Advocate General Szpunar has advised that the supply of eBooks by download online is to be regarded as a ‘communication to the public’ rather than a distribution. This means that, for copyright purposes at least, it is to be regarded as a service rather than as a sale of goods. If this advice is followed by the Court of Justice, the practical result would be that eBooks – and potentially some other digital content - could generally no longer be sold second hand without the authorisation of the copyright holder.
The case (C-263/18 10.09.19)
The case was referred to the Court of Justice (CJEU) from the Netherlands and relates to an online market place for e-books known as Tom Kabinet. Tom Kabinet buys eBooks from official distributors and others and resells them to individuals registered on its site. Individuals are encouraged to sell the books back to the site after they have read them, earning credits which are then used to buy more books. They are required to delete their own copies after sale, and digital watermarks are put on the books sold to indicate that they are legal copies. The books can be sold at a cheaper price than that charged by official distributors, among other things because they are sold multiple times in this way.
This practice was challenged by publishers’ associations in the Netherlands, which argued that it infringed copyright. The District Court of The Hague referred questions to the CJEU about how the supply of eBooks by downloading online should be treated.
No second hand marketplace for eBooks
The Advocate General (AG) advised that the supply of eBooks by downloading should be regarded as a ‘communication to the public’ rather than as a distribution. The significance of this is that if it were regarded as a distribution, EU rules on ‘exhaustion’ of copyright would kick in after the first sale (i.e. the original download to the user from the official distributor). The effect of exhaustion would be that further transfers of the book within the European Economic Area would be treated much like sales of tangible books, which do not require consent of the copyright owner. By contrast, the principle of exhaustion does not apply to a communication to the public, giving the copyright owner much more control over how the book is exploited digitally, not least because every digital transfer of the book would involve a reproduction requiring the copyright owner’s consent. The AG’s view that the sale of an eBook by downloading online is to be regarded as a ‘communication to the public’ would therefore potentially rule out a secondary market like the Tom Kabinet service, which relies on the application of the exhaustion rule.
What about software?
The AG’s analysis may come as a surprise to some who are familiar with the CJEU’s earlier decision in UsedSoft (Case C-128/11 July 2012). In that case the CJEU treated the download of a software program accompanied by a fully paid-up licence for an indeterminate period as functionally equivalent to the sale of a tangible medium and applied the rules of exhaustion. It held that second hand sales were permitted without the consent of the copyright owner. The AG explains at some length why he regards software as different to eBooks, including certain differences between the Software Directive (2009/19) and the Copyright Directive (2001/29), and that computer programs are a special category of work which is more like a tool than a “proper” copyright work – as for example a video or book where the copyright relates to the content (such as the film, music or story).
Implications of the case
It is likely that if the CJEU follows the AG, the consent of the copyright owner will generally be required for second hand sales of eBooks which have been supplied by download online, and that this will also apply in other areas such as music and videos too. However, it would appear that the AG is of the view that UsedSoft should continue to apply to software. The AG remarks that the supply of content by downloading with a permanent right to use is “fast being relegated to the past” in any event and is being over-taken by streaming and subscription access, even for eBooks. The impact of this case in practice may, therefore, be fairly limited.
He also comments that the digitisation of content and the internet have upset the balance that existed in the analogue environment between, on the one hand, the interests of copyright holders and, on the other hand, the interests of users of the copyright works. The introduction of digital exhaustion in relation to software as in UsedSoft can to some extent be seen as an attempt to adjust that balance in favour of the user. By contrast, in this case the AG appears to seek to adjust the balance in favour of the copyright holder in the face of the ease with which perfect copies of eBooks, videos and music can be made in the digital environment, threatening the copyright owner’s ability to control the exploitation of their work. This accords with EU policy of giving a high level of protection to copyright holders.
*Readers may wish to note that the question of whether software is to be regarded as goods or services for the purposes of the Commercial Agents (Council Directive) Regulations 1993/3053 is due to be addressed by the CJEU in the near future following a reference by the UK Supreme Court in the case of Computer Associates UK Ltd v The Software Incubator Ltd.