At a lengthy June 28 hearing in New York, a three-judge panel of the U.S. Court of Appeals for the Second Circuit heard oral arguments in the Internet Archive's appeal of a March 2023 court decision finding its program to scan and lend print library books to be copyright infringement. And while the court clearly appeared skeptical of the Internet Archive's arguments, the panel was deeply engaged and well-prepared, peppering both sides with a wide array of questions.

The hearing comes after federal judge John G. Koeltl last year found the Internet Archive infringed the copyrights of four plaintiff publishers by scanning and lending their books under a legally contested practice known as CDL (controlled digital lending). “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,” Koeltl wrote in his March 24 opinion granting the publisher plaintiffs’ motion for summary judgment and denying the Internet Archive’s cross-motion. “But no case or legal principle supports that notion. Every authority points the other direction.”

At Friday’s appeal hearing, IA lawyer Joe Gratz made it less than a minute into his argument before the court cut to the chase with a foundational question:

“If [print and e-book formats] are considered distinct things and there are separate markets for them, why shouldn't the law recognize that converting the paper book into a digital book isn't just the same thing as passing around the paper book?”

Gratz countered that the IA and libraries were simply using technology to do what they traditionally do—lend the books they’ve legally acquired—but more efficiently and conveniently, and that such efficiency is favored by the courts as transformative. But the court pushed back.

“In the real world, there's a lot more friction in the sort of market for passing a paper book from one person to another. And I'm imagining that that's priced into the price of the paper book,” the court said. “Your premise is that a scanned, digital version of that paper book is tantamount to the same thing as the [print] book, but we know there's a distinct market for those digital books. They're priced separately. So you're taking something from one market and you're inserting it into another market without ever having paid the premium in that new market.”

Arguing for the publishers, Elizabeth McNamara had an easier time.

“Internet Archive is asking this court to disregard the controlling law of this court, as well as the Supreme Court, and what it is seeking is a radical change in the law that, if accepted, would destabilize the digital economy,” she began, restating the publishers’ core claim. “Not just for books, but for movies, for music, for TV and the like. Without license or payment, Internet Archive is making a complete, exact digital copy of the publishers' print books and distributing them around the world so that they can be read, the exact same purpose for which the publishers are publishing these works.”

But the court also vigorously probed the publishers’ legal arguments for nearly half an hour, and at one point pushed back on the narrative offered by McNamara that the IA and its allies “got together in a room” and “contrived” CDL to rationalize their illegal conduct.

“That’s what fair use is, right?” the court retorted. “Like, people get together and decide, like, can we use it to this extent? What are the limits of how the fair use factors will be applied? I mean, it's not nefarious to sit down and decide whether you're proposing to do something that's covered by fair use or not.”

The court did not decide the case from the bench and gave no time frame for when it would issue a ruling. At a post-hearing press conference, Gratz said a decision could come as early as fall, or could take a year.

IA co-counsel Corynne McSherry acknowledged the court’s deep engagement (the arguments were scheduled for 10 minutes per side yet went on for 90 minutes) and said that the questions suggested the court was taking its work seriously. “They get it. They understand this is an important decision,” she said.

In a statement, a rep for the Association of American Publishers expressed confidence the outcome would go their way. “We thought it was a strong day in court, and we look forward to the opinion.”