Implications of the U.S. Controlled Digital Lending Decision in Canada Remain Unclear


Whether the decision against Internet Archive in the U.S. will have a chilling effect on controlled digital lending practices in Canada remains to be seen.

Earlier this year, a U.S. district court ruled that San Francisco–based non-profit Internet Archive (IA) infringed the copyright of four international publishing houses when it loaned unlicensed digital copies of books online, a practice known as controlled digital lending (CDL). CDL is based on the premise that once a library has purchased a physical book it is free to make a digital copy of the work and loan that copy, provided the original work is removed from circulation. If two digital copies are loaned, there must be two books kept out of circulation by the library, a limitation called the “owned-to-loaned” ratio. Only one user may be given access to a single digital copy at any one time, and a separate digital copy is not loaned until the first one is “returned.” For publishers and authors, CDL amounts to blatant copyright infringement leading to the destruction of e-book markets and licensing. Many libraries see the issue differently, and the Canadian Federation of Library Associations has provided its members with guidelines for pursuing CDL. Until the recent U.S. decision, the CDL theory had not been tested in court.

Several arguments have been advanced to justify CDL, even though all concerned acknowledge that it requires making a full, unauthorized copy of the work. Its proponents argue they are simply bringing library lending into the digital age, and that digital lending is an extension of the first sale or exhaustion doctrine through other means (once a book has been purchased it can be loaned or resold multiple times without recourse to the original seller). This, and the fact that CDL is claimed to be a “transformative use” (along the lines of the Google Books online index case in the U.S.), constituted the essence of the fair-use defence presented by the Internet Archive. Transformative use is a U.S. legal concept under which use of a work is more likely to be considered fair if it adds something new, with a further purpose or different character, and does not substitute the original use of the work.

While the March decision has no direct applicability to Canada, and U.S. fair-use interpretations, while similar to Canada’s fair dealing laws, are not identical, had the decision gone the other way, it is very likely that CDL advocates in Canada would be citing the American precedent to argue for legality in Canada. The U.S. decision applies only to the practices of Internet Archive and is limited to the 127 works named in the suit (all of which are available in licensed e-book editions). The judge noted that Internet Archive remains free to scan and distribute all public domain works in its collection. The IA says it has digitized more than 675,000 unique texts from Canadian libraries. While it is not possible to know how many of these works are Canadian titles, a good proportion undoubtedly fall into this category. Likewise, it is impossible to know how many of these works are still protected by copyright. The fact that a book does not have a digital edition does not constitute grounds for making an unauthorized digital copy, although there is less likelihood of a legal challenge if an older, out-of-print but still copyright-protected work is digitized and loaned.

Part of the problem for CDL advocates is the way that Internet Archive made itself a ready target for publishers through some of its lending practices, including suspending the owned-to-loaned ratio for a few months, as well as questions relating to whether it can be considered a true library. Publishers are understandably reluctant to take legal action against bona fide libraries, yet there is no doubt that the CDL theory has been dealt a setback, if not legally undermined. The implications for Canadian libraries are still being assessed.

The Internet Archive established a Canadian branch in 2016, and since scanning began in Canada in 2004, it has worked with more than 250 Canadian institutions and libraries. Almost 80 Canadian schools, universities, and government entities are listed as partner libraries and have contributed part or all of their collections for digitization. CDL’s supporters claim that if CDL is not legal in Canada, it should be. As several Canadian librarians have argued in a recent paper in the Canadian Journal of Library Practice and Research, “CDL offers the opportunity for libraries to continue to meet their mandates of providing free and equitable access to knowledge in the digital environment.”

Jonathan Bengtson, chief librarian of the University of Victoria Library, says that while his university does not engage in CDL and has no immediate plans to do so, they will continue to work with the Internet Archive. CDL is only one aspect of Internet Archive’s work; their other projects include providing open access to a wide range of materials, notably the Wayback Machine, which allows users to see how specific websites appeared in the past. Susan Haigh, executive director of the Canadian Association of Research Libraries (CARL), believes the decision won’t change much in Canada in the immediate term. CDL has its limitations, and the use of CDL by CARL members within the Canadian legal framework has been “cautious,” she says. Nonetheless, Canadian libraries that have contributed their collections to the IA for digitization are indirectly supporting CDL by allowing their holdings to increase the number of physical copies on which the Archive bases its owned-to-loaned ratio. Canadian works sold in the U.S., including those with e-editions, will continue to be vulnerable to the IA’s CDL practices. At the same time, publishers in the U.S. feel vindicated by the decision, since their right to control the exploitation of works to which they hold the rights has been upheld in accordance with well-established U.S. legal principles. These same basic principles of copyright law exist in Canada.

Whether the decision against Internet Archive in the U.S. will have a chilling effect on CDL practices in Canada remains to be seen. Legally acquiring licences is still the best ethical and legal strategy to avoid unnecessary risk, while limiting digital scanning to out-of-print books used for research, thus avoiding direct competition with the marketplace. At the same time, publishers need to continue to work to make e-books as accessible as possible by licensing to libraries on terms that are not unduly restrictive in terms of distribution or cost.

This blog post first appeared as an Opinion piece published in Quill and Quire on June 7, at

© Hugh Stephens, 2023

Author: hughstephensblog

I am a former Canadian foreign service officer and a retired executive with Time Warner. In both capacities I worked for many years in Asia. I have been writing this copyright blog since 2016, and recently published a book "In Defence of Copyright" to raise awareness of the importance of good copyright protection in Canada and globally. It is written from and for the layman's perspective (not a legal text or scholarly work), illustrated with some of the unusual copyright stories drawn from the blog. Available on Amazon and local book stores.

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