Copyright

March 24, 2023, saw the release of the District Court ruling in Hatchette Book Group v. Internet Archive,[ref]Hatchette Book Group v. Internet Archive 2023 WL 2623787 U.S. District Court for the S.D. of New York 2023[/ref] the long running battle between several book publishers and the Internet Archive over the practice of "Controlled Digital Lending." "Controlled Digital Lending" is quite frankly, a myth, designed to give the IA the patina of legitimacy as a self-stylized "library." As this Court ruling makes clear, CDL is not legal and never has been. "[N]o case or legal principle supports that notion. Every authority points in the other direction."[ref]Id. at 15 (page references are to the original pagination)[/ref] Well, it doesn't get much plainer than that. In essence, the CDL theory works like this: the IA acquires a copy of a book. It then creates a digital copy of this book and "lends" the digital copy over the internet. Under the CDL theory, as long as the IA does not lend out more digital copies than it has physical copies, this is either (1) protected by the first sale doctrine under Section 109(a) of the Copyright Act, or (2) fair use under Section 107. But the IA doesn't stop there. The "Open Library of Richmond" run by Brewster Khale, the same person behind IA, "buys or accepts donations of print books, primarily from Better World Books ("BWB"), a for-profit used bookstore affiliated with IA and the Open Library (citation omitted)."[ref]Id. at 2[/ref] Hmm. I sense a pattern here. "The Open Library then sends the books to IA scanning centers, where operators turn and photograph each page using a book-digitization device called a ‘Scribe.' (citation omitted) After scanning, the print books are stored in double-stacked shipping containers and are not circulated."[ref]Id.[/ref] Let's see here. A "library" that does not actually lend out the physical books in its possession? It just stores them in containers? How is that a "library"? Not to mention the fact that all of these entities seem to be run by the same people. But again, the IA doesn't stop there. "Around 2018, IA began expanding significantly its lending capacity of copyright-protected works through the ‘Open Libraries' project. (citation omitted) Libraries now can ‘pool [ ] their physical collections' with IA ‘in order to make more lendable copies of digital books available to their users and the world.' (citation omitted) To participate, a Partner Library sends its catalogue to IA to run an ‘overlap analysis' that compares ISBN numbers for the Partner Library's physical holdings with IA's digital holdings. (citation omitted) Whenever a book in the Partner Library's catalogue matches an ebook on IA's Website, IA increases by one the number of concurrent checkouts of that book allowed on the Website. (citation omitted). As of late 2021, 62 Partner Libraries, including 13 public libraries, had contributed books through IA's overlap analysis. (citation omitted) IA encourages Partner Libraries to populate their websites with links to IA's Website. (citation omitted)"[ref]Id. at 3[/ref] But under the theory of CDL, the digital copies should not exceed the number of copies in the collection, and "Partner Libraries" are supposed to remove the hard copies off its shelf when the IA lends its corresponding digital copy. Not surprisingly, it didn't really work that way. "Although the Open Library's print copies of the Works in Suit are non-circulating, IA concedes that it has no way of verifying whether Partner Libraries remove their physical copies from circulation after partnering with IA. (citation omitted) To the contrary, IA knows that some Partner Libraries do not remove the physical books from their shelves, and even if a Partner Library puts a physical book into a non-circulating reference collection, it could be read in the library while the ebook equivalent is checked out. (citation omitted)  IA also does not inform Partner Libraries when an ebook in its collection is checked out, and Partner Libraries do not tell IA when their physical copies are circulating.(citation omitted) IA admits it has never taken action against a Partner Library that did not suppress circulation properly."[ref]Id. at 10[/ref] So, despite the fact that CDL was a fanciful notion created out of thin air, and unsupported by any law, it never really worked the way IA promised it would. But none of this matters. Because the first step in controlled digital lending is to make an illegal copy. The IA could have seen this coming because that was exactly the holding of the Second Circuit in Capitol Records LLC et al v. ReDigi.[ref]2018 WL 6518076 2^nd Circuit Court of Appeals 2018[/ref] Both the District Court and the Court of Appeals held that when the first step is to make an illegal copy, the first sale doctrine no longer applies.[ref]Court of Appeals Rejects ReDigi[/ref] The Court here holds: "The first sale doctrine limits a copyright owner's distribution right under § 106(3), but Section 109(a) ‘says nothing about the rights holder's control under § 106(1) over reproduction of a copy or phonorecord.' (citation omitted) Although Section 109 entitles IA and its Partner Libraries to resell or lend their lawfully acquired print copies of the Works in Suit, ‘unauthorized reproduction,' which is at the heart of IA's online library, ‘is not protected' by § 109(a)."[ref]Hatchette Book Group v. Internet Archive at 10[/ref] So, the IA pivots and claims that CDL is (all together now) fair use. The Court takes a mere five pages to dismantle the IA's fair use defense.

• As to factor one: "IA in no way transforms the use of the Works in Suit. It merely creates derivative ebooks that, when lent to the public, compete with those authorized by the Publishers. The promise of a one-to-one "owned-to-loaned ratio," whether cast under Section 109 or fair use, is no defense…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."[ref]Hatchette Book Group v. Internet Archive at 11[/ref]
• As to factor two: "IA argues that because most of the Works in Suit were published more than five years before IA copied them, IA has not interfered with the authors' ‘right to control the first public appearance of [their] expression.'(citation omitted). IA is correct that the unpublished nature of a work tends to negate a defense of fair use. (citation omitted) However, ‘the converse is not necessarily true; neither Harper & Row nor any principle of fair use counsels that the publication of the copyrighted work weighs in favor of fair use.' (citation omitted). Published works do not lose copyright protection after five years."[ref]Id. at 12 (emphasis added)[/ref]
• As to factor three: "In this case, however, IA copied the Works in Suit wholesale for no transformative purpose and created ebooks that, as explained below, competed directly with the licensed ebooks of the Works in Suit. IA's wholesale copying therefore cannot be excused, and the third factor weighs strongly in the Publishers' favor."[ref]Id.[/ref]
• As to factor four: "The fourth factor necessarily relates to the first and third factors. The less transformative a secondary use is under the first factor, the more ‘likely it will supplant the commercial market for the original.' (citation omitted) So too, the larger the amount of the original that is taken under the third factor, ‘the greater the likelihood that the secondary work might serve as an effectively competing substitute for the original'… 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. To state the obvious, ‘[i]t is difficult to compete with a product offered for free.'"[ref]Id. at 14 (emphasis added)[/ref]

And the final nail in the IA coffin: "At bottom, IA's fair use defense rests on the notion that lawfully acquiring a copyrighted print book entitles the recipient to make an unauthorized copy and distribute it in place of the print book, so long as it does not simultaneously lend the print book. But no case or legal principle supports that notion. Every authority points the other direction... 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."[ref]Id. at 15[/ref] Calling yourself a "library" as a way of generating sympathy and support (because who doesn't love a library?) does not make you an actual library. Especially where you don't actually lend out the books you own, preferring to keep them in a storage container. Calling copyright infringement "Controlled Digital Lending" does not make it legal. Just as calling something "fair use" does not automatically make it so.

On March 16, 2023, the U.S. Copyright Office issued a new policy directive for the registration of works created in whole or in part by artificial intelligence.[ref]Federal Register Vol. 88 No. 51 – 37 CFR Part 202.[/ref] Unfortunately, the directive was not very clear, as it generated these headlines in response: "AI-"Assisted" Works Are Now Open to Copyright Protection, Raising Questions for Hollywood"[ref]AI-"Assisted" Works Are Now Open to Copyright Protection, Raising Questions for Hollywood[/ref] "US Copyright Office: AI Generated Works Are Not Eligible for Copyright"[ref]US Copyright Office: AI Generated Works Are Not Eligible for Copyright[/ref] "U.S. Copyright Office says some AI-assisted works may be copyrighted"[ref]U.S. Copyright Office says some AI-assisted works may be copyrighted[/ref] "U.S. Copyright Office Rules A.I. Art Can't Be Copyrighted"[ref]U.S. Copyright Office Rules A.I. Art Can't Be Copyrighted[/ref] Who's right? Unfortunately, both of them. Let's go back and look at two areas that do not have copyright protection; facts and the public domain. Facts are ineligible for copyright protection. And, additionally, as Section 102(b) enumerates, no protection exists for any "idea, procedure, process, system, method of operation, concept, principle, or discovery." Yet, if the facts are arranged in a manner that shows authorship, or are explained in a manner that shows authorship, then a copyright will issue, yet the facts will remain unprotected. No history book could exist if this were not so. Similarly, a work that is in the public domain has no copyright. But if a book consists primarily of photographs in the public domain, a copyright will issue if the photos are arranged in an original manner, such as a pictorial biography of Mark Twain, in which all of the subject photos will be in the public domain. Such as it is with "Zarya of the Dawn," the graphic novel which at first was granted copyright by the Copyright Office but later had its registration revoked, when it was revealed (by the author rather imprudently) that the artwork was generated by AI.[ref]U.S. Copyright Office Says AI-Generated Images Do Not Qualify For Copyright Protection[/ref] "Although the images cannot be copyrighted, USCO did state that [the author] can copyright the parts of the book that she wrote and how the AI-generated images are arranged on the page… USCO rescinded the original protection and issued a new copyright that only covers the writing and the layout of the images, not the images themselves. The new copyright is retroactive to the original issue date."[ref]U.S. Copyright Office Says AI-Generated Images Do Not Qualify For Copyright Protection[/ref] So the new policy regards how a work which has been "assisted" in whole or in part by AI may be registered. Unfortunately, it is not the picture of clarity. "Individuals who use AI technology in creating a work may claim copyright protection for their own contributions to that work. They must use the Standard Application, and in it identify the author(s) and provide a brief statement in the ‘Author Created' field that describes the authorship that was contributed by a human. For example, an applicant who incorporates AI-generated text into a larger textual work should claim the portions of the textual work that is human-authored. And an applicant who creatively arranges the human and non-human content within a work should fill out the ‘Author Created' field to claim: ‘Selection, coordination, and arrangement of [describe human-authored content] created by the author and [describe AI content] generated by artificial intelligence.'"[ref]Federal Register Vol. 88 No. 51 – 37 CFR Part 202.[/ref] BUT, "AI-generated content that is more than de minimis should be explicitly excluded from the application. This may be done in the ‘Limitation of the Claim' section in the ‘Other' field, under the ‘Material Excluded' heading. Applicants should provide a brief description of the AI-generated content, such as by entering ‘[description of content] generated by artificial intelligence.' Applicants may also provide additional information in the ‘Note to CO' field in the Standard Application."[ref]Id.[/ref] Now, the person who is filling out the registration form is not likely to be an attorney. It may be the authors themselves. Are they to know that the "Standard Application" must be used rather than form TX (for literary works), or form VA (for works of the visual arts) if the work contains AI material? Plus, unless the person is familiar with the process, how are they to judge whether the contribution is de minimus and that the required information should go in the "Limitation of Claim" field rather than the "Author Created" field? This sort of regulatory nit-picking is going to lead to various unwelcome outcomes, the most likely being that mistakes are going to be made or the author is going to say "to heck with it," and lie about the AI contribution. None of this will matter, of course, until the copyright at issue is subject to litigation, either by the author suing for infringement or being sued for infringement. Since the AI process is the proverbial "cat let out of the bag," an attorney, before filing suit, will need to quiz the client closely about whether AI was used, and if so, how much. Likewise, the defense attorney's first question to the Plaintiff will be "was AI used in the creation of all or some of the work at issue?" For the unlucky author who botches this part of the registration process, the result may be a court ruling that their copyright is invalid. For my two cents, it would be much better for the Copyright Office to amend the registration forms to ask this point-blank question: "Was Artificial Intelligence used in whole or in part, in the creation of this work?" with a box to check "Yes" or "No." Following up, the next box should be "If the answer is "yes," please explain in detail the areas and extent in which AI was used." That would vastly clear things up. And be a lot easier for all concerned.

As a general rule, I do not comment on pending litigation. Too much can happen on the way to a judgement or court ruling. Once there is a court ruling, which generates substantive law, IMHO that is the best time for commentary. However, artificial intelligence art program creator Stability AI has been sued three times in recent months. Once in a class action in the United States, secondly in the UK by Getty Images,[ref]Do AI Art Tools Break Copyright Laws? Two New Lawsuits Will Find Out.[/ref] and a third lawsuit, also by Getty Images, filed in the US District Court in Delaware.[ref]Getty Images lawsuit says Stability AI misused photos to train AI[/ref] I enter into this fray in response to this sneering comment on the class action lawsuit by a spokesperson for Stability AI: "Anyone that believes that this isn't fair use does not understand the technology and misunderstands the law."[ref]Do AI Art Tools Break Copyright Laws? Two New Lawsuits Will Find Out.[/ref] Well then! Verily the gauntlet has been thrown! So let's take a look, shall we?

Toto, We're Not in Kansas Anymore, Part I

Copyright is a global institution, and the programs' distribution is world-wide. The first of Getty's lawsuits was filed in the United Kingdom. The UK, for example, does not recognize "fair use" as it exists in America. Instead, it recognizes a much more limited concept of "fair dealing." And UK law has specific provisions regarding the sort of data mining engaged in by Stability AI, which has the effect of making SAI's action infringing. Article 29(a) of the Copyright, Designs and Patents Act of1988 provides:

Copies for text and data analysis for non-commercial research

                "(1) The making of a copy of a work by a person who has lawful access to the work does not infringe copyright in the work provided that— (a)the copy is made in order that a person who has lawful access to the work may carry out a computational analysis of anything recorded in the work for the sole purpose of research for a non-commercial purpose" And "(2) Where a copy of a work has been made under this section, copyright in the work is infringed if— (a )the copy is transferred to any other person, except where the transfer is authorised by the copyright owner, or (b )the copy is used for any purpose other than that mentioned in subsection (1)(a), except where the use is authorised by the copyright owner."[ref]Copyright, Designs and Patents Act 1988[/ref] So, the type of data mining engaged in by SAI seems to create massive liability on their part, as the purpose was clearly not "non-commercial."

Toto, We're Not in Kansas Anymore, Part II

Defenses of AI art as being "fair use" all start at the same point: the opinion of the Second District Court of Appeals in Authors Guild v. Google, Inc.[ref]804 F.3d 202 (2d Cir. 2015)[/ref] In that case: "Through its Library Project and its Google Books project, acting without permission of rights holders, Google has made digital copies of tens of millions of books, including Plaintiffs', that were submitted to it for that purpose by major libraries. Google has scanned the digital copies and established a publicly available search function. An Internet user can use this function to search without charge to determine whether the book contains a specified word or term and also see "snippets" of text containing the searched-for terms."[ref]Id. at 207[/ref] There, the Court held this was fair use, ruling: "Google's making of a digital copy to provide a search function is a transformative use, which augments public knowledge by making available information about Plaintiffs' books without providing the public with a substantial substitute for matter protected by the Plaintiffs' copyright interests in the original works or derivatives of them."[ref]Id.[/ref] So far so good. Except that the Getty Images case was filed in the District Court in Delaware. Why Delaware? According to the complaint, Stability AI, Inc is incorporated in Delaware. And Delaware is in the jurisdiction of the Third Circuit Court of Appeals, not the Second Circuit Court of Appeals.[ref]United States Court of Appeals for the Third Circuit[/ref] As persuasive as the Second Circuit's reasoning and logic in the Google Books case might be, the Courts of the Third Circuit are under no obligation to follow the ruling or treat it as settled law. It can rule any way it wishes.

Toto, We're Back In Kansas, But We're Still In Trouble

Last but not least, even if the case were being heard in the Courts governed by the Second Circuit, the outcome of fair use is hardly the slam dunk that SAI thinks it is. First, the opinion in the Google Books case itself admits that the case "tests the boundaries of fair use."[ref]804 F.3d 202 (2d Cir. 2015) at 207[/ref] Next, recall the Court's ruling depended upon the finding that Google Books was not "providing the public with a substantial substitute for matter protected by the Plaintiffs' copyright interests in the original works or derivatives of them."[ref]Id.[/ref] That is not the case here. Clearly the intent of the SAI program is to act as a market substitute for the works they have ingested in the training process. Since the SAI program cannot really "create" anything, it can only make use of what has been ingested into the database, it is the ingestion point which becomes infringing. If you've already got the entire Getty Images database for free in your SAI program, why go and get a license from Getty Images? Or consider this, if the ingestion of millions of copyrighted images from Getty Images into the SAI program is indeed fair use, what is to prevent other image manipulation programs, say PhotoShop from offering the Getty Images database as well? Next up is the failure to recognize that the Second Circuit made a significant retreat from its ruling in the Google Books case when it issued its opinion in Fox News Network, LLC v. TVEyes, Inc.[ref]883 F.3d 169 (2d. Cir 2018)[/ref] "TVEyes has two basic modes. A ‘search' function allows the subscriber to find video segments that contain certain buzzwords. The ‘watch' function allows that same subscriber to view that same segment for up to 10 minutes of video, unaltered from its first performance by Fox News."[ref]Eyes Wide Shut: TVEyes Video Clip Service Not Fair Use[/ref] Fair use, right? Nope. "‘This [3^rd] factor clearly favors Fox because TVEyes makes available virtually the entirety of the Fox programming that TVEyes users want to see and hear. While ‘courts have rejected any categorical rule that a copying of the entirety cannot be a fair use,' ‘a finding of fair use is [less] likely ... when the copying is extensive, or encompasses the most important parts of the original.' (citation omitted) In this respect, the TVEyes Watch function is radically dissimilar to the service at issue in Google Books."[ref]883 F.3d 169 (2d. Cir 2018) at 179[/ref] And this: "Since the ability to re-distribute Fox's content in the manner that TVEyes does is clearly of value to TVEyes, it (or a similar service) should be willing to pay Fox for the right to offer the content. By providing Fox's content to TVEyes clients without payment to Fox, TVEyes is in effect depriving Fox of licensing revenues from TVEyes or from similar entities. And Fox itself might wish to exploit the market for such a service rather than license it to others. TVEyes has thus ‘usurp[ed] a market that properly belongs to the copyright-holder.' (citation omitted) It is of no moment that TVEyes allegedly approached Fox for a license but was rebuffed: the failure to strike a deal satisfactory to both parties does not give TVEyes the right to copy Fox's copyrighted material without payment."[ref]Id. at 180[/ref] According to the Getty Images complaint, SAI has copied more than 12 million images in the Getty images database,[ref]Getty Images (US) Inc. v. Stability AI, Inc Complaint at 1[/ref] which has copyright registration TXu002346096.[ref]Id. at 10[/ref] In addition, for the purposes of trial, 7,216 individual images will be at issue.[ref]Id. at 7[/ref] It is easy to see how the inclusion of the entire Getty Images database into the training of the program will negatively affect the ability of Getty Images to license these images. Indeed, the complaint shows instances of SAI output with the Getty Images watermark still attached to them.[ref]Id. at 18[/ref] The issue is not what the output might look like, even though SAI and its apologists try very hard to make this the crux of the case. The issue is that an entire database was copied, and made available to the public without compensation to the copyright owner, just like the TV Eyes case.