It's legal to scan books—even if you don't own the copyright—the US Court of Appeals for the 2nd Circuit held today.

The Authors' Guild sued Google, saying that serving up search results from scanned books infringes on publishers' copyrights, even though the search giant shows only restricted snippets of the work. The authors' group said that Google's book search isn't transformative, that the snippets provide an illegal free substitute for their work, and that Google Books infringes their "derivative rights" in revenue they could gain from a "licensed search" market.

In its opinion (PDF), a three-judge panel rejected all of the Authors' Guild claims in a decision that will broaden the scope of fair use in the digital age. The immediate effect means that Google Books won't have to close up shop or ask book publishers for permission to scan. In the long run, the ruling could inspire other large-scale digitization projects.

Google's digital copies make public "information about Plaintiffs' books," the judges point out, but do not provide a "substantial substitute" for them. As for the licensing market, the authors' group misconstrues how it works. An author's copyright does not include "an exclusive right to supply information... about her works."

The opinion begins with a brief description of Google's book scanning project, which started in 2004. Working with major libraries like Stanford, Columbia, the University of California, and the New York Public Library, Google has scanned and made machine-readable more than 20 million books. Most of them are nonfiction and out of print.

That effort has allowed the public to search for particular terms that might appear in a book (or not appear), which has enabled new forms of research, as tens of millions of books can be searched to learn more about word frequencies, nomenclature, linguistic usage, and other topics. Unlike other forms of Google search, Google does not display advertising to book searchers, nor does it receive payment if a searcher uses Google's link to buy a copy.

Four factors

The court then goes into considering the four fair use factors. Google's use is indeed transformative, the court held, citing caselaw involving other "full-text searchable database[s]" as a "quintessentially transformative use." The court points to Google's "ngrams" tool that allows searches for frequency of usage of selected words—something that couldn't be done in a lifetime of manual searching, even given access to the millions of books in the libraries working with Google. The "snippet view" that Google provides is also transformative, "identifying books of interest to the searcher" without replacing them.

Judges gave little weight to the second factor, which is "the nature of the copyrighted work," a quality that "rarely play[s] a significant role" in deciding fair use.

The third factor is Google's mountain to climb: the amount of the copyrighted work that's used. Google scanned the entire book. But that didn't kill its argument. Courts have rejected any "categorical rule" that a whole copy can't be a fair use. "While Google makes an unauthorized digital copy of the entire book, it does not reveal that digital copy to the public," the opinion states. "The copy is made to enable the search functions to reveal limited, important information about the books."

The judges also carefully analyze Google's use of "snippet view." The snippets are small, normally an eighth of a page. No more than three snippets are shown for any searched term, and no more than one per page. Google also "blacklists" some parts of each page—and one full page out of each ten—excluding them from snippet view entirely. Finally, snippet view isn't available in cases where a snippet might entirely satisfy a reader's needs, such as in dictionaries or cookbooks.

The fourth factor is the effect on the market for the copyrighted work, and here again the judges ruled in favor of Google. The snippet function "can cause some loss of sales," the judges acknowledge. If a searcher's need is satisfied by the small snippet, they might not make a purchase or create demand at a library (thus spurring additional library purchases.) "But the possibility, or even the probability or certainty, of some loss of sales does not suffice to make the copy an effectively competing substitute that would tilt the weighty fourth factor in favor of the rights holder in the original," the judges conclude.

No right to a “licensed search” market

A second argument of the authors is that a market for licensing their digital works exists "or would have existed" and is being unfairly grabbed by Google. In part, they make that argument by citing the original (rejected) settlement, in which Google would have paid authors for use of their digitized copies.

The court notes that those earlier arrangements would have allowed users "to read substantial portions of the book" and "have no bearing on Google's present programs."

The authors also point to their "unpaid market in licenses" (emphasis in decision), like licenses granted to Amazon for its "Search Inside the Book" feature. Again, the appeals judges don't accept the comparison. Google is disseminating information "about the original works, which falls outside the protection of copyright."

Finally, the Authors' Guild makes the intriguing argument that the Google Books project puts them at risk of a hack attack that could steal their digitized books and disseminate them, "thus destroying the value of their copyrights." The judges found that Google's security measures, including keeping the digital scans on computers "walled off from public Internet access," was good enough.

The case was originally filed in 2005 as a class action. The parties reached a settlement, but the judge rejected it in 2011. Instead, the fair use issue was litigated, and Google won at the district court in 2013. That win has now been upheld by the appeals court. Given the importance of the Google Books case, the next and final stop may be the Supreme Court.

The fair use result should please some critics of the earlier settlement who saw it as edging toward giving Google a monopoly on digitized books. With no licensing requirement, any competitor who can muster sufficient resources and relationships with libraries could create an alternative to Google Books.

Google didn't immediately respond to a request for comment on the decision. The Authors' Guild published a statement saying that the decision leaves writers "high and dry" and saying that it will appeal to the Supreme Court.

"The Authors Guild is disappointed that the Court has failed to reverse the District Court’s flawed interpretation of the fair use doctrine,” said Authors Guild Executive Director Mary Rasenberger. "Most full-time authors live on the edge of being able to keep writing as a profession, as our recent income survey showed; a loss of licensing revenue can tip the balance... We are very disheartened that the court was unable to understand the grave impact that this decision, if left standing, could have on copyright incentives and, ultimately, our literary heritage.