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David R. Courtney [1]. This paper is about how libraries can legally lend digital copies of books. We write this paper in support of the Position Statement on Controlled Digital Lending , [2] a document endorsed by many libraries, librarians, and legal experts.

CDL enables a library to circulate a digitized title in place of a physical one in a controlled manner. Under this approach, a library may only loan simultaneously the number of copies that it has legitimately acquired, usually through purchase or donation.

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. Circulation in any format is controlled so that only one user can use any given copy at a time, for a limited time. Further, CDL systems generally employ appropriate technical measures to prevent users from retaining a permanent copy or distributing additional copies.

Thus, CDL would permit circulation of copies equal to those that had been legitimately acquired by the participating libraries. When the digital copy is being read by a patron, however, the corresponding physical copy is restricted and unavailable for consultation, so there is no situation in which the library is getting use of two copies for the price of one.

A library can lend a physical book to a patron through standard circulation or to another library through interlibrary loan. What CDL does do is shift that lending to a new format that opens up access possibilities for readers with disabilities, physical access limitations, research efficiency needs, or other needs for digitally-accessible content. A CDL system is not a brand-new concept. There are multiple versions of CDL-like systems currently being used in libraries.

These partners include large library systems such as the Boston Public Library, to smaller specialized libraries such as the Allen County Public Library, which houses the largest genealogical collection of any public library in the country.

At its core, CDL is about replicating with digital lending the legal and economically significant aspects of physical lending. To do so, we libraries must truly exercise control in the process. The Statement identifies six specific requirements to do so. It states that for CDL, libraries should:.

The first sale doctrine, codified in Section of the Copyright Act , provides that anyone who legally acquires a copyrighted work from the copyright holder receives the right to sell, display, or otherwise dispose of that particular copy, notwithstanding the interests of the copyright owner. This is how libraries loan books. Controlled digital lending as we conceive it is premised on the idea that libraries can embrace their traditional lending role to the digital environment.

For decades, libraries and cultural institutions have sought to provide greater access to their collections with the hope of reaching a broader and more diverse set of readers. Attempting to clearly answer those questions on a title-by-title basis has proven costly, [14] making full digital access for large numbers of works based on rightsholder permission difficult.

Particularly for books and other published materials for which there was once an active market, libraries have not yet been able to provide broad full-text access online. Many 20th Century books are not available for purchase as new copies in print or as digital versions online. The morass of rights management, combined with the orphan works problem and the ever-increasing copyright length, has made it complicated to see a path forward to broad digital access.

For modern libraries with users whose research and information use patterns mean they look to digital access first, [17] this means that a whole world of research is effectively invisible to a variety of types of users. For some, the inability to physically travel to a library because of their remote physical location, economic wherewithal, or homebound limitations means that physical lending is not practical. For others, physical access is a matter of great inefficiency in their research and learning.

For a large research library, this means holdings of millions of volumes, already purchased at a cost of hundreds of millions of dollars, are not accessible in a format that is more meaningful and easier to use for many researchers today. For books primarily from the mid th Century, presumptively still protected by copyright, but not currently available in electronic form from their rightsholders, we believe CDL holds significant promise.

We also believe the legal rationale for lending these works is among the strongest of all types of works. Others may have identifiable owners, but are in practice neglected, unavailable in the digital marketplace and with no plan for revitalization in modern formats. So, how can libraries provide access? First, we start with a detailed look at the two fundamental copyright law doctrines that already empower libraries to fulfill their missions: first sale and fair use.

Section of the Copyright Act enumerates the basic bundle of rights granted to copyright owners: the exclusive right to control reproduction of the work, public distribution of the work, public performances, public displays, and creation of derivative works. But, the rights granted in Section are limited by a number of statutory exceptions. Section , the statutory first sale doctrine, is one such provision.

Entire industries and enterprises are built upon the first sale doctrine. Libraries were built on it. The first sale doctrine balances the rights of copyright owners to distribute with those of purchasers to dispose of their copies as they wish. With distribution of physical copies, such as lending a print book to a library user, that framework works well enough. Much of the literature on first sale applied in the digital environment recognizes that library lending raises unique concerns requiring special treatment.

Indeed, several libraries have already engaged in limited CDL for years without issue, indicating perhaps a tacit acknowledgement of the strength of their legal position. We limit our analysis to non-commercial, controlled, digital lending by U. That brings us next to fair use. All are to be explored, and the results weighed together, in light of the purposes of copyright.

The basic concept of applying first sale principles to digital transactions is not new, either as justified under the first sale doctrine alone, as fair use, or through some combination of the two together.

The U. ReDigi, LLC , has raised the question of how these doctrines apply to a commercial, digital resale market for mp3s. Again, the literature on digital first sale recognizes that library most likely will require special treatment. And we also believe that these library uses, of all the varying digital uses, are among the most likely to be justified under a fair use rationale.

Several libraries have already engaged in limited CDL for years without issue. Our focus is on these narrow and specialized use by libraries. Again, we limit our analysis to non-commercial, controlled, digital lending by U.

In applying fair use, not every factor in the analysis will be highly relevant in every situation. The core concept with CDL is that it closely mimics the economic transaction that Congress has already provided for through the first sale doctrine under Section The purpose of the use with CDL is to fulfill the statutory objectives and balance of rights already identified by Congress in Section , effectuating that balance considering a new technological use not contemplated at the time Section was enacted.

When raised, courts have largely rejected that argument. For example, in Sega Enterprises Ltd. Accolade, Inc. As a matter of copyright policy, the presence of a specific copyright exception or, in some cases, other provisions of federal law provides persuasive evidence of the kinds of purposes that should be favored in the fair use assessment.

While not extensively litigated, a number of cases indicate that this is the right approach, which we review here to give a sense of the strength of this position. In Authors Guild v. Some courts have pointed to broader policy objectives, both within and outside of the copyright act, as influencing the purpose and character analysis. Bloomberg, L. Indeed, as Bloomberg points out, the SEC has mandated that when American companies disclose this kind of material nonpublic information, they must make it available to the public immediately.

See Regulation FD, 17 C. Copyright Office has also cited specific copyright exceptions as positively influencing the fair use assessment. Those include looking to Section exceptions for interoperability, Section exceptions for nonprofit public performances and teaching, and Section exceptions for computer program adaptation. For CDL, the purpose of the use is one that intends to mirror the basic purpose of first sale as embodied in Section In Kirtsaeng v.

As technology and markets have shifted, libraries employing CDL seek to use technology to hold up that same balance of rights while allowing users to access materials in formats that are most meaningful to them today.

CDL promotes consumer choice in formats and platforms, while avoiding dragging courts into the thicket of restrictions and rights conflicts that would require extensive litigation to resolve. Under CDL, if one copy is purchased, a library can only lend one copy—either print or physical—out to a user at a time.

There are a few cases in the commercial context that come close, however. Those cases are primarily negative, though as we explain below we believe they are distinguishable from CDL applications, and one case is currently on appeal.

ReDigi Inc. Upon sale through the ReDigi marketplace, the file would be downloaded to the purchaser and simultaneously deleted from the Cloud Locker. It did not, however, assess the two provisions together. For fair use, the ReDigi court was fairly dismissive of the purpose factor, focusing almost exclusive on the commerciality of the program. The analysis was brief and considered almost none of the arguments laid out above. In honing in on the commerciality of the use, the court found that the purpose and character of the use weighed against a fair use finding.

For instance, in Wall Data Inc. More recently, in Disney Enterprises, Inc. VidAngel, Inc. For each user, VidAngel would purchase a physical DVD on behalf of the user, which VidAngel then copied, edited and streamed to the user online. VidAngel conceded that its use was commercial, and the court did not consider the use to be transformative. Like with Wall Data , the streams were provided for videos with known copyright owners who themselves license rights to competing streaming services.

One way these cases are distinguished is just that the issue was not raised; except for ReDigi where the issue was only obliquely argued , first sale and the purpose and character assessment were not raised by the litigants or addressed by the court. The argument was not presented. Another, more significant distinguishing factor is that all three cases involved commercial uses, both in the specific application and in connection with a broader, functioning market place for the works used.

This brings us to the second characteristic of CDL that we believe tilts the first factor analysis decidedly in favor of fair use: Libraries engaging in CDL are doing so for non-commercial research and learning purposes.

Unlike commercial resale or streaming markets, library use of CDL is non-commercial and designed to promote public benefits by facilitating research and learning. Libraries engaging in CDL, as we envision it, will not generate monetary profit. Given the costs of digitizing, building and maintaining the technical infrastructure necessary to lending digitally and controlling physical copies, and personnel time used to restrict print copies when its digital equivalent is circulating, libraries may spend considerable sums with no compensation.

To be sure, libraries and their users would stand to benefit from CDL.


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