On 10 November 2016, the European Court of Justice (CJEU) rendered a landmark decision on the lending of e-books. Public libraries may rely on statutory copyright exceptions when lending out e-books and are not required to obtain a contractual license explicitly covering such e-lending right. With its decision, the CJEU applies the same legal principles to e-books that already govern the lending of physical books. However, the equal treatment of both only takes place where the lending schemes are comparable, meaning that multiple access to the same digital publication at the same time must be prohibited (CJEU, decision of 10 November 2016, Case Ref.: C-174/15).

Legal Background

The case rests on court proceedings currently pending in the Netherlands from which the Dutch Rechtbank Den Haag referred a number of questions to the judges in Luxembourg. The legal dispute initially arose between the library society Vereniging Openbare Bibliotheken (VOB) and the collecting society Stichting Leenrecht. At the center of the conflict is the question whether public libraries are allowed to lend out e-books in the same way as they lend out physical books, i.e. without a dedicated license. With regard to physical books, this rights stems from to Article 6(1) of the Directive 2006/115 on rental right and lending right and on certain rights related to copyright in the field of intellectual property. The wording of the provisions does not suggest a differentiation between physical and digital books. Still the scope of Article 6(1) of the Directive 2006/115 was under debate and it must be noted that the CJEU has not put the discussion to an end.

Advocate General Szpunar published his opinion already in June this year (see our blog post) in which he argued in favor of a so-called “dynamic” interpretation of the directive. Digital and physical books should be treated the same provided that the digital lending scheme is built in a way that mirrors the physical lending process.

The Advocate General was satisfied with the so-called “One-copy-one-user” concept. Accordingly, libraries may provide a digital copy of an e-book (Reproduction A) on their library server and enable the user to download a digital copy (Reproduction B). Upon expiry of the lending period, the Reproduction B becomes inaccessible. Moreover, during the time that the e-book has been lent out, no other library user could download a copy of the same e-book. If such process is safeguarded, the library shall be entitled to rely upon Article 6(1) of the Directive 2006/15.

The Judgment

The CJEU pretty much follows the “dynamic” interpretation put forward by the Advocate General. According to the judges, the wording of Article 6(1) of the Directive 2006/15 does not restrict the term “lending” to tangible objects only. There are also no justified reasons to generally exclude intangible objects such as digital e-books from the scope of the directive. Neither the copyright contract by the WIPO, nor the original directive on rental right and lending right 92/100 support a narrow understanding of “lending“. To the contrary, the directive´s objective supports a wide interpretation of the term. In particular, recital 4 of the directive clarifies that copyright must adapt to new economic developments such as new forms of exploitation – thus, including e-books. Where the “One-copy-one-user” principle is applied, lending an e-book has the same characteristics as lending a printed book. Note that Article 6 (1) of the Directive 2006/115 includes lending e-books as well.

According to the CJEU, it is for the Member States to decide whether they wish to implement additional conditions. This could be, for instance, the first sale or other transfer of ownership of that copy within the European Union. In any case, the original copy must be obtained from a lawful source in line with the objective of the directive to hinder counterfeits and piracy.

Comment

With this decision, the CJEU has made a resounding step towards more legal certainty both for public libraries and publishers. In copyright law, works are to be understood and defined regardless of their physical or digital nature. Rights as well as exceptions thereto should also be defined homogeneously; at least, where the use of the work takes place under equal conditions. Of course, there are occasions where digital use must be deemed more intense or more limiting to the right holder’s position. In a “one-copy-one-user” circumstance, the situation is fairly comparable, however, not all questions involving e-books have been clarified yet. In particular, the matter of reselling used e-books is still unclear. The issue of reselling used software has however already been decided by the European Court of Justice in 2012 (C-128/11UsedSoft).

It is worth mentioning that not only the CJEU is concerned with adapting European copyright law to the digital world we live in. The Commission’s strategy for a Digital Single Market is well under way (see our DSM Watch resource platform).