NEW YORK, Sept 4 (Reuters) - A U.S. appeals court sided

with four major book publishers that accused the nonprofit

Internet Archive of illegally scanning copyrighted works and

lending them to the public online for free and without

permission.

The 2nd U.S. Circuit Court of Appeals in Manhattan agreed

with Hachette Book Group, HarperCollins Publishers

, John Wiley & Sons ( WLY ) and Penguin Random House

that the archive's "large scale" copying and

distribution of entire books did not amount to "fair use."

Publishers accused the nonprofit of infringing copyrights in

127 books from authors like Malcolm Gladwell, C.S. Lewis, Toni

Morrison, J.D. Salinger and Elie Wiesel, by making the books

freely available through its Free Digital Library.

The archive, which hosts more than 3.2 million copies of

copyrighted books on its website, contended that the library was

transformative because it made lending more convenient and

served the public interest by promoting "access to knowledge."

But in a 59-page decision on Wednesday, Circuit Judge Beth

Robinson said the archive merely supplanted the original books

rather than transform them into "something new."

She said making books available for free harmed publishers

and would "undoubtedly negatively impact the public," by taking

away the incentive for many consumers and libraries to pay for

books and for many authors to produce new works.

Robinson quoted a declaration from Sandra Cisneros, who

wrote the best-selling novel "The House on Mango Street," that

finding her works available for free online "was like I had gone

to a pawn shop and seen my stolen possessions on sale."

The Internet Archive was appealing a March 2023 ruling from

U.S. District Judge John Koeltl in Manhattan.

"We are reviewing the court's opinion and will continue to

defend the rights of libraries to own, lend and preserve books,"

said Chris Freeland, the archive's director of library services.

Maria Pallante, president of the Association of American

Publishers, said the decision "reinforced the indispensable role

of authors and publishers in society" and was a major victory

for authors, publishers and readers.

The Internet Archive limits lending from its Free Digital

Library to one "checkout" for each physical book in storage.

It temporarily expanded lending in 2020, allowing checkouts

by up to 10,000 users at a time, when the COVID-19 pandemic

caused mass closures of schools, libraries and bookstores.

The expansion ended on June 16, 2020, two weeks after the

publishers sued.

The case is Hachette Book Group Inc et al v. Internet

Archive, 2nd U.S. Circuit Court of Appeals, No. 23-1260.