The following blog post was authored by Becca Lynch, a student clinician with the Samuelson-Glushko Technology Law & Policy Clinic at University of Colorado Boulder under the supervision of Professor Blake Reid, as part of an Authors Alliance student clinic project on library e-book licensing legislation.

Over the past year, various state bills have been proposed that would require publishers to license e-books to public libraries under “reasonable terms,” the most notable of which being the Maryland bill, which passed and was set to take effect on January 1, 2022.

As the pandemic has shown, the importance of public libraries cannot be understated. As a tax-funded institution created solely for public benefit, regulation of e-book licensing terms is important for the sustainability of libraries’ e-book lending. 

On December 9^, 2021, the Association of American Publishers (“AAP”) announced its filing of a lawsuit attempting to keep the Maryland bill from taking effect, and on January 14, the state of Maryland asked the court to dismiss the lawsuit. As this bill is the only bill of its type currently set to take effect, the outcome of this lawsuit could trigger similar lawsuits against other such proposed bills, such as the one currently pending in Rhode Island. While New York passed a similar bill last year, Governor Kathy Hochul recently vetoed the bill, citing the possibility of preemption as a reason for doing so.

The primary component of AAP’s complaint against the Maryland bill is its supposed preemption. “Preemption” is a legal doctrine which applies to block state laws when those state laws are not compatible with federal law. But, contrary to both AAP’s complaint and the United States Copyright Office’s initial letter on the matter, a conflict preemption analysis (which applies when state and federal laws actually conflict) does not provide a clear answer, nor is the handling of conflict preemption by courts a straightforward matter.

Courts have used a wide range of possible approaches to preemption analysis in the context of federal copyright law, the primary ones being (I) a balancing test from a case called In Re Jackson when the state law is alleged to conflict with U.S. copyright law, (II) deference to certain state market interests, and (III) examination of physical impossibility of compliance with both federal and state regulations. As a result, understanding and predicting the analytical approach a judge may take based on those available is a rather complicated process.

The test from In Re Jackson involves balancing a state’s interests (distinct from the interests of copyright law) against the potential for conflict between the relevant state law and federal copyright law. Under this test, the more substantial the state law interest undergirding the state law, the stronger the case is to allow that right to exist alongside federal copyright law. Moreover, there needs to be additional evidence to show that a claim arising from violation of the state law is more than a simple copyright infringement claim in order for the state law to not be preempted.

Under the second approach, deference to state market interests, courts consider whether there are significant state market interests animating the state law. Courts tend to allow state regulations that are designed to ensure a fair market, while finding that copyright law preempts state laws which force a copyright holder to distribute and license her work against her will.

The third approach is one where courts find that federal copyright law preempts state law in situations where compliance with both state law and federal law is impossible. In this situation, since the state e-book licensing laws do not deprive the publishers of their exclusive right to license e-books, complying with both state law and federal copyright law is not impossible. The publishers retain their exclusive rights and maintain control over the decision to license e-books to the general public. Only upon exercising this right must they abide by the reasonable terms within the state licensing law. 

Maryland’s interests motivating its e-book licensing bills is simple, yet compelling: ensuring its citizens have access to culturally and socially significant creative works in the form of e-books. In addition, the law seeks to remedy an inequitable market situation by preventing publishers from abusing their market power to overcharge tax-funded public libraries. These interests are both substantial and distinct from those undergirding copyright law (which include, for example, incentivizing the creation of new creative works). The Maryland state bill would be enforced under state deceptive and unfair trade practice law, and as a result, the elements for bringing a claim under state law would contain much different elements than one under copyright law.

Ultimately, regardless of the analysis used, there is strong evidence that supports a finding that the e-book licensing bills are not preempted by federal copyright law under an implied conflict preemption analysis. 

Although this lawsuit is still in its early stages, Authors Alliance will be monitoring its progress and keeping our members apprised of updates in the case.