By judgment issued on last January 22nd, the European Court of Justice ruled on the interpretation of article 4(2) of Directive 2001/29/CE, in order to clarify whether the distribution right of the copyright holder may be exercised with regard to the reproduction of a copyright-protected work which has been sold and delivered within the EEA by or with the consent of the right holder, in the case where that reproduction had subsequently undergone an alteration in respect of its form and is again brought into circulation in that form.

In particular, the Court had been empowered by the Hoge Raad der Nederlanden to rule on exhaustion of the distribution right, in proceedings between Stichting Pictoright (a Netherlands copyright collecting society which looks after the interests of copyright owners affiliated to it) and Art & Allposters International BV, regarding a possible infringement of copyright, resulting from the transfer of images of protected works from a paper poster to a painter’s canvas and the sale of those images on that new medium.

The parties in the main proceedings are in disagreement on two matters: first, as to whether exhaustion of the distribution right covers the tangible object into which a work or its copy is incorporated or the author’s own intellectual creation and, secondly, as to whether the alteration of the medium, as undertaken by Art & Allposters International BV, has an impact on exhaustion of the exclusive distribution right.

Regarding the first matter, the Court had ruled that exhaustion of the distribution right applies to the tangible object into which a protected work or its copy is incorporated if it has been placed onto the market with the copyright holder’s consent.

On the question relating to modification of the medium, the Court had stated that a replacement of the medium, as was carried out in the case in the main proceedings, results in the creation of a new object incorporating the image of the protected work, whereas the poster itself ceases to exist. Such an alteration of the copy of the protected work, which provides a result closer to the original, is actually sufficient to constitute a new reproduction of that work, within the meaning of Article 2(a) of Directive 2001/29, which is covered by the exclusive right of the author and requires his authorisation.

In light of the foregoing, since from the arguments advanced by the parties in the main proceedings, the copyright holders did not consent to the distribution of the canvas transfers, at least not expressly, applying the rule of exhaustion of the distribution right would deprive those right holders of the possibility of prohibiting those objects from being distributed or, in the event of distribution, of requiring appropriate reward for the commercial exploitation of their works.

Having regard to all the foregoing considerations, the Court has declared that Article 4(2) of Directive 2001/29 must be interpreted as meaning that the rule of exhaustion of the distribution right set out in Article 4(2) of Directive 2001/29 does not apply in a situation where a reproduction of a protected work, after having been marketed in the European Union with the copyright holder’s consent, has undergone an alteration of its medium, such as the transfer of that reproduction from a paper poster onto a canvas, and is placed on the market again in its new form.