InfoSoc Directive : no digital exhaustion according to the ECJ

For the ECJ, the sale of second-hand e-books through a website constitutes a communication to the public that requires the author’s authorization (C-263/18). There is therefore no digital exhaustion.

Digital and second-hand …

This case involved Nederlands Uitgeversverbond (NUV) and Groep Algemene Uitgevers (GAU), two associations whose purpose is to defend the interests of Dutch publishers, against Tom Kabinet. The latter had set up, via a ‘reading club’, a ‘second-hand’ e-book distribution and resale model. NUV and GAU claim that these activities infringe their affiliates’ copyright in those e-books.

By offering second-hand e-books for sale through this reading club, Tom Kabinet would be making an unauthorized communication to the public of these books. Tom Kabinet contended, on the contrary, that such activities fall within the scope of the right of distribution, which is subject by the Directive 2001/29 to a rule of exhaustion where the relevant object has been sold within the EU by the right holder or with their consent. In that event, NUV and GAU would no longer have the exclusive right, as a result of the sale of the e-books, to authorize or prohibit their distribution to the public.

Directive 2001/29 : no digital exhaustion

As explained in the official press release :

The Court ruled that the supply to the public by downloading, for permanent use, of an e-book is covered by the right of ‘communication to the public’ within the meaning of Directive 2001/29, and not by the right of ‘distribution to the public’.

Supporting that finding, the Court concluded in particular from the WCT underlying the InfoSoc Directive and from the Directive’s travaux préparatoires that the EU legislature had intended exhaustion to be reserved for the distribution of tangible objects, such as books on material medium.

Still according to the ECJ, the supply of a book on a material medium and the supply of an e-book are not economically and functionally equivalent. The application of the exhaustion rule to e-books could affect the interest of right holders in obtaining appropriate remuneration much more significantly than in the case of books on material mediums. Indeed, dematerialized digital copies, unlike books on material medium, do not deteriorate with use, making them perfect substitutes for new copies on any second-hand market.

As regards the concept of ‘communication to the public’, the ECJ stated that it should be understood in a broad sense, covering all communications to the public not present at the place where the communication originates. Furthermore, the Court notes that the provision of an e-book is generally accompanied by a user licence authorizing only the user who has downloaded the e-book to read it. Consequently, a communication such as that made by Tom Kabinet is made to a public that was not already been taken into account by the copyright holders. Such communication to a new public therefore requires the author’s authorization.