“Controlled Digital Lending”: Could Canadian Universities Find Themselves Out on a Limb?

In my year end blog post looking back at significant developments for copyright and creators in 2022 and looking forward to topics that will be at the top of the agenda in 2023, I identified questions over the legality of a contrived and unproven concept, so-called “Controlled Digital Lending” (CDL), as one of the big issues likely to be clarified this year.

Back in June 2020, four major publishers (Hachette Book Group, HarperCollins Publishers, John Wiley & Sons and Penguin Random House), all members of the American Association of Publishers (AAP) filed suit against the Internet Archive for Systematic Mass Scanning and Distribution of Literary Works”. The Internet Archive (IA), an organization that brands itself as “a non-profit library of millions of free books, movies, software, music, websites, and more”, provides a number of services including archiving the internet through its “Wayback Machine”, archiving television programs and audio recordings, and digitizing documents and books, both those in the public domain and others still protected by copyright.  Although registered as a US non-profit, it was founded and still led by Brewster Kahle, a multimillionaire entrepreneur and digital “guru”.

The publishers’ lawsuit was provoked by the IA’s decision to create a self-described “National Emergency Library” in March 2020, during the peak of the COVID pandemic. The Emergency Library expanded the untested theory of Controlled Digital Lending (CDL), championed by the Archive, by eliminating even the pretence of limits on the numbers of digital copies of books that could be borrowed, in effect eliminating all wait times. As I noted in an earlier blog post (“Are Authors the Enemies of Authors and Publishers?”), COVID was the pretext used by the Archive for pushing the envelope on CDL. Under the IA’s interpretation of CDL, a digital scan of a book can be substituted for the original work by a lending library as long as the library holds the requisite number of physical copies. As is the case with legitimate lending of licensed e-books, there is no need for the borrower to physically collect the work; it is all done digitally including terminating the loan once the book is due.

The issue of scanning a book without authorization in order to provide a substitutable digital version is clearly at odds with the law, especially when it comes to US case law which has been very clear and consistent on this point. As authors and publishers point out, it is a form of copying that destroys the licensing market for e-books. Despite this obvious fact, this has not stopped advocates, like the Internet Archive, from claiming that the practice is somehow fair use under US law. Until COVID hit, the Archive purported to follow what it characterized as normal lending rules by allowing only as many digital copies into circulation as it physically held in its inventory, with a digital copy having to be “returned” before a new copy could be loaned out. However, in reality it exercised no actual controls, simply asserting that it was following the correct “own to loan” ratio. Then, with the arrival of COVID, the Archive dropped all pretence of controls and announced that it was suspending the normal practice of maintaining a wait list and would allow unlimited digital copies to go into circulation.

While a few initially misguidedly lauded the Archive for taking measures to assist consumers who were self-isolating because of the pandemic, it didn’t take long for authors and publishers to push back, pointing out that this unilateral move was a case of giving away someone else’s property without consultation or permission. Although the possibility of litigation had been simmering for some time, the IA’s declaration of the “National Emergency Library” was the precipitating event leading to the filing of suit by the publishers. The IA then ended the Emergency Library program prematurely and Kahle appealed to the publishers to settle the dispute in the boardroom rather than the courtroom. The hypocrisy of this appeal was not lost on authors and publishers who had been trying for years to engage the Archive in meaningful discussions. Both sides moved for summary judgment, and those motions are currently pending in front of the judge.

So, how does this all affect Canadian institutions? Some Canadian universities and research libraries are avid devotees of CDL and have worked closely with the Internet Archive. The IA established a Canadian branch, Internet Archive Canada, in 2016. In fact, when the National Emergency Library was announced in 2020, among the major sources of digital books being offered for unlimited lending was the collection of Trent University, in Peterborough ON. Another keen Canadian university proponent of CDL is the University of Alberta.

Using an invented doctrine such as CDL to skirt both authors’ rights and the commercial market is clearly seductive to many libraries, but it ignores the basic rights of the authors and publishers who created the works. Unauthorized CDL copies are not “free goods” to expand the reach of libraries, or to reduce wear and tear on books, or to cut storage and handling costs, but this is what some very reputable institutions seem to think. For example, when it wanted to downsize its physical collection, the National Library of New Zealand turned to the Internet Archive to digitize its holdings. The institution decided it would simply turn over large parts of its collection to the Archive to be digitized—and then seemed somewhat nonplussed when this scheme was attacked by New Zealand writers and publishers whose copyrighted works were being “volunteered” for digital copying without any reference to them as rights-holders. After initially stubbornly insisting that what it was doing was good public policy, the National Library finally backed down in the face of mounting political opposition.

Like most things that sound almost too good to be true, they usually are–and CDL is no exception. In this case, there is a major “inconvenient truth”. To engage in CDL, in many instances a library has to make an unauthorized copy of a copyrighted work. Of course, they could license a digital version (e-book) from a publisher if one is available, but that would involve additional payment and the need for licence renewal after a specified number of uses. (Books wear out and get replaced; digital copies don’t).

As for the unauthorized copy, CDL advocates argue this is a case of technological neutrality—doing the same thing (lending a book) by a new technological means, akin to format shifting—but format shifting is carefully defined under the law. CDL proponents also claim that the making of the (unauthorized) copy is a fair use (in the US context) or a fair dealing (for research, private study, or education purposes) under Canadian law. However, another inconvenient truth is that the unauthorized copy often substitutes for the normal exploitation of the work in the market and constitutes unauthorized distribution. Even if there is not currently a licensed digital version of the work available in the market, the making and distribution of an unauthorized copy undermines any economic incentive to produce a legitimate digital version for licensing. In short, there are some fundamental questions regarding the legality of CDL. The Hachette v Internet Archive case in the US is surely going to provide some clarity on this question in terms of US law.

Meanwhile, Canadian institutions and libraries that have embraced CDL should be wary. Its proponents in Canada argue that it is “likely legal” and if not, it should be[i]. They argue that since there is no language in the Copyright Act that specifically prohibits CDL, it must be legal. Except we all know it doesn’t work that way. The courts play an important role in interpreting the application of legislation when there is uncertainty. Depending on how the Hachette case turns out in the US (and it will surely be appealed no matter which party prevails), there are potential knock-on effects for Canada and other countries, with attendant risks for libraries that have embraced the IA’s version of CDL. (One relevant point is whether the Internet Archive even qualifies as a library. It earns over US$30 million a year from its digitization services).

Genuine libraries will be watching. There is already a provision in Canada’s Copyright Act (Section 30.1.1) allowing Libraries, Museums and Archives to digitally copy copyright protected published and unpublished works in order to maintain and manage their collections. Examples include copies for insurance purposes, preservation of a rare or unpublished work that is deteriorating or damaged or making a copy in a new format if the original format is obsolete. However, this does not authorize distribution or CDL and does not apply if “an appropriate copy is commercially available in a medium and of a quality that is appropriate…”.

Libraries engaged in digital lending can mitigate their risk by licensing legitimate digital works (e-books) when they are available, by focusing on works already in the public domain or by obtaining permission to make and distribute digital copies of works still under copyright and–while still potentially carrying some risk–lending only out of print titles, especially those long out of print. It worth noting that the US publishers are not suing the Internet Archive for its digitization project or for all the digitized books in its collection. They are suing it for the use of 127 specific works, although the Archive reportedly has over 3 million digitized books that are in-copyright in its inventory.

Authors, publishers, libraries and readers are all part of the same ecosystem, as I wrote in an earlier blog about e-books. (“Books, e-Books, Authors, Publishers and Libraries: A Complex Relationship”). They are interdependent. Technology is changing but that interdependence has not changed. Some libraries and librarians don’t like the terms on which e-books are made available, but forcing compulsory licensing or worse, doing an end run on the licensing market by making unauthorized digital copies through the Internet Archive and then distributing them without authorization, is not the answer. At the end of the day, libraries, while playing important roles in both local communities and scholarship, are customers that support the creation of more books by participating in the legitimate marketplace. The Internet Archive has been on a crusade to break the system, and although it calls itself an open library, it is not really a library at all. However, real libraries have been courted by, and in some cases succumbed to, the blandishments and digital services of the Archive and seem to think that CDL is the solution. It is not the answer from the perspective of those who create the content, authors, those who distribute it—publishers– and anyone who values the right to earn a living through creating. As the Copyright Alliance, a US-based advocacy group representing over 2 million individual creators and over 15,000 organizations in the United States., put it;

“…While the Internet Archive masquerades as a library, it does not behave like one. Legitimate Libraries pay for the eBooks they lend, helping to support authors, publishers and the creation and dissemination of books. Internet Archive doesn’t pay authors for books – it simply takes the books, copies them and distributes them without any permission, and without compensating the authors or publishers who created the books in the first place. To be clear: this lawsuit is about stopping systematic theft. It is not about library lending.”

It was no doubt inevitable that CDL would end up before the courts, especially given the cavalier attitude of the Internet Archive toward digital copying and lending compounded by eliminating all pretence of limits through its self-described National Emergency Library. We probably won’t know the results of the court case for some time, but if the Internet Archive is found liable for copyright infringement, this will inevitably have an impact on the question of CDL’s legality elsewhere. Canadian research libraries and universities that are big users of the Internet Archive model need to think and act carefully if they don’t want to find themselves out on the end of a long and fragile limb.

© Hugh Stephens, 2023. All Rights Reserved.


[i] https://summit.sfu.ca/item/18093; see Ariel Katz and Patrick Pang, “Is Controlled Digital Lending Legally Permissible”.

This blog post has been edited and updated for clarity, including noting that the court’s decision on summary judgement is still pending.

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