According to art. 4.1 of the Directive 2001/29/EC authors should be entitled an exclusive right to authorise or prohibit any form of distribution to the public by sale or otherwise of original works or copies thereof. Following the case law of the Court of Justice of the European Union (CJEU) the exclusive right in question (“the Distribution right”) shall be interpreted in accordance with art. 6 (1) of the 1996 WIPO Copyright Treaty to which EU is a party and in such a way that it provides the authors with a high level of protection. Thus, the Distribution right does not only concern the actual sale of a copyright protected work or copy thereof, but any acts relating to such sale; “at the very least” all acts in the series of acts from the conclusion of a contract of sale to the performance thereof by delivery. It has further been established by the CJEU that the Distribution right also include the offer of sales or advertisement whereby consumers are invited to purchase protected works even when such an offer does not conclude in a sale and transfer of the ownership of the protected works or copy thereof. If has, however, been unclear if other acts, such as for example storage, which may precede the offer of sales should be included in the Distribution right.
On 19 December 2018, in the case C-572/17 Riksåklagaren v. Mr Syed, the CJEU provided further clarifications whether certain preceding acts should be considered a part of the Distribution right. The case concerned inter alia the question if warehouse storage of copyright protected works without the rightholder’s consent could constitute an infringement in the rightholder’s exclusive right to distribute the works to the public by sale. The question had been raised by the Swedish Supreme Court in relation the public prosecutor’s appeal in a criminal case regarding trademark and copyright infringement.
The case in the main proceedings concerned Mr Syed, who had at his disposal a shop, located in the Old Town of Stockholm (Gamla Stan), where he offered and sold clothing and accessories decorated with copyright protected motifs and trademarks pertaining to famous rock bands and football clubs. The goods were kept in the shop but also in an adjacent warehouse and in a warehouse located in the suburbs of Stockholm (Bandhagen). Mr Syed acknowledged that he had, in the business, imported a large part of the goods from UK, offered the goods for sale in the shop and stored them for this commercial purpose. Mr Syed had also stated during examination that the shop was regularly supplied with goods from both of the warehouses.
The first instance, the District Court of Stockholm, found Mr Syed liable for trademark infringement – import, offering of sale and storing, in both warehouses, of infringing goods for commercial purposes – but also copyright infringement. The District Court held that the Distribution right covered the offering of sale of goods, displayed in the shop, but also such identical goods that had been found in the warehouses. However, goods found solely in the warehouses and not in the shop could not be regarded as offered for sale or as an attempt to commit a copyright infringement.
Mr Syed, as well as the public prosecutor, appealed the judgment in parts whereby the Swedish Patents and Market Court of Appeal in a judgment on 11 October 2016 excluded liability also for such infringing goods stored in the warehouse even though identical examples of the infringing goods had been offered for sale in the shop. The reason was that the storage – however with a commercial purpose – could not be considered an offer for sale and consequently not an act included in the Distribution right. After appeal by the public prosecutor the question regarding interpretation of art. 4.1 of the Directive 2001/29/EC was referred to the CJEU by the Swedish Supreme Court. The questions referred by the Swedish Supreme Court were:
‘1. When goods bearing protected motifs are unlawfully offered for sale in a shop, can there also be an infringement of the author’s exclusive right of distribution under Article 4(1) of Directive 2001/29 as regards goods with identical motifs, which are held in storage by the person offering the goods for sale?
2. Is it relevant whether the goods are held in a storage facility adjacent to the shop or in another location?’
In its decision, which confirms the opinion of the advocate general Campos Sánchez-Bordona, the CJEU re-stated that while the Distribution right is not limited to fully performed sales it must be proven when establishing an infringement of the Distribution right, to that end, that the goods concerned are actually intended to be distributed to the public without the rightholder’s consent. The CJEU further noted that the storage of goods bearing copyright protected motifs which by the trader also are also offered for sale may be considered an act covered by the Distribution right, if it can be established that the goods stored actually are intended for sale without the rightholder’s authorisation. The storage of copyright protected goods identical to goods sold in a shop, could not as such, without the intent to offer those goods for sale, be deemed included in the acts following the Distribution right.
While it is for the national court to determine, with considering of the evidence available to it, whether all the stored goods identical to those sold in the shop at issue, or only some of them, were intended to be marketed in that shop, the CJEU provided some guidance. Firstly, it cannot be inferred by the mere fact that the goods sold in the shop and the goods stored are identical that the storage of such goods constitutes an act with the aim of making a sale. One must establish the intent to make the sale. Secondly, all factors which may demonstrate that the goods are stored with the purpose of making a sale must be considered; one such factor is the distance between the storage facility and the place of sale (however not on its own decisive). Other relevant factors are the regular restocking of the shop with goods from the storage facilities at issue, accounting elements or the volume of sales and orders as compared with the volume of stored goods, or current contracts of sale.
The CJEU thereby concluded that the Distribution right following article 4.1 of the Directive 2001/29/EC could include acts such as storing the goods, provided that identical goods are offered for sale by the trader, without the authorisation of the rightholder, and that the stored goods are actually intended for sale on the territory of the Member State in which the goods are copyright protected.
In light of previous CJEU case law, the decision is not surprising and provides a good basis for a harmonised approach in assessing infringement of the Distribution right for example in counterfeit situations. It should however be noted that the CJEU assessment only concerns storage of goods identical to those that have been offered for sales whereby the question remains if storage of copyright infringing goods, that have not yet been offered for sale (or as in the main proceedings not found in the shop), with the intention of offering the goods to the market could constitute an attempt or preparation to violate the Distribution right (or even an act included in the Distribution right). The CJEU interpretation of the Distribution right in the case in question does not directly exclude it but it will ultimately be a question of the national courts to determine.
As highlighted by the Advocate General in his opinion, the question of the criminal offence and the various stages of the “iter criminis” such as intent, preparatory acts, attempt and consummation, will need to be determined by the Swedish Supreme Court. Therefore interesting questions may be further resolved, such as what evidentiary requirements that needs to be fulfilled to prove a consummated infringement or an attempt and also how to distinguish an attempted infringement of the Distribution right, through storage of copyright infringing goods which also have been sold, from the consummated crime. Consequently, we will with interest await the judgment from the Swedish Supreme Court for further guidance.