In a January 14 filing, the Maryland Attorney General defended the state’s new library e-book law, rejecting the Association of American Publishers’ contention that the measure runs afoul of federal copyright law.

“This case is not about copyright protection—it is about the unfair and discriminatory trade practices of publishers at the expense of public libraries,” reads the first line of the state’s brief. “[When] a publisher elevates its own reward to the detriment of the public, the state has a legitimate interest in remedying the situation,” the brief later states. “Maryland decided to remedy such a situation, and chose a remedy that is fully consistent with the purpose of copyright.”

The Maryland e-book law went into effect on January 1. It requires that publishers offering e-books to consumers in the state must also offer to license the works to public libraries on “reasonable” terms.

The filing comes after the AAP on December 9 sued Maryland state officials in federal court, arguing that the law is preempted by the federal Copyright Act. The AAP also claims the law violates interstate commerce laws, and is unconstitutionally vague. The heart of the case, however, is that the Maryland law allegedly functions as a “compulsory license” that infringes on the exclusive rights granted to publishers and authors under copyright. The AAP is seeking an order declaring the Maryland law is preempted, as well a preliminary and permanent injunction against enforcement of the act.

In their 42-page legal memorandum, Maryland Attorney General Brian Frosh and his team counter that the state's library e-book law is constitutional, does not touch upon the exclusive rights granted under copyright, and is in fact a "modest" consumer protection statute enacted to prevent some publishers from “capitalizing on the digital revolution at libraries’ expense.”

The brief argues that the AAP has fallen far short of meeting its burden for a preliminary injunction, which it urges the court to deny. And state attorneys argue that the AAP's preemption claim is based on an "erroneous" premise and should be dismissed for failure to state a claim. Notably, the state opted not to challenge the AAP's standing at this time, citing the need for fact discovery, but in a footnote preserved the issue for litigation should the case progress.

Maryland's answer now sets up what will be a closely watched legal battle that observers say will likely hinge on the AAP’s claims of federal preemption.

In its December 9 complaint, the AAP argued that the Maryland law impinges upon the exclusive grant of rights under the federal Copyright Act because it allegedly "compels publishers to distribute e-books, audiobooks, and other digital literary works on terms set by the State of Maryland, and takes away publishers’ rights to decide when, how, to whom, and in what formats they will distribute their works, and whether to decline to distribute their works altogether." Furthermore, the AAP argues there is no “extra element” that "changes the nature of the state law action so that it is qualitatively different from a copyright infringement claim," the key legal test for preemption.

This case is not about copyright protection—it is about the unfair and discriminatory trade practices of publishers at the expense of public libraries.

Maryland attorneys, however, say there is an “extra element,” which is the state’s authority to regulate market practices.

“Maryland has a legitimate interest in protecting its citizens, including libraries and their patrons, against unfair, abusive, or deceptive trade practices,” the state argues, asserting that nothing in the Copyright Act prevents Maryland from addressing “biased pricing practices” that place “a significant burden of added cost on county library systems” and deny residents “equal access" to literature and information. “A copyright does not make a product invulnerable to regulation of the manner in which it is marketed,” Maryland state attorneys point out.

Furthermore, Maryland attorneys say the AAP is mischaracterizing the Maryland e-book law.

“The Maryland Act does not give public libraries the right to dictate the terms of a license agreement with a publisher; all it requires is that publishers offer to license these products to Maryland public libraries on reasonable terms,” the brief states. "Nor does the Maryland Act even require that an agreement be reached between the publisher and the public library. It seeks to ensure that the terms upon which publishers offer to license electronic literary products are fair and not abusive when compared to the terms offered to the public generally." AAP members “continue to enjoy complete control over the rights granted by the Copyright Act,” the brief goes on to argue, adding that a "contextual reading" of the law shows that no publisher will be "forced to enter into involuntary and uneconomic" licensing agreements.

Because the AAP's case "rests on the mistaken assumption that the Maryland Act is a copyright law and not a regulation of unfair trade practices," the state says the case should be dismissed and its bid for a preliminary injunction denied.

“There is no clear and readily apparent inconsistency between the Copyright Act and the Maryland Act that either makes compliance with both laws impossible or renders the Maryland Act an obstacle to the purposes of the Copyright Act," the brief states. In fact, far from “frustrating the intent of Congress,” the Maryland law seeks to restore some of the balance that publishers have eliminated through their license agreements, Maryland attorneys argue. “By ensuring that publishers and libraries work together toward mutually acceptable licenses, the Maryland Act follows the congressional intent for the Copyright Act."

The AAP now has until January 28 to reply in court. But in an unusual move for an active litigant, AAP president and CEO Maria Pallante issued a statement to the press on January 17.

“The Maryland Attorney General’s arguments are unresponsive and unpersuasive as to the legal problems presented in our lawsuit," Pallante said. "By interfering with the exclusive rights that are the basis of copyright transactions in online markets, including library markets, the Maryland Act creates confusion in a vibrant digital economy, undermines publishing contracts, and preposterously threatens copyright owners with penalties for following the uniform authority of the U.S. Copyright Act. The state has also badly misunderstood the premise and operation of the copyright framework and its constitutional origins, in which public access to original works of authorship is not achieved by government fiat or manipulation of terms, but rather through a system of economic incentives that foster investment, rewards, and continuous market innovations during a statutory term of protection."

First introduced in January 2021, the Maryland law (SB432/HB518) passed the Maryland General Assembly unanimously on March 10, a direct response to Macmillan's (since abandoned) 2019 embargo on frontlist e-book titles, which prompted numerous appeals to both federal and state legislators. The law further comes after a decade of tension in the digital library market, with libraries long complaining of unsustainable, non-negotiated high prices and restrictions.

A hearing is set for February 7 on the AAP's motion for a preliminary injunction, and on Maryland's motion to dismiss the case.

Update, January 21, 2022: Alan Inouye, ALA’s Senior Director, Public Policy & Government Relations, issued the following statement this week regarding Maryland's filing: “The Attorney General of Maryland provides a thorough and convincing argument that soundly refutes each claim by the Association of American Publishers. The American Library Association agrees with the Attorney General’s assessment that "publishers capitalize on the digital revolution at libraries’ expense." Accordingly, the Maryland law needs to remain in place as a modest step towards positive progress in the public interest.

In addition, the University System of Maryland & Affiliated Institutions (USMAI), a consortium of 17 academic libraries in the State of Maryland, also issued a statement in support of the Maryland Attorney General, which reads in part:

"USMAI member libraries are deeply grateful for the vigorous defense of the Maryland eBook law by Maryland Attorney General Brian Frosh against the complaint filed by the Association of American Publishers, Inc. (AAP). In its Friday, January 14, 2022, opposition to the AAP's motion for preliminary injunction and motion to dismiss the AAP complaint, the Maryland Attorney General's office cuts through the AAP's rhetoric and stresses that the law is narrowly tailored to address compelling state interests: to rectify unfair trade practices, to advance the purpose of public libraries, and to promote equitable access to information by individuals who do not have easy access to the physical premises of public libraries, including people living in rural areas, people with disabilities, children, and the elderly."