2015 WL 11170727, at




     7 The Publishers do not challenge certain uses IA makes of the Works
in Suit, including “indexing them for the purpose of searching, displaying
short excerpts in response to searches and citations, and supporting
research in text and data mining.” Def.’s Memo., ECF No. 106, at 16-17. The
Publishers limit their claims to IA’s digital lending of entire ebook
versions of the Works in Suit.
                                    18
   Case 1:20-cv-04160-JGK-OTW Document 188 Filed 03/24/23 Page 19 of 47




*2-4 (D. Ariz. May 11, 2015) (service that made complete copies

of copyrighted print works and published them online was not

transformative because republication did “not imbue the Works

with new expression or meaning”). 8

     The Court of Appeals for the Second Circuit previewed as

much in HathiTrust and Google Books, cases that “test[ed] the

boundaries of fair use.” Google Books, 804 F.3d at 206. The

defendant in HathiTrust scanned whole copies of millions of

books, including those protected by valid copyrights, to create a

database on which the general public could search for particular

terms across the scanned works. 755 F.3d at 91. The creation of

this “full-text searchable database [was] a quintessentially

transformative use,” the court held, because “the result of a

word search is different in purpose, character, expression,

meaning, and message from the page (and the book) from which it




     8 Other cases consistently have held that the first fair use factor
weighs against infringers who do nothing more than “change[] the format” of
a preexisting work, as IA does here. Infinity Broad. Corp. v. Kirkwood, 150
F.3d 104, 108 n.2 (2d Cir. 1998); accord Disney Enters. v. VidAngel, 869
F.3d 848, 862 (9th Cir. 2017) (explaining that courts “unanimously reject
the view that “space-shifting” is fair use under § 107” and holding that it
was not fair use to “make[] illegal copies of pre-selected movies [on
discs] and then sell[] streams . . . . in a different format than that in
which they were bought”); UMG Recordings, Inc. v. MP3.com, Inc., 92 F.
Supp. 2d 349, 350-52 (S.D.N.Y. 2000) (service that “simply repackage[d] []
recordings to facilitate their transmission through another medium” was not
transformative). These cases further support the conclusion that IA’s use
of the Works in Suit is not transformative.
                                    19
   Case 1:20-cv-04160-JGK-OTW Document 188 Filed 03/24/23 Page 20 of 47




is drawn.” Id. at 97. Importantly, the database did not “allow

users to view any portion of the books they [were] searching” and

therefore, unlike IA’s Website, “d[id] not add into circulation

any new, human-readable copies of any books” or “merely repackage

or republish the originals.” Id.

     Google Books similarly found transformative use in Google’s

scanning of copyrighted books to create a database that included

a “snippet view” search function that allowed readers to view a

few lines of text containing searched-for terms. 804 F.3d at 208.

The snippet view showed the searcher “just enough context

surrounding the searched term” to help the searcher evaluate

whether the book fell within the scope of the searcher’s interest

“without revealing so much as to threaten the author’s copyright

interests.” Id. at 208, 216. But the Court of Appeals cautioned

that “[i]f Plaintiffs’ claim were based on Google’s converting

their books into a digitized form and making that digitized

version accessible to the public,” precisely what the Publishers

allege in this case, the “claim [for copyright infringement]

would be strong.” Id. at 225. If HathiTrust and Google Books

demarcated the boundaries of fair use, this case shows what

conduct remains squarely beyond fair use.

     Asked at oral argument on the current motions for its best

authority on the first fair use factor, IA directed the Court to

                                   20
   Case 1:20-cv-04160-JGK-OTW Document 188 Filed 03/24/23 Page 21 of 47




a second holding in HathiTrust: that fair use allowed the

defendant to provide “print-disabled patrons with versions of all

the works contained in its digital archive in formats accessible

to them.” 755 F.3d at 101. But HathiTrust’s endorsement of this

distribution of complete ebooks was carefully limited to print-

disabled readers. See id. at 102 (relying on the Supreme Court’s

and Congress’ endorsement of “[m]aking the copy of a copyrighted

work for the convenience of a blind person” as an example of fair

use); see also 17 U.S.C. § 121 (Limitations on exclusive rights:

Reproductions for blind or other people with disabilities).

HathiTrust reiterated that outside this context, when a defendant

“recasts copyrighted works into new formats,” it appears to

“creat[e] derivative works over which the author ordinarily

maintains control.” 755 F.3d at 101. IA’s ebooks are available to

the general public, not only to the print-disabled. HathiTrust’s

second holding therefore does not begin to support IA’s copying

and distribution of the Works in Suit.

     The principal argument IA raised in its papers was that it

expands the “utility” of the Works in Suit. See TVEyes, 883 F.3d

at 176. By scanning print books and lending them one at a time

over the Internet while retaining a copy of the print originals,

IA claims that it performs the transformative function of making

the delivery of library books more efficient and convenient.

                                   21
   Case 1:20-cv-04160-JGK-OTW Document 188 Filed 03/24/23 Page 22 of 47




     But IA distorts the way courts have treated utility-

expanding transformative uses. IA does not expand the utility of

the Works in Suit by “provid[ing] information about” them.

ReDigi, 910 F.3d at 661. Creating a full-text searchable database

“in a manner that [does] not allow users to read the texts,” as

in HathiTrust, is an example of such a utility-expanding

transformative use. Id. The same is true for copying protected

work into a database to detect plagiarism, see A.V. ex rel.

Vanderhye v. iParadigms, LLC, 562 F.3d 630, 639 (4th Cir. 2009),

and displaying tiny, low-resolution “thumbnail” art reproductions

that link to the websites containing the originals, see Perfect

10, Inc. v. Amazon.com, Inc., 508 F.3d 1146, 1165 (9th Cir.

2007); Kelly v. Arriba Soft Corp., 336 F.3d 811, 818-19 (9th Cir.

2003). Far from providing information about the Works in Suit,

IA’s ebooks merely replace those authorized by the Publishers.

     Nor does IA expand the utility of the Works in Suit in the

other way recognized in this Circuit: by using technology to

“improv[e] the efficiency of delivering content” to “one entitled

to receive the content” in a way that does not “unreasonably

encroach[] on the commercial entitlements of the rights holder.”

ReDigi, 910 F.3d at 661 (citing Sony Corp. of Am. v. Universal

City Studios, Inc., 464 U.S. 417 (1984)); see also TVEyes, 883

F.3d at 177. IA relies heavily on Sony. Sony was accused of

                                   22
      Case 1:20-cv-04160-JGK-OTW Document 188 Filed 03/24/23 Page 23 of 47




contributory copyright infringement based on its sale of Betamax

machines to customers who could then copy programs to be viewed

at a later time even though the customers could have viewed the

programs for free when they were broadcast. 464 U.S. at 421, 448-

55. The Supreme Court held that customers who used the Betamax

machines to “time-shift” satisfied the first fair use factor,

because “time-shifting for private home use” was a

“noncommercial, nonprofit activity” and the Betamax machine

“merely enable[d] a viewer to see such a work which he had been

invited to witness in its entirety free of charge.” Id. at 449.

IA argues that its digital lending is “at least as transformative

as the use at issue in Sony,” because IA and its Partner

Libraries already paid for print copies of the Works in Suit and

because a patron who digitally borrows one of IA’s ebooks is “the

one person in the world who is then borrowing that

particular . . . library book.” Def.’s Memo., ECF No. 106, at 17-

18.

       But Sony is plainly inapposite. IA is not comparable to the

parties in Sony -- either to Sony, the alleged contributory

copyright infringer, or to the home viewers who used the Betamax

machine for the noncommercial, nonprofit activity of watching

television programs at home. Unlike Sony, which only sold the

machines, IA scans a massive number of copies of books and makes

                                      23
   Case 1:20-cv-04160-JGK-OTW Document 188 Filed 03/24/23 Page 24 of 47




them available to patrons rather than purchasing ebook licenses

from the Publishers. IA is also unlike the home viewers in Sony,

who engaged in the “noncommercial, nonprofit activity” of viewing

at a more convenient time television programs that they had the

right to view for free at the time they were originally

broadcast. 464 U.S. at 449. The home viewers were not accused of

making their television programs available to the general public.

Although IA has the right to lend print books it lawfully

acquired, it does not have the right to scan those books and lend

the digital copies en masse. To hold otherwise would be to ignore

the teaching of the Court of Appeals for the Second Circuit in

Google Books that there would be a “strong” claim for copyright

infringement if Google had distributed digitized copies of

complete books. 804 F.3d at 225; see also A&M Recs., Inc. v.

Napster, Inc., 239 F.3d 1004, 1019 (9th Cir. 2001) (finding Sony

to be “inapposite” because its time shifting did not “involve

distribution of the copyrighted material to the general public”). 9




      9 TVEyes, another case involving transformative use in a utility-

expanding technology, helps IA even less than Sony does. The defendant in
that case copied all television programming in the United States, as well
as its closed-captioning text, into a database, then offered a commercial
subscription service that allowed business and professional clients to
search the transcripts and watch up to ten minutes of selected video
segments. 883 F.3d at 175. The court found the defendant’s secondary use
“at least somewhat transformative” because “it enable[d] nearly instant
access to a subset of material -- and to information about the material --
that would otherwise be irretrievable, or else retrievable only through
                                    24
   Case 1:20-cv-04160-JGK-OTW Document 188 Filed 03/24/23 Page 25 of 47




     Finally, IA argues that its digital lending is

transformative because it “facilitates new and expanding

interactions between library books and the web.” Def.’s Memo. at

18. For example, “writers of Wikipedia articles” can “borrow

books from the Internet Archive’s collection, and then link from

their article to a particular page” on IA’s Website, and

librarians can “curate, and make available online, collections of

banned books.” Id.; see also Def.’s 56.1 ¶¶ 60-65. But these

purported uses are not transformative. “[A] use does not become

transformative by making an invaluable contribution to the

progress of science and cultivation of the arts.” HathiTrust, 755

F.3d at 96. Instead, “a transformative work is one that serves a

new and different function from the original work and is not a

substitute for it.” Id. IA offers no transformative use of the




prohibitively inconvenient or inefficient means.” Id. at 177. IA
appropriately does not analogize its library to the service in TVEyes: The
court ultimately held that any modest transformative uses were easily
outweighed by the harm to the rights holders’ market under the fourth fair
use factor. Id. at 180-81. By providing Fox’s copyrighted programming to
its clients “without payment to Fox, TVEyes . . . usurped a market that
properly belong[ed] to the copyright-holder.” Id. at 180. As discussed
below, the same is true here. Any “efficiency” IA offers by giving users
instant, unauthorized access to the Works in Suit is easily outweighed by
the harm that this access inflicts on the Publishers’ commercial
entitlements as the copyright holders to market the ebooks that IA produces
and provides.
                                    25
   Case 1:20-cv-04160-JGK-OTW Document 188 Filed 03/24/23 Page 26 of 47




Works in Suit, which strongly suggests that the first fair use

factor favors the Publishers.

                                  2.

     The first factor also directs courts to consider whether the

secondary use “is of a commercial nature or is for nonprofit

educational purposes.” 17 U.S.C. § 107(1).

     IA argues that its library is “wholly noncommercial” because

IA is a non-profit organization that does not charge patrons to

borrow books and because private reading is noncommercial in

nature. Def.’s Memo. at 16. However, IA’s non-profit status and

decision not to charge patrons are not dispositive. See Weissmann

v. Freeman, 868 F.3d 1313, 1324 (2d Cir. 1989) (“The absence of a

dollars and cents profit does not inevitably lead to a finding of

fair use.”). “The crux of the profit/nonprofit distinction is not

whether the sole motive of the use is monetary gain but whether

the user stands to profit from exploitation of the copyrighted

material without paying the customary price.” Harper & Row, 471

U.S. at 562.

     IA exploits the Works in Suit without paying the customary

price. IA uses its Website to attract new members, solicit

donations, and bolster its standing in the library community. See

Pls.’ 56.1 ¶¶ 379-388. Better World Books also pays IA whenever a

patron buys a used book from BWB after clicking on the “Purchase

                                   26
   Case 1:20-cv-04160-JGK-OTW Document 188 Filed 03/24/23 Page 27 of 47




at Better World Books” button that appears on the top of webpages

for ebooks on the Website. Id. ¶¶ 340, 346-347; see also

id. ¶ 349 (testimony of IA’s Director of Finance that “every

single page of the Archive is monetized”). IA receives these

benefits as a direct result of offering the Publishers’ books in

ebook form without obtaining a license. Although it does not make

a monetary profit, IA still gains “an advantage or benefit from

its distribution and use of” the Works in Suit “without having to

account to the copyright holder[s],” the Publishers. Worldwide

Church of God v. Phila. Church of God, Inc., 227 F.3d 1110, 1118

(9th Cir. 2000). The commercial-noncommercial distinction

therefore favors the Publishers. See also, e.g., Weissmann, 868

F.2d at 1324 (finding commercial use where professor’s verbatim

copying of academic work could allow him to “profit” by gaining

authorship credit and recognition among his peers); Soc’y of Holy

Transfiguration Monastery, Inc. v. Gregory, 689 F.3d 29, 61 (1st

Cir. 2012) (church official’s posting of religious texts on

website was “commercial” because he “benefitted by being able to

provide, free of cost, the core text of the [copyrighted] Works

to members of [his] faith, and by standing to gain at least some

recognition within [his] religious community for providing

electronic access”); Am. Buddha, 2015 WL 11170727, at *4 (finding

commercial use where online library solicited donations and stood

                                   27
   Case 1:20-cv-04160-JGK-OTW Document 188 Filed 03/24/23 Page 28 of 47




to gain recognition and financial support by posting copyrighted

books).

     It is “largely irrelevant” that an IA patron’s private

reading of an ebook provided by IA is noncommercial. See De

Fontbrune v. Wofsy, 39 F.4th 1214, 1224 (9th Cir. 2022); see also

Princeton Univ. Press v. Michigan Document Servs., Inc., 99 F.3d

1381, 1386 (6th Cir. 1996) (rejecting fair use defense where

college-town copy shop copied portions of books and sold them to

students in “coursepacks” intended for educational use). What

matters is whether IA profited from copying the Works. And

although the “commercial nature of a secondary use is of

decreased importance when the use is sufficiently transformative

such that the primary author should not reasonably expect to be

compensated,” Andy Warhol Found., 11 F.4th at 44, this is far

from that situation. The Publishers reasonably expect to be

compensated for the reproduction of their copyrighted works, and

IA stands to profit from its non-transformative exploitation of

the Works in Suit. The commercial-noncommercial distinction, like

the transformativeness inquiry, therefore counsels against a

finding of fair use.

                                  3.

     IA makes a final argument that the first factor favors fair

use because, according to IA, by reproducing and distributing

                                   28
   Case 1:20-cv-04160-JGK-OTW Document 188 Filed 03/24/23 Page 29 of 47




only ebook editions of print books that were lawfully acquired,

IA furthers the goals of copyright’s “first sale” doctrine. This

argument is without merit.

     A “common-law doctrine with an impeccable historic

pedigree,” Kirtsaeng v. John Wiley & Sons, Inc., 568 U.S. 519,

538 (2013), the first sale doctrine is codified at 17

U.S.C. § 109(a). 10 The doctrine provides that a “rights holder’s

control over the distribution of any particular copy or

phonorecord that was lawfully made effectively terminates when

that copy or phonorecord is distributed to its first recipient.”

ReDigi, 910 F.3d at 655. Thus, “the lawful purchaser of a copy of

a book is free to resell, lend, give, or otherwise transfer that

copy without violating the copyright holder’s exclusive right of

distribution,” and “[t]he copy so resold or re-transferred may be

re-transferred again and again without violating the exclusive

distribution right.” Id.

     Section 109(a) does not excuse IA’s unauthorized

reproduction of the Works in Suit. The first sale doctrine limits

a copyright owner’s distribution right under § 106(3), but




     10 “Notwithstanding the provisions of section 106(3), 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.” 17 U.S.C. § 109(a).
                                    29
   Case 1:20-cv-04160-JGK-OTW Document 188 Filed 03/24/23 Page 30 of 47




Section 109(a) “says nothing about the rights holder’s control

under § 106(1) over reproduction of a copy or phonorecord.”

ReDigi, 910 F.3d at 656. Although Section 109 entitles IA and its

Partner Libraries to resell or lend their lawfully acquired print

copies of the Works in Suit, “unauthorized reproduction,” which

is at the heart of IA’s online library, “is not protected” by

§ 109(a). Id. at 659.

     Acknowledging this, IA refashions a first sale argument

within its fair use analysis. IA argues that although “Section

109 does not expressly encompass the reproduction right, neither

does it abrogate the common-law principle favoring the ability of

the owner of a copy to freely give, sell, or lend it.” Def.’s

Memo. at 19-20. But IA points to no case authorizing the first

recipient of a book to reproduce the entire book without

permission, as IA did to the Works in Suit. IA cites only Doan v.

American Book Co., 105 F. 772 (7th Cir. 1901), for the

proposition that the “common-law doctrine of exhaustion can

encompass reproduction of copyrighted material.” Def.’s Memo. at

21. That century-old case merely held that the owner of a

schoolbook could reproduce new copies of the book’s cover,

because the right of ownership “includes the right to maintain

the book as nearly as possible in its original condition, so far,

at least, as the cover and binding of the book is concerned.” 105

                                   30
   Case 1:20-cv-04160-JGK-OTW Document 188 Filed 03/24/23 Page 31 of 47




F. at 777. By its terms, Doan does little to help IA, which seeks

permission to do far more than replace for personal use the cover

and binding of print books it already owns.

     Moreover, the Court of Appeals has cautioned courts against

relying on “the purported breadth of the first sale doctrine as

originally articulated by the courts” in older cases, given

Section 109(a)’s narrower reach. See ReDigi, 910 F.3d at 664

(citing Bureau of Nat’l Literature v. Sells, 211 F. 379, 381-82

(W.D. Wash. 1914), which found no infringement, in light of the

first sale doctrine, where reseller re-bound used books and held

them out as new books). In ReDigi, the Court of Appeals plainly

held that the first sale doctrine has now been codified in

Section 109(a), that it does not include a right of reproduction,

and that any broader scope of the first sale doctrine should be

sought from Congress, not the courts. Id.

     Nor does IA’s promise not to lend simultaneously its

lawfully acquired print copies and its unauthorized reproductions

help its case. As an initial matter, IA has not kept its promise.

Although the Open Library’s print copies of the Works in Suit are

non-circulating, IA concedes that it has no way of verifying

whether Partner Libraries remove their physical copies from

circulation after partnering with IA. Pls.’ 56.1 ¶¶ 495-496. To

the contrary, IA knows that some Partner Libraries do not remove

                                   31
      Case 1:20-cv-04160-JGK-OTW Document 188 Filed 03/24/23 Page 32 of 47




the physical books from their shelves, and even if a Partner

Library puts a physical book into a non-circulating reference

collection, it could be read in the library while the ebook

equivalent is checked out. Id. ¶¶ 494, 497. IA also does not

inform Partner Libraries when an ebook in its collection is

checked out, and Partner Libraries do not tell IA when their

physical copies are circulating. Id. ¶ 498. IA admits it has

never taken action against a Partner Library that did not

suppress circulation properly. Id. ¶ 499.

       Even full enforcement of a one-to-one owned-to-loaned ratio,

however, would not excuse IA’s reproduction of the Works in Suit.

ReDigi is instructive. The defendant in that case created a

computer program that allowed users to resell lawfully acquired

digital music files. 910 F.3d at 652-54. ReDigi sought to ensure

that its files never existed in more than one place at once by

deleting the original file from the seller’s computer once a copy

was made on ReDigi’s servers. See id. at 656. Echoing CDL’s core

principle -- that a physical book should not be in use at the

same time as its digital copy -- ReDigi argued that, under the

first sale doctrine, it did not unlawfully reproduce new copies

but merely facilitated the transfer of copies lawfully acquired.

Id.



                                      32
   Case 1:20-cv-04160-JGK-OTW Document 188 Filed 03/24/23 Page 33 of 47




     The Court of Appeals rejected this argument. It explained

that the measures ReDigi took to avoid increasing the total

number of copies in existence did “not rebut or nullify the fact

that” ReDigi’s program unquestionably created new copies of each

work and involved unauthorized reproduction. Id. at 657. As the

court explained, in language that applies equally to IA: “We are

not free to disregard the terms of [Section 109(a)] merely

because the entity performing an unauthorized reproduction makes

efforts to nullify its consequences by the counterbalancing”

removal from circulation of the preexisting copies. Id. at 658.

     IA accepts that ReDigi forecloses any argument it might have

under Section 109(a). But in pressing its first sale argument

under the guise of fair use, IA ignores that ReDigi also rejected

the fair use defense. Id. at 660-64. The ReDigi software was not

transformative because the company “ma[d]e no change in the

copyrighted work[s],” but merely “provide[d] a market for the

resale of digital music files, which resales compete[d] with

sales of the same recorded music by the rights holder.” Id. at

661. The same is true of IA’s online library. IA in no way

transforms the use of the Works in Suit. It merely creates

derivative ebooks that, when lent to the public, compete with

those authorized by the Publishers. The promise of a one-to-one



                                   33
   Case 1:20-cv-04160-JGK-OTW Document 188 Filed 03/24/23 Page 34 of 47




“owned-to-loaned ratio,” whether cast under Section 109 or fair

use, is no defense.

                                   ***

     The crux of IA’s first factor argument is that an

organization has the right under fair use to make whatever copies

of its print books are necessary to facilitate digital lending of

that book, so long as only one patron at a time can borrow the

book for each copy that has been bought and paid for. See Oral

Arg. Tr. 31:10-15. But there is no such right, which risks

eviscerating the rights of authors and publishers to profit from

the creation and dissemination of derivatives of their protected

works. See 17 U.S.C. §§ 106(1), (2). IA’s wholesale copying and

unauthorized lending of digital copies of the Publishers’ print

books does not transform the use of the books, and IA profits

from exploiting the copyrighted material without paying the

customary price. The first fair use factor strongly favors the

Publishers.

                                  B.
     The second fair use factor directs courts to consider “the

nature of the copyrighted work.” Id. § 107(2). “[S]ome works are

closer to the core of intended copyright protection than others,”

and “fair use is more difficult to establish when the former

works are copied.” Campbell, 510 U.S. at 586. Two distinctions

                                   34
   Case 1:20-cv-04160-JGK-OTW Document 188 Filed 03/24/23 Page 35 of 47




are relevant to this analysis: (1) “whether the work is

expressive or creative, such as a work of fiction, or more

factual, with a greater leeway being allowed to a claim of fair

use where the work is factual or informational,” and (2) “whether

the work is published or unpublished, with the scope of fair use

involving unpublished works being considerably narrower.” Blanch

v. Koons, 467 F.3d 244, 256 (2d Cir. 2006).

     The second factor favors the Publishers. “[C]reative

expression for public dissemination falls within the core of the

copyright’s protective purposes.” Campbell, 510 U.S. at 586. The

Works in Suit are published works of fiction and non-fiction. The

fiction books, as paradigmatic creative works, are close to the

core of intended copyright protection. See, e.g., Am. Buddha,

2015 WL 11170727, at *5. But the Copyright Act also values and

seeks to protect the non-fiction Works in Suit, which contain

“subjective descriptions and portraits . . . whose power lies in

the author’s individualized expression,” Harper & Row, 471 U.S.

at 563, and are “far removed from the . . . factual or

descriptive work more amenable to fair use,” MP3.com, 92 F. Supp.

2d at 351; cf. Nihon Keizai Shimbun, Inc. v. Comline Bus. Data,

Inc., 166 F.3d 65, 72-73 (2d Cir. 1999) (explaining that

“predominantly factual news articles” are “less close to the core



                                   35
   Case 1:20-cv-04160-JGK-OTW Document 188 Filed 03/24/23 Page 36 of 47




than more fictional pieces” or pieces whose “expressive elements”

are “dominant features of the works”).

     IA argues that because most of the Works in Suit were

published more than five years before IA copied them, IA has not

interfered with the authors’ “right to control the first public

appearance of [their] expression.” Def.’s Memo. at 22

(citing Harper & Row, 471 U.S. at 562). IA is correct that the

unpublished nature of a work tends to negate a defense of fair

use. Harper & Row, 471 U.S. at 554. However, “the converse is not

necessarily true; neither Harper & Row nor any principle of fair

use counsels that the publication of the copyrighted work weighs

in favor of fair use.” Dr. Seuss Enters., L.P. v. ComicMix LLC,

983 F.3d 443, 456 (9th Cir. 2020). Published works do not lose

copyright protection after five years.

     Finally, although the second factor is not “likely to help

much in separating the fair use sheep from the infringing goats”

in cases involving transformative copying, Campbell, 510 U.S. at

586, IA has not made transformative use of the Works in Suit. IA

has simply copied the Works in Suit wholesale and made the copies

available for lending. That this dispute involves original works

close to the core of copyright protection further counsels

against a finding of fair use.



                                   36
   Case 1:20-cv-04160-JGK-OTW Document 188 Filed 03/24/23 Page 37 of 47




                                  C.
     Under the third fair use factor, courts consider “the amount

and substantiality of the portion used in relation to the

copyrighted work as a whole.” 17 U.S.C. § 107(3). IA copied the

entire Works in Suit and made the copies available for lending.

Wholesale copying like this “tends to disfavor a finding of fair

use.” ReDigi, 910 F.3d at 662; see also, e.g., On Davis v. The

Gap, Inc., 246 F.3d 152, 175 (2d Cir. 2001); Am. Buddha, 2015 WL

11170727, at *5.

     It is true that copying an entire work is sometimes

necessary to make a fair use of the work. Bill Graham Archives v.

Dorling Kindersley Ltd., 448 F.3d 605, 613 (2d Cir. 2006). In

Google Books and HathiTrust, for example, it was “reasonably

necessary” for the defendants “to make use of the entirety of the

works in order to enable” the transformative uses of portions of

the underlying works. See Google Books, 804 F.3d at 221;

HathiTrust, 755 F.3d at 98. In this case, however, IA copied the

Works in Suit wholesale for no transformative purpose and created

ebooks that, as explained below, competed directly with the

licensed ebooks of the Works in Suit. IA’s wholesale copying

therefore cannot be excused, and the third factor weighs strongly

in the Publishers’ favor.




                                   37
   Case 1:20-cv-04160-JGK-OTW Document 188 Filed 03/24/23 Page 38 of 47




                                  D.
     The fourth fair use factor is “the effect of the [copying]

use upon the potential market for or value of the copyrighted

work[s].” 17 U.S.C. § 107(4). This factor focuses on whether a

secondary use “usurps the market for the [original] by offering a

competing substitute.” Andy Warhol Found., 11 F.4th at 48. “When

a secondary use competes in the rightsholder’s market as an

effective substitute for the original, it impedes the purpose of

copyright,” which is “to incentivize new creative works by

enabling their creators to profit from them.” ReDigi, 910 F.3d at

662. The fourth factor necessarily relates to the first and third

factors. The less transformative a secondary use is under the

first factor, the more “likely it will supplant the commercial

market for the original.” Id. So too, the larger the amount of

the original that is taken under the third factor, “the greater

the likelihood that the secondary work might serve as an

effectively competing substitute for the original.” Google Books,

804 F.3d at 221.

     Like the other three factors, the fourth factor strongly

favors the Publishers. “[A] copyright holder is entitled to

demand a royalty for licensing others to use its copyrighted

work,” and “the impact on potential licensing revenues is a

proper subject for consideration in assessing the fourth factor.”

                                   38
   Case 1:20-cv-04160-JGK-OTW Document 188 Filed 03/24/23 Page 39 of 47




TVEyes, 883 F.3d at 180. In this case, there is a “thriving ebook

licensing market for libraries” in which the Publishers earn a

fee whenever a library obtains one of their licensed ebooks from

an aggregator like OverDrive. Pls.’ 56.1 ¶¶ 577-578. This market

generates at least tens of millions of dollars a year for the

Publishers. Id. ¶¶ 170, 172. And IA supplants the Publishers’

place in this market. IA offers users complete ebook editions of

the Works in Suit without IA’s having paid the Publishers a fee

to license those ebooks, and it gives libraries an alternative to

buying ebook licenses from the Publishers. Indeed, IA pitches the

Open Libraries project to libraries in part as a way to help

libraries avoid paying for licenses. See Pls.’ 56.1 ¶ 383

(presentation IA gave to libraries asserting that pairing with IA

means that “You Don’t Have to Buy It Again!”); id. ¶ 382

(different presentation promising that the Open Libraries project

“ensures that a library will not have to buy the same content

over and over, simply because of a change in format”). IA thus

“brings to the marketplace a competing substitute” for library

ebook editions of the Works in Suit, “usurp[ing] a market that

properly belongs to the copyright-holder.” TVEyes, 833 F.3d at

179.

       It is equally clear that if IA’s conduct “becomes

widespread, it will adversely affect the potential market for

                                   39
   Case 1:20-cv-04160-JGK-OTW Document 188 Filed 03/24/23 Page 40 of 47




the” Works in Suit. Andy Warhol Found., 11 F.4th at 48. IA could

expand the Open Libraries project far beyond the current

contributing partners, allowing new partners to contribute many

more concurrent copies of the Works in Suit to increase the loan

count. New organizations like IA also could emerge to perform

similar functions, further diverting potential readers and

libraries from accessing authorized library ebooks from the

Publishers. This plainly risks expanded future displacement of

the Publishers’ potential revenues. See, e.g., Gregory, 689 F.3d

at 65 (“If anyone could freely access the Works, electronically

or otherwise, the [plaintiff] would have no market in which to

try and publish, disseminate, or sell its [Works].”); Am. Buddha,

2015 WL 11170727, at *6 (“[U]nrestricted and widespread conduct

of the sort engaged in by American Buddha would essentially gut

the potential market for the Works.”). 11




     11 It is no answer for IA to argue that the Publishers have provided
“no concrete evidence” of past market harm. Def.’s Memo. at 28. That is not
the Publishers’ burden. A rightsholder bears only “some initial burden of
identifying relevant markets.” Andy Warhol Found., 11 F.4th at 49; see also
id. (“[W]e have never held that the rightsholder bears the burden of
showing actual market harm. Nor would we so hold.”). In this case, the
Publishers have met their burden by identifying the thriving library ebook
licensing market, with its tens of millions of dollars in annual revenue,
as a market that IA’s copying stands to harm. See Ringgold v. Black Ent.
Television, Inc., 126 F.3d 70, 81 (2d Cir. 1997) (“Ringgold is not required
to show a decline in the number of licensing requests for the ‘Church
Picnic’ poster since the ROC episode was aired. The fourth factor will
favor her if she can show a ‘traditional, reasonable, or likely to be
developed’ market for licensing her work as set decoration.”).
                                    40
   Case 1:20-cv-04160-JGK-OTW Document 188 Filed 03/24/23 Page 41 of 47




     IA argues that it does not compete in the library ebook

market because it only offers libraries a way to “lend a copy the

library owns,” while library ebook licenses “are not tied to what

print books the library owns or what the library does with them.”

Def.’s Memo. at 30. But IA’s free library ebook model need not

mimic the Publishers’ licensing schemes in every respect to

provide a significantly competing substitute. An accused

infringer usurps an existing market “where the infringer’s target

audience and the nature of the infringing content is the same as

the original.” Cariou, 714 F.3d at 709; see also Andy Warhol

Found., 11 F.4th at 50. That is the case here. For libraries that

are entitled to partner with IA because they own print copies of

books in IA’s collection, it is patently more desirable to offer

IA’s bootleg ebooks than to pay for authorized ebook licenses. To

state the obvious, “[i]t is difficult to compete with a product




      There is also no merit to IA’s contention, raised for the first time
at argument, that “in the situation where the use is non-commercial . . .
it remains an open question where the burdens lie.” Oral Arg. Tr. At 43:17-
19. As explained above, IA’s use of the Works in Suit is commercial under
the first factor. In any event, IA unequivocally bears the burden to show a
lack of market harm. See Andy Warhol Found., 11 F.4th at 49 (collecting
cases uniformly explaining that because “[f]air use is an affirmative
defense,” the “ultimate burden of proving that the secondary use does not
compete in the relevant market is appropriately borne by the party
asserting the defense: the secondary user”).
                                    41
   Case 1:20-cv-04160-JGK-OTW Document 188 Filed 03/24/23 Page 42 of 47




offered for free.” Sony BMG Music Ent. v. Tenenbaum, 672 F. Supp.

2d 217, 231 (D. Mass. 2009).

     Equally unavailing is IA’s reliance on various metrics that

allegedly demonstrate that its online library has not harmed, or

is not likely to harm, the Publishers’ financial bottom lines.

IA’s experts observed that print sales of the Works in Suit and

general demand for library ebooks did not decrease while the

Works in Suit were available on IA’s Website; that Amazon

rankings for the Works in Suit improved when IA’s digital lending

skyrocketed (and government lockdowns were in full effect) at the

beginning of the Covid-19 pandemic; and that, despite the removal

of the Works in Suit from IA’s library in June 2020, OverDrive

checkouts of the Works in Suit did not increase. See Def.’s

56.1 ¶¶ 121-122, 138, 140-141, 150. IA attributes these outcomes

to the “discovery” effect of its book lending: Patrons decide

they enjoy the books they have borrowed through IA enough to

purchase those books and recommend them to others. See Def.’s

Memo. at 25. 12




      12 The Publishers argue that, were there a trial, they would move

under Federal Rule of Evidence 702 to exclude the entire testimony of two
of IA’s experts, as well as portions of IA’s third expert’s opinions, on
the grounds that they are based on insufficient facts and impermissibly
flawed principles and methods. Pls.’ Opp. to Def.’s Memo. at 18 n.1. It is
unnecessary to assess the reliability of IA’s expert opinions, because even
                                    42
   Case 1:20-cv-04160-JGK-OTW Document 188 Filed 03/24/23 Page 43 of 47




     But these metrics do not begin to meet IA’s burden to show a

lack of market harm. Taking them at face value, they show at best

that the presence of the Works in Suit in IA’s online library

correlated, however weakly, with positive financial indicators

for the Publishers in other areas. They do not show that IA’s

conduct caused these benefits to the Publishers. In any event, IA

cannot offset the harm it inflicts on the Publishers’ library

ebook revenues, see, e.g., Andy Warhol Found., 11 F.4th at 48;

TVEyes, 883 F.3d at 180, by pointing to other asserted benefits

to the Publishers in other markets. Nor could those asserted

benefits tip the scales in favor of fair use when the other

factors point so strongly against fair use. See, e.g., Campbell,

510 U.S. at 590 n.21 (“Even favorable evidence, without more, is

no guarantee of fairness. Judge Leval gives the example of the

film producer’s appropriation of a composer’s previously unknown

song that turns the song into a commercial success; the boon to

the song does not make the film’s simple copying fair.” (citing

Pierre Leval, Toward a Fair Use Standard, 103 Harv. L. Rev. 1105,

1124 n.84 (1990)). Ultimately, the question under the fourth

factor is whether the infringing use “pose[s] cognizable harm” in




accepting their conclusions, they do not help IA meet its burden to show a
lack of market harm in this case.
                                    43
   Case 1:20-cv-04160-JGK-OTW Document 188 Filed 03/24/23 Page 44 of 47




the relevant market, in this case the market for authorized

library ebook licenses. See Andy Warhol Found., 11 F.4th at 51.

That harm here is evident.

     It is also irrelevant to assessing market harm in this case

that IA and its Partner Libraries once purchased print copies of

all the Works in Suit. The Publishers do not price print books

with the expectation that they will be distributed in both print

and digital formats, Pls.’ 56.1 ¶ 92, and “[a]ny allegedly

positive impact of [a] defendant’s activities on [the]

plaintiffs’ prior market in no way frees [the] defendant to usurp

a further market that derives from the reproduction of the

plaintiffs’ copyrighted works.” MP3.com, 92 F. Supp. 2d at 352;

see also Infinity Broadcast, 150 F.3d at 111. The Publishers are

entitled to revenue from all formats of the Works in Suit,

regardless whether IA lawfully acquired the Works in print first.

     Finally, the Court must consider “the public benefits [IA’s]

copying will likely produce.” Andy Warhol Found., 11 F.4th at 50.

IA argues that its digital lending makes it easier for patrons

who live far from physical libraries to access books and that it

supports research, scholarship, and cultural participation by

making books widely accessible on the Internet. But these alleged

benefits cannot outweigh the market harm to the Publishers. “Any

copyright infringer may claim to benefit the public by increasing

                                   44
   Case 1:20-cv-04160-JGK-OTW Document 188 Filed 03/24/23 Page 45 of 47




public access to the copyrighted work.” Harper & Row, 471 U.S. at

569. It is clear that IA’s distribution of ebook copies of the

Works in Suit without a license deprives the Publishers of

revenues to which they are entitled as the copyright holders. See

TVEyes, 883 F.3d at 179. The fourth factor therefore strongly

favors the Publishers.

                                  E.
     Each enumerated fair use factor favors the Publishers, and

although these factors are not exclusive, IA has identified no

additional relevant considerations. At bottom, IA’s fair use

defense rests on the notion that lawfully acquiring a copyrighted

print book entitles the recipient to make an unauthorized copy

and distribute it in place of the print book, so long as it does

not simultaneously lend the print book. But no case or legal

principle supports that notion. Every authority points the other

direction. Of course, IA remains entitled to scan and distribute

the many public domain books in its collection. See Pls.’

56.1 ¶ 294. It also may use its scans of the Works in Suit, or

other works in its collection, in a manner consistent with the

uses deemed to be fair in Google Books and HathiTrust. What fair

use does not allow, however, is the mass reproduction and

distribution of complete copyrighted works in a way that does not

transform those works and that creates directly competing

                                   45
   Case 1:20-cv-04160-JGK-OTW Document 188 Filed 03/24/23 Page 46 of 47




substitutes for the originals. Because that is what IA has done

with respect to the Works in Suit, its defense of fair use fails

as a matter of law.

                                  IV.

     IA also argues that it made fair use of the Publishers’

copyrights during the National Emergency Library. The analysis

above applies even more forcefully to the NEL, during which IA

amplified its unauthorized lending of ebook versions of the Works

in Suit by lifting the one-to-one owned-to-loaned ratio. IA’s

defense of fair use with respect to the NEL therefore also fails.

                                  V.

     Finally, IA asks that statutory damages be remitted if the

Court rejects IA’s fair use defense. -
                                     See
                                       --
                                          Def.’s Memo. at 35-36.

Section 504 of the Copyright Act directs courts to remit

statutory damages where, as relevant here, the infringer is a

“nonprofit educational institution, library, or archives,” or one

of its agents or employees, and the defendant “infringed by

reproducing the work in copies” and “believed and had reasonable

grounds for believing” that its use of the work was fair use. 17

U.S.C. § 504(c)(2). At this point, IA’s statutory remittance

argument is premature. IA may renew the argument in connection

with the formation of an appropriate judgment.



                                   46
   Case 1:20-cv-04160-JGK-OTW Document 188 Filed 03/24/23 Page 47 of 47




                                CONCLUSION

     The Court has considered all of the parties' arguments. To

the extent not specifically addressed above, the arguments are

either moot or without merit. For the foregoing reasons, the

plaintiffs' motion for summary judgment is granted and the

defendants' motion for summary judgment is denied. The parties

should submit their respective proposals (or preferably a joint

proposal) for the appropriate procedure to determine the judgment

to be entered in this case. The submission or submissions should

be made within fourteen (14) days of the date of this Opinion and

Order. The Clerk is respectfully directed to close all pending

motions.

SO ORDERED.
Dated:     New York, New York
           March 24, 2023

                                            /_,/John G. keel tl
                                        United States District Judge




                                   47