Lending and LendInk: six lessons on copyright from one big mess

LendInk: copyright infringer? Witchhunt victim? Both? Neither? More rhetorical questions?

What happened last week to LendInk, where hundreds of authors sent takedown notices to a site that matched people willing to lend e-books to people wanting to borrow them, seems to be an unfortunate artifact of two things:

1. Lots of creators don't know what the law actually permits and prohibits.
2. When they want to find out, they don't really know where to turn.

I can't do much about the first point. But I'll try to help with the second.


I never saw LendInk when it was live. But from reports it appears that on its site purchasers of digital books who had the right under their license terms to lend out those books would post that they had the books. Other people who were interested in being loaned those books would then contact the purchasers and arrange for the loan. There were pages that contained descriptions of various books and cover art from the books.

And although the site had been live for over a year, once authors found out about it they didn't like what they saw. Whether they misunderstood and thought that LendInk was sharing copies of e-books, or they thought LendInk's promoting lending of e-books was copyright infringement, or they had other reasons they thought LendInk was violating copyright, they reacted in force. Authors apparently sent hundreds of takedown notices under the Digital Millennium Copyright Act (DMCA) to LendInk's ISP, as well as more standard cease and desist (C&D) letters.

The ISP did what a prudent ISP would under the circumstances: it shut down the site and invited Dale Porter, LendInk's CEO, to file counter-notices under the DMCA alleging that there was no infringement. It would appear that Porter has decided instead to leave the site down.

As happens, the Internet responded with a backlash against the authors who sent the DMCA notices. Very quickly the headlines around LendInk changed from "LendInk is violating copyright" to "LendInk is the victim of a witchhunt". Never having seen the site myself, I can't speak to whether LendInk was operated legally or not. But the issues that arose are often misunderstood, which isn't surprising because they are some of the more highly technical areas of copyright law. So let's agree that I'm not taking a position on one particular site, and I'll explore some of the background issues in more depth.


1. True lending isn't copyright infringement. First: Lending e-books isn't copyright infringement unless the loan requires making a copy. I'll use Amazon for my example here because I'm most familiar with its lending environment. If you loan a Kindle e-book, it disappears from your device and appears on the recipient's device. No one has made a copy of it so there was no infringement.

2. A license could prohibit lending in the USA... Many authors looked to their Kindle Direct Publishing Terms and found that they had permitted lending - it's the default setting. But what they maybe don't realize is that by offering them the chance to turn off lending Amazon is in one way doing them a favor. Under a rule called the "first sale doctrine", a purchaser of a copyrighted good can't stop further transactions. This is why there are stores selling used books, CDs, and video games. But where there's a license, the case of Vernor v. Autodesk holds that in the USA license terms can prevent what copyright law otherwise allows. So the license is why Amazon can prevent lending, not because lending is copyright infringement.

3. But not in Europe. In Europe the rule on lending is exactly the opposite. I wrote about a document called the EU Software Directive in the context of app development (see link below) but it applies here too: in the EU, license terms can't restrict what you can do with software once you've bought it. If your license says otherwise then that term is void. So a European book lending site may well be able to do what an American one can't, at least for customers in the EU.

4. Displaying cover art may not be infringement either. This is tough. Not as a matter of law, but because there's some authors out there whom I respect and who think sites shouldn't be allowed to show their cover art.

Again, one question comes down to whether there's a copy being made. But on the Web there's a way to show images without copying them. Otherwise Google Image Search would be illegal. Oversimplifying a bit, if Website 1 uses some special coding techniques to open a frame to Website 2 and cause an image from Website 2 to be displayed on Website 1, then even if it looks like the picture is on Website 1 it's actually still on Website 2 and Website 1 hasn't made a copy. Kind of like the way you can look out your window and see the view. In a case brought by a porn company called Perfect 10 against Amazon, Google, and a bunch of other companies, a court held that if you structure your site that way then there was no copying and so there was no infringement. If a site does that, the site hasn't infringed.

But that's not all. There's a legal doctrine that someone who is engaging in a legal commercial activity is often allowed to display an image of the item so that consumers can make sure they're not being misled (which is why eBay is allowed to host user-uploaded images of goods for sale). LendInk itself may not have been engaged in a commercial activity and so this exception may not have applied, but it's also worth knowing.

5. Even if all of this is true, there still might be copyright infringement. This may get lost in the shuffle. But there are all sorts of types of copyright infringement. Lending might not be a problem, opening a frame to show cover art might not be a problem, but what if the page where the book is listed contains a 10-paragraph extract of the book?  Or pictures, if it's an illustrated book? That might be copyright infringement right there. Fair use is a complex topic - this is why copyright lawyers get paid a lot of money - and there's a lot of misinformation floating around the Web. I'll be putting up a fair number of posts on fair use over the next few weeks to give some general information. Stay tuned.

6. But if there was no infringement then there's no grounds for a DMCA notice. If there was no copyright infringement then there should be no DMCA notices. And that could be a problem. When you send a DMCA notice you're required to affirm that the person doing the thing you're complaining about has no legitimate defenses under the law. And you do so under pain of perjury, which means that if you file a false one you're committing perjury. Which, although no one ever seems to get charged for it in the DMCA notice context, is a federal crime.

That's not a problem with a C&D letter: you can have claims against someone that don't arise from copyright (e.g. breach of license) and you don't sign C&D letters under pain of perjury. But DMCA notices are unique: sending them gets special notice but like Spider-Man said with great power comes great responsibility.

So there's six points that may be instructive here on why e-book lending isn't such a simple thing to characterize. The Internet sure seems to think that LendInk has been defamed. Defamation isn't the right legal theory here. But sending a DMCA notice to a website that wasn't infringing leaves the sender exposed to a lawsuit based on something called interference in contractual relations. Like I said, I don't know whether LendInk itself might have been infringing, but the next site to come along might not be.

And that site operator might get mad enough to try to make a point.

LINKS:
Differences between Kindle Lending Library and lending Kindle books:
http://moirarogers.com/2012/08/kindle-lending-library-vs-lending-kindle-books-hint-theyre-different/
Interview with Dale Porter, owner of LendInk:
http://www.digitalmediamachine.com/2012/08/what-happened-to-lendink-owner-explains.html
Judgment in Vernor v. Autodesk:
http://scholar.google.com/scholar_case?case=10742056384168408518&hl=en&as_sdt=2&as_vis=1&oi=scholarr
EU Software Directive post from Legal Minimum:
http://legalminimum.blogspot.com/2012/07/app-developers-if-you-sell-into-eu-and.html
Judgment in Perfect 10 v. Amazon:
http://scholar.google.com/scholar_case?q=perfect+10+google&hl=en&as_sdt=2,48&case=9280547131690965273&scilh=0