1
BEFORE THE
U.S. HOUSE OF REPRESENTATIVES
COMMITTEE ON THE JUDICIARY
SUBCOMMITTEE ON COURTS, INTELLECTUAL PROPERTY AND THE
INTERNET
HEARING ON FIRST SALE UNDER TITLE 17
TESTIMONY OF
GREG CRAM
ASSOCIATE DIRECTOR, COPYRIGHT AND INFORMATION POLICY
THE NEW YORK PUBLIC LIBRARY
JUNE 2, 2014
2
BEFORE THE
U.S. HOUSE OF REPRESENTATIVES
COMMITTEE ON THE JUDICIARY
SUBCOMMITTEE ON COURTS, INTELLECTUAL PROPERTY AND THE
INTERNET
HEARING ON FIRST SALE UNDER TITLE 17
JUNE 2, 2014
TESTIMONY OF
GREG CRAM
ASSOCIATE DIRECTOR, COPYRIGHT AND INFORMATION POLICY
THE NEW YORK PUBLIC LIBRARY
Chairman Coble, Ranking Member Nadler, Members of the Subcommittee, my
name is Greg Cram and I am the Associate Director of Copyright and Information Policy
at The New York Public Library, Astor, Lenox and Tilden Foundations (“NYPL”) in
New York City. I am the only copyright specialist working at a public library in the
United States, which demonstrates NYPL’s commitment to engaging with copyright
issues. My testimony is endorsed by the Library Copyright Alliance (“LCA”).
1
NYPL is virtually unique in that it combines both a world-class research library
and a network of community libraries. NYPL serves, without charge, a broad and diverse
public ranging from toddlers to seniors, and from persons acquiring literacy skills to
1
LCA consists of three major library associations—the Association of Research Libraries
(“ARL”), the American Library Association (“ALA”), and the Association of College
and Research Libraries (“ACRL”)—that collectively represent over 100,000 libraries in
the United States employing over 350,000 librarians and other personnel. LCA
contributed to the development of this written testimony.
3
post-graduate scholars, many of whom may be unaffiliated with academic institutions.
Serving close to 50 million users both in person and online, NYPL is one of the largest
library systems in the country. Our 88 community branches located in Manhattan, Staten
Island, and the Bronx circulate a collection of six million books, e-books, CDs and DVDs
each year. Our research collection consists of more than 51 million items, including
published books, archival materials, family photographs, sound recordings, and
ephemera. NYPL’s mission is to inspire lifelong learning, advance knowledge, and
strengthen our communities. In addition to offering our users access to the materials in
our collection, we further this mission by providing free services and other resources
including computer access, classes, exhibitions, programming and more.
I appreciate the opportunity to testify today on the importance of the first sale
doctrine to libraries and NYPL’s support for the Supreme Court’s decision in Kirtsaeng
v. John Wiley & Sons. I will also explain how the digital first sale issue should be viewed
in the broader context of contractual restrictions on copyright exceptions.
I. THE IMPORTANCE OF THE FIRST SALE DOCTRINE TO LIBRARIES
Section 106(3) of the Copyright Act grants the copyright owner the exclusive
right “to distribute copies or phonorecords of the copyrighted work to the public
by…lending.”
2
However, the first sale doctrine, codified at Section 109(a) of the
Copyright Act, terminates the copyright owner’s distribution right in a particular copy
“lawfully made under this title” after the first sale of that copy.
3
The House Judiciary
Committee Report on the 1976 Copyright Act explains that under Section 109(a), “[a]
2
17 U.S.C. § 106(3) (2012).
3
17 U.S.C. § 109(a) (2012).
4
library that has acquired ownership of a copy is entitled to lend it under any conditions it
chooses to impose.”
4
The first sale doctrine thus is critical to the operation of libraries:
“[w]ithout this exemption, libraries would be unable to lend books, CDs, videos, or other
materials to patrons.”
5
In short, the first sale doctrine is critical to one of the most basic
library functions: lending books and other materials to the public.
A. Throughout American History, Libraries Have Promoted Democratic Values By
Lending Books to the Public
For almost 400 years, libraries in America have been lending books and other
materials. In 1638, John Harvard bequeathed his collection of books to a newly
established college in Cambridge, Massachusetts for the use of its faculty and students.
6
Benjamin Franklin in 1731 helped establish the Library Company of Philadelphia, which
allowed its stockholders to borrow its books.
7
William Rind created a commercial
circulating library in Annapolis in 1763, which rented books for a small fee.
8
By the end
of the eighteenth century, many towns throughout the new nation had academic libraries,
membership libraries, circulating libraries or church libraries.
9
4
H.R. REP. NO. 94-1476, § 109, at 79 (1976), as reprinted in 1976 U.S.C.C.A.N. 5659,
5693.
5
CARRIE RUSSELL, COMPLETE COPYRIGHT: AN EVERYDAY GUIDE FOR LIBRARIANS 43
(2004).
6
MICHAEL HARRIS, HISTORY OF LIBRARIES IN THE WESTERN WORLD 173 (1999).
7
Id. at 183-84. Benjamin Franklin explained his rationale for organizing a library: “by
thus clubbing our Books to a common Library, we should, while we lik’d to keep them
together, have each of us the Advantage of using the Books of all the other Members
which would be nearly as beneficial as if each owned the whole.” BENJAMIN FRANKLIN,
THE AUTOBIOGRAPHY OF BENJAMIN FRANKLIN 130 (Leonard W. Labaree ed., 1964).
8
“In many ways more democratic than the subscription social libraries, the circulating
libraries often allowed women to have books, featured reading rooms with long hours,
and provided access to a variety of reading matter, including newspapers, popular
pamphlets, and novels.” Dee Garrison, Libraries, in ENCYCLOPEDIA OF THE UNITED
STATES IN THE NINETEENTH CENTURY (Paul Finkelman ed., 2001).
9
HARRIS, supra note 6, at 202-03.
5
In 1800, Congress established the Library of Congress. President Thomas
Jefferson appointed the first Librarian of Congress, and sold his private collection to the
Library of Congress in 1815, after its collection burned during the British occupation of
Washington, D.C., in the War of 1812.
10
Thomas Jefferson also articulated a vision of
libraries across the country providing broad public access to books. In a letter to John
Wyche, Jefferson stated that “I have often thought that nothing would do more extensive
good at small expense than the establishment of a small circulating library in every
county, to consist of a few well-chosen books, to be lent to the people of the county under
regulations as would secure their safe return in due time.”
11
During the first half of the nineteenth century, access to books increased.
Apprentice libraries were established for the use of young men migrating to the cities to
help them “train for the new factory system which had been brought about by the
industrial revolution.”
12
Mercantile libraries developed for the use of merchants and law
clerks. School districts began to invest in libraries for their students. By 1853, New York
State had created school district libraries throughout the state with over 1,604,210
volumes.
13
Horace Mann urged Massachusetts to follow New York’s lead because he
“saw the library as an essential contributor to the educational program of the school, as an
10
Id. at 196-97. The Library of Congress circulates materials to Supreme Court Justices,
Members of Congress, thousands of Congressional employees, and other libraries (which
can make the materials available to users within the library premises). Interlibrary Loan,
LIBRARY OF CONG., http://www.loc.gov/rr/loan/loanweb1.html (last visited May 28,
2014).
11
Letter from Thomas Jefferson to John Wyche (May 19, 1809), in THOMAS JEFFERSON:
A CHRONOLOGY OF HIS THOUGHTS 223 (Jerry Holmes ed. 2002).
12
JEAN KEY GATES, INTRODUCTION TO LIBRARIANSHIP 70 (1968).
13
Id. at 79.
6
invaluable aid in continuing education and in self-improvement, and an indispensable
part of the cultural life of the people.”
14
In 1848, the Massachusetts legislature authorized the City of Boston “to establish
and maintain a public library, for the use of the inhabitants….”
15
In the following
decades, other public libraries were established, but the public library movement
accelerated dramatically after 1881 through the philanthropy of steel magnate Andrew
Carnegie. Carnegie said that “[t]here is not such a cradle of democracy upon the earth as
the Free Public Library, this republic of letters, where neither rank, office, nor wealth
receives the slightest consideration.”
16
Carnegie ultimately funded the construction of
1,679 public library buildings in 1,412 communities across the United States.
17
NYPL was founded with this public mission in mind. In 1895, the Astor and
Lenox libraries combined with the support of The Tilden Trust to “establish and maintain
a free library and reading room in the city of New York….”
18
In 1901, NYPL contracted
with the City of New York to operate 39 Carnegie-built public library buildings in
14
Id. at 80.
15
Founding Legislation, BOSTON PUB. LIBRARY,
http://www.bpl.org/general/legislation.htm (last visited May 28, 2014).
16
Adam Arensen, Libraries in Public Before the Age of Public Libraries: Interpreting the
Furnishings and Design of Athenaeums and Other “Social Libraries,” 1800-1860, in
THE LIBRARY AS PLACE: HISTORY, COMMUNITY, AND CULTURE 74 (John Buschman &
Gloria J. Leck, eds., 2007). “When mention is made of the dependence of a democratic
society on an informed citizenry, the American public library usually comes to mind as
the instrument which has had as its fundamental purpose the serving of this crucial need.”
GATES, supra note 12, at 91. See also U.S. OFFICE OF EDUC., PUBLIC LIBRARIES IN THE
UNITED STATES OF AMERICA iii (1876) (“[O]ur libraries will fulfill in every respect their
high station as indispensable aids to public education, to the privilege and responsibility
of instructing our American democracy.”).
17
HARRIS, supra note 6, at 246-47.
18
Will of Samuel J. Tilden (Apr. 23, 1884). For more information on the founding of
NYPL, see The New York Public Library, Introductory Statement, BULLETIN OF THE
NEW YORK PUBLIC LIBRARY, ASTOR, LENOX AND TILDEN FOUNDATIONS, Jan. 1897, at 3,
available at http://books.google.com/books?id=waNMAAAAYAAJ.
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Manhattan, Staten Island, and the Bronx. For the last century, NYPL has served a vital
role in the intellectual fabric of American life. Today, NYPL provides free and open
access to its physical and electronic collections of information as well as to its services
for people of all ages, backgrounds and needs.
In the twentieth century, the federal government expanded its support of libraries
far beyond the Library of Congress. During the Great Depression, the Works Progress
Administration built 350 new libraries and repaired many existing ones.
19
In 1941,
President Franklin Roosevelt issued a proclamation identifying libraries as “essential to
the functioning of a democratic society” and “the great tools of scholarship, the great
repositories of culture, the great symbols of the freedom of the mind.”
20
Congress enacted
the Library Services Act of 1956 and the Library Services and Construction Act of 1964
to provide federal funding for library construction. Currently, the Institute of Museum
and Library Services, an independent federal agency, administers the Library Services
and Technology Act of 1996 and its 2003 reauthorization to allocate federal funding
annually to libraries throughout the United States.
21
B. Americans Borrow Books and Other Materials From Libraries 4.4 Billion Times
A Year
Notwithstanding the spread of digital technology, millions of Americans check
out books and other materials from libraries. The collections of the over 9,225 public
libraries in the country contain 934.8 million materials of which 88.3 percent are printed
19
Byron Anderson, Public Libraries, in ST. JAMES ENCYCLOPEDIA OF POPULAR CULTURE
133 (Tom Pendergast & Sara Pendergast eds., 2000).
20
PATTI CLAYTON BECKER, BOOKS AND LIBRARIES IN AMERICAN SOCIETY DURING
WORLD WAR II: WEAPONS IN THE WAR OF IDEAS 49 (2005).
21
See generally INSTITUTE OF MUSEUM AND LIBRARY SERVICES, http://www.imls.gov
(last visited May 28, 2014).
8
materials, 5.7 percent are audio materials, 5.4 percent are video materials, and 1.6 percent
are e-books.
22
For these 934.8 million materials, there were a total of 2.241 billion
circulation transactions in 2009.
23
Per capita circulation grew by 26.1 percent between
2000 and 2009.
24
The collections of 81,920 public school media centers contain 959 million books
and 42.6 million phonorecords and audiovisual materials.
25
These materials were checked
out 2.05 billion times during the 2007-08 school year.
26
The collections of 3,689 academic libraries include 1.07 billion copies of printed
materials, as well as 112 million phonorecords and audiovisual materials and 158 million
e-books.
27
There were a total of 176 million circulation transactions for these materials in
2010.
28
At NYPL, we have seen an increase in lending and use of the collection since
2008. In 2012, NYPL circulated 28 million items, an increase from 18 million items in
2008. This represents a 44 percent increase in circulation since 2008. All this library
lending is enabled and protected by the first sale doctrine.
22
INSTITUTE OF MUSEUM AND LIBRARY SERVICES, PUBLIC LIBRARIES SURVEY FISCAL
YEAR 2009 10 (2010).
23
Id. at 7.
24
Id.
25
NATIONAL CENTER FOR EDUCATIONAL STATISTICS, U.S. DEPARTMENT OF EDUCATION,
CHARACTERISTICS OF PUBLIC AND BUREAU OF INDIAN EDUCATION ELEMENTARY AND
SECONDARY SCHOOL LIBRARY MEDIA CENTERS IN THE UNITED STATES: RESULTS FROM
THE 2007–08 SCHOOLS AND STAFFING SURVEY 9 (2009).
26
Id. at 14.
27
NATIONAL CENTER FOR EDUCATION STATISTICS, U.S. DEPARTMENT OF EDUCATION,
ACADEMIC LIBRARIES: 2010 FIRST LOOK 8 (2011).
28
Id. at 4.
9
II. AVOIDING THE PARADE OF HORRIBLES: WHY THE SUPREME
COURT’S KIRTSAENG DECISION SHOULD NOT BE DISTURBED
The first sale doctrine in Section 109(a) applies only to “copies lawfully made
under” Title 17. In an effort to prevent parallel imports, some rights holders had argued
that this phrase means lawfully manufactured in the United States. The Second Circuit in
John Wiley & Sons v. Kirtsaeng
29
agreed with publisher John Wiley & Sons that the first
sale doctrine did not apply to copies of its textbooks printed with its authorization in
Thailand. Thus, a student who imported these foreign-printed copies into the United
States and sold them online infringed copyright.
By restricting the application of Section 109(a) to copies manufactured in the
United States, the Second Circuit’s decision threatened the ability of libraries to continue
to lend materials in their collections. Over 200 million books in U.S. libraries had foreign
publishers. Moreover, many books published by U.S. publishers were actually
manufactured by printers in other countries. Although some books indicated on their
copyright page where they were printed, many did not. Libraries, therefore, had no way
of knowing whether these books complied with the Second Circuit’s rule. Without the
certainty of the protection of the first sale doctrine, librarians would have had to confront
the difficult policy decision of whether to continue to circulate these materials in their
collections in the face of potential copyright infringement liability. For future
acquisitions, libraries would have been able to adjust to the Second Circuit’s narrowing
of Section 109(a) only by bearing the significant cost of obtaining a “lending license”
whenever they acquired a copy that was not clearly manufactured in the United States.
29
654 F.3d 210 (2d Cir. 2011).
10
On March 19, 2013, by a 6 to 3 vote, the Supreme Court overturned the Second
Circuit and ruled that the first sale doctrine applies to non-infringing copies, regardless of
where they are made. This means that libraries throughout the United States could
continue their existing purchasing and circulation practices with new confidence that they
would not infringe copyright by doing so.
Writing for the majority, Justice Breyer closely examined the meaning of the five
words “lawfully made under this title.” After reviewing the context of those words in
Section 109(a) and the Copyright Act, the common law history of the first sale doctrine,
the legislative history of Section 109(a), and the Court’s earlier decisions, Justice Breyer
rejected the “geographical interpretation” of lawfully made under this title as meaning
made in the United States. Instead, he found that the phrase meant manufactured in a
manner that met the requirements of American copyright law, e.g., manufactured with the
permission of the rights holder.
Reinforcing this interpretation was the “parade of horribles” that might ensue if
the Court adopted the geographical interpretation. The first, and by far the most detailed,
example Justice Breyer used was the potentially adverse impact on libraries.
The American Library Association tells us that library collections contain
at least 200 million books published abroad (presumably, many were first
published in one of the nearly 180 copyright-treaty nations and enjoy
American copyright protection under 17 U.S.C. §104, see supra, at 10);
that many others were first published in the United States but printed
abroad because of lower costs; and that a geographical interpretation will
likely require the libraries to obtain permission (or at least create
significant uncertainty) before circulating or otherwise distributing these
books. Brief for American Library Association et al. as Amici Curiae 4,
15–20.
30
Cf. id., at 16–20, 28 (discussing limitations of potential defenses,
including the fair use and archival exceptions, §§107–108). See also
30
The brief Justice Breyer refers to as the American Library Association brief is the brief
submitted jointly by ALA, ARL, and ACRL, referenced above.
11
Library and Book Trade Almanac 511 (D. Bogart ed., 55th ed. 2010)
(during 2000–2009 “a significant amount of book printing moved to
foreign nations”).
How, the American Library Association asks, are the libraries to obtain
permission to distribute these millions of books? How can they find, say,
the copyright owner of a foreign book, perhaps written decades ago? They
may not know the copyright holder’s present address. Brief for American
Library Association 15 (many books lack indication of place of
manufacture; “no practical way to learn where [a] book was printed”).
And, even where addresses can be found, the costs of finding them,
contacting owners, and negotiating may be high indeed. Are the libraries
to stop circulating or distributing or displaying the millions of books in
their collections that were printed abroad?
31
The Court’s geographic interpretation of Section 109(a) results in an international
exhaustion rule: the distribution right is exhausted regardless of where the first sale
occurs, meaning that the rights holder cannot prevent the parallel importation of copies
purchased abroad. This is the right rule for libraries and for American consumers, and
Congress should not disturb it.
III. DIGITAL FIRST SALE
Libraries are increasingly licensing electronic resources, from e-books in public
libraries to databases of academic journals. The license sets the terms under which the
library is permitted to make the content available to its users. Often the content is hosted
on the server of the publisher or other intermediary, and the library is buying access to
the server for its users. An authorized user might be able to download the content onto
her computer or device, and digital rights management software will allow the content to
reside there until it is automatically deleted in accordance with the license terms. For
example, Overdrive provides many public libraries with access to e-books with the
31
Kirtsaeng v. John Wiley & Sons, 133 S. Ct. 1351, 1364 (2013).
12
publishers’ authorization. Currently, for most popular trade titles, a library contracts with
vendors like Overdrive to enable users to check out a licensed title based on the print
“one copy, one user” model. Libraries must license additional e-book files in order to
lend to more than one user at the same time. Similar to the length of time a physical book
is borrowed for, after a prescribed period, the e-book is automatically returned and
becomes immediately available for digital check-out by another user. Other licenses
might not allow digital download, but instead permit a user to print out a limited number
of pages, e.g., a journal article. Other licenses permit users to access content only when
the user is connected to the Internet, e.g., streaming access.
This obviously is a major shift from the traditional model where libraries bought
physical copies of books and other materials, which they then lent to users pursuant to the
first sale doctrine. This new model has certain advantages over the traditional model.
Libraries do not need to repair torn pages or broken bindings, nor do they need to put the
books on a physical shelf. Users get immediate access to materials once they are
automatically returned, and, if the license permits, users can access the materials
remotely.
At the same time, the new model has certain drawbacks. Under the old model, a
book remained in the collection until the book physically wore out or the library chose to
replace it. In contrast, under most current business terms applied by publishers to this
new digital environment, a library can provide access to licensed content only so long as
it has paid the appropriate license fee. As new digital content licensing models evolve,
libraries will continue to evaluate licenses against their obligation to act responsibly with
13
taxpayer dollars and private funding.
32
Also, when libraries renew licenses, the terms of
the renewal may be different than the previous license, adding some unpredictability as to
what will be available from year-to-year.
Further, some current licensing models contain arbitrary circulation limits, and the
libraries must re-license an e-book after a given period in order to maintain access. Thus,
if the library wanted to retain a title for ten years, it would have to license the title ten
times in addition to the annual licensing fee for electronic access. The library license rate
for an e-book can more expensive than its print counterpart, and sometimes more than ten
times the consumer e-book price.
33
Some publishers (or authors who retained their
copyright) do not license e-books to libraries at all, or restrict access to the publisher
catalog through embargos or particular genres.
Moreover, if the publisher or content provider goes out of business, or decides to
discontinue access to certain products because it is no longer profitable, the library might
no longer be able to provide access to the content at all under the original terms of the
license. This, of course, would have serious preservation consequences, leaving large
holes in the cultural and scholarly record. Libraries preserve materials to prevent the loss
of vital cultural, historical and scholarly resources so that generations of users to come
32
For smaller libraries, the cost differential between purchasing a physical item and
licensing a digital file may be significant. According to one study, a public library on
average purchases 59 hardcover copies each of the top 20 New York Times bestseller list
titles (1,180 individual copies) at a total cost of $2.4 million. The same public library
spends $1.2 million on 19 electronic copies of each of the same bestselling titles (380
individual copies). This represents a 55% increase in cost for the same titles. OCLC
ONLINE COMPUTER LIBRARY CENTER, THE BIG SHIFT: PUBLIC LIBRARY STRATEGIES FOR
ACCESS TO INFORMATION IN ANY FORMAT 15 (2013), available at
http://www.oclc.org/content/dam/campaign-landing-pages/en/214936_the-big-shift.pdf.
33
See Douglas County Libraries Report, Price Comparison as of April 3, 2014 (Apr.
2014), http://evoke.cvlsites.org/files/2014/04/DCL-Pricing-Comparison-4-3-14.pdf.
14
are able to use them. If libraries are unable to access and preserve digital content, then
libraries may not be able to fulfill their mission to protect the record of our cultural
heritage for future readers and knowledge creators.
Libraries and publishers are working collaboratively to resolve digital transition
issues. Although some publishers have been reluctant to license e-books to public
libraries on reasonable terms, business models are evolving and experimentation is
occurring. NYPL has taken an active role in encouraging publishers to responsibly
re-enter the library market for e-books, and explore new ways to address their concerns
and the needs of library users. In 2012, Tony Marx, the president of NYPL, offered
NYPL as a pilot-testing lab for virtually any e-book distribution model any publisher
wanted to test. These pilots helped both libraries and publishers understand how to work
with new business models and how users engage with e-books. These partnerships are
consistent with NYPL’s role in providing access to content while promoting the
discovery of new literature. Furthermore, consortia of libraries with a mission for
preserving cultural heritage and the scholarly record have formed partnerships for digital
preservation, starting with journal content, with each library taking responsibility for
particular titles among its holdings. For example, NYPL was an early participant in
Portico, a digital preservation service that operates in partnership with publishers to
protect digital journals and other materials.
34
At the same time, as progressively more content is licensed rather than sold,
Congress needs to consider whether to prohibit the enforcement of contractual limitations
on copyright exceptions in certain circumstances. Significantly, the suite of statutory
34
See generally PORTICO, http://www.portico.org/ (last visited May 28, 2014).
15
instruments for amending the U.K. copyright law that will come into force on June 1,
2014, prohibit the “contracting out” of many exceptions in the research and education
context.
35
Congress, therefore, needs to closely monitor the evolving digital marketplace
to ensure that it is sufficiently competitive to provide widespread public access to works.
IV. CONCLUSION: PROTECT FIRST SALE FOR PHYSICAL ITEMS AND
MONITOR EVOLVING DIGITAL BUSINESS MODELS
Throughout American history, libraries have played a fundamental role in
promoting democratic values by providing access to information. By lending materials to
users, libraries help users become informed citizens. Recognizing this important activity,
U.S. copyright law protects the physical lending of material through the first sale
doctrine. Attempts to limit the scope of the first sale doctrine, such as those contemplated
in the Kirtsaeng v. John Wiley & Sons litigation, are very concerning to libraries. For
licensed digital content, Congress should continue to monitor evolving business models
to ensure that the public can continue to access content lent by libraries free of charge.
I would like to thank the Committee for holding this hearing and inviting NYPL
to participate.
35
See, e.g., The Copyright and Rights in Performances (Research, Education, Libraries
and Archives) Regulations 2014,
http://www.legislation.gov.uk/ukdsi/2014/9780111112755.
