More than four months after a federal judge found the Internet Archive liable for copyright infringement for its program to scan and lend library books, the parties have delivered a negotiated agreement for a judgment to be entered in the case. But a final resolution in the case could still be many months, if not years, away, as Internet Archive officials have vowed to appeal.

The jointly proposed agreement includes a declaration that cements the key finding from Judge John G. Koeltl’s March 24 summary judgment decision: that the IA's unauthorized scanning and lending of the 127 in-suit copyrighted books under a novel protocol known as “controlled digital lending” constitutes copyright infringement, including in the IA's controversial "National Emergency Library" (under which the IA temporarily allowed for simultaneous access to its collections of scans in the the early days of the pandemic, when schools and libraries were shuttered).

The proposed agreement also includes a permanent injunction that would, among its provisions, bar the IA’s lending of unauthorized scans of the plaintiffs' in-copyright, commercially available books, as well as bar the IA from “profiting from” or “inducing” any other party’s “infringing" copying, distribution, or display of the the plaintiffs' books "in any digital or electronic form.” Under the agreement, the injunction will not be stayed while the case is on appeal—essentially meaning that once notified the IA will have to stop making unauthorized scans of the plaintiff Publishers' copyrighted works available to be borrowed. Meanwhile, AAP officials said a "side agreement" with the IA will motivate the IA to similarly resolve issues with other non-plaintiff AAP member publishers.

The parties left one final dispute for Koeltl to clean up, however: what books will be “covered” by the proposed injunction?

In a letter to the court, IA attorneys argue that "Covered Books" should be limited to books that are both “commercially available” and available in digital format. “This case involved only works that the Publishers make available as e-books and so the scope of any injunction should be limited accordingly,” IA attorneys argue. “Because the parties did not have the opportunity in this case to litigate the degree to which the unavailability of digital library licensing would affect the fair use analysis, it is inappropriate for an injunction in this case, by its breadth, to effectively prejudge the outcome of that question.”

Lawyers for the plaintiff publishers counter that the injunction should cover all unauthorized scans of commercially available books, whether the copyright holder has licensed a digital edition or not. “The law is clear that the right to decide whether or not to publish a book in electronic format belongs to its authors and publishers, not IA,” the publishers’ letter argues. Furthermore, IA’s unauthorized digital editions create “clear potential market harm to the print book market,” the publisher letter claims, because a “straight, verbatim digital copy of the entire work is an obvious competing substitute for the original.”

It is expected Koeltl will simply rule on the dispute based on what's already been filed, and move forward with the proposed judgment.

In his emphatic March 24 summary judgment ruling, Koeltl easily found the IA's program to be infringement, eviscerating the IA's fair use defense in the process. “At bottom, IA’s fair use defense rests on the notion that lawfully acquiring a copyrighted print book entitles the recipient to make an unauthorized copy and distribute it in place of the print book, so long as it does not simultaneously lend the print book,” Koeltl held in his decision. “But no case or legal principle supports that notion. Every authority points the other direction.”

This comprehensive proposed consent judgment...underscores the public purpose of copyright law and the well-established rights of authors and publishers to license and communicate their works to readers through a variety of formats and delivery models.

The jointly proposed agreement also includes a confidential monetary settlement, which, according to the Association of American Publishers (which organized the case on behalf of the publisher plaintiffs), will “substantially” cover the publishers’ “significant attorney’s fees and costs in the action.” Under the agreement, the payment is contingent upon the publishers prevailing on appeal, and the publishers won’t collect until the appeal process has played out.

The negotiated payment is all inclusive—it covers costs, fees, damages, and other claims, including the IA's claim that damages should be remitted—something that should assuage initial concerns expressed by some who feared a massive damage award might force the nonprofit IA to cease operations. The negotiated judgment does seek destruction of the IA's scans as the publishers' initial complaint had suggested.

In a statement, AAP said it got what it wanted from the litigation: a strong ruling in support of the rights of copyright holders.

“This comprehensive proposed consent judgment—made possible by the District Court’s unequivocal infringement finding—underscores the public purpose of copyright law and the well-established rights of authors and publishers to license and communicate their works to readers through a variety of formats and delivery models,” said Maria A. Pallante, president and CEO of the Association of American Publishers, on behalf of the Plaintiffs and AAP’s board of directors. “As the Court has so clearly reinforced, infringement serves only the infringer, not the public.”

For the Internet Archive, the negotiated judgment allows them to get the case to the appeals court more quickly (where, whatever the outcome at the district court, the case was surely headed) without the time and expense of a damages trial.

“We remain steadfast in our belief that libraries should be able to own, preserve, and lend digital books outside of the confines of temporary licensed access,” Internet Archive officials said, in an August 11 statement. “We believe that the judge made errors of law and fact in the decision, and we will appeal.”

Record Labels Sue IA

But even with the negotiated judgment in the publisher case, the Internet Archive's legal woes appear to be mounting. On August 11, a group of major record labels sued the IA in the Southern District of New York over its "Great 78" program, which collects vintage, 20th century 78 rpm recordings, some 400,000 so far, digitizes them and makes them available to users for free.

"Although Internet Archive describes the Great 78 Project’s goal as 'the preservation, research and discovery of 78 rpm records,' the Great 78 Project is actually an illegal effort to willfully defy copyright law on an astonishing scale," the suit claims. But the recordings in question are in no danger of being "lost," the complaint argues, with many of the recordings available from commercial streaming services. And the suit specifically points to the publishers' case, noting that "this is not the first time Internet Archive has improperly sought to wrap its infringing conduct in the ill-fitting mantle of fair use."

The case includes a list of more than 2,700 allegedly infringing files, which the labels say is a small sample of the scope of the infringement, putting potential damages in the hundreds of millions of dollars.

Editor's Note: This story has been updated with further information. Specifically, Judge John G. Koeltl entered the negotiated judgment agreement late on Friday, August 11, which was made public early Monday afternoon, August 14, after this story went to press. In resolving the lingering dispute over which books should be covered by the injunction, Koeltl found for the Internet Archive. "This case did not concern copyrighted works that are not yet available in electronic form and the parties therefore did not brief the legal issues related to such works," Koeltl wrote in a brief decision. "Accordingly, the Court has narrowly tailored the injunctive relief in this case to cover only copyrighted works, like the Works in Suit, that are available, from the Publishers in electronic form."