The copyright protection of authors is being increasingly challenged by the continuing digitalization of the book market. The emergence of the e-book has caused a very IP-relevant question: Is the consumer allowed to re-sell the e-book he purchased?
When it comes to physical works such as hard copy books, European copyright legislation clearly states that once a work has been sold within the EEA, with the consent of the owner, this item can freely be resold to third parties. However, the copying and distribution of digital works is more easy, cost-free and difficult to control. Accordingly, there are many arguments as to why the exhaustion of rights should not apply in the same degree to intangible items.
Despite hereof, the CJEU stated in the UsedSoft/Oracle judgment (C-128/11) of 2012 that the rules on exhaustion does indeed also apply to intangible copies of computer software, as long as the first sale of these was accompanied by a user license agreement. The outcome makes sense as a license agreement does at least limit the possibility of buyers performing unlimited copying and second hand sale.
E-books are typically not sold with licenses, and despite the above decision from the CJEU it therefore remained unanswered whether such could be treated as other software and be legally distributed to third parties after the first sale, without the consent of the copyright owner.
In July 2014, the Amsterdam District Court, somewhat surprisingly found that this was indeed the case. The Dutch website www.tomkabinet.nl provided consumers with the opportunity of re-selling their used e-books for half price of the original e-book. The Dutch publisher union NUV tried to stop this website, as they found such re-sale infringing. However, although the Dutch court agreed this was a grey area, they found that it would be too drastic a measure to close the website, and instead encouraged NUV to refer this question to the CJEU in order to have them decide whether the rights are also exhausted when it comes to sale of intangible items that are not accompanied by licensing agreements.
It will be very interesting to know, whether the CJEU finds such second sale of e-books without accompanying licensing agreements legal and, if so, how copyright owners can be sure that no illegal reproduction of copies is taking place. Obviously, digital security measures are already being taken in order to prevent the copying of e-books. But these are far from bullet-proof, and without actual licensing agreements, it seems very difficult for copyright owners to trace illegal copies and distinct them from the legal originals.
However, the difficulties in controlling the market do not seem to bother the CJEU as demonstrated by a very recent decision of 11 September 2014 (C-117/13), concerning the digitization of books by libraries. The CJEU stated that libraries pursuant to article 5(3)(n) of the Infosoc Directive are allowed to digitize work contained in their collections, and offer them on their publicly accessible databases, regardless of whether a specific licensing agreement has been offered to the library by the right holder. Furthermore, member states may permit users to print out on paper or store on a USB stick the books digitized by the library, as long as a fair compensation is paid to the right holders. Accordingly, things do not seem to become easier for copyright holders to written works.
Anders Michael Poulsen, Attorney at Law, LL.M.
