USDC, SDNY

“ The home viewers were not accused of making their television programs available to the general public. Although IA has the right to lend print books it lawfully acquired, it does not have the right to scan those books and lend the digital copies en masse. To hold otherwise would be to ignore the teaching of the Court of Appeals for the Second Circuit in Google Books that there would be a “strong” claim for copyright infringement if Google had distributed digitized copies of complete books. ”

“ A “common-law doctrine with an impeccable historic pedigree,” Kirtsaeng v. John Wiley & Sons, Inc., 568 U.S. 519, 538 (2013) , the first sale doctrine is codified at 17 U.S.C. § 109 (a) . [10] The doctrine provides that a “rights holder’s control over the distribution of any particular copy or phonorecord that was lawfully made effectively terminates when that copy or phonorecord is distributed to its first recipient.” ”

“ IA argues that its digital lending is “at least as transformative as the use at issue in Sony,” because IA and its Partner Libraries already paid for print copies of the Works in Suit and because a patron who digitally borrows one of IA’s ebooks is “the one person in the world who is then borrowing that particular ... library book.” ”

“ IA’s wholesale copying and unauthorized lending of digital copies of the Publishers’ print books does not transform the use of the books, and IA profits from exploiting the copyrighted material without paying the customary price. The first fair use factor strongly favors the Publishers. ”

“ IA argues that its digital lending makes it easier for patrons who live far from physical libraries to access books and that it supports research, scholarship, and cultural participation by making books widely accessible on the Internet. ”

“ For libraries that are entitled to partner with IA because they own print copies of books in IA’s collection, it is patently more desirable to offer IA’s bootleg ebooks than to pay for authorized ebook licenses. ”

“ It also may use its scans of the Works in Suit, or other works in its collection, in a manner consistent with the uses deemed to be fair in Google Books and HathiTrust. What fair use does not allow, however, is the mass reproduction and distribution of complete copyrighted works in a way that does not transform those works and that creates directly competing substitutes for the originals. Because that is what IA has done with respect to the Works in Suit, its defense of fair use fails as a matter of law. ”

“ The Publishers task aggregators with ensuring that a library lends its ebooks only to the library's members. Id. ¶¶ 123, 125. The Publishers also require aggregators to employ approved "digital rights management" ("DRM") software and other security measures to prevent unauthorized copying or distribution of ebook files. Id. ¶ 126. Demand for library ebooks has increased over the past decade. In 2012, OverDrive, the largest aggregator, processed 70 million digital checkouts of ebooks and audiobooks ”

“ That is not the Publishers’ burden. A rightsholder bears only “some initial burden of identifying relevant markets.” Andy Warhol Found., 11 F.4th at 49; see also id. (“ [W] e have never held that the rightsholder bears the burden of showing actual market harm. Nor would we so hold.”) . In this case, the Publishers have met their burden by identifying the thriving library ebook licensing market, with its tens of millions of dollars in annual revenue, as a market that IA’s copying stands to harm. ”

“ As the court explained, in language that applies equally to IA: “We are not free to disregard the terms of [Section 109 (a) ] merely because the entity performing an unauthorized reproduction makes efforts to nullify its consequences by the counterbalancing” removal from circulation of the preexisting copies. Id. at 658.
IA accepts that ReDigi forecloses any argument it might have under Section 109 (a) . But in pressing its first sale argument under the guise of fair use, IA ignores that ReDigi also rejected the fair use defense. ”

“ Black Ent. Television, Inc., 126 F.3d 70, 81 (2d Cir. 1997) (“Ringgold is not required to show a decline in the number of licensing requests for the ‘Church Picnic’ poster since the ROC episode was aired. The fourth factor will favor her if she can show a ‘traditional, reasonable, or likely to be developed’ market for licensing her work as set decoration.”) .
​ There is also no merit to IA’s contention, raised for the first time at argument, that “in the situation where the use is non-commercial ... it remains an open question where the burdens lie.” ”

“ If the moving party meets its burden, the nonmoving party must produce evidence in the record and "may not rely simply on conclusory statements or on contentions that the affidavits supporting the motion are not credible." ”

“ Public and academic libraries in the United States spend billions of dollars each year obtaining print books and ebooks for their patrons to borrow for free. Pls.' 56.1 ¶ 113. Libraries usually buy their print books from publishers or wholesalers. Id. ¶ 114. Copies of ebooks, however, are typically not bought but licensed to libraries from publishers through distributors called "aggregators." ”

“ IA never charges patrons fees for any service, including borrowing books. Id. ¶ 25. The Website has titles in popular categories, including Romance, Thrillers, "Books we Love," and "Trending Books." Pls.' 56.1 ¶¶ 514–516. Patrons can read books they have checked out on IA's BookReader web browser platform, or they can download a "High Quality" encrypted PDF or ePub version of the ebook. [3] Id. ¶¶ 207–209, 277; Def.'s 56.1 ¶¶ 32, 34. IA secures its downloadable versions with software that prevents the patron from copying, accessing, or distributing the book after the loan period. ”

“ Even favorable evidence, without more, is no guarantee of fairness. Judge Leval gives the example of the film producer’s appropriation of a composer’s previously unknown song that turns the song into a commercial success ”

“ These cases further support the conclusion that IA’s use of the Works in Suit is not transformative. ↑ TVEyes, another case involving transformative use in a utility-expanding technology, helps IA even less than Sony does. The defendant in that case copied all television programming in the United States, as well as its closed-captioning text, into a database, then offered a commercial subscription service that allowed business and professional clients to search the transcripts and watch up to ten minutes of selected video segments. ”

“ To state the obvious, “ [i] t is difficult to compete with a product offered for free.” Sony BMG Music Ent. v. Tenenbaum, 672 F. Supp. 2d 217, 231 (D. Mass. 2009) .
Equally unavailing is IA’s reliance on various metrics that allegedly demonstrate that its online library has not harmed, or is not likely to harm, the Publishers’ financial bottom lines. IA’s experts observed that print sales of the Works in Suit and general demand for library ebooks did not decrease while the Works in Suit were available on IA’s Website ”