COVID-19 and Libraries: E-Books and Intellectual Property Issues

COVID-19 and Libraries: E-Books and Intellectual Property Issues

Legal Sidebari

COVID-19 and Libraries: E-Books and
Intellectual Property Issues
April 28, 2020
With many states issuing stay-at-home orders, and many public library buildings closed during the
COVID-19 pandemic, members of the public looking for reading material have increasingly turned to e-
books. Yet even before the pandemic, libraries faced challenges in meeting patron demand for e-books.
For example, in November 2019 the Washington Post reported months-long wait times to borrow high-
demand e-books from major public libraries.
The legal framework for lending physical books is different than that for e-books. While a library may
generally lend a physical copy of a book in any manner it chooses, under current law a library may only
lend an e-book in the manner approved by the copyright holder (usually the publisher). Thus, for
example, the publisher may limit the length of time during which the library may lend the e-book, the
number of times the e-book may be checked out, or both. These limitations may restrict a library’s ability
to meet patron demand. This Sidebar explains how copyright law governs e-book lending; describes how
the COVID-19 pandemic has affected e-book accessibility; and outlines some possible legal approaches
Congress may consider.
Legal Background
A copyright gives its owner the exclusive right to take or authorize certain actions involving the
underlying work, including the exclusive right to distribute and reproduce the copyrighted work. If any
person violates the copyright owner’s exclusive rights (for example, by distributing or reproducing the
copyrighted work without the owner’s permission), then that person generally has infringed the copyright.
A person held liable for copyright infringement may be subject to a court order to stop infringing (an
“injunction”) or may be required to pay monetary damages. The amount of damages may include both the
copyright owner’s actual damages and any profits made by the infringer, or an amount set by statute
(“statutory damages”). Courts have discretion to award statutory damages between $750 and $30,000 per
work infringed, or up to $150,000 if the infringement was willful. The prevailing party in an infringement
action may also be able to recover its attorney’s fees. In certain circumstances, copyright infringement
may even be a criminal offense.
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Copyright law, however, does not allow the copyright owner to control how others, after purchasing a
lawfully made copy of the work, distribute that copy. Under 17 U.S.C. § 109 (§ 109), the owner of a
lawfully made copy may “sell or otherwise dispose of the possession” of that copy “without the authority
of the copyright owner.” This concept, referred to the “first sale doctrine,” thus protects conduct which
would otherwise infringe the copyright owner’s exclusive rights. For example, under the first sale
doctrine, the owner of a physical copy of a book may sell or lend that copy to another person without fear
of infringement liability.
Instead of selling a copy of a work to a user, a copyright owner may use a contract to grant permission to
another person to use a copy subject to certain conditions (a “license”). In this arrangement, the party
granting permission to use the work (i.e., the copyright owner) is the “licensor,” and the party receiving
permission to use the work (i.e., the user) is the “licensee.” For example, the license may permit the
licensee to make a certain number of copies of the work, or allow the licensee to distribute copies of the
work for a period of time. Importantly, the copyright owner’s granting of a license is generally not
regarded as a sale that would trigger § 109 protections. Thus, the copyright owner retains greater control
over subsequent distributions of the work by transmitting rights via a license as opposed to a sale.
Libraries and the First Sale Doctrine
The first sale doctrine protects libraries from liability for lending physical books, so long as the library
purchased a lawfully made copy of the book. In general, distributing copyrighted works without the
copyright owner’s permission infringes the copyright. Thus, without § 109, a library would infringe the
copyright whenever it loaned out a book. Avoiding this result was an intended result of § 109’s passage.
The House of Representatives Judiciary Committee Report accompanying § 109’s enactment specifically
indicated that libraries would be protected, stating that “[a] library that has acquired ownership of a copy
is entitled to lend it under any conditions it chooses to impose.” Notably, § 109 links the first sale
doctrine’s protections to the “owner” of the copy in question; if the library does not own the copy, the first
sale doctrine does not protect it from infringement liability for distributing the work.
The first sale doctrine created a balance between the rights of copyright holders and the mission of
libraries. Libraries could maintain and grow their collections as their budgets and storage space allowed,
purchasing physical books at retail or used books on the secondary market. Even so, the physical
impediments to checking out a book from a library (e.g., library membership, traveling to the library,
physical limitations on the number of copies) maintained incentives for consumers to buy physical copies
from publishers, and there was little risk of piracy through physical copying. The development of e-
books, however, arguably shifted this balance.
Libraries and E-books
E-books are generally governed by different legal doctrines than physical books because a user typically
does not own an e-book, but instead receives a limited license to use the e-book. When a reader or library
pays to access an e-book (e.g., “buys” an e-book on Amazon.com), that transaction generally does not
transfer ownership of the copy to the reader. Instead, the reader merely receives a license to download and
read the e-book for personal use. Accordingly, the first sale doctrine does not apply because the reader or
library does not own the copy. In addition, the nature of e-book technology prevents the development of a
secondary market for “used” e-books. When a reader downloads an e-book onto a device, it creates a new
copy of the e-book in the memory of that device. If the reader attempted to “sell” his digital copy to
another person, the transaction would require an additional copy of the e-book to be produced and stored
in the memory of the purchaser’s device. This implicates the copyright owner’s reproduction right, and
the first sale doctrine protects potential users only from infringement of a copyright owner’s distribution

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right. In other words, § 109 protects purchasers of legal copies from liability for infringement from
distributing their copies, not from reproducing or duplicating them.
From the publishers’ perspective, this difference in treatment is justified because e-books seemingly
present a greater threat to retail sales than physical books. Unlike physical books, library patrons can
check out, download, and read e-books on their smartphones from their home. Accordingly, whereas there
are numerous barriers to checking out a physical book from a library, there are nearly no barriers to
checking out, reading, and returning an e-book, beyond having access to the requisite technology (e.g., a
compatible device, the correct app). This ease of access concerns publishers as unrestricted library
lending could lead to lost sales of e-books, unreasonably low compensation for authors and artists, and
thus less of an incentive for writers to produce books. One publisher noted that the revenue from library
reads was “a small fraction” of the revenue from a retail purchase, and decreases as time goes on.
The difference in treatment has important implications for libraries. Libraries must acquire e-books from
the publisher because a license purchased at retail does not include the right to further distribute to the
library’s patrons. Moreover, there is no secondary market to provide another, less expensive option for
purchase. Thus, if libraries wish to lend e-books, they must pay for a special license that permits
subsequent distribution, and then follow the publisher’s licensing terms.
Exclusive rights are an intended feature of intellectual property law, which gives copyright holders (here,
the publishers) the right to control distribution of the copyright work as a way to encourage creativity.
However, those licensing terms may also cause difficulties for libraries. Because licenses to libraries
include a limited distribution right, they are nearly always more expensive than licenses to individuals—
often several times more expensive. As an example, for one publisher, an individual e-book copy costs
$14.99; a library copy costs $84. Licenses to libraries often expire after a certain amount of time (for
example, two years), after the e-book has been checked out a certain number of times (for example,
twenty-six), or both. Most e-book licenses to libraries will also provide that each e-book may only be
checked out by a single user at once, just as a physical copy may only be checked out by a single user at
any given time.
Certain publishers have experimented with more restrictive policies. For example, in November 2019
Macmillan implemented a policy where it would not license e-books to libraries during the first eight
weeks after a title’s release. Macmillan explained that those early weeks were key for profits and that
libraries were “cannibalizing sales.” This led to many libraries boycotting Macmillan purchases entirely.
Macmillan eventually ended this policy in March 2020.
E-Book Lending During COVID-19
During the COVID-19 pandemic, several entities have attempted various methods in an attempt to
address issues of e-book accessibility. For example, the Internet Archive (“Archive”) maintains an “Open
Library” where it allows users to check out digital scans of physical books the Archive owns. The Open
Library would only lend as many scans as it owned physical books at any given time, similar to the
lending practice required under e-book licenses; if all scans of a book were checked out, users would join
a waitlist. On March 24, 2020, however, the Archive announced that it was suspending waitlists and
allowing its physical scans to be checked out by any number of users. The Archive justified the
suspension (which is scheduled to run until the later of June 30, 2020 or the end of the current national
emergency) as “ensuring that students will have access to assigned readings and library materials” and
allowing borrowing for those who cannot physically access their local libraries.
Nevertheless, the legality of such unrestricted digital lending is uncertain. Although publishers did not
challenge the Archive’s original practice in court, writers’ groups and individual authors have harshly
criticized the new practice. Senator Thom Tillis, Chairman of the Senate Judiciary Committee

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Subcommittee on Intellectual Property, wrote to the Archive that he was “deeply concerned that” the
Open Library “is operating outside the boundaries of the copyright law.”
Because creating a digital copy of a work infringes the copyright, the Open Library’s practice is likely an
infringement absent an exception. The Archive’s response to Senator Tillis contended that the practice is
permitted by copyright’s “fair use” doctrine, which protects copyright use “for purposes such as criticism,
comment, news reporting, teaching . . . , scholarship, or research.” (This CRS sidebar on COVID-19-
related copyright issues provides more information on fair use.) While the Archive contends that fair use
“provides flexibility to libraries and others to adjust to changing circumstances,” others argue that there is
“no basis in the law for scanning and making copies of entire books available to the public.” The fair-use
argument may be difficult for the Archive in view of a recent case holding that fair use does not apply
where the defendant made direct copies of a work that competed with the copyright holders’ legitimate
market. Because fair use is a fact-intensive determination, however, it is unclear how a court would rule.
Implications for Congress
Particularly in the time of stay-at-home orders, limits on e-book availability raise questions about public
access to information. For example, long wait times at libraries can bar access altogether to those who
cannot afford to purchase e-books or physical books. On the other hand, lowering restrictions on the
dissemination of e-books could undermine authors’ ability to receive fair compensation for their work.
One option for Congress would be to maintain the legal status quo. When publishers introduce new
restrictions, libraries often push back. As Macmillan’s response to the libraries’ boycott shows, those
efforts can be successful. Thus, the market may yet lead to an equilibrium whereby libraries are able to
lend e-books to fulfill their mission (albeit not as easily as they might like) and publishers and authors are
able to profit (albeit not as much as they might like).
Another option for Congress could be to amend the copyright laws to introduce a digital version of the
first sale doctrine. For example, Congress could enact legislation providing that when users receive the
right to read an e-book or other digital media file for personal use, they also receive the right to re-sell or
otherwise distribute that e-book. Congress considered the possibility of a “digital first sale doctrine” when
it enacted the Digital Millennium Copyright Act (DMCA) in 1998 by ordering the Register of Copyrights
to report on “the relationship between existing and emergent technology and the operation” of § 109. The
report recommended not enacting such a digital first sale doctrine to allow the market to develop, and at
that time Congress took no further action. Congress could now reexamine the market and determine
whether it has matured sufficiently and in a manner that would warrant further action.
Congress could also amend the copyright laws to provide limited copyright immunity for library e-book
lending, while stopping short of a full digital first sale doctrine. For example, 17 U.S.C. § 110 (§ 110)
exempts certain performances and displays of copyrighted works from infringement liability (for
example, when a religious work is performed “in the course of services at a place of worship or other
religious assembly”) and 17 U.S.C. § 108 allows “a library or archives” to make a limited number of
copies, in certain circumstances, for archival purposes without infringing the copyright. Congress could
consider broadening § 108 or § 110 by adding protection from infringement when a library makes a copy
of an e-book for the purposes of or as incidental to lending. Such an amendment might require additional
action to shield libraries from breach of contract actions, assuming that a library’s license with the
publisher bars copying. Congress could render any legal changes temporary by, for example, having them
expire on a particular date or when the current national emergency ends.

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Author Information

Kevin T. Richards

Legislative Attorney

Disclaimer
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