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In its Judgment of December 19, 2019 (case C-263/18), the CJEU concluded that downloading e-books for permanent use is included under the concept of communication to the public and, more specifically, provision to the public, and it is not an act of distribution subject to the doctrine of exhaustion.

This question arose in the context of the lawsuit filed by Nederlands Uitgeversverbond (NUV) and Groep Algemene Uitgevers (GAU) seeking to protect the interests of Dutch publishers against the company Tom Kabinet, for the book club service on its website, which it uses to sell e-books. The book club offers registered users, for a price,  e-books that Tom Kabinet has already purchased or that have been donated to it by members of the club. Users are also encouraged to sell these e-books back to Tom Kabinet after reading them in exchange for credits toward buying other books.

As we discussed previously on this blog in the context of the advocate general’s conclusions, the court petitioning the CJEU for a preliminary ruling asked whether remotely providing e-books via downloads for indefinite use in exchange for payment constitutes an act of distribution, or whether that type of provision is included under the concept of communication to the public. The significance of this question lies in determining whether this type of distribution is subject to the rule of exhaustion or, conversely, it is not subject to exhaustion because it is an act of communication to the public.

We recall that the doctrine of exhaustion only applies to the right of distribution, and it means that the holder’s exclusive rights end when it introduces (or allows the introduction of) products or goods that are protected by the right of distribution into the market. Thus, with the first sale of each copy, the right of distribution over that copy is exhausted, and any products already introduced into the market may be subject to subsequent sales, over which the rights holder has no control.

The CJEU based its analysis on the need to differentiate between material and immaterial copies of a work. It stated that it follows from the WIPO Copyright Treaty that the expressions “copies” and “originals,” as defined in the right of distribution, apply exclusively to permanent copies that can be put into circulation as tangible objects. This category cannot include immaterial copies such as e-books (sec. 40). The proposed directive on copyrights in the information society (Directive 2001/29) made a similar provision by specifying that interactive a la carte transfer was a new way of using intellectual property that should be covered by the right of communication to the public.

The CJEU recognized that the dividing line between distribution and communication to the public in digital matters has already been interpreted by the court in its Judgment of July 3, 2012 (UsedSoft, C-128/11), although since that case dealt with computer programs, Directive 2009/24 on computer programs applied. That directive equates tangible and intangible computer program copies for their protection, which means that a program is exhausted with regard to all of its copies.

However, the CJEU emphasized that an e-book is not a computer program; therefore, it rejected applying that doctrine. In particular, it rejected that delivering a book in hard copy and delivering an e-book are equivalent from an economic and functional perspective. Intangible digital copies, unlike hard copies of books, do not deteriorate with use, and exchanging them does not require additional costs or effort. Therefore, supplying them affects the interests of the rights holders to obtain adequate remuneration (sec. 58).

Lastly, the CJEU ruled that the necessary requirements were met for the supply of e-books falling within the concept of communication to the public and, in particular, for interactive provision.

For an act of public communication to occur, two requirements must be met: i) there must have been an act of communication, “including making their works available to the public in such a way that anyone can have access to them from a  chosen place and time,” and (ii) the communication must be focused on a new audience, although the members of that audience do not necessarily have to use the possibility of accessing the work.

According to the CJEU, the fact that works are made available to users who must register, and the fact that anyone can join the book club without there being any technical measures that prevent copies from being used after the specified term, make it possible to affirm that there is a communication, and that it is addressed to an audience. Moreover, since making the e-book available involves granting users a user license to download the e-book, the communication must be understood to be aimed at a new audience, i.e., it requires authorization from the rights holder.

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