Page:A White Paper on Controlled Digital Lending of Library Books.pdf/30

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deserves special consideration. For these 20^th century books, we believe the fair use argument is strongest.

The most significant market failure for these books is with truly orphaned works—i.e., books for which the rightsholder cannot be identified or located after a diligent search.^[1] For those works, market failure is confirmed through the diligent search, which demonstrates the insurmountable transaction costs just in searching for the rightsholder. But the 20^th century book market suffers from market failure even when owners are known. Failure of rightsholders to exploit the e-book market likely has many causes. Some of those are production-related transaction costs, some are due to the complex thickets of rights associated with each work,^[2] and some are likely due just to competing priorities. In all such cases, books are not commercially available in digital form. High transaction costs make it economically unviable for a willing rightsholder and a willing user to negotiate for a sale.

The Copyright Act does not require rights holders to sell their works in the marketplace; they do not face a “use it or lose it” regime of protection.^[3] Beyond the threshold question of protection, even within the fair use analysis, courts have found valid reasons why market harm analysis should weigh against the use when the copyright owner may have had creative or economic reasons for holding back the work.^[4] Yet, courts have held that failure to exploit the market can be evidence of lack of market harm under the fourth fair use factor. For example, in Cambridge University Press v. Patton, a group of publishers sued Georgia State University, claiming that university-uploaded excerpts of books to

↑ See Jennifer Urban, How Fair Use Can Help Solve the Orphan Works Problem, 27 Berkeley Tech. L.J. 1379, 1404–09 (2012).
↑ See Pamela Samuelson, Google Book Settlement as Copyright Reform, 2011 Wisc. L. Rev. 479, 495–99 (identifying uncertainty over ownership of e-book rights as contributing to the development of the Google Books Search Settlement, which have provided e-access to millions of books). See also Random H., Inc. v. Rosetta Books LLC, 150 F. Supp. 2d 613 (S.D.N.Y. 2001), aff’d, 283 F.3d 490 (2d Cir. 2002) (resolving contractual dispute between publisher and author over ownership of e-book rights).
↑ Nor must copyright owners sue for each infringement. For example, in concluding that the doctrine of laches is rarely available to copyright defendants, the Supreme Court in Petrella v. Metro-Goldwyn-Mayer, Inc. explained: “If the rule were, as MGM urges, ‘sue soon, or forever hold your peace,’ copyright owners would have to mount a federal case fast to stop seemingly innocuous infringements, lest those infringements eventually grow in magnitude.” The Copyright Act’s statute of limitations and accrual rules “avoids such litigation profusion. It allows a copyright owner to defer suit until she can estimate whether litigation is worth the candle.” 134 S. Ct. 1962, 1976 (2014).
↑ Balsley v. LFP, Inc., 691 F.3d 747, 761 (6th Cir.2012) (“current desire or ability to avail themselves of the market” was irrelevant to the question of potential market harm); Castle Rock Entm’t, Inc. v. Carol Publ’g Grp., Inc., 150 F.3d 132, 145–46 (2d Cir.1998) (finding market harm and noting that “copyright law must respect that creative and economic choice”).

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[1] See Jennifer Urban, How Fair Use Can Help Solve the Orphan Works Problem, 27 Berkeley Tech. L.J. 1379, 1404–09 (2012).

[2] See Pamela Samuelson, Google Book Settlement as Copyright Reform, 2011 Wisc. L. Rev. 479, 495–99 (identifying uncertainty over ownership of e-book rights as contributing to the development of the Google Books Search Settlement, which have provided e-access to millions of books). See also Random H., Inc. v. Rosetta Books LLC, 150 F. Supp. 2d 613 (S.D.N.Y. 2001), aff’d, 283 F.3d 490 (2d Cir. 2002) (resolving contractual dispute between publisher and author over ownership of e-book rights).

[3] Nor must copyright owners sue for each infringement. For example, in concluding that the doctrine of laches is rarely available to copyright defendants, the Supreme Court in Petrella v. Metro-Goldwyn-Mayer, Inc. explained: “If the rule were, as MGM urges, ‘sue soon, or forever hold your peace,’ copyright owners would have to mount a federal case fast to stop seemingly innocuous infringements, lest those infringements eventually grow in magnitude.” The Copyright Act’s statute of limitations and accrual rules “avoids such litigation profusion. It allows a copyright owner to defer suit until she can estimate whether litigation is worth the candle.” 134 S. Ct. 1962, 1976 (2014).

[4] Balsley v. LFP, Inc., 691 F.3d 747, 761 (6th Cir.2012) (“current desire or ability to avail themselves of the market” was irrelevant to the question of potential market harm); Castle Rock Entm’t, Inc. v. Carol Publ’g Grp., Inc., 150 F.3d 132, 145–46 (2d Cir.1998) (finding market harm and noting that “copyright law must respect that creative and economic choice”).

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