Introduction
Facts
InfoSoc or Software Directive?
Communication to public?
Acts of reproduction and burden of proof
Preliminary questions to ECJ
In 2014 Dutch company Tom Kabinet launched an online service via the website 'www.tomkabinet.nl', allowing users to purchase second-hand e-books. Since the launch, Tom Kabinet's activities have been opposed by Dutch publishers, which have unsuccessfully initiated interim injunction proceedings against the company with regard to e-books that were initially purchased and downloaded lawfully (with the copyright owner's consent). At present, proceedings on the merits of the case are pending before The Hague District Court, which recently decided to refer questions to the European Court of Justice (ECJ).
Tom Kabinet has amended its business several times since the launch of its website. Under its existing business model, it is no longer an intermediary. Instead, it trades e-books by way of its members' club, Tom's Reading Club. It offers only second-hand e-books that:
- it originally purchased (first hand); or
- have been donated by members.
In case of such a donation, the members must provide the download link of the e-book on their 'digital bookshelf' to Tom Kabinet by filling in a form on its website. Members must declare that they have deleted the e-book from their systems. Subsequently, Tom Kabinet downloads the donated e-book from the relevant retailer's website and adds an invisible watermark that enables it to identify the e-book. All second-hand e-books are added to the Tom Kabinet catalogue and can be purchased by members for €2. After purchasing an e-book, members can resell it to Tom Kabinet in return for credits. Tom Kabinet, without believing that it is formally obliged to do so, reserves €0.50 per sale of a second-hand e-book, which it contributes to the e-book's authors and publishers.
To sell a second-hand e-book on 'www.tomkabinet.nl', the seller must:
- prove that the original e-book is a legal version; and
- remove the original e-book from his or her computer.
The plaintiffs in this case (NUV and GAU) asked the court to:
- declare that the offering of e-books infringes the copyrights of the authors and publishers; and
- prohibit Tom Kabinet from continuing to sell e-books.
NUV and GAU argued that Tom Kabinet makes a 'communication to the public' – as referred to in Article 3(1) of the EU Information Society (InfoSoc) Directive (2001/29/EC) – when offering a downloadable e-book without the proprietor's permission. Second, NUV and GAU held that Tom Kabinet makes 'unauthorised reproductions', as referred to in Article 2 of the InfoSoc Directive, because it downloads a copy of the e-book, which remains available on its servers after a sale of the e-book to a member. Third, NUV and GAU argued that if Tom Kabinet offered a streaming service, this way of offering e-books would also be an unauthorised communication to the public. According to NUV and GAU, the exhaustion doctrine is not applicable to these (intended) actions of Tom Kabinet.
InfoSoc or Software Directive?
The parties agreed that an e-book's text and images constitute a work protected by copyright and that the InfoSoc Directive applies to e-books. However, Tom Kabinet argued that an e-book, like any digital file which can interact with a computer (eg, Word, MP3, JPEG and MPEG files), is also a 'computer program' within the meaning of the EU Software Directive (2009/24/EC) and that the latter prevails over the InfoSoc Directive in case of overlap. The Hague District Court disagreed, holding that the fact that a digital file can interact with a computer does not make it a computer program. The court therefore continued to assess the plaintiffs' claims based on the InfoSoc Directive.
The court first concluded that no communication to the public occurs merely when the download of an e-book is offered. The section of the website that is accessible to the public shows only the title and author of the particular e-book. The public receives no information regarding the content of the specific e-book; therefore, they cannot (yet) access the work.
In addition, the court held that while downloading an e-book is a communication, it is not a communication to the public (as required by Article 3(1) of the InfoSoc Directive). The notion of 'public' requires an indefinite and relatively large number of recipients. In this case, a communication occurs because the download of an e-book becomes available when payment is made, so access to the work is provided. However, the e-book will be available only to the individual Tom's Reading Club member who purchased it, which does not fall within the definition of 'public'. Bearing in mind the ECJ's rather broad application of the notion of a communication in recent cases, The Hague District Court could also have justified a ruling to the contrary.
The court further substantiated its decision by referring to the ECJ's decision in Usedsoft (C-128/11), according to which the existence of a transfer of ownership changes an act of 'communication' to the public into an act of 'distribution' if:
- the conditions in Article 4(2) of the InfoSoc Directive are satisfied; and
- the sale of the e-book in fact constitutes a 'first sale of a copy of a program'.
Under certain circumstances, this may give rise to an exhaustion of the distribution right.
Acts of reproduction and burden of proof
Tom Kabinet makes a copy of an e-book on its server after purchasing it from a retailer. It has become clear that the retailers keep a copy of these e-books on their servers. The court held that Tom Kabinet cannot be blamed for the fact that the retailers keep a copy on their servers. Tom Kabinet also stores a copy on its servers in case of an e-book donated by a member. This act of reproduction is only non-infringing when a member can rely on exhaustion of the distribution rights. The court held that, in the event of exhaustion, the copyright owner cannot oppose a lawful transfer between successive buyers of a reproduction. The member must make his or her copy unusable. This requirement is part of the conditions of Tom's Reading Club, which are accepted by every member. The court held that Tom Kabinet is not obliged to check whether the member has actually made the copy unusable. This is an important element of the judgment, because the ECJ in both Usedsoft and Ranks and Vasiļevičs (C-166/15) left room for interpretation when it comes to the burden of proof relating to the deletion of copies.
The fact that Tom Kabinet retains a copy of an e-book after a book club member has downloaded it is considered to be an act of reproduction that the copyright owners can oppose. Although this infringement was found, the court nonetheless sought clarification on the notion of exhaustion in this case. The court was of the opinion that when an e-book is bought for the first time by or with the consent of the copyright owners via a retailer, the acquirer normally acquires a right to use that e-book for an indefinite period against payment of a certain price (which is materially equivalent to the transfer of ownership of a copy). The question remains as to whether the distribution right within the meaning of Article 4(1) of the InfoSoc Directive also applies to non-tangible items, such as e-books.
The court considered it necessary to submit questions to the ECJ in order for it to issue a preliminary ruling. In its interim judgment of July 12 2017, it suggested that the following questions be submitted:
- Does "any form of distribution to the public of the original of their works or of copies thereof by sale or otherwise", as mentioned in Article 4(1) of the InfoSoc Directive, include remotely making e-books available for use through downloading if such making available is for an unlimited time and against a price equal to reasonable compensation for the copyright owner?
- If so, is the distribution right referred to in Article 4(2) of the InfoSoc Directive exhausted when the first sale or other transfer of ownership of the e-book is made by the owner, or with its consent, in the European Union?
- Does Article 2 of the InfoSoc Directive allow a transfer between successive acquirers of a copy of which the distribution right is exhausted even if such transfer requires an act of reproduction in order to be able to lawfully use the copy?
- Should Article 5 of the InfoSoc Directive be interpreted in such a way that it is no longer possible for a copyright owner to oppose acts of reproduction which are required for a legitimate transfer of the copy in respect of which the distribution right has been exhausted?
These questions may change and additional questions may be raised, as the parties can still provide their input. Notably, at this stage, The Hague District Court has not suggested that preliminary questions regarding the applicability of Article 3 of the InfoSoc Directive be submitted to the ECJ. The court is clear in its finding that Article 3 of the InfoSoc Directive does not apply. However, if the ECJ rules that the sale of second-hand e-books is not a 'distribution' within the meaning of Article 4 of the InfoSoc Directive, it is difficult to imagine that the outcome of the matter will be that the act also does not qualify it as a 'communication to the public', as set out in Article 3 of the directive.
For further information on this topic please contact Martin Hemmer at AKD by telephone (+31 88 253 50 00) or email ([email protected]). The AKD website can be accessed at www.akd.nl.