Exception 3: Digitizing For Replacement Of Lost Or Damaged Works
§ 108. Limitations on exclusive rights: Reproduction by libraries and archives
(c) The right of reproduction under this section applies to three copies or phonorecords of a published work duplicated solely for the purpose of replacement of a copy or phonorecord that is damaged, deteriorating, lost, or stolen, or if the existing format in which the work is stored has become obsolete, if —
(1) the library or archives has, after a reasonable effort, determined that an unused replacement cannot be obtained at a fair price; and
(2) any such copy or phonorecord that is reproduced in digital format is not made available to the public in that format outside the premises of the library or archives in lawful possession of such copy.
For purposes of this subsection, a format shall be considered obsolete if the machine or device necessary to render perceptible a work stored in that format is no longer manufactured or is no longer reasonably available in the commercial marketplace. (US Copyright Office, n. d.)
A library may digitize to replace a work due to damage, deterioration, loss, theft, or its format becoming obsolete under a couple of conditions. The first condition requires the library to look for an unused replacement, but if the work can´t be found “at a fair price,” the library may proceed (US Copyright Office, n. d.). Nevertheless, the library cannot distribute the digital copy outside of the library or offer it off-site, so no ILL. Libraries must include a notice of copyright protection, if applicable.