The Language of the Deal

July 11, 2011
Posted in: Board Member Posts, Uncategorized

Do libraries own or simply license their ebooks? Ever since the HarperCollins/Overdrive situation, that question has had new urgency. A dispute between ebook aggregator Overdrive and the Kansas Digital Library Consortium centers around this question. Kansas State Librarian Jo Budler argues that the consortium owns the content it has acquired from Overdrive.

This dispute aside, the issue of libraries’ ownership of electronic content is not clear. There is a major disconnect between the marketing language used by vendors, and the details of their contracts. Making the situation for libraries even more complicated, new ebook services have been announced in recent months.

The Disclaimer: I am not a lawyer. I will not make a legal opinion about the disagreement between the Kansas State Library and Overdrive. Nor will I argue whether libraries own, or are licensing their content. I will discuss circumstances that cloud libraries’ understanding about electronic content. I will argue that vendors’ marketing materials often use language that implies ownership of content; and as libraries feel continued pressure to add third-party e-content services, they are signing contracts without appreciating the long-term consequences.

A recent U.S. District Court decision included a new test that applies to agreements regarding the exchange of electronic content. This test comes from a ruling in Vernor v. Autodesk. Timothy Vernor tried to sell used copies of Autodesk’s software on eBay and sued the software company for repeatedly issuing Digital Millennium Copyright Act notices to the online auction company to prevent the sales. ALA backed Vernor and issued a brief to the U.S. District Court for the Ninth Circuit. In its decision against Vernor, the court basically told ALA to get Congress to modify the first sale doctrine (Liston, 2010).

As part of it’s ruling, the court issued a three-part test to determine whether a transaction constitutes a license or a sale (Liston, 2010):

  • First, we consider whether the copyright owner specifies that a user is granted a license.
  • Second, we consider whether the copyright owner significantly restricts the user’s ability to transfer the software
  • Finally, we consider whether the copyright owner imposes notable use restrictions.

Overdrive is not the copyright holder, but an intermediary. Even so let’s look at the language it uses in its marketing material (emphasis added):

“If you BUY eBooks, patrons will download.”

“Enhance your digital catalog with tools and features that help you select content, improve access, and automate PURCHASE processes”

Overdrive’s “buy it now” program, in which patrons acquire titles for their own use with some of the proceeds going to their libraries, imply that the patron is “buying” the titles:

“LibraryBIN is a digital bookstore associated with your library where patrons can BUY popular and classic eBooks and audiobooks, and a portion of the profit for every SALE goes directly toward an OverDrive content credit to your library.”

Recorded Books also uses language that implies a sale in its marketing material:

“If your library has an annual subscription to the Premium Core Collection, you’ll also be able to purchase individual Recorded Books titles.”

I think it would be unreasonable to infer a licensing scheme based on such language. I would argue the use of terms like “purchase” and “buy”, etc., have been used as a metaphor for libraries’ traditional procurement processes. As a result, libraries have spent a lot of money on ebooks from a range of vendors–not just Overdrive–without understanding their rights to the content they have invested in.

During the relationship with the vendor, libraries need to understand what happens to their content after the relationship with the vendor ends; and what recourse they have when the terms of the deal change based on the demands of publishers, or when fees for these services can increase significantly when contract-renewal-time comes around.

I am of the opinion that Congress has no interest in tackling copyright issues and the first sale doctrine at this time, or any time in the near future. Libraries that have renewed or signed a contract with Overdrive after clause 11.4 was emended to remove the controversial language about the transfer of ebooks are likely to be bound to the contracts that they signed.

For libraries considering adding ebook services, consider all of the providers out there. Ask a lot of pointed questions. Take the long view. Remember, as pointed out so thoroughly by Sarah Houghton-Jan in her criticism of Freegal, the  sales pitch does not reflect the reality of the service. Ultimately, take Andy Woodworth’s advice: if it’s not a good deal, don’t buy it. And most importantly, make sure you understand the language of the deal.

Matt Weaver


Liston, Samuel. (2010). First Sale Rights: Autodesk, Redbox, and the Future of Libraries. Computers in Libraries. Dec. pp. 16-18.

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