The Criminal Law Division of the Riga Regional Court was dealing with a case concerning an unlawful sale of copyrighted items in an organised group, intentional unlawful use of another person’s trade mark, and conduct of unregistered business activities by means of selling used copies of computer programs stored on non-original media. More specifically, Mr Aleksandrs Ranks and Mr Jurijs Vasiļevičs were selling numerous copies of the Microsoft Windows and the Microsoft Office software on an online marketplace. In this context, the Latvian public prosecutor’s office for investigating financial and economic crime requested the Court of Justice of the European Union (“CJEU”) for a preliminary ruling.
The preliminary ruling was to give answers to the following questions:
1) May a person that has acquired a “used” computer program with a user licence, (stored) on a non-original material medium, which is functional and not used by any other user, invoke the rule of exhaustion of the right to distribute a copy (reproduction) of such computer program that was acquired by the initial acquirer from the right holder together with an original material medium if the original material medium has been damaged and the initial acquirer has erased his copy (reproduction) or ceased using it?
2) If the answer to the first question is positive, may thus the person, who may invoke the rule of exhaustion of the right to distribute a copy (reproduction) of the computer program, resell such computer program on a non-original material media to a third person?
First of all, it has to be noted that that at the time the criminal activity was completed, Council Directive 91/250/EEC was in force, which, by virtue of its Article 10, superseded Council Directive 2009/24. The CJEU thus interprets the provisions of Directive 91/205, which are similar to those of Directive 2009/24.
The CJEU has found the preliminary questions to be admissible. Then it dealt with the very issue, i.e. the exhaustion of the distribution right to copyrighted items. In general, the distribution right exhausts with the first sale of the item, or with the right holder’s consent. The CJEU determined that the first sale is deemed to be the placing of the first copy on the European market for an unlimited use. The definition of sale is to be interpreted broadly, as covering all forms of marketing of reproductions in the European Union, which are characterised by providing the right of use for an indefinite period against consideration that serves as the right holder’s remuneration. Unquestionably, even according to this practice of the Court of Justice (see e.g. Case C-128/11), the acquirer may resell the copy together with a licence, without the consent of the right holder. It must be, however, ensured that the copies of the initial acquirer can no longer be used by him.
The acquirer has also a right to make other copies for personal use. Provided that he is the authorised user of an unlimited license, and the making of such copy is necessary for using the program. Such copy may even be obtained in a situation where it is contractually prevented (e.g. by a licence contract or the terms and conditions of the computer program distributor). Contractual provisions of this nature are invalid. Since such other (back-up) copy is intended for personal use, it is not possible to resell it without the consent of the right holder.
The conclusions we can arrive at can be summarised as follows: the right holder’s distribution right exhausts with purchasing a material medium with a computer program, and the acquirer may resell the medium. If the medium is lost or damaged, one can make another copy for personal use (on condition that he must be an authorised user and that the making of a copy is a necessity). However, such copy (contained on a non-original material medium) may not be lawfully resold without the consent of the right holder.