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Mr. Syed owned a shop selling clothes and accessories with rock music motifs in Stockholm, some of which were decorated with distinctive signs protected by trademarks and copyright. Mr. Syed was sentenced for copyright infringement under Act (1960:729) on copyright in literary and artistic works, which transposes Directive 2001/29/EC of May 22, 2001, on the harmonization of certain aspects of copyright and related rights in the information society into Swedish law, due to infringement of the exclusive right of the authors to public distribution.

During the proceedings against Mr. Syed, it was also established that he had storage facilities on the outskirts of Stockholm with goods identical to those sold in his shop and that he regularly used to stock the shop. The Swedish court of first instance and appeal court found that, although the goods were stored for future sale, they could not be considered to have been offered for sale to the public. Based on this, they limited the fine imposed on Mr. Syed to the offense of selling the goods in the shop open to the public.

However, the Högsta domstolen (Supreme Court of Sweden) referred the case to the CJEU to determine whether storage of the infringing goods in the storage facilities, presumably for sale to the public, was contrary to Article 4(1) of Directive 2001/29 regulating the right of distribution to the public. A question was also raised regarding the relevance of the distance of the storage facilities from the potential premises for public sale.

The Fourth Chamber of the CJEU handed down a judgment on December 19, 2018. It found that “the storage of goods bearing copyrighted motifs may be considered such an act if it is established that those goods are actually intended to be sold to the public without the rightholder’s authorization” (paragraph 30). This was found to be the case, given that an act carried out before a sale is made could infringe Article 4(1) of the Directive. However, according to the CJEU, it is necessary to prove where the goods were intended to be marketed to establish an infringement. The court reasoned that, as there were identical goods in the storage facilities, this could be an indication but is not conclusive evidence, given that the goods could be intended for other purposes or for sale in Member States where the distinctive signs are not protected by copyright.

Following the same line of argument, the court reasoned that one of the elements that could be considered to determine the final objective of storing the goods is the distance between the shop and the storage facilities. However, once again, it added that distance was not a decisive element, but should be considered together with all the factors likely to be relevant, such as the regular restocking of the shop with goods from the storage facilities, accounting elements and the volume of sales.

Based on the above, the CJEU concluded that the courts could find that there was a breach of the exclusive distribution right, if the goods stored were actually intended for sale, a circumstance that must be proven at a national level.

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