The European Court of Justice (ECJ) has ruled that supplying e-books by way of download for permanent use constitutes a “communication to the public” rather than a “distribution to the public”. As the former (unlike the latter) is not subject to exhaustion of rights, this means that the unauthorised re-sale of second-hand e-books will be an act of copyright infringement, at least unless technical measures have been put in place so that only an insubstantial number of users can access the e-books. This contrasts with the position for second-hand physical books, where there are physical practicalities which limit re-sale and where there are separate rental rights.

This ruling (which is consistent with the Opinion of Advocate-General Szpunar on which we have commented previously) is a significant win for copyright holders. Interestingly, however, the ECJ recognised some of the concerns in the Opinion by suggesting that its conclusion may have been different had sufficient technical measures aimed at restricting user access been in place, as we discuss further below.

Facts

Tom Kabinet Internet BV is a Dutch company that runs an online marketplace for used e-books. The company buys e-books from individuals or official distributors (who agree to delete the copies from their computer), and resells them to other individuals. Two associations that defend the interests of Dutch publishers brought proceedings in the Dutch courts against Tom Kabinet, alleging that the resale of e-books was an infringement of copyright.

ECJ ruling

The ECJ addressed the issues by considering whether the supply by way of download of an e-book for permanent use constituted a “communication to the public” within the meaning of Article 3(1) InfoSoc Directive (which is not subject to the exhaustion of rights doctrine), or whether it constituted a “distribution to the public” pursuant to Article 4(1) of that Directive (a right which, in contrast, is subject to the exhaustion of rights doctrine). Adopting a teleological approach led the court to conclude that making the books available on the website should be covered by the concept of “communication to the public”.

The ECJ distinguished the position of e-books from that of computer programs. In UsedSoft (C-128/11), the ECJ ruled that the exhaustion of the right of distribution of copies of computer programs under Article 4(2) Directive 2009/24 on the legal protection of computer programs does not distinguish between tangible and intangible copies of programs. However, the ECJ considered that “an e-book is not a computer program” and therefore it was not appropriate to apply the specific provisions of Directive 2009/24.

In line with earlier case law, the ECJ explained that the concept of “communication to the public” involves two elements:

  1. a communication of the work – in this case there was such a communication because Tom Kabinet makes the works available to anyone who is registered with their website, from a place and time individually chosen by him/her (it does not matter that a person had not actually retrieved the e-book); and
  2. a communication to the public – here the court considered that the “public” requires a certain scale and that the public be “new”. First, the court explained that the concept of public requires a de minimis threshold, meaning that there will be no communication to the public if the group of persons concerned is too small, considering both simultaneous and sequential users. Here, the lack of technical measures in place to restrict user access led the court to conclude that the number of persons who had access to works via the platform was substantial. Second, the court also rejected the argument that the e-book was not being made available to a “new public” who had not been already taken into account by the copyright holders. Since the original making available of an e-book is generally accompanied by a user licence authorising the user who has downloaded the e-book only to read that e-book from his or her own equipment, the court considered that a communication such as that effected by Tom Kabinet was to a “new” public.

Although the court clearly indicated that Tom Kabinet was infringing, the point regarding technical measures is of particular interest. The ECJ pointed particularly to the absence of technical measures that ensured (i) that only one copy of the work may be downloaded in the period during which the user actually has access to the work, and (ii) that, after the period during which the user has access to the work has expired, the downloaded copy could no longer be used by that user. This observation leaves open the possibility that a system with proper digital rights management might not be regarded as communicating to the public.

The ECJ justified the differential treatment of second-hand e-books and second-hand hard-copy books by explaining that digital copies do not deteriorate with use (in fact they are perfect substitutes for new copies). The ECJ was also of the view that a parallel market of second-hand of e-books would affect the economic interests of copyright holders much more than a parallel market of second-hand hard-copy books, because exchanging digital copies “requires neither additional effort nor additional cost”. In a case where a reseller puts in efforts to introduce technical measures such as those discussed above, the end result may be a different one to that on the facts of this case.

A copy of the full decision can be found here.