Can we talk for digital exhaustion in the case of e-books – one important opinion.

pexels-photo-1324859.jpegThe Advocate General of the European Court M. SZPUNAR gave its position in the case  C‑263/18 Nederlands Uitgeversverbond, Groep Algemene Uitgevers v Tom Kabinet.

In brief, this lawsuit concerns one essential question – whether there is digital exhaustion over e-books or not.

The case background is as follow:

Nederlands Uitgeversverbond (‘NUV’) and Groep Algemene Uitgevers (‘GAU’), the applicants in the main proceedings, are associations whose purpose is to defend the interests of Netherlands publishers.

Tom Kabinet Internet BV (‘Tom Kabinet’), the defendant in the main proceedings, (8) is a company governed by Netherlands law. Tom Kabinet has a website which supplies an online market for used e-books. The ways in which that market operates have changed during the main proceedings. At present, in the context of that service, called a ‘reading club’ (leesclub), Tom Kabinet resells to individuals registered on its site e-books which it has bought either from the official distributors or from other individuals. The prices charged by Tom Kabinet are lower than the prices charged by the official distributors. Tom Kabinet’s site encourages individuals who have bought e-books on its site to resell them to it after they have read them, which entitles them to ‘credits’ allowing them then to buy other books. When it buys e-books from individuals, Tom Kabinet requires that they delete their own copy, (9) and it places a digital watermark on the copies which it sells in order to ensure that the copy is legal.

On 1 July 2014, NUV and GAU brought an action against Tom Kabinet before the urgent applications judge at the Rechtbank Amsterdam (District Court, Amsterdam, Netherlands), who dismissed their application on the ground that there was no prima facie breach of copyright. (10) NUV and GAU appealed against that judgment before the Gerechtshof te Amsterdam (Court of Appeal, Amsterdam, Netherlands), which upheld the judge’s decision but prohibited Tom Kabinet from offering an online service that allowed the sale of unlawfully downloaded e-books. No appeal on a point of law was lodged against the judgment of the Gerechtshof te Amsterdam (Court of Appeal, Amsterdam).

The referring court, in its interlocutory judgment, considered that the books in question must be classified as ‘works’ within the meaning of Directive 2001/29 and that the supply of downloadable e-books in circumstances such as those of the main proceedings does not constitute a communication to the public of those works within the meaning of Article 3(1) of that directive. It observes, however, that the answer is unclear to the questions as to whether making an e-book available at distance by downloading for use for an unlimited period may constitute an act of distribution within the meaning of Article 4(1) of Directive 2001/29, and as to whether the distribution right may thus be exhausted within the meaning of Article 4(2) of that directive. Furthermore, it wonders whether the copyright holder may, in the event of a resale, object to the acts of reproduction necessary for the transmission between subsequent purchasers of the copy for which the distribution right is, if such be the case, exhausted.

It was in those circumstances that the referring court decided to stay the proceedings and to refer the following questions to the Court for a preliminary ruling:

‘1. Is Article 4(1) of [Directive 2001/29] to be interpreted as meaning that “any form of distribution to the public by sale or otherwise of the original of their works or copies thereof” as referred to therein includes the making available remotely by downloading, for use for an unlimited period, of e-books (being digital copies of books protected by copyright) at a price by means of which the copyright holder receives remuneration equivalent to the economic value of the work belonging to him?

2. If question 1 is to be answered in the affirmative, is the distribution right with regard to the original or copies of a work as referred to in Article 4(2) of [Directive 2001/29] exhausted in the Union, when the first sale or other transfer of that material, which includes the making available remotely by downloading, for use for an unlimited period, of e-books (being digital copies of books protected by copyright) at a price by means of which the copyright holder receives remuneration equivalent to the economic value of the work belonging to him, takes place in the European Union through the rightholder or with his consent?

3. Is Article 2 of [Directive 2001/29] to be interpreted as meaning that a transfer between successive acquirers of a lawfully acquired copy in respect of which the distribution right has been exhausted constitutes consent to the acts of reproduction referred to therein, in so far as those acts of reproduction are necessary for the lawful use of that copy and, if so, which conditions apply?

4. Is Article 5 of [Directive 2001/29] to be interpreted as meaning that the copyright holder may no longer oppose the acts of reproduction necessary for a transfer between successive acquirers of the lawfully acquired copy in respect of which the distribution right has been exhausted and, if so, which conditions apply?’

The Advocate General’s opinion:

The foregoing considerations lead me to conclude that arguments, of both a legal and a teleological nature, are in favour of recognition of the rule of exhaustion of the distribution right with respect to works supplied by downloading for permanent use. (64) In particular, the permanent possession by the user of a copy of such a work shows the similarity of that mode of supply with the distribution of tangible copies. However, I am of the view that, as EU law now stands, the arguments to the contrary should prevail. These are, in particular, the arguments developed in points 36 to 49 of this Opinion, concerning the EU legislature’s clear intention that downloading should be covered by the right of communication to the public, the limitation of the distribution right to acts of transfer of ownership of a copy, and the right of reproduction. Those legal arguments are supported by the arguments of a teleological nature set out in points 89 to 96 of this Opinion.

For that reason, I propose that the following answer be given to the questions for a preliminary ruling referred by the Rechtbank Den Haag (District Court, The Hague, Netherlands):

Article 3(1) and Article 4 of Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society must be interpreted as meaning that the supply of e-books by downloading online for permanent use is not covered by the distribution right within the meaning of Article 4 of that directive but is covered by the right of communication to the public within the meaning of Article 3(1) of that directive.

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