Not Copyright Infringement to Provide Perpetual Access to Sample

Louis K. Smith wrote The Hardscrabble Zone, a book that he marketed through online ebook distributor Smashwords, Inc. Smith’s agreement with Smashwords allowed Smashwords to distribute samples of Smith’s book. One customer stored a sample of Smith’s book in the customer’s Barnes & Noble digital locker system.  Barnes & Noble’s digital locker system operates as an online bookshelf that a customer with an account can populate with that customer’s ebook purchases and free samples. 

Smith terminated his agreement with Smashwords, but the sample of his book remained in the customer’s Barnes & Noble digital locker. The customer accessed the sample twice after Smith terminated his agreement with Smashwords. Smith’s widow sued Barnes & Noble for copyright infringement, arguing that Barnes & Noble was not allowed to provide customer access to the sample after Smith terminated his agreement with Smashwords. The district court granted summary judgment in favor of Barnes & Noble. The Second Circuit affirmed.

The Second Circuit ruled that Barnes & Noble’s conduct was authorized by contracts between the parties.

Where, as here, the existence of the license is undisputed, and the only contested issue is its scope, the copyright owner bears the burden of proving that the defendant’s conduct was unauthorized under the license.

(Opinion pdf page 5).

Distribution of samples was explicitly permitted by the agreement between Smith and Smashwords. The agreement also provided for distributing samples with a license for “free, noncommercial use, duplication and sharing.” The agreement did not contain a provision for terminating licenses to samples that were distributed during the term of the agreement.

Significantly, the distribution agreement authorizes paper samples as well as digital samples, and treats them alike. Since a customer who has a paper sample may obviously keep it, reread it, and make additional paper copies of it for noncommercial use at will, it follows that the agreement does not provide or imply that a person who obtained a digital sample would lose the license for free access upon termination of the distribution agreement. To the contrary, the agreement contemplated robust sampling rights, and Smashwords prohibited authors from using digital rights management schemes that would limit a customer’s ability to consume the author’s work ‘as they see fit.’

(Opinion pdf page 6).

The agreement between Smashwords and Barnes & Noble authorized Barnes & Noble to allow customers to upload and download eBooks purchased by customers from the eBook Store, even if the eBook was no longer for sale. Why should the free sample license be more restrictive?

The Second Circuit ruled that once the customer acquired the cloud-based sample, Barnes & Noble provided access to the work, not distribution of the work. The Second Circuit did not mention that access is not one of the exclusive rights granted to the copyright holder under the Copyright Act. Rather, the Second Circuit relied on the lack of a termination provision regarding the license to the sample to uphold summary judgment in favor of Barnes & Noble.

The Second Circuit also declined the opportunity to base its ruling on a cloud storage theory, particularly because the record was so sparse.

This case is Smith v., LLC, No. 15‐3508, Second Circuit Court of Appeals.

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