Libraries Do Not Need Permission To Lend Books: Fair Use, First Sale, and the Fallacy of Licensing Culture

*The opinions and scholarship communicated on this website are the author’s own, expressed in his personal capacity.*

Licensing culture is out of control. This has never been clearer than during this time when hundreds of millions of books and media that were purchased by libraries, archives, and other cultural intuitions have become inaccessible due to COVID-19 closures or, worse, are closed off further by restrictive licensing.

And, many of us have watched as librarians, educators, parents, and students have questioned (and battled) over the right to read books aloud online to schoolchildren or to stream movies or music for our new online “classroom” environment. We have also heard about resistance to emergency or temporary digital libraries to increase access to the materials needed for education and research during this pandemic.

The answer to these questions coming from vendors, publishers, and now, the U.S. Copyright Office, appears to be singular: more licensing. This answer threatens the purpose, values, and mission of libraries and archives in the United States. It undermines the ability of the public (taxpayers!) to access the materials purchased with their money for their use in public libraries and state institutions, and further, it is short sighted, and not in the best interest of library patrons or the public at large.

The ultimate example of this licensing culture gone wild is captured in a recent U.S. Copyright Office letter. Note that this letter is not a legally binding document. It is the opinion of an office under the control of the Library of Congress, that is tasked among other missions, with advising Congress when they ask copyright questions, as in this case.

Recently, Sen. Senator Tom Udall (NM) wrote the U.S. Copyright Office with concerns about emergency digital libraries providing access during the COVID-19 crisis. He urged the U.S. Copyright Office “to use its expertise and guidance to help libraries, authors, and online outlets to identify potential solutions that respect both the ownership of the creator community’s work and the broader public’s need to access online collections within legal bounds.” Sen. Udall also asked to the Office to “include a legal analysis” of “17 U.S.C.S. §107.” [Note to Sen. Udall’s office: the citation to the code is U.S.C., not U.S.C.S. The U.S.C.S. is the unofficial U.S. Code published by Lexis. Is it telling that maybe in your letter you cited to the Lexis version that typically requires a license for accessing the Lexis database?]

The Office responded with a letter revealing their recommendation was not going to be the guidance document to “help libraries, authors, and online outlets,” but, ultimately, called for more licensing. It also continued a common misunderstanding of an important case, Capitol Records, LLC v. ReDigi Inc., 910 F. 3d 649 (2d Cir 2018).

Again, I believe this answer is not in the best interest of libraries, archives, their patrons, or the public at large – and includes a grave risk and lack of foresight for continued access and preservation of culture.

I am not going to review the entire letter, and, in fact, I think its valuable to examine this letter in the context of a previous Congressional Research Service report about nearly the same topic. The CRS Report “COVID-19 and Libraries: E-Books and Intellectual Property Issues” outlines the problems and law in a much more balanced manner and addresses some of the same issues (and includes an interesting question as to why libraries are charged double or more for the same e-books via licensing agreements)

Expanding Licensing?

First, the Office letter “applauds the creativity shown in all copyright sectors as individuals and organizations respond to the challenges of providing access to educational materials during the current crisis….” This part sounds good because there are multiple ways to respond! I have outlined the ability for libraries to understand and utilize their copyright superpowers in several posts here previously, which is part of the creativity the Office mentions in providing access.

However, the quote reads that they are applauding “providing access to educational materials during the current crisis by expanding licensing—including, in some cases, offering zero-cost licenses for educational use…”

Expanding licensing? That should make us all worry. And this concern is backed by some starling data: “In a recent survey of public libraries, 74% report that they have continued, added, or expanded online services like e-books and streaming media.”

These expanded licenses are eroding away our ownership rights over purchased materials, and also eviscerating the critical copyright exceptions and rights that every user, not just libraries, have under copyright.

Licenses are not the same equivalent as an actual purchase. This is especially true for libraries. I, along with many, many others have sounded the alarm on this topic previously (See my post “Think You ‘Own’ What You ‘Buy’ on the Internet?” in Politico for example)

And don’t get me wrong, I equally applaud the vendors and publishers that made their works available by seeking permission from their own contracted authors and clients before releasing them. But that is not what is required of a library.

The U.S. Copyright Office’s letter name checks the publishers that “have expanded online access to digital books and articles to students, educational institutions, or the general public, in some cases making some or all of their titles freely available.” Cambridge University Press (Reminder: CUP is a publisher that sued Georgia State University Library and dragged them through 12+ years of ligation over a basic reserves fair use policy) Cengage, and Macmillan Learning are mentioned as examples of vendors that provided permission-based, free licensing to students that needed access.

Libraries do not need permission to loan books (and we don’t need a license either!)

Here’s the problem though: these vendors and publishers are not libraries. The law does not treat them the same. Vendors must must ask permission, they must license, this is their business model. Libraries are special creatures of copyright. Libraries have a legally authorized mandate granted by Congress to complete their mission to provide access to materials. They put many these specialized copyright exemptions for libraries in the Copyright Act itself.

The Copyright Office missed this critical difference completely when it said digital, temporary, or emergency libraries should “seek permission from authors or publishers prior” to the use. I think think this is flat-out wrong. And I have heard this in multiple settings over the last few months: somehow it has crept into our dialog that libraries should have always sought a license to lend books, even digital books, exactly like the vendors and publishers who sought permission first. Again, this is fundamentally wrong.

Let me make this clear: Libraries do not need a license to loan books. What libraries do (give access to their acquired collections of acquired books) is not illegal. And libraries generally do not need to license or contract before sharing these legally acquired works, digital or not. Additionally, libraries, and their users, can make (and do make) many uses of these works under the law including interlibrary loan, reserves, preservation, fair use, and more!

Libraries can make these uses of their legal acquired books without permission because the copyright system, via Section 109 first sale, maintains the market balance long recognized by the courts and Congress as between rightsholders and libraries. Libraries sit right in the middle of the economic purpose of copyright (we buy the books!) and the access purpose of copyright (we loan the books!) – or in the Constitutional narrative, “to Promote the Progress of Science and the Useful Arts” libraries provide unfettered access and freedom to the books they purchase.

When a library legally acquires a book via a sale, it has the right, under the first sale doctrine, to continue to loan that work unimpeded by any further permission or additional fees to the copyright holder. No license is needed. A digitized copy replaces the legitimately acquired copy, not an unpurchased copy in the marketplace. To the extent there is a “market harm,” it is one that is already built into the transaction and built into copyright law: libraries are already legally permitted to circulate and loan their materials. The authors have been paid (as have the publishers) in that first transaction.

Congress, when it legislated the copyright exceptions, made it possible for libraries to fulfill their “vital function in society” by enabling the lending of books to benefit the general learning, research, and intellectual enrichment of readers by allowing access to these materials. And arguably, now that we are in the 21^st century, why should we not use technology to allow this loaning to continue online? Let libraries use technology (the same used by the publishers, for example) to INCREASE access to these works, especially during a pandemic.

Quick Fiscal Reasoning

Let’s look at the fiscal problem as well. Again, hundreds of millions of books are unavailable to patrons during this crisis. Why should any library, that has spent tens of millions of dollars (and, I might add these are often tax dollars spent at public libraries) over the years have to re-purchase these books subject to a new limited licensed e-book format? Or, further, why should they, even if the license is free, sign a license that limits their usage with a host of restrictions – including restrictions that directly forbid the actions like sharing, loaning, reading aloud, interlibrary loan, reserves, or any other number of uses?

(The Office letter also notes that other “publishers and authors, such as Penguin Random House and J. K. Rowling, have provided ‘read-along’ licenses to permit teachers to read works to students online.” “Read along” licenses? Wait, so people are not entitled to read a book out loud or online without permission? Does that seem right to anyone? NO! See “Can Teachers Read Books Out Loud Online? Actually, Yes” and “Reading Aloud: Fair Use Enables Translating Classroom Practices to Online Learning” )

Licensing is eviscerating ownership

Some incredible colleagues, Aaron Perzanowski and Jason Schultz, already wrote a whole book on this topic (The End of Ownership: Personal Property in the Digital Economy) so you should read that, but, allow me to share my analysis of their work through the lens of libraries.

Licenses continue to eviscerate ownership rights for patrons, libraries, and the general public under very restrictive terms. And, these licenses are absolutely not the equivalent of a purchase. These vendors may use the word “buy it now” or “purchase” or “for sale” but, when you read the fine print – it is absolutely the opposite (again, see “Think You ‘Own’ What You ‘Buy’ on the Internet?”)

When a library or patron agrees to these licenses, at best they are merely renting or leasing temporary access to these works. And, depending on the terms of the license, the library or patron may have to renew or pay for access again and again. Libraries do not own their e-books! Users do not own their streaming movies! Students do not own their streaming music! All of these are more akin to temporary rentals under the license (Read the license – it typically offers only “a limited, non-exclusive, non-transferable right to access….”).

Or, in some licenses, the terms are so limited that libraries or their patrons are restricted from the very uses, exceptions, or exemptions made legal in the Copyright Act. I pulled an example of one of the more common licensing clauses:

“Except as explicitly authorized in this License, you agree not to archive, download, reproduce, distribute, modify, display, perform, publish, license, create derivative works from, or use content and information contained on or obtained from the Work….” and “articles, chapters, and other materials made available via this License may not be used for the purpose of interlibrary loan…”

This license takes away nearly all the copyright exceptions for libraries, and many exceptions for the public as well. Licenses do often restrict use beyond what copyright law might otherwise allow. And the licenses do not have consistent language relating to library uses, so they are all different, and all full of boilerplate limiting terms. What other rights are these licenses interfering with?

Well, to start, the Copyright Act itself is supposed to be a balance of rights. Sections 101 through 106 of the Copyright Act defines all the various “rights” section of copyright. The most critical of these is section 106 which defines the exclusive rights of the copyright holder.

But these exclusive rights are not so exclusive for certain uses! These rights are balanced out by another significant portion of the act, sections 107 through 122 which are all the exceptions/exemptions to the copyright owner’s section 106 rights. (In fact, Section 106 states at the start “Subject to sections 107 through 122…”) And often, these exceptions have POWERFUL language that states “notwithstanding” the rights of the copyright owner, you can legally do certain things.

For example, document delivery, interlibrary loan, and digital preservation are empowered by Section 108. As a result, once you paid the author or publisher for the work, a library, via interlibrary loan, doesn’t have to ask permission to ship that single book to hundreds of other libraries and patrons in the lifetime of the book. Libraries even share books, via the IFLA interlibrary loan norms, internationally.

Additionally, under Section 109, first sale, a library can place a book on reserve and let it be accessed or checked out as many times as it can. Each patron uses and returns the book – and there is no license, no additional payment, and the library or user does not have to seek any further permission from the copyright holder. Some books have been read hundreds of thousands of times on reserves! The author and publisher were compensated for that first purchase, and from there, the access and loaning can continue unfettered.

And, of course,Section 107 is fair use – and there has been plenty of discussion about that right over the years (For a most recent discussion of fair use and the pandemic see the “Public Statement of Library Copyright Specialists: Fair Use & Emergency Remote Teaching & Research “)

The licenses generally eliminate all these the rights of users and libraries, and that method cannot, or should not, be encouraged. It would be the death of ownership, and also hinder access to information and preservation efforts. If anything, licensing should promote access, preservation, since the library mission is separate under the copyright law.

ReDigi Doesn’t Say What You Think It Says for Libraries

The Office letter also offers what I think is an overly broad analysis of an important decision in the copyright world, Capitol Records, LLC v. ReDigi Inc., 910 F. 3d 649 (2^nd Cir 2018). This is a critical first sale case, and one which requires close examination. Simply put, the door isn’t shut on digital first sale for non-profit, educational uses featuring the use of legal acquired books, with the same market harm that exists for present library loaning.

It was certainly not a surprise to the copyright world when the Second Circuit held that ReDigi’s system to sell previously licensed commercial works (mp3s) was infringement. Yes, it did cause direct market harm under the famous fourth factor of the fair use statute.

However, the Second Circuit found that ReDigi had no actual control of the objects being sold and that it “made reproductions of Plaintiffs’ works for the purpose of resale in competition with the Plaintiffs’ market for the sale of their sound recordings.” Again, this is not quite the same analogy libraries with regards to control and access to books, digital or otherwise, by libraries. This does not mean that ReDigi stands for the total elimination of libraries making a digital first sale of its print collection.

Here is the main difference: these ReDigi resales the court examined were exact, bit-for-bit replicas of the original sold in direct competition with “new” mp3s online through other marketplaces, such as iTunes. The substitutionary effect was clear, especially since the mp3 format is the working market experiencing harm.

However, again, a library is not a commercial for-profit company. The books they own, via first sale, are not licensed mp3s. There is clearly a distinguishable analysis here.

For digitized copies of legally acquired print books under the first sale doctrine, the substitutionary effect is far less clear. With most 20th-century books, the vast majority of books in a library’s collection, the market has almost been exclusively print-based. And, for those books, some new evidence from the Google Books digitization project suggests that digitization may in fact act as a complementary good, allowing digital discovery to encourage new interest in long-neglected works.

Secondarily, the ReDigi court raises a significant question as to whether using digitized copies of legally acquired books may be “transformative” in nature – a modern fair use test adopted by the U.S. Supreme Court. In the decision, examining the first factor of fair use, Judge Level, who established the concept of transformative fair use in a law review article, explained that a use can be transformative when it “utilizes technology to achieve the transformative purpose of improving delivery of content without unreasonably encroaching on the commercial entitlements of the rights holder.” This sounds awfully close to correct analysis for modern libraries loaning digital copies of books.

This quote interprets another critical technology and fair use case from the U.S. Supreme Court, Sony Corp. of America v. Universal City Studios, Inc., 464 U.S. 417 (1984), famously called the “Betamax case.” Since its decision in 1984, the Sony ruling helped establish and foster the creation of new and vital technology, from personal computers and iPods to sampling machines and TiVo. And the rightsholder/publisher world similarly lost its collective mind when the VCR came out – in an analogous way we are seeing, frankly, an anti-library rights reaction over libraries digitally loaning books they have legally acquired (This Sony quote from the ReDigi court was also used in another Second Circuit case, Fox News Network, LLC v. TVEyes.)

So, the ReDigi court draws upon the precedent of two important transformative fair use cases to make its point. Under this transformative use definition, digital libraries made from their legally acquired print collections should be determined to be transformative by the courts, especially if the commercial rights of the rights holder are not unreasonably encroached.

Therefore, while the court found (for-profit company) ReDigi’s use to not be transformative, the Second Circuit opened the door for continued technological development, especially for non-commercial transformative uses under the fair use first factor and for appropriate market friction that is already allowed for libraries to loan books under first sale.

All in all, the ReDigi case most certainly does not settle the issue; if anything, the specific language of the court emphasizes the potential for more non-commercial transformative uses like, say, controlled digital lending.

Again, the language of the ReDigi court should be examined closer than the Office letter does. The Second Circuit distinguished the substitutionary markets from those that are complementary and natural extensions of the use inherent with purchasing the original: “to the extent a reproduction was made solely for cloud storage of the user’s music on ReDigi’s server, and not to facilitate resale, the reproduction would likely be fair use just as the copying at issue in Sony was fair use.” Reading this language through the lens of a modern library’s digitize and loan service, such as controlled digital lending, that further enhances the owner’s use of materials that were purchased under first sale or owned under other authorized means would also qualify as a fair use.

Another Letter or Solution?

You know what would make all of this go away? What if the U.S. Copyright Office wrote a letter on behalf of the libraries and its patrons. And the letter said:

“Please do not use restrictive licenses when selling e-books or other e-media to libraries. Stop restricting the rights of libraries and users via license. Actually “sell” the books to libraries, like you do in print, and trust libraries, who are the often the author’s and publisher’s best customers, to use technology to provide the same access and control for these materials in the same way they have done for hundreds of years – and let libraries loan books in the modern environment. And not just now, during a pandemic, but forever.”

Publisher’s missions may involve the next fiscal quarter, but libraries mission of preservation and access looks at the next 100 years. Let libraries continue their mission unfettered by restrictive licensing and remain a “vital function in society.”