Category Archives: Law and Policy

Judge Hears Oral Arguments in Hachette Book Group v. Internet Archive

Posted March 20, 2023

Earlier today, Judge John Koeltl of the Southern District of New York heard oral arguments in Hachette Book Group v. Internet Archive—a case Authors Alliance has been following since the lawsuit was first filed back in 2020. The case is about—among other things—whether Internet Archive’s controlled digital lending program qualifies as a fair use. Authors Alliance submitted an amicus brief in support of the Internet Archive back in July, arguing that CDL serves the interests of authors who write to be read. IA’s attorney cited to our brief during oral argument, and we are pleased that we were able to magnify the voices of authors who write to be read through its submission. You can learn more about the case and read our brief here.

In the hearing, the judge considered each party’s motion for summary judgment. The parties hotly contested a number of key issues in the case, including whether each side’s experts had properly demonstrated market harm (or lackthereof), what the appropriate market to consider was for purposes of fair use analysis, the commerciality of IA’s use, and what legal cases supported both arguments in favor of and against fair use. Judge Koeltl asked the Internet Archive’s attorney a number of probing questions on these points, grappling with the difficult questions in this case. The judge further implied that there may be open issues of fact in this case, which could indicate the need for additional briefings or hearings.

CDL and Commerciality

The parties disagreed on the commerciality of IA’s use when it produces and makes CDL scans available. The publishers attorney argued that IA’s CDL operations are “intertwined” with its other functions, such as its ownership of the book vendor Better World Books, and further emphasizing its argument that CDL loans result in lost revenue for the publisher—in other words, that the supposed commercial harm to the publishers that results from CDL lending makes the CDL lending itself commercial. The Internet Archive’s attorney answered that IA is a nonprofit organization that does not profit at all from its CDL program. He pointed to the fact that traditional library lending is not commercial in nature and does not provide libraries like IA with commercial benefits.

CDL and Market Effects

The plaintiffs’ attorney began by setting forth plaintiffs’ views on the issue of market harm—the fourth factor in fair use analysis, often cited as one of the most important factors in the inquiry. Plaintiffs discussed what they see as massive financial harm stemming from IA’s CDL program, which they estimated to amount to “millions of dollars in licensing revenues.” Plaintiffs also emphasized that, were CDL “given the green light,” or upheld as a fair use, the plaintiffs would suffer even greater losses. Throughout her argument, plaintiffs’ attorney emphasized the “basic economic principle and common sense is that you cannot compete with free.” In other words, the publishers argue that the ebook library licensing market could collapse altogether if CDL were allowed to continue. Yet this misses the point that CDL is a longstanding and established practice, which has seen adoption and growth in libraries across the country while the ebook licensing market has continued to thrive.

Judge Koeltl, however, pressed the publishers on whether they had shown evidence of actual market harm, i.e. proof that IA’s CDL program had directly harmed their bottom line. In response, plaintiffs criticized the expert evidence offered by IA’s experts to show that no such harm had occurred. This is a difficult question because the party asserting a fair use defense typically has the burden of showing that the use has not harmed the market, but it exceedingly difficult to prove a negative.

The judge also questioned whether CDL actually could represent such a loss: the publishers’ argument rests on the premise that libraries loan out CDL scans in lieu of paying to license ebooks, and were CDL not permitted under the law, IA and other libraries would instead choose to pay licensing fees to lend out ebooks. The judge pointed out that the result might in fact be that libraries would choose not to lend digital copies of works out at all, or would instead lend out physical books, undercutting the lost licensing revenue argument.

IA’s attorney argued that the publishers had not offered empirical evidence of market harm in this case, focusing on the fact that when a library lends out a CDL scan, it does so in lieu of a physical book, “simulating the limitations of physical books.” This is due to CDL’s “owned to loaned” ratio requirement: a library can only loan out the number of CDL scans as it has physical books in its collection, and can only loan these scans out to one patron at a time. When a library lends out a CDL scan, it does so in lieu of loaning the physical book, for which it has already paid. And while the plaintiffs mentioned harm to authors (who are, after all, the people that copyright law is intended to protect) several times during their argument, they did this in a way that linked authors with publishers as parties that are financially invested in a works’ sale—author interests and the finer details of the economics of author income and library lending were absent from the discussion.

The parties also disagreed about which market was the appropriate one to look to when discussing market harm in the context of fair use analysis. The publishers argued, and the judge seemed to assume, that the proper market is the library ebook licensing market. The judge opined that libraries could, instead of using CDL to lend out their books, simply purchase an ebook license. He seemed to view CDL scans and licensed ebooks as one and the same, despite the fact that there are several key differences between these types of loans, both in form and function, as explained in other amicus briefs in the case. Moreover, missing from the argument was the fact that, in many cases, libraries loan out CDL scans because no ebook is available to them: particularly for older books in a publisher’s backlist, or for books that are no longer available commercially, there is in many cases no ebook available, or no ebook available to libraries. Library patrons with print or mobility disabilities in need of digital copies of these kinds of works in order to read them would be greatly harmed if CDL were no longer permitted.

CDL and Transformativeness

The publishers’ attorney started from the premise that CDL as a use was not transformative, explaining that a licensed ebook and a CDL scan served precisely the same function. In response, IA’s attorney in response argued that CDL is a transformative use because it “utilizes technology to achieve the transformative purpose of improving efficiency of delivering content without unreasonably encroaching on the rights of the rightsholder.” He further explained that fair uses are favored when they serve the key purpose of copyright: incentivizing new creation for the public benefit without harming the interests of rightsholders. To illustrate these benefits, he cited to Authors Alliance’s amicus brief, in which we explained the myriad ways that CDL benefits authors and can even incentivize the creation of new works.

Adding to its transformativeness argument, IA explained that, when it comes to speculative or actual market harm, such an effect must be balanced against the public benefit that results from the use. And when it comes to CDL, this public benefit is tremendous: numerous amici, as well as Authors Alliance, explained that CDL serves the interests of library patrons, authors, and the public writ large.

What’s Next?

Now that the judge has heard both sides’ arguments, he will issue a decision in the case. While there is no way of knowing exactly when this will happen, Judge Koeltl is known for issuing decisions fairly quickly, so we may have a decision as soon as later this week. As always, we will keep our members and readers apprised of any developments in this pivotal case as it moves forward.

Copyright Office Issues Opinion Letter on Copyright in AI-Generated Images

Posted March 8, 2023

In late February, the Copyright Office issued a letter revoking a copyright registration it had previously granted artist Kristina Kashtanova for a comic that used images generated using Midjourney, a generative AI program that creates images in response to user prompts. While this may seem minor, or simply another data point in the ongoing fight about copyright protection for AI-generated works, the determination is quite significant: it comes at a moment when AI-generated art has captured public attention, and moreover shows the Copyright Office’s thoughts on the important question of whether an artist who relies on a program like Midjourney can obtain copyright protection for an original compilation of AI-generated works. In today’s post, we explain the Copyright Office letter, contextualize it within the growing debate over AI and copyright, and share our thoughts on what all of this might mean for authors who write to be read.

Copyright and Human Authorship

As technology has advanced to allow the creation of works without the direct involvement of a human, courts have grappled with whether these creations are entitled to copyright protection. In the late 19th century, the Supreme Court established that copyright was intended to protect the products of human labors and creativity, creating the “human authorship” requirement. In an early case on the topic, the Court held that a photograph was copyrightable despite the fact that a camera literally created the image, since photographs were “representatives of original intellectual conceptions of the author.” It cautioned, however, that when it came to creations resulting from processes that were “merely mechanical,” lacking “novelty, invention, or originality” by a human author, such hypothetical works might be beyond the scope of copyright protection.

This principle was tested in the 2010s: in 2011, an Indonesian crested macaque monkey named Naruto seized a photographer’s camera and took hundreds of images of himself. The photographer, David Slater, shared some of these images online, which promptly went viral. Several websites posted these images as well, prompting Slater to assert that he owned the copyright in the images and request their removal. The Wikimedia Foundation, which had uploaded the image to Wikimedia Commons, a repository of public domain and free license content, argued that the image was a part of the public domain due to the lack of a human creator. Several years later, Slater published a book of nature photographs which included Naruto’s selfie. Then, in 2015, the People for the Ethical Treatment of Animals (PETA) filed a lawsuit in the Northern District of California on Naruto’s behalf, asserting that the macaque owned the copyright in the image and requesting damages. The district court judge held that Naruto could not own the copyright in the image due to copyright’s human authorship requirement. However, the judge did indicate that Congress might be free to do away with the human authorship requirement and permit copyright ownership by animals, suggesting that the requirement was not a constitutional one, but indicating that it was beyond the power of the judiciary to decide. The Ninth Circuit Court of Appeals later affirmed the district court’s ruling.

Currently, the Copyright Office is defending a lawsuit in the D.C. district court brought by AI system developer, Dr. Stephen Thaylor, regarding the constitutionality of copyright law’s human authorship requirement. Thaylor argues that the Copyright Act does not forbid treating AI systems as “authors” for the purpose of copyright law, and contends that the human authorship principle is unsupported by contemporary case law. While it seems unlikely that Thaylor will prevail on this argument, the case will at the very least generate new attention about the human authorship requirement and how it fits into creation in the digital age.

The Creativity Requirement and Zarya of the Dawn

Kashtanova’s assertion of copyright ownership in her comic, Zarya of the Dawn, is in many ways similar to the photographer David Slater’s claim that he owned the copyright in Naruto’s selfie. In each case, the Copyright Office indicated that when a work is not the product of human authorship, a human may not claim copyright in that work (the latest compendium of Copyright Office practices lists “a photograph taken by a monkey” as an example of work that is not entitled to copyright protection since it does not meet the human authorship requirement).

Kashtanova’s attorney had argued that Midjourney served “merely as an assistive tool,” and that Kashtanova should be considered the work’s author. But the Office likened Midjourney to a “merely mechanical process” lacking “novelty, invention, or originality” by a human creator, quoting the Supreme Court’s warning about the limits of copyright protection in the 19th century case discussed earlier in this post. And it was not only the human authorship requirement that made Zarya of the Dawn beyond the scope of copyright protection, but also copyright’s creativity requirement: for a work to be copyrightable, it must possess at least a “modicum” of creativity, a very low bar that rarely forecloses copyright protection for works of human authorship.

The Office explained that Midjourney generates images in response to user prompts, “text commands entered in one of Midjourney’s channels.” But these are not “specific instructions” for generating an image, rather input data that Midjourney compares to its training data before generating an image. The Office also argued that these images lack human authorship because the process is “unpredictable” and “not controlled by the user.” In other words, the “creativity” in these images comes not from the human entering prompts, but from the interaction between the prompt and Midjourney’s training data. This makes it different from a tool like a camera over which a user exercises total control—there is little to no unpredictability when we use digital cameras to photograph the world around us, rather all creative choices come from the human using the device.

The Office also noted that this opinion was not necessarily the final world on AI-generated images, as “other [generative] AI offerings” might operate differently, such that the creativity and human authorship requirements could be met. Kashtanova argued that minor edits she had made to the images were sufficiently creative to give her copyright ownership in the work as a whole. While the Office disagreed in this specific case (the before and after images demonstrating the editing were nearly identical), it did leave this possibility intact for future cases. Moreover, the Office granted Kashtanova ownership in the comic’s text, which she alone had written, as well as copyright ownership in the compilation of Midjourney-generated images. Compilations of uncopyrightable subject matter can sometimes be protected by copyright, because both the human authorship and creativity requirements are met when a human selects and arranges the material. The copyright owner does not own a copyright in the material itself, but in the original compilation they have created.

What Does this Mean for Authors?

The Copyright Office’s denial of registration in the Midjourney-generated images has important implications for the public domain and authors’ abilities to use new forms of technology as assistive tools in the creation of their works. But the Office’s action also leaves some open questions about the copyright status of images generated by Midjourney and similar systems. One possibility is—as was asserted by Wikimedia in the case of Naruto’s selfie—these images are a part of the public domain. Were that to be the case, it could be a boon for artists and creators. Recall that once a work is in the public domain, it becomes free for all to use without fear of copyright infringement. The case of the monkey selfie is further instructive here, as the owner of the camera in that case did not prevail on claiming his own copyright in Naruto’s selfie. By the same token, it is unlikely that the creators of Midjourney could claim a copyright in images like those used by Kashtova, despite their role in creating and making available the “assistive tool.”

If AI systems could be used to generate infinite public domain content—whether through text-based systems like ChatGPT or image-generating systems like Midjourney—this would greatly expand public domain content. The public domain can be a boon for creators, as they are free to do anything they wish with this material. On the other hand, some have expressed fear that, should all AI-produced works be considered a part of the public domain, these public domain works could compete with works produced by human authors. It is also important to remember the practical economic realities of systems like Midjourney. Whether or not the Copyright Office and other policymakers determine that AI-generated content is a part of the public domain, the creators of those systems could employ other means to assert ownership or forbid onward uses of the content created by these systems. Contractual override, the employment of so-called “digital locks” like DRM, or other legal and technical mechanisms could conceivably limit authors’ ability to use AI-generated works the way they might use more traditional public domain materials.

The First Copyright Small Claims Court Judgment

Posted March 6, 2023

Authors Alliance members will recall the posts we’ve made over the years about the enactment and implementation of a new copyright small claims court, the “Copyright Claims Board,” housed within the U.S. Copyright Office.

Late last week, the CCB issued its very first judgment. It came in a case brought by photographer David Oppenheimer against an California attorney, David Prutton, who had used an unlicensed copy of one of Oppenheimer’s photos (a picture of the federal courthouse in Oakland) on his solo-practitioner website (h/t to Plagiarism Today, where we first saw reporting about the case, here).

Screenshot of Prutton’s website, showing use of Oppenheimer’s photo of the Federal Courthouse in Oakland (twin buildings on the right).

The case had a head start because it was originally filed in federal district court, where the parties voluntarily agreed to dismiss the federal case and have the case referred to the CCB. You can read the entire history, including all the filings, here. The CCB ruled in favor of Oppenheimer, and awarded the photographer an award of statutory damages of $1,000, significantly less than the $30,000 (the maximum amount available to claimants in CCB proceedings) that Oppenheimer originally sought.

In many ways, this was a pretty easy case for the CCB. Prutton readily admitted that he had used Oppenheimer’s unlicensed photo, in whole, on his website. Though Prutton raised a fair use defense, he didn’t bother to argue any except one of the four fair use factors. Prutton’s sole contention was that the impact on the market was so minimal—and that Oppenheimer had shown no evidence of harm—that Prutton should win on the fourth fair use factor.

The CCB, noting that the fair use factors need to be balanced and weighed together, did its own analysis of all the fair use factors but concluded—rightly, I think—that for the other three fair use factors:

Prutton’s use was not particularly transformative or for a new purpose, weighing against the use;
Oppenheimer’s original photo was creative (certainly enough for copyright protection, though reasonable minds might disagree on the extent of the creativity and therefore how strong this factor should weigh in its favor), weighing against the use;
Prutton has used the whole work, not a small portion of it, weighing against the use.

For the fourth fair use factor, Prutton argued that because Oppenheimer showed essentially no history of licensing revenue from this photograph, along with a history of other litigation that tended to indicate that Oppenheimer’s business was primarily oriented toward generating revenue through litigation, there was no meaningful market harm. The CCB disagreed, essentially concluding that it was Prutton’s job to show a lack of market harm (which they said he did not do), and the burden did not rest on Oppenheimer to show evidence of a market. However, because Oppenheimer didn’t show any actual evidence of financial harm, this also led the CCB when assessing damages to grant an award far below Oppenheimer’s request—his original demand of $30,000 in damages was reduced to just $1,000.

Where the case was a little more interesting was how the CCB addressed Prutton’s defense of “unclean hands,” in which he essentially asks the CCB to excuse his use because Oppenheimer had acted improperly. If you do a quick search for “David Oppenheimer” and “copyright” you will find that Oppenheimer is frequently in court over alleged infringement of rights in his photographs, with fact patterns very similar to the one in this case, including heavy-handed negotiation tactics and aggressive use of litigation. In several of those cases, such as this case in the Western District of North Carolina, courts refused to grant Oppenheimer easy wins—concluding that Oppenheimer’s litigation tactics could reasonably be viewed as so problematic as to block his assertion of rights by the defense of “copyright misuse.”

The CCB dismissed Prutton’s “unclean hands” defense by highlighting how unusual and extreme a plaintiff’s conduct has to be to fall subject to that general defense. The CCB didn’t, however, really assess Prutton’s more substantial “copyright misuse” defense, perhaps because Prutton didn’t raise it as a separate defense. In my view, copyright misuse may well have been a valid defense in this case.

As the Western District of North Carolina explained in a previous case brought by Oppenheimer, “misuse of copyright is a valid affirmative defense where the use of a copyright is contrary to the public policy upon which copyrights are granted. . . . Typically, the defense applies when seeking to avoid anti-competitive behavior, but it can also apply to other scenarios where a copyright owner attempts to extend the copyrights beyond their intended reach. . . . The underlying policy principles behind copyrights extend from the United States Constitution, with the relevant policy here being to promote the ‘useful arts.’” The court in that case concluded that if Oppenheimer’s “purpose in copyrighting the Copyrighted Work was to license it for use when individuals or companies need [his photo] then Plaintiff is likely not misusing his copyrights. Yet, a reasonable jury could find Plaintiff is using copyrights to derive an income from infringement suits and this issue is one of fact that the Court should not decide.”

Lessons Learned

As this is the very first decision of the CCB, I don’t think we should draw sweeping conclusions from it about how the CCB will do its work. But it is interesting to see that this first case wasn’t exactly a suit between legal amateurs—Oppenheimer is a seasoned litigant who has brought many copyright cases, and Prutton is an attorney (albeit not one who specializes in copyright). Both made significant missteps in the presentation of their cases. And so, one observation I think we can make is that while the copyright small claims system is meant to have low barriers to participation, and the CCB seems inclined to go to extra lengths to help parties understand the process and present cogent filings, the CCB is not going to excuse incomplete argumentation. At least in this case, the CCB refused to assume facts or arguments not presented by the parties. That was true both for the plaintiff and defendant: plaintiffs who make damage assertions are going to need to show evidence of actual harm in order to get awards close to their requested amounts. And defendants who raise defenses will need to fully argue them; glossing over three of the four fair use factors is not a winning strategy. Nor does it seem passing references to defenses such as “unclean hands” and “copyright misuse” will work without adequate support.

Jack Daniels v. VIP Products and the Freedom to Parody and Comment in the United States

Posted March 2, 2023

This post was written for the Kluwer Copyright Blog, and is based in part on an amicus brief filed last week by the Harvard Cyberlaw Clinic on behalf of Authors Alliance and ComicMix before the United States Supreme Court in Jack Daniels v. VIP Products.

Ordinarily, authors who write parodies look to copyright limitations and exceptions to protect their rights. In the United States, the doctrine of fair use has been held to permit parody in uses ranging from rap music to children’s books. These fair use rights, the courts have said, have their roots in the U.S. Constitution’s First Amendment protections for freedom of speech.

In a recent case before the U.S. Supreme Court, Jack Daniels v. VIP Products, those parody rights are at risk. In a twist, however, it is not copyright law, but rather an expansive view of trademark law, that poses this threat.

The facts of this case are straightforward: Jack Daniels, creator of the famous Tennessee Whiskey, brought the trademark suit to stop VIP Products for production of a dog toy, which it titled “Bad Spaniels,” in the shape of Jack Daniels’ iconic whiskey bottle and label. Jack Daniels asserts that the Bad Spaniels toy infringes on its trademark and dilutes its brand. VIP Products counters that the toy is meant to parody Jack Daniels’ bottle and is protected speech under the U.S. Constitution’s First Amendment.

Jack Daniel’s Whiskey Bottle (left) and VIP Products’ “Bad Spaniels” dog toy (right). From Jack Daniels Properties, Inc. s v. VIP Products, LLC, Case No. 22-148, U.S. Supreme Court, Brief for Petitioner (11 January 2023), page 3, available **here**.

Although dog toys and whiskey bottles seem relatively inconsequential to literature, parody, and creative work, this case could have a dramatic impact on how authors write about, and parody, famous brands.

Trademarks are a cornerstone of our shared cultural vernacular. Popular brands are woven into the fabric of our national identity, recognizable by and meaningful to those from many different backgrounds. Authors often draw on these shared associations in their literary works, sending beloved fictional characters to real colleges, serving them familiar cereals, and outfitting them in well-known clothing labels. Whether to evoke nostalgia or to immerse their readers, authors use trademarks both to simulate reality and to critique it.

While trademark law aims to protect consumers and prevent confusion as to the source of goods or services, it must be enforced in a manner consistent with the speech protections guaranteed by the First Amendment of the U.S. Constitution. The freedom of authors to use trademarks in their works could be stifled by the threat of litigation. Overenforcement of trademark law runs contrary to both the purpose of intellectual property law and the U.S. constitutional legacy of protecting free expression. Protections for parody in other areas of the law, such as copyright’s fair use doctrine, will be undermined by a trademark ruling that allows for expansive enforcement.

If heightened First Amendment protections are not put in place, the threat of costly legal proceedings may cause creators to avoid the use of trademarks in their artistic works. While trademark law does have other mechanisms to protect authors of parody and commentary, such as a showing that an author’s use does not pose a likelihood of confusion, the process for successfully defending a trademark infringement case is remarkably expensive. In 2020, the American Intellectual Property Law Association reported that the median cost of trademark litigation in the U.S. before even going to trial ranged from $150,000 to $588,000. In the American system, litigants ordinarily bear their own costs, and so even an author who successfully defends such a suit would be on the hook for a large amount in legal fees. While litigation is commonplace for large corporations with significant legal resources, even a single lawsuit could be career-ending for an author without the resources to handle it.

If the threat of legal sanction hangs over the heads of writers, their literary characters may no longer use iPhones, eat at McDonald’s, or visit Disneyland. These uses offer meaningful expressive value to authors. Brands are often intentionally selected as cultural signifiers, chosen for the implicit associations they convey to readers. Cory Doctorow’s Down and Out in the Magic Kingdom (a Disney theme park) would have a different meaning if it were instead titled Down and Out in an Amusement Park. Nor is The Devil Wears Luxury Clothing as evocative as The Devil Wears Prada.

Even when trademarks are evoked in literary circumstances that their owners find distasteful, these uses are still expressive and noncommercial, thus worthy of the highest First Amendment protection. Prioritizing the pecuniary interests of trademark owners over the First Amendment rights of creative artists could lead to a catastrophic chilling effect on authors’ speech based on the perceived risk of litigation, whether or not such risk is actualized. This result is both untenable and entirely unnecessary. It is possible to ensure that trademark owners still have access to a wide variety of robust and reasonable remedies in cases of true infringement without creating unnecessary panic in many other circumstances.

The Supreme Court has a clear doctrinal path to avoiding a speech-suppressive environment. In Rogers v. Grimaldi, 875 F.2d 994 (2d Cir. 1989), the Second Circuit Court of Appeals struck a balance between the interests of trademark owners and First Amendment speech by crafting a clear and efficient test for infringement with appropriate protections for speech. The Rogers court recognized the mark owner’s interest in preventing confusion while ensuring adequate protection for the vital free speech principles at play, and provided a rule to determine at the outset of litigation–before incurring substantial costs–when expressive works infringe trademark rights. Rogers, in short, provided that in cases of artistic or creative works, trademark infringement should only be considered “where the public interest in avoiding consumer confusion outweighs the public interest in free expression.” Ordinarily, the court explained, this rule “will normally not support [the] application of [trademark law] unless the title has no artistic relevance to the underlying work whatsoever, or, if it has some artistic relevance, unless the title explicitly misleads as to the source or the content of the work.”

A ruling that substantially adopts a test like that in Rogers would continue to protect the rights of trademark owners, while also ensuring that authors who reference popular brands are protected by providing a clear, consistent and efficient rule to protect authors. A ruling in favor of Jack Daniels, however, could strike fear into the hearts of risk-averse creators, chilling their speech by discouraging them from using certain trademarks in their works altogether. It would undermine the otherwise strong protections that U.S. courts have identified for parodists and other authors in U.S. copyright law, under the doctrine of fair use.

You can read more about our views on the interaction between trademark law and authors’ free expression rights in our amicus brief filed in Jack Daniels v. VIP Products, available here.

Fair Use Week 2023: Looking Back at Google Books Eight Years Later

Posted February 24, 2023

This post is authored by Authors Alliance Senior Staff Attorney, Rachel Brooke.

More recent members and readers may not be aware that Authors Alliance was founded in the wake of Authors Guild v. Google, a class action fair use case in the Second Circuit that was litigated for nearly a decade, and finally resolved in favor of Google in 2015. The case concerned the Google Books project—an initiative launched by Google whereby the company partnered with university libraries to scan books in their collections. These scans would ultimately be made available as a full-text searchable database for the public to search through for particular terms, with short “snippets” displayed accompanying the search results. Users could not, however, view or read the scanned books in their entirety. The Authors Guild, along with several authors, filed a lawsuit against Google alleging that scanning the books and displaying these snippets constituted copyright infringement.

In addition to Authors Guild representing its members in the litigation, its associated plaintiffs brought the case as a class action, claiming to bring the case on behalf of a broad group of authors: “[a]ll persons residing in the United States who hold a United States copyright interest in one or more Books reproduced by Google as part of its Library Project” who were either authors or the authors’ heirs.

But many of these authors did not agree with the Authors Guild’s stance in the case, and felt that the Google Books project served their interests in sharing knowledge, seeing their creations be preserved, and reaching readers interested in their work. A group of authors and scholars came together to share their views with the district court, many of whom would soon become founding members of Authors Alliance. Many of those same authors signed on to amicus briefs before both the district court and Second Circuit explaining why they opposed the litigation and supported Google’s fair use defense. Then, in 2014, Authors Alliance submitted its first amicus brief to the Second Circuit, supporting Google’s ultimately successful fair use defense. The plaintiffs later appealed the Second Circuit’s ruling, asking the Supreme Court to weigh in, but the Court ultimately declined to hear the case, leaving the Second Circuit’s ruling intact.

Nearly a decade later, the effects of Google Books can still be seen in fair use decisions and copyright policy developments involving the challenges of adapting copyright to the digital world. In today’s post, I’ll reflect on how Google Books can be contextualized within today’s fair use landscape and share my thoughts on what the case can tell us about copyright in the digital world.

Google Books and Transformativeness

A major question in Authors Guild v. Google was whether Google’s use of the copyrighted works was “transformative,” a key component of the fair use inquiry. When a use is found to be transformative, this in practice weighs heavily in favor of a finding of fair use. In the case, the court found that Google’s scanning, as well as the search and snippet display functions, were transformative because the service “augments public knowledge by making available information about [the] books without providing the public with a substantial substitute for . . . the original works.” This was because Google Books provided information about the books—such as the author and publisher information—without creating substitutes of the original works. In other words, readers could learn about the books they searched through, but could not read the books in full—to do this, those readers would have to purchase or borrow copies through the normal channels.

Since the doctrine of transformativeness was established in the 1994 landmark Supreme Court case, Campbell v. Acuff-Rose Music, there have been myriad questions about the precise contours of what it means for a use to be transformative. Campbell established that a use is transformative when it endows the secondary work with a “new meaning or message,” but it can be difficult to apply this test in practice, particularly in the context of new or nascent technologies. Google Books tells us that scanning works in order to create a full-text searchable database with limited snippet displays is a transformative use based on its new and different purpose from the purpose of the works themselves. Furthermore, it reinforces the notion that a use is particularly likely to be considered transformative when it serves the underlying purpose of copyright law: incentivizing new creation for the benefit of the public and “enriching public knowledge.” By highlighting that Google contributed to public knowledge about books through its scanning activities and the Google Books search function, the court helped bring fair use for scholarship and research—two key prototypical uses established in the 1976 Copyright Act—into the digital age, setting an important precedent for later cases.

Google Books and Derivative Works

One of the plaintiffs’ arguments in Google Books was that Google’s full-text searchable database constituted a derivative work. One of a copyright holder’s exclusive rights is the right to prepare derivative works—such as adaptations, abridgements, or translations of the original work—and the plaintiffs alleged that this right had been infringed. The court disagreed, finding that Google’s use had a transformative purpose, whereas derivative works tend to involve a transformation in form, such as the adaptation of a novel into a movie or an audiobook. Furthermore, the court explained that derivative works are “those that re-present the protected aspects of the original work, i.e., its expressive content, converted into an altered form[.]” In contrast, the Google Books project provided information about the books and offered a limited “snippet” view, but did not re-present the expressive content: the full text of the books themselves.

The distinction the court drew between transformative fair uses and derivative works in Google Books is an important one, as it can often be a close question whether a work involves a transformative purpose or merely represents the same work in a new form, without enough added to tip the scales towards fair use. And it is a question that continues to arise in fair use cases today: just last year, the Supreme Court agreed to hear Warhol Foundation v. Goldsmith, a case about whether Andy Warhol’s creation of a series of screenprints of the late musical artist Prince which drew from a photograph taken by photographer Lynn Goldsmith qualified as a fair use. We’ve covered this case extensively on our blog over the past few years, and submitted an amicus brief in the case. Our brief argues (among other things) that Warhol’s screen prints involve much more than a transformation in form: they are stylistically and visually distinct from Goldsmith’s photograph, and endow the photograph with a new meaning or message, making the use highly transformative.

As in Google Books, the parties and amici in Goldsmith grapple with the line between transformative uses and the creation of derivative works, an often complicated and fact-sensitive determination. In this context, Google Books serves as a reminder that fair use is not a one-size-fits-all determination. Yet it also provides support for arguments advanced by Authors Alliance and others that simply because a transformation in form exists—in the Google Books case, the transformation from a print book to a scanned copy, and in Goldsmith, the transformation of a black and white photo to a series of colorful screenprints—does not mean that a secondary use cannot be a fair one. Warhol’s use did not merely “re-present the protected aspects of the original work[‘s] . . . expressive content,” but was transformative in the different “purpose, character, expression, meaning, and message” it conveyed.

Google Books and Controlled Digital Lending

The practice of controlled digital lending (“CDL”)—and the arguments in favor of it constituting a fair use—can be traced back in part to the fair use principles established and reinforced in Google Books. As I argue in our amicus brief in Hachette Books v. Internet Archive, a case about—among other things—whether CDL constitutes a fair use, Google Books shows that copying the entirety of a work in the process of making a transformative use of it can be fully consistent with fair use.

Another important suggestion in the Google Books case, made at the district court level, was that the Google Books search function could actually drive book sales: the search results were accompanied by links to purchase the book, and research suggested that this could enhance sales of those books. This is analogous to the effects of library lending: library readers often purchase books by authors they first discovered at the library, an effect which can apply with equal force when the library patron borrows a CDL scan. Indeed, several other amici in Hachette Books argue that the finding that the Google Books search was a fair use lent substantial support for the argument that CDL is a fair use, based on both the factual similarities between the two initiatives and their shared objective of “enriching public knowledge.”

As in Google Books, CDL also helps authors reach readers who could not otherwise access their books, and achieves this through scanning books on library shelves. And also like Google Books, CDL helps solve the problem of 20th century works “disappearing”: the commercial life of a book tends to be much shorter than the term of copyright, so when books under copyright go out of print, they can disappear into obscurity. Scanning these books to preserve them ensures that the knowledge they advance will not be lost.

Google Books and Text Data Mining

Text data mining—the process of using automated techniques aimed at quantitatively analyzing text and other data—is also widely considered to be a fair use, and this determination is similarly built in part on the building blocks established in Google Books. As was the case in Google Books, the results of text data mining research provide information about the works being studied, and cannot in any way serve as substitutes for the content of the works. In fact, one important aspect of the new exemption to DMCA liability for text data mining, which Authors Alliance successfully petitioned for in 2021, is that researchers are not able to use the works in the text data mining corpus for consumptive purposes. And also like Google Books, researchers are able to view the content in a limited manner to verify their findings, analogous to Google Books’s snippet view. The new TDM exemption was a huge win for Authors Alliance members, and something to celebrate for all scholars engaged in this important research. Importantly, the precedent established by Google Books strongly supported its adoption and the Register of Copyright’s suggestion that text data mining was likely to be a fair use.

Looking Forward: Google Books and Artificial Intelligence

In recent years, scholars and researchers have grappled with the implications of copyright protection on AI-generated content and AI models more generally. The holding in Google Books provides some support for companies’ and researchers’ ability to engage in these activities: one important factor in the case was that Google Books did not harm the market for the books at issue in the case, since the books in the database could not serve as substitutes for the books themselves. Similarly, when copyrighted works are used to train AI, the output cannot serve as a substitute for the copyrighted works, and the market for those works is not harmed, even if—like the plaintiffs in Google Books—the copyright holders might prefer that their works not be used in this way. Google Books establishes that simply because copyrighted works are used as “input” in a given model, this does not mean that the outputs constitute infringement. It is also worth noting that the court found Google’s use to be fair despite the fact that it was a use by a commercial, profit-seeking entity. While a commercial use can sometimes tip the scales in favor of finding a use to not be fair, this can be overcome by a socially beneficial, transformative purpose. This could arguably apply with equal force to AI models trained on copyrighted works which contribute to our understanding of the world, despite the fact that commercial entities are often the ones deploying these technologies.

Eight years after it was decided, the legacy of Google Books endures in policy debates and copyright lawsuits that capture the public’s attention. Policymakers and judges would be wise to heed the lessons it teaches about the value of advancing public knowledge through digitization and the use of copyrighted works for new and socially beneficial purposes. As we await policy developments regarding text data mining and wait for decisions in Goldsmith and Hachette Books, it is my hope that this legacy will live on, reminding us all of the vast capabilities of information technology to enrich our understanding of the world and advance the progress of knowledge, which, after all, is what copyright law is all about.

Fair Use Week 2023: Resource Roundup

Posted February 21, 2023

Authors who want to incorporate source materials into their writings with confidence may find themselves faced with more questions than answers. What exactly does fair use mean? What factors do courts consider when evaluating claims of fair use? How does fair use support authors’ research, writing, and publishing goals? Fortunately, help is at hand! This Fair Use/Fair Dealing Week, we’re featuring a selection of resources, briefs, and blog posts to help authors understand and apply fair use.

Fair Use 101

Cover of the Fair Use Guide for Nonfiction Authors

Authors Alliance Guide to Fair Use for Nonfiction Authors: Our guidebook, Fair Use for Nonfiction Authors, covers the basics of fair use, addresses common situations faced by nonfiction authors where fair use may apply, and debunks some common misconceptions about fair use. Download a PDF today.

Authors Alliance Fair Use FAQs: Our Fair Use FAQs cover questions such as:

Can I still claim fair use if I am using copyrighted material that is highly creative?
What if I want to use copyrighted material for commercial purposes?
Does fair use apply to copyrighted material that is unpublished?

Codes of Best Practices in Fair Use: The Center for Media and Social Impact at American University has compiled this collection of Codes of Best Practices in Fair Use for various creative communities, from journalists to librarians to filmmakers.

Fair Use Evaluator Tool: This tool, created by the American Library Association, helps users support and document their assertions of fair use.

Dig Deeper

U.S. Copyright Office Fair Use Index: The U.S. Copyright Office maintains this searchable database of legal opinions and fair use test cases.

Fair Use Amicus Briefs: Authors Alliance submitted several friend of the court briefs on issues related to fair use over the past year. Check out our brief in Hachette Books v. Internet Archive, where we expand on our longtime defense of Controlled Digital Lending as a fair use; our brief in Goldsmith v. Warhol Foundation, where we advocate for a broad yet sensible conception of “transformativeness”; and our brief in Sicre de Fontbrune v. Wofsy, where we explain why fair use is a crucial aspect of U.S. policy and why it should shield authors from the enforcement of foreign copyright judgments where fair use would have protected the use had it occurred in the U.S.

Fair Use and Text Data Mining: Learn about Authors Alliance’s new project, “Text and Data Mining: Defending Fair Use,” intended to support researchers engaging in text and data mining under the recent DMCA exemption for Text Data Mining, generously supported by the Mellon Foundation.

Fair Use and Public Policy: Learn about why we voiced opposition to the SMART Copyright Act of 2022 and the Journalism Competition and Preservation Act—proposed legislation that, if passed, could erode our fair use rights.

Public Domain Day 2023: Welcoming Works from 1927 to the Public Domain

Posted January 5, 2023

*Montage courtesy of the* Center for the Public Domain

Literary aficionados and copyright buffs alike have something to celebrate as we welcome 2023: A new batch of literary works published in 1927 entered the public domain on January 1st, when the copyrights in those works expired. The public domain refers to the commons of creative expression that is not protected by copyright. When a work enters the public domain, anyone may do anything they want with that work, including activities that were formerly the “exclusive right” of the copyright holder like copying, sharing, translating, or adapting the work.

Some of the more recognizable books entering the public domain this year include:

Virginia Woolf’s To the Lighthouse
William Faulkner’s Mosquitoes
Agatha Christie’s The Big Four
Edith Wharton’s Twilight Sleep
Herbert Asbury’s The Gangs of New York (the original 1927 publication)
Franklin W. Dixon’s (a pseudonym) The Tower Treasure (the first Hardy Boys book)

Literary works can be a part of the public domain for reasons other than the expiration of copyright—such as when a work is created by the government—but copyright expiration is the major way that literary works become a part of the public domain. Copyright owners of works first published in the United States in 1927 needed to renew that work’s copyright in order to extend the original 28-year copyright term. Initially, the renewal term also lasted for 28 years, but over time the renewal term was extended to give the copyright holder an additional 67 years of copyright protection, for a total term of 95 years. This means that works that were first published in the United States in 1927—provided they were published with a copyright notice, were properly registered, and had their copyright renewed—were protected through the end of 2022.

Once in the public domain, works can be made freely available online. Organizations that have digitized text of these books, like Internet Archive, Google Books, and HathiTrust, can now open up unrestricted access to the full text of these works. HathiTrust alone has opened up full access to more than 40,000 titles originally published in 1927. This increased access provides richer historical context for scholarly research and opportunities for students to supplement and deepen their understanding of assigned texts. And authors who care about the long-term availability of their works may also have reason to look forward to their works eventually entering the public domain: A 2013 study found that in most cases, public domain works are actually more available to readers than all but the most recently published works.

What’s more, public domain works can be adapted into new works of authorship, or “derivative works,” including by adapting printed books into audio books or by adapting classic books into interactive forms like video games. And the public domain provides opportunities to freely translate works to enrich our understanding of those works and help fill the gap in works available to readers in their native language.

Updates on the JCPA

Posted December 14, 2022

Last week saw a flurry of news about the Journalism Competition and Preservation Act (“JCPA”), proposed legislation that would create an exemption to antitrust law that would allow certain news publishers to join together to collectively negotiate with digital platforms to negotiate payments for carrying their content. Authors Alliance has consistently opposed the JCPA, as we believe it would harm small publishers and creators, while further entrenching major players in the news media industry.

Last Monday, December 5th, it was uncovered that the revised JCPA had been included in a “must pass” defense spending bill (the National Defense Authorization Act, or NDAA), leading the legislation’s opposition to promptly decry the move and caution against it. Then, the next day, news broke that Congress had removed the JCPA from the legislation—something to celebrate for those, like Authors Alliance, who believed this was ill-advised legislation that would not have served the interests of the creators who contribute to the news media.

Background

The JCPA was first proposed as separate bills in the Senate and House of Representatives in March 2021. The JCPA has laudable goals: to preserve a strong, diverse, and independent press, responding to ongoing crises in local and national journalism. But the actual text of the JCPA doesn’t meet those goals, while causing other problems. One major problem has been that the JCPA implicitly expands the scope of copyright, and would potentially require payment for activities like linking or using brief snippets of content that are not only fair uses, but are crucial for digital scholarship. In June 2021, Authors Alliance joined a group of like-minded civil society organizations on a letter urging Congress to clarify that the bill would not expand copyright protection to article links, and that authors and other internet users would not have to pay to link to articles or for the use of headlines and other snippets that fall within fair use.

Then, this September, a new version of the bill was released in the Senate. While the revised language made some improvements—like clarifying that the bill would not modify, expand, or alter the rights guaranteed under copyright—it still failed to clarify that the bill would not cover activities like linking that are fundamental for authors creating digital scholarship. And some changes to the legislation posed serious First Amendment concerns. For example, new language in the bill would have forced platforms to carry content of digital journalism organizations that participated in the collective bargaining, regardless of extreme views or misinformation. The revised bill could also have hurt authors of news articles financially, because it failed to include a provision that would require authors of the press articles to be compensated as part of the collective bargaining it envisioned.

Inclusion in the NDAA

Last week, the news that the JCPA had been included in the NDAA was met with outcry. Its opponents argued that the bill was far too complex to be included in must-pass legislation, and merited further discussion and revision before becoming law. The JCPA was never marked up in the House of Representatives, nor did it receive a hearing there. Authors Alliance once again joined 26 other civil society organizations on a letter protesting the move and urging Congress not to include the JCPAA in military spending or other must-pass legislation.

A wide variety of other stakeholders also objected to the inclusion of the JCPA in the NDAA. Small publications, lobbyists for platforms, and even journalism trade groups reiterated their opposition. Meta, the company that owns Facebook, even threatened to remove news from their platform were the legislation to pass (in response to a similar bill being passed in Australia, Meta did in fact remove news from its platform in the country). Then, late on Tuesday, December 6th, the latest version of the bill’s text was released, with the JCPA omitted. The NDAA was approved by the House a few days later.

A Victory for Now

Because the JCPA was removed from the NDAA before its passage, it is no longer on the brink of becoming law. What happens next with the JCPA is less certain. There have already been multiple iterations of the bill, and it could be reintroduced, with or without modifications, at the next legislative session. While it’s unclear how the new makeup of Congress following the midterm elections might affect the JCPA’s chance of becoming law, this is certainly a factor in the bill’s future. This was also not the first time that the government has attempted to support journalism and local news through proposals that could affect users’ and authors’ ability to rely on fair use. Just last year, the Copyright Office conducted a study on establishing a new press publishers’ right in the United States which would have required news aggregators to pay licensing fees as part of their aggregation of headlines, ledes, and short phrases of news articles (you can read about Authors Alliance’s reply comment in that study here), activities. While the Office ultimately decided not to recommend the adoption of a new press publisher’s right, its study shows that the government may continue to investigate these policies from other fronts.

Analysis: Opinion Released in U.S. v. Bertelsmann

Posted November 18, 2022

Last week, the district court released its opinion in United States v. Bertelsmann, an antitrust case concerning a proposed merger between Penguin Random House (“PRH”) and Simon & Schuster (“S&S”), which the court blocked (an “amended opinion” was released earlier this week, but the two documents only differ in their concluding language). Authors Alliance has been covering this case on our blog for the past year, and we were eager to read Judge Pan’s full opinion now that redactions had been made and the opinion made public. This post gives an overview of the opinion; shares our thoughts about what Judge Pan got right, got wrong, and left out; and discusses what the case could mean for the vast majority of authors who are not represented in the discussion.

Background

The Department of Justice initiated this antitrust proceeding after PRH and S&S announced that they intended to merge, with Bertelsmann, PRH’s parent company, purchasing S&S from its parent company, Paramount Global. The trade publishing industry has long been dominated by a few large publishing houses which have merged and consolidated over time. Today, the trade industry is dominated by the “Big Five” publishers: PRH, S&S, HarperCollins, Hachette Book Group, and Macmillan. And a sub-section of the trade publishing industry, “anticipated top sellers,” is the focus of the government’s argument and Judge Pan’s opinion. This market segment is defined as books for which authors receive an advance of $250,000 or higher (a book advance is an up-front payment made to authors when they publish a book, and often the only money these authors receive for their works).

The main thrust of Judge Pan’s opinion is simple: the proposed merger would have led to lower advances for authors of anticipated top sellers, and the market harm that would flow from the decreased competition in the industry is substantial enough that the merger can not go forward under U.S. antitrust law. To arrive at this conclusion, the court considered testimony from a variety of publishing industry insiders, experts in economics, and authors.

Defining the Market

Trade publishing houses are those that distribute books on a national scale and sell them in non-specialized channels, like at general interest bookstores or on Amazon. It stands in contrast to self-publishing, academic publishing, and publishing with specialized boutique presses. But changes in how we read and how books are distributed has complicated these distinctions. For example, university presses are sometimes considered to be non-trade publishers, despite the fact that many also publish trade books. University presses are particularly well poised to publish books that bridge the gap between the scholarly and the popular—Harvard University Press’s publication of Thomas Picketty’s Capital in the 21st Century is one example, and it was an unexpected bestseller. Similarly, Amazon sells trade books alongside other types of books. The Authors Alliance Guide to Understanding Open Access is available as a print book on Amazon, but it is one we released under an open access license, and is far from a trade book. Consumers increasingly buy books online as brick and mortar bookstores across the country close or downsize, and the Amazon marketplace obscures the distinction between trade publishing and other types of publishing.

Within trade publishing, there is a small segment of books which are seen as “hot,” which the DOJ calls anticipated top sellers. While PRH argued that this distinction was pulled out of whole cloth, the popular “Publisher’s Marketplace,” a subscription-based service for those in the industry, uses certain terms (essentially code words) to indicate the size of the advance in a book deal when they are announced. “Deals under $50,000 are ‘nice,’ those up to $100,000 are ‘very nice,’ those up to $250,000 are ‘good,’ those up to $500,000 are ‘significant,’ and larger deals are ‘major.””

For the market for anticipated top sellers (trade books with advances of $250,000 or higher), the Big Five collectively control 91% of the market share. In contrast, for books where an author receives an advance under $250,000, the Big Five control just 55% of the market, with non-Big Five trade publishers publishing a significant portion of trade books in this category. Post-merger, the combined PRH and S&S were expected to have a 49% share of the market for anticipated bestsellers, according to expert testimony—more than the rest of the Big Five put together. For these reasons, the merger was determined to be improper as a matter of antitrust.

Beyond Anticipated Top Sellers

While Judge Pan’s opinion is measured, thoughtful, and reaches (from our perspective) the correct result, the broader context of the publishing industry shows how narrow the subset of authors in this market is, and how some authors were left out. The market the court considered in this case is “a submarket of the broader publishing market for all trade books.” In its pre-trial brief, PRH asserted that “[s]ome 57,000 to 64,00 books are published in the [U.S.] each year by one of more than 500 different publishing houses” and “another 10,000-20,000 are self published.” It is unclear whether the first number includes academic books and other non-trade titles. “[A]nticipated top-selling books” account for just 2% of “all books published by commercial publishers” (again, it is unclear what “commercial publishers” means in this context), and an even smaller share of all books published in the U.S. in a given year (a difficult statistic to pin down, but somewhere between 300,000 and 1,000,000 books per calendar year, depending on who you ask).

It is not just that the authors that are the topic of this discussion are unique in the high advances they receive for their books, it is that the business of publishing a book is fundamentally different for these authors than less commercially successful authors. And this is what is missing from Judge Pan’s opinion: the economic system of Big Five book acquisitions for anticipated top sellers is totally unlike many authors’ experiences getting their work published. While many authors struggle to find a publisher willing to publish their book, and more still struggle to convince their publisher to do so on terms that are acceptable to them, anticipated top sellers are generally the subject of book auctions, whereby editors bid on the rights to a manuscript in an auction held by an author’s literary agent. It is important to keep in mind that for a vast majority of working authors, these auctions do not take place.

The language in the opinion shows how it generalizes the experiences of commercially successful trade authors to authors more broadly, doing a disservice to the multitude of authors whose book deals do not look like the transactions it describes. Judge Pan states that “[a]uthors are generally represented by literary agents, who use their judgment and experience to find the best home for publishing a book.” Literary agents play an important role in the publishing ecosystem, and serve as intermediaries for some authors to help them develop their manuscripts and get the best deal possible. But the author-agent relationship is also a financial one: agents receive a “commission” of around 15% of all monies paid to the author. It stands to reason that an author who cares more about their work reaching a broad audience than receiving a large advance, or even an advance at all, is much less likely to be represented by an agent. And these authors too care about finding the right home for their work, getting a book deal with favorable terms, and feeling confident that their publisher is invested in their work. Making the publishing industry less diverse, with fewer houses overall, is just as detrimental to these authors as it is to top-selling ones.

What is troubling about the decision is not that it focuses in on a certain type of author and certain type of book—the question of what the relevant “market” is in antitrust cases is a complicated one—but that the vision of authorship and publication it presents as typical does not reflect the lived experiences of most authors. The dominant narrative that “authors” are famous people who make a living from their writing, primarily through the high advances they receive from trade publishers, simply does not bear out in today’s information economy.

Overall, the decision in this case is in many ways a boon for authors who care about a vibrant and diverse publishing ecosystem—whether they are authors of anticipated top sellers or authors who forgo compensation and publish open access. When publishing houses consolidate, fewer books are published, and fewer authors can publish with these publishers. This could lead less commercially successful trade authors to turn to other publishers (whether small trade publishers, university presses, or boutique publishers), who would then be forced to take on fewer books by less commercially successful authors. Self-publishing is an option for authors no longer able to find publishers willing to take their work on, but self-published authors earned 58% less than traditionally published authors as of 2017, and this decrease could lead some authors to abandon their writing projects altogether. These downstream effects may be speculative, but they deserve attention: this is almost certainly not the last we will hear about anticompetitive behavior in the publishing industry, and the effects of this behavior on non-top selling authors also matter. We hope that future judges considering these thorny questions will remember that authors are not a monolith, yet all are affected by drastic changes to the publishing ecosystem.

Judge Blocks Penguin Random House/Simon & Schuster Merger

Posted November 2, 2022

On Monday, Judge Florence Pan issued an order enjoining (or blocking) the proposed merger of Penguin Random House and Simon & Schuster following a weeks-long trial in the D.C. Circuit. Authors Alliance has been monitoring the case and covering it on this blog for the past year. While Judge Pan’s full opinion is not yet public—it is currently sealed while each party determines what information it would like to be redacted as confidential—but her decision to block the proposed merger strikes a blow for efforts to consolidate major trade publishers and signals judicial concern about too little competition in the publishing industry.

Judge Pan (who was appointed to the D.C. Circuit Court of Appeals to replace then-judge Kentanji Brown Jackson in September, but has continued to preside over this district court case), issued a short order announcing the decision. Judge Pan found that the Department of Justice had “shown that ‘the effect of [the proposed merger] may be substantially to lessen competition’ in the market for the U.S. publishing rights to anticipated top-selling books.” She concluded that the merger could not move forward under U.S. antitrust law, which seeks to protect market competition and ensure that no one firm wields too much power.

The DOJ applauded the decision, with Assistant Attorney General Jonathan Kanter stating that the decision “protects vital competition for books and is a victory for authors, readers, and the free exchange of ideas,” and that the merger would have “reduced competition [and] decreased author income.” Penguin Random House, on the other hand, has already signaled that it is considering appealing the decision, and initially indicated it would be filing an “expedited appeal” before walking back this position in later comments. Jonathan Karp, president and CEO of Simon & Schuster, released a statement to the firm’s employees indicating Penguin Random House’s plans to appeal and stating that Simon & Schuster would be reviewing the decision and conferring with Penguin Random House to determine “next steps.”

The parties have until November 4th to propose redactions to her opinion, which Judge Pan will then decide on, before the court releases it to the public. There is no set timeline for the full decision being released, but the short timeline for the parties to request redactions could signal that the process will not take long.

One interesting aspect of the case is that the government focused on the market for “anticipated bestsellers” in its filings and argument, as well as the effect that lessened competition would have on authors, not the general public. Judge Pan adopted this position in her order, apparently accepting the argument as valid. Typically, antitrust focuses on harm to consumers, and indeed, Penguin Random House argued staunchly that the lack of a tangible harm to consumers meant the proposed merger did not pose an antitrust problem.

But were the merger to go forward, with fewer firms bidding on books expected to be commercially successful, the authors of those books could receive lower advances or less favorable contract terms due to the lessened competition. While the government chose to focus on a narrow segment of the book market (a move which faced criticism by some), the point that publishing house consolidation can hurt authors’ interests by giving them fewer choices is an important one.

Authors Alliance cares deeply about ensuring that our publishing ecosystem is diverse and vibrant, and the merger could have had deleterious effects on this diversity. At the same time, the focus on the anticipated bestseller market demonstrates one pitfall of the publishing industry: authors of commercial bestsellers tend to be centered as the authors whose interests are most important or worthy of attention, but these represent a vanishingly small percentage of working authors. Many of Authors Alliance’s members are authors who do not publish with trade publishers like Penguin Random House and S&S, and these authors have different motivations and priorities than authors of anticipated bestsellers. It is important that the government consider a variety of different types of authors as they work to shape author-friendly laws and policies, and we look forward to engaging with policy makers to help raise awareness of this important issue.