A manifesto for an e-lending limitation in copyright

Libraries and other cultural heritage institutions carry out a discrete series of activities that, at different degrees, further the preservation and dissemination of knowledge, from acquiring and developing a collection, preserving it, indexing it, making it available on its premises, organising education activities, helping persons to find what they are looking for, to ultimately letting people checking out books to read, learn, and entertain themselves. As repositories for cultural artefacts produced by a society, libraries occupy a central place in the politics of access to culture, research and learning.

Public lending is one of the core activities of libraries  [5] , but its intensity might significantly differ from one type of library to the other, with the consequence that the activity presents a varying impact on the practices of users, market of copyrighted works, and protection of rights holders.

Academic and research libraries, as institutions associated with universities or research establishments, aim at supporting scholarly or scientific research. Their main activity is to constitute a collection of scholarly books, journals, or databases that will be mostly consulted on the premises of the library. Acts of lending happen but are more limited than in general libraries. Researchers and students will check out books from those libraries when they need more time to search in the book. The objective of the lending is, thus, research and thorough consultation, without necessarily an extensive reading of the book. Academic and research libraries will also engage more often in interlibrary loans.

Similarly, in national libraries that are in charge of the legal deposit, the lending activity will be minimal compared to on-site consultation for research and the provision of materials to other institutions through the interlibrary loan. Besides, a significant part of their collection, consisting of documents, maps, manuscripts, newspapers, magazines, prints and drawings, music scores, photographs, or old publications, is not subject to lending, due to their historical importance, state of decay, or uniqueness.

On the contrary, general public libraries will largely engage in public lending, as their mission is to provide the public, with no discrimination, with materials for private study and entertainment. The consultation of their books or other items on the premises of the establishment is rather limited (except for reference books or magazines).

In addition to these two major categories, libraries can also serve special needs of a limited part of the public. For instance, social institutions such as hospitals, prisons, or schools might have a library that provides books or other works to the patients, inmates, or pupils. They will be reserved to a limited public. The main activity of such libraries will be to lend books to their specific users. Some libraries can also provide specialised documentation to professionals and no restricted conditions of admission. For instance, some libraries are operated by governments to the benefit of their civil servants, but can equally be open to individuals upon defined conditions. For example, the libraries of judicial courts generally admit professional lawyers who are registered at the bar. Usually, those types of libraries will not lend books beyond the members of the institution they serve. Other specialised libraries will not be open to the public, such as libraries of private companies or governmental libraries with restricted admission policies.

Within the public libraries, some distinction could also be drawn, depending on the type of cultural items subject to lending. Libraries generally refer to books in the general opinion, but public institutions deal with other types of content, as well, such as phonograms, DVDs, videogames, or audiobooks. Public libraries can have collections of different categories of works. Content other that books might be held and made available by dedicated multimedia libraries or médiathèques. Lending also occurs in those institutions, sometimes under adapted conditions.

The public that libraries target will depend on their category. In a broad sense, general public libraries, by definition, address the need of the general population to access cultural content, whereas academic and research libraries are primarily visited by the members of their institutions (students, professors, researchers for academic libraries) and researchers. They are, nevertheless, open to the public and cater to the needs of professionals looking for specialised information (such as private lawyers visiting law libraries). Specialised libraries in social institutions will have a more limited audience. Public libraries also play an important role for people with reading disabilities. Dedicated libraries exist in many countries to provide books in Braille, audiobooks, or other adapted forms to visually-impaired people, but general libraries also try to have a collection of large print books and audiobooks.

Rental and lending rights were introduced as exclusive rights in the European copyright by a 1992 directive that has since been codified in the directive 2006/115  [6] . Article 1 of the directive states that “in accordance with the provisions of this Chapter, Member States shall provide, subject to Article 6, a right to authorize or prohibit the rental and lending of originals and copies of copyright works, and other subject matter as set out in Article 3(1)”. The notion of lending contained in the directive only refers to acts of public lending since, according to its article 2 (1) b), “’lending’ means making available for use for a limited period of time, and can not be for direct or indirect economic or commercial advantage when it is made through establishments which are accessible to the public”. The terminology of public lending right is, however, generally used to refer to the right of remuneration that the article 6 of the directive allows Member States to enact instead of the exclusive lending right stated as a principle. Certain categories of establishments can even be exempted from the payment of the remuneration.

Lending is covered by the directive when a work is made available for use  [7] for a limited period of time and not for direct or indirect economic or commercial advantage. This criterion distinguishes lending from rental and is further defined by the recital 11 of the directive that provides that “Where lending by an establishment accessible to the public gives rise to a payment the amount of which does not go beyond what is necessary to cover the operating costs of the establishment, there is no direct or indirect economic or commercial advantage within the meaning of this Directive”. Therefore, the payment of a fee for lending does not exclude the qualification of lending  [8] . The last condition is that the establishment doing the lending is accessible to the public, a notion that is not defined in the directive  [9] . The initial proposal for a directive included a list of the eligible establishments, encompassing “public libraries, research libraries, specialized libraries, school libraries, church libraries, collections of new media or of works of visual art, libraries organized or sponsored by public or private companies, and other collections of subject matter”  [10] . The condition of public accessibility should be broadly construed and include libraries open to a specified public.

Article 6 of the directive  [11] allows Member States to replace the exclusive right by a remuneration right, and even to exempt certain categories of establishments from this remuneration, which has been done by most Member States  [12] . The exception for public lending right “reflects the compromise found at the time between complying with the Internal Market needs, on the one hand, and taking account of the different traditions of Member States in this area, on the other”  [13] .

The objective of such derogation is, clearly, the promotion of cultural objectives, which is referred to in article 6(1) as justifying the leeway left to the States in determining the remuneration. Some establishments, e.g. university and school libraries, libraries in social institutions, or some public libraries, could be exempted from any remuneration, at the exception of lending of phonograms, films, or computer programs (if those categories of works are encompassed in the lending right). The European Court of Justice has, nevertheless, decided that Member States are not entitled to exempt all public libraries from the payment of the remuneration, as such a large-scale exemption would result in emptying the public lending right of any relevance  [14] .

More recently, the European judges have decided that the remuneration to authors for public lending cannot be calculated solely on the basis on the number of borrowers of works, but that the amount of the remuneration should also take into account the works available to the public, so that the biggest public lending establishments pay more than the smaller institutions  [15] .

The legal form of the derogation is left to the Member States  [16] . The exemption of the exclusive right is often understood as creating an exception in the form of a statutory license, with a right to remuneration  [17] . In other countries, the public lending right is just recognised as a remuneration right for the copyright and related rights owners. Books are always concerned with the exception but some States have extended the exception to other cultural content, such as musical or audio-visual works  [18] .

In many countries, libraries have started to make e-books available online to their members  [19] . Lacking any legal authorization to undertake e-lending, this development was made possible by licensing agreements with publishers and the intervention of dedicated platforms hosting and delivering e-books to libraries’ users.

Distribution models may vary, but the most common way of proceeding for a library is to have recourse to “an intermediary distributor (sometimes referred to as an ‘aggregator’), which sells access to e-books titles and copies of e-books, often from multiple publishers”  [20] . The distributor offers full-service packages to libraries, with the licensing rights to e-books and the hosting of the e-book collection  [21] . Libraries can serve as an interface, through their websites, for their readers to get access to the collection of titles that are available for downloading. The e-book will then be sent by the platform operated by the distributor to the user that has requested it.

The primary model governing e-lending normally includes four actors: the publisher or copyright owner, the distribution platform, the public library, and the reader that is the end-user of the loan. The publishers license the rights for distribution with e-book distributors, a new type of actor on the book market that has emerged to provide services of e-lending to libraries  [22] . They sublicense the rights to e-books to libraries for making them available on-line to their patrons, along with additional services, such as the operation of a web platform that hosts the e-books; provides a searchable interface for users; manages the availability to readers and the accounts of its library’s clients; and controls the conditions and duration of the loan. This requires the use of Digital Right Management tools embedded in the e-books that are made available; DRMs are generally developed and operated by the e-book aggregator. Platforms for lending are, for instance, “OverDrive” that dominates the English library market  [23] , NetLibrary, Ebscohost in the Netherlands  [24] , Dilicom in France, or Onleihe.net in Germany.

The relationship between the publishers and the distributors triggers the availability of the book on the platform. Publishers decide the format and conditions under which the book will be offered for lending in a way that tends to align the modalities of accessing e-books with the restraints usually endured by library readers. A license then applies to the relationship between the libraries and their patrons, and stipulates the conditions of access to e-content by the library and the terms of use. Due to the intercession of an intermediary, the public libraries do not host e-books as they do tangible books, for they are usually kept by the intermediary on its platform. The provision of a collection of downloadable titles can be organised in different models. The most common is the so-called ‘perpetual access’ model  [25] , by which libraries acquire an individual copy of an e-book title that will be integrated in the e-collection of the library (in contracts with the subscription model where the access to the title terminates if the subscription is not renewed). In most cases, only one reader at a time can borrow the e-book (one copy/one user model)  [26] . It is a kind of “digital replication of the use pattern for a print-on‐paper library book”  [27] .

Several licenses can be bought for popular works to be entitled to lend them to more users simultaneously. The number of licenses is the equivalent to the number of acquisitions of tangible books and its corresponding number of simultaneous readers. Other possibilities are the subscription model with unlimited number of loans per title and limited simultaneous users, or the pay-per-view model.

Books can be bought by individual titles or per packages by the library. Further conditions are laid down by the license and relate to the devices on which the e-book can be downloaded and read, the possibilities to print out and to what extent. Some licenses impose the renewal of the license after some delay or a certain number of loans (e.g. license valid for one year or for 30 circulations), so as to mimic the way tangible books wear out after a few readings and oblige libraries to buy a new copy. The e-books could be proposed in different formats, but they are usually in ePUB, which is a format dedicated to e-readers, or in pdf, which is readable on more devices.

The library owes a renumeration for the services performed by the e-book distributor and its platform, which is added to the remuneration agreed-upon renumeration for the loans, themselves.

The relationship between the library and the user follows the model put in place. The lending will generally be restricted to the users registered in a library. They will get access to the collection of available titles through the website of their library and can install the e-books on their computers or other devices (such as smartphones, tablets or e-readers). Only a maximum number of books for a determined period can be downloaded, and the book will be unavailable at the end of lending term- which is, generally, rather short (2 or 3 weeks). The duration is renewable if the book has not been reserved by another user. Once the book is installed on the device, it can be read offline. Usually, the readers only have access to the e-collection of their library, i.e. to the collection of titles for which the library bought a license. This is the model of the German Onleihe platform where patrons registered in one library only have access to the part of the platform hosting titles for which their library has a license. Other models include consortiums of local libraries (e.g. LibrariesWest in the UK) that have acquired a bulk license for e-books that they all propose to their registered patrons.

The directive on rental and lending does not explicitly exclude e-lending or lending of digital items from its scope. However, some elements point in that direction. The article 1 that provides the exclusive right of lending applies to “the original and copies of copyright works, and other subject matter”. This formulation is usually interpreted as encompassing the “first materialisation” of the work and further reproductions thereof  [28] . Since the on-line lending includes a transmission of a digital file, and not of a tangible item, it should be considered as being outside of the scope of the lending right  [29] .

In the proposal for a rental and lending directive, the European Commission referred to “objects (…) which incorporate protected works or performances”  [30] , indicating that it had tangible items in mind  [31] . The question was addressed in the Council Working Group, during which the Member States did discuss the coverage of electronic rental or lending but decided that they did not want to deal with it at the time, considering that the topic was still premature  [32] . Some scholars consider that the purpose of the directive was to cover the entire situation of rental and lending, including electronic forms thereof  [33] .

Yet, the inclusion of digital products in the public lending right was not completely closed as demonstrated by later documents from the European Commission. In the Green Paper on Copyright and Related Rights of 1995, it was discussed whether the lending and rental rights may be applied by extension to digital transmissions  [34] . It seems that the starting point for the reflection was the application of the rental right to services on demand, such as video-on-demand, that were emerging at the time. In its comparison between traditional lending and new forms of making available on-line, the Green Paper went as far as stating that “the definition [of lending] does, however, cover digital lending by establishments accessible to the public and the on-line consultation of a work from a public library comes to the same thing as borrowing a copy of the work”  [35] . The Commission document nonetheless acknowledges that such an extension should be confirmed in legislation and its details should be spelled out in order to reconcile “the cultural and educational functions of bodies such as public libraries and universities, which have the aim of ensuring the widest possible dissemination of works and data, (…) with the legitimate protection of rightholders”  [36] . True, the Green Paper warned against new forms of uses within libraries, with respect to the protection of the interests of copyright holders, but still stressed the interests of the different parties concerned: “authors must be able to control the use of their works, libraries must ensure the transmission of available documents and users should have the widest possible access to those documents while respecting the rights or legitimate interests of everyone”  [37] . The European Commission then came to the conclusion that “the application of the lending right to electronic transmission should also be reviewed with a view to maintaining a balance between the interests of public libraries and those of rightholders”  [38] .

Such a generous position in favour of libraries might seem surprising. It should be remembered that this Green Paper was released at a time prior to the mainstream development of the Internet and without any digital products yet commercially available on-line for consumers, such as e-books or movies. The economic impact or the development of digital libraries could not have been anticipated in 1995.

That view was given up in the Follow-Up to the Green Paper in 1996. Even though it was therein reiterated that on-demand transmissions, such as VOD, enter in the field of application of the rental right  [39] , the opinion of most Member States against an extension of the rental right and distribution right to on-line transmission was followed. No reference was made to on-line lending.

The European Commission preferred to cover all forms of on-line transmission, whether on-demand or not, under a broadly-defined right of communication to the public, and it was the direction that the discussion took that would become the WIPO Copyright Treaty of 1996, which opted for a right of making available that would cover on-demand services. The fate of on-line rental and lending as falling out of the box of those rights was sealed. The adoption of the Information Society Directive and its communication to the public right should then be considered as being a lex specialis for all forms of making available right and would prevail over an extensive interpretation of the rental and lending rights in the earlier directive of 1992  [40] .

The recital 40 of the Information Society Directive that recommends that acts of making works available on demand by libraries be subject to licensing with rights holders could also be interpreted as rejecting e-lending outside of the right to remuneration for which most Member States opted by transposing the lending directive  [41] .

This interpretation will be challenged before the European Court of justice, thanks to the preliminary questions referred thereto by a Dutch court seized by libraries Heather Hufstedler HH . Beyond the question as to whether or not the notion of ‘lending’ also covers the online downloading of e-books, the relationship between the lending and the principle of exhaustion is part of the referral. The Dutch court wonders whether the acquisition of an ebook by libraries is subject to exhaustion and hence, gives them the privilege to distribute it to their patrons in lending. This detour by the principle of exhaustion is probably an offspring of the UsedSoft decision and follows a similar economic logic, more than a legal one. Indeed, it makes sense that the acquisition of a product, whether analogue or digital, entitles its owner to dispose thereof. That is what the EU court has decided for software whose owner could resell. In some legal systems such as the United States, the authorisation of public lending flows from the application of the first sale doctrine or exhaustion principle: once the book is bought by the library, its further distribution, including lending to library patrons is not an infringement of copyright. On the contrary, the European Union law interposes an exclusive right of lending, generally transformed at State level into a right of remuneration, that annuls the exhaustion rule. The act of distribution is legally qualified as an act of lending that is not exhausted but re-enters into the field of control of copyright owners (either through an exclusive right or a right to remuneration). This is clearly stated by the recitals 28 and 29 of the Information Society Directive that preclude the application of the distribution qualification and of the rule of exhaustion to rental and lending  [42] .

The UK Government has also commissioned a review of e-lending that has resulted in a recommendation to extend the public lending right to remote e-lending  [43] . Following that report, the British Government has announced its intention to make libraries able to offer digital books to their readers, by revising the Public Lending Right in two stages  [44] . First, and it was started by the Digital Economy Act of 2010  [45] , the Public Lending Right Act 1979 was modified to include audio-books and e-books in the notion of “books”  [46] . However, this does not extend to the making available of an e-book by means of electronic transmission  [47] . Only the provision of e-books on readers have been included in the public lending right  [48] . More precisely, “copying or issuing a copy of the e-book as an act incidental to lending it” shall not be considered as infringing the rights conferred by copyright or related rights. In a second stage, the Government contemplates to enable public libraries to offer remote e-lending services to their readers and to recommend further legislative changes accordingly, while acknowledging that the EU directive 2001/29 probably stands in the way  [49] .

The growth of e-lending experiments based on licensing between libraries and publishers, in lack of any certainty as to the status of e-lending, demonstrates that the market is capable of providing literary works, and sometimes other types of cultural content, to libraries and their readers. In our opinion and despite the capability of copyright owners to license their works for offsite lending by libraries, the public interest of entitling libraries to autonomously provide access to cultural content to the public would still beg for a legislative intervention to make a limitation of copyright prevail on or subsist aside market-based initiatives.

The cultural promotion objectives referred to in the provision of the Rental and Lending Directive authorizing Member States to limit the exclusive right of lending are rooted in the need to ensure circulation of works in the public sphere and beyond the mere operation of the market  [50] . Its democratic value is to ensure that people are offered access to culture, whatever their social situation.

Public lending right broadens access to works in different ways. Firstly, libraries provide access to works to a larger public of readers, enabling access by some populations who cannot afford buying all the works they read, view, or listen to. This lack of access can be grounded on, but is not restricted to, economic reasons. For instance, libraries will cater to the cultural needs of low-income populations, children, and teenagers, but also of people having difficulty traveling to a bookshop or living in remote places (public lending can then be ensured by mobile libraries or by post), as well as people staying in institutions (e.g. prisons, hospitals, nursing homes, etc.). More generally, libraries complement the commercial offer by making books available to the general public, whatever their financial means or access restrictions to books. They bring authors and readers together in a different way than the market. Many big readers often go to libraries to fulfil their reading habits, while equally buying many books in bookshops and retailers. Secondly, libraries provide larger access to works than the market. Whereas bookshops have only a limited percentage of published books in stock and the average life of a book in bookshops is less than one year, public libraries, through their preservation mission, might offer a more extensive collection, depending on their size and budget  [51] . Another limitation of the market in providing books is absent in the way libraries operate. Whereas the market will mostly obey to a demand-rule, libraries tend to choose the works they acquire on other criteria (namely cultural ones, notably a selection of local and national authors), or in an exhaustive way, if they are in charge of legal deposit, which can lead to more cultural diversity in the offer. Finally, libraries provide access to sources for research (mostly in academic and research libraries) as they hold extensive collections of publications on scientific topics. Researchers who need to consult many sources of documentation could not afford to buy all the relevant books published in their field and rely on consultation within the library, and, additionally, on lending to get access to the material they need. Academic libraries also provide scientific books to students to carry out research required for specific assignments or papers.

Transposed to e-books and e-lending, these objectives could still be sustained for the most part. Some segments of the libraries’ readers will still need access to works by libraries, as they could not afford to access culture otherwise, or only partially. This is the case of younger people, low-income populations, or people in institutions with no access to culture but by the library of such institution (hospitals, prisons, …), but also of ‘big’ readers. On the other hand, e-lending will require to get access to e-readers, which could constitute a new hurdle to access culture for some categories of people and increase the cost of access through libraries, except in the case where libraries also provide the device to read the e-book. Not all works will be offered by the market in e-book format or some e-books might not be commercialized after some time. Libraries could keep their role of preserving works and providing them to the public long after they have been put off the market, even though the development of e-books has also lengthened the period of availability of e-books in a catalogue of a publisher. As for access for research purposes, academic and research libraries are accustomed to dealing with digital resources. Besides, scientific books or textbooks might be amongst the types of content that will be more systematically proposed in an electronic format. The access to such works for research, that includes episodic lending to researchers or students, will not decrease with the shift to e-books.

Libraries argue for some preservation of their role as providers of culture and information and demand that they could offer e-books under reasonable terms and conditions  [52] . The Sieghart Review on e-lending, commissioned by the UK Government, warns that “whatever analysis you make about the impact of remote digital borrowing on the physical footfall in libraries, it is plain that an inability to offer digital lending will make libraries increasingly irrelevant in a relatively short time”  [53] . Similarly, the Lescure Report in France acknowledges that libraries constitute a “third sector” for the dissemination of culture and information, between the commercial sector of cultural industries and non-market exchanges between individuals  [54] . The key role of libraries in our societies is to guarantee some collective use and dissemination of creation and culture. That does not mean that an exception or limitation should necessarily cover e-lending but that the objectives of maintaining some alternative of provisions of books, by the channel of public libraries, is still justified for digital content. The second channel of dissemination of books cited by Lescure, i.e. the sharing between individuals, might also decrease as an e-book, at least in a proprietary format such as Kindle, can usually not be transmitted to someone else  [55] .

The public interest role of libraries justify, from our point of view, that public lending should not be completely left to the market operation. When discussing the public lending right in 1992, most Member States wanted to carve out some space for public libraries from the exclusive right conferred to copyright and related rights holders. It is doubtful that their position will change today and that the public space in which libraries operate be closed for e-lending. Should lending under a copyright limitation be reserved to books made of paper and ink, a large part of the cultural and scientific production will not enter in the privilege granted by copyright laws. E-books will form a significant part of the literary production of the years to come and will sometimes have no paper equivalent. Soon, some specialized books will only be commercialized in an electronic version. But e-books have also gone beyond the mere literary form and have been developed as multimedia products for smartphones and tablets. Early examples of such new types of digital creation, particularly children’s books, include features that would not fit on paper, such as animated images or interactive narration  [56] . As far as music and movies are concerned, they might soon be released only as downloadable digital products. Excluding this new digital content altogether from the public mission of libraries to make cultural items available to the public in a non market-mediated transaction would deprive their users of a significant part of culture and creations.

Current projects of e-lending developed by public libraries and publishers demonstrate that the offer of e-books in lending is possible and not prevented by copyright law. So why not let the normal operation of the market prevail and organise, through licensing and the exercise of exclusive right of lending, the making available of e-books and other digital content to libraries’ users? One could argue that copyright does not need to assume the cultural value and cost of providing access to cultural content by libraries, but that this is an obligation and charge for the States towards their citizens.

That remark hides two issues: on one hand, the relationship between copyright exceptions and contract; on the other hand, the specific shortcomings of a market-based system of e-lending.

Adopting an exception for e-lending, probably in the form of a statutory license with fair compensation for authors, could be justified by the public interest that underlies the provision of access to works that is one key mission of libraries. No market failure happens here as the market is capable to organise and license e-lending, but the copyright limitation would be explained by a market limitation, for normative reasons related to the central role of public libraries.