By: Abhishek Gupta
INTRODUCTION
In today’s age of modernisation and digital era, it is strived that access to knowledge and information becomes more accessible than ever before. One such emerging trend with the same goal is Controlled Digital Lending (CDL). CDL is a system in which a library takes a book that it owns, digitises it and loans it to borrowers one at a time. Under this approach, a library in all cases, can circulate only those number of copies that it physically owns before digitisation thereby maintaining an ‘Owned-to-Loaned’ ratio. Therefore, CDL essentially mirrors the functionality of a traditional library in a digital format. It facilitates access for readers with impairments, physical access restrictions, demands for research efficiency, or other demands for digitally accessible information. However, there have been claims that the CDL constitutes wilful digital piracy on an industrial scale and hurts the copyright claims of the authors and the publishers. Once again, we stand at a critical juncture where the copyright law stands at crossroads where it has to balance the commercial interests of the publishers and the interests of the public. Recently, the issue was mooted in a case in the United States, where four publishers sued Internet Archive for controlled digital lending. This article examines how the practice of CDL is supported by the fair use and first sale doctrine under the Indian copyright law.
FIRST SALE DOCTRINE AND CONROLLED DIGITAL LENDING
One of the principal and basic legal arguments in favour of CDL is the first sale doctrine that permits anybody who has obtained a copy of a copyrighted work legally from the rightsholder to sell, exhibit, or to make use of that particular copy without affecting the rights of the copyright holder. The second sale right of the owners of copyrights is exhausted as a result of the first sale doctrine. As a result, on the second sale of the work’s copy, the copyright holder cannot continue to exercise ownership-based control over the copy. Thus, the owner of copyrighted work need not be asked for permission for future sale. This is how traditional libraries function. Under Indian Law, the doctrine of first sale finds itself under Section 14(a)(ii) of the Copyright Act, 1957. The section exempts those copies of the work from copyright which are ‘already in circulation.’ Thus, there is clear evidence in Section 14(a)(ii) that the owner of the copyrighted work cannot exercise control over how a copy is resold once it is ‘circulated.’ There is an exhaustion of the right of the copyright owner over his work upon first sale. A library is therefore, nothing but a real-life extension of this principle. CDL seeks to utilise the first sale doctrine to digital content by enabling libraries to lend digital copies of books they own, while the physical copy is unavailable. However, there is debate whether the digitisation of physical copies into digital copies amounts to reproduction of a copyright work. This is where the doctrine of fair use steps up to guard the first sale doctrine since one of the primary objectives of the fair use doctrine is to prevent the enforcement of those copyright laws that prioritise superficial aspects over the essence of the work which will go against the objectives of copyright law itself i.e., to intellectually enrich the public.
FAIR USE DOCTRINE AND CONTROLLED DIGITAL LENDING
Since CDL’s goal and nature are both non-commercial and in the public interest, it is claimed that its implementation is a fair use. The objective of the fair use is to find a middle ground between the rights of writers and publishers and the interests of the general public. In simple terms, a person can use a copyrighted material without obtaining permission of the author by virtue of this doctrine in some circumstances like criticism, review, scholarship or research. Article 13 of TRIPS (Trade related aspects of Intellectual Property Rights) and Article 9(2) of the Berne Convention also outline the doctrine of fair use. Under Indian law, Section 52 of the Copyright Act, 1957 contains the exemption of ‘fair dealing’ which states that use of the work for research, criticism or reporting of current events will not be considered violation of copyright. Library usage of CDL is non-commercial and intended to advance public benefits by aiding research and education, especially for people facing difficulty in accessing physical books. Section 52(1)(zb) specifically mentions that ‘adaptation, reproduction or issue of copies’ in an accessible format by any person or organisation specifically to enable persons with disabilities to access such works for educational or research purposes is not copyright infringement. This provision explicitly supports the practice of CDL for persons with disabilities. In Super Cassettes Industries v Hamar Television Network, the court clarified that it is not feasible to define the exact parameters of fair use and the same is a “question of fact, degree and the overall impression carried by the court.” The doctrine of fair use is also codified in US copyright law under Section 107 of the Copyright Act, 1976 which mentions four factors to assess fair use. Even though these factors are not mentioned in the Indian copyright law, Indian courts have considered these factors in assessing whether the use of a work qualifies as a fair use. For instance, the Delhi High Court used these four factors in India TV Independent News Service v Yashraj Films and opined that even in India, fair use is determined on the same four factors. The judgment also mentioned other cases where these four factors were used: Blackwood & Sons Ltd. v. Anparasuraman, R.G. Anand v. Deluxe Films and the Chancellor Masters and Scholars of the University of Oxford v. Narendera Publishing House, thereby establishing it as an accepted practice among the courts. These four factors are: “(i) The purpose and character of use, including whether such work is of commercial nature or is for non-profit educational purpose; (ii) The nature of the copyrighted work; (iii) The amount and substantiality of the portion used in relation to the copyrighted work as a whole; (iv) Effect of the use on the potential market effect for or value of the copyrighted work.”
Under the first factor, two characteristics of CDL support fair use. CDL working is in consonance with the first sale doctrine and the not-for-profit nature of the use to fulfil research and educational goals is aligned with the statutory examples of fair use as well as the fundamental goals of the copyright system itself, i.e., intellectual enrichment of the public. In determining whether a work is fair use, courts have also considered its transformational potential, albeit this is not the only factor. Although, CDL cannot be termed as transformative since it closely resembles to a traditional library however, an argument can be made that it has been transformative in providing access to people with disability or to those in remote areas. Under the Second factor, Courts have generally favoured the use of scholarly, scientific or factual work in fair use recognising a greater need to disseminate such works. The second factor is not of much significance here since it has rarely been used in the assessment of fair use. Its importance has clearly been refuted in recent judgments. The third factor considers the amount of work utilised in comparison to the original work. Since it is “necessary to copy the entire copyrighted work,” for the purpose non-profit library lending, this is a case in which “Factor Three does not weigh against a finding of fair use.” The fourth factor examines “the effect of the use upon the potential market for or value of the copyrighted work.” In essence, the fourth criteria mandate that courts weigh the gains that copyright holders will stand to make if the usage is approved against the benefit the public will get. The reason why fourth factor supports the use of CDL is that its market effect closely resembles the market impact already protected by the first sale doctrine. The restrictions required by CDL ensure that the usage roughly resembles the market impact for which the rightsholder was previously paid upon the book’s initial sale. Also, there is no negative effect on the market for or on the value of books at issue. In the case of the Internet Archive, the US court regarded that the CDL cannot be regarded as fair use on the basis of its potential market harm to the copyright owners. However, in doing so, the Court overlooked the insights offered in Google LLC v Oracle America, Inc., which held that while weighing the potential market effects to gauge fair use, the court must also consider the benefits that the public will derive out of it against the potential market loss for the copyright owner. Clearly, CDL offers immense benefits to the public as already discussed above. Therefore, based on the aforementioned factors, there is a compelling argument for considering CDL as fair use.
CONCLUSION
CDL has immense potential to open up access to library collections especially to those which have difficulty in accessing physical books like people with disability or people living in remote areas. Considering that it offers great benefit to the public and helps in furthering the goal of copyright law i.e., the intellectual enrichment of the society. Although, the legal position of CDL is not clear in India, there are strong arguments offered to consider CDL as fair use. Ultimately, we must remember that the goal of copyright is not just to protect the interests of copyright owners but also broader public interest.
(Abhishek Gupta is a law undergraduate at National Law University, Delhi. The author may be contacted via mail at abhishek.gupta21@nludelhi.ac.in)
Cite as: Abhishek Gupta, Analysing Controlled Digital Lending through the Prism of Fair Use and First Sale Doctrine under Copyright Law, 5 November 2023<https://rmlnlulawreview.com/2023/11/05/analysing-controlled-digital-lending-through-the-prism-of-fair-use-and-first-sale-doctrine-under-copyright-law/ >date of access.
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