The U.S. Court of Appeals for the 2nd Circuit upheld a lower court ruling that found the Internet Archive's huge, digitized lending library of copyrighted books was
not covered by the "fair use" doctrine and infringed on the rights of publishers.

Agreeing with the Archive's interpretation of fair use "would significantly narrow—if not entirely eviscerate—copyright owners' exclusive right to prepare derivative works," the 2nd Circuit ruled. "Were we to approve [Internet Archive's] use of the works, there would be little reason for consumers or libraries to pay publishers for content they could access for free."

Following the decision, Maria Pallante, president of the Association of American Publishers, said in a press release that the Archive "attempted to do what no one had done before, which was to call unauthorized distribution of entire books 'lending' without permission."