Written by Antoine d’Huart and Elisabeth Guissart, Avocats à la Cour
Published on 05.05.2020 - Paperjam
At the end of 2019, the ECJ issued a major ruling, banning the resale of e-books(1). What are the lessons to be learned from this? What are the implications of this decision on the free enjoyment of other digital works?
This last question is not insignificant, since the Paris Court of First Instance had, three months earlier, ruled that the resale of video games was perfectly legal(2). However, let's go back in time: the questions surrounding the transferability of digital content of all kinds are not recent. In this regard, some may recall the landmark ReDigi case, in which a New York federal court ruled in 2013 that the resale of music purchased from the iTunes Store constituted copyright infringement and that such resale was therefore prohibited(3). A year earlier, the ECJ had, on the contrary, preferred to pave the way for the resale of second-hand software through its UsedSoft decision(4).
Resale of e-books is prohibited
According to the recent Tom Kabinet decision, e-books cannot be resold. The ECJ ruled that, according to European copyright law, resale constitutes a new "communication to the public" for which the authorization of the copyright owner of the works in question is required.
This case was based on the business model of the Dutch company Tom Kabinet, which operated an online marketplace for used e-books. People who bought e-books from this platform were able to sell them back to Tom Kabinet and delete their own copies. Dutch publishers' associations saw this as an infringement of copyright and took the case to the Dutch courts, which in turn referred it to the ECJ.
Why shouldn't e-books be able to be resold? After all, this is common practice for printed books. While ruling in favor of the Dutch publishers' associations, the ECJ argued, among other things, that the interest of copyright holders to be adequately remunerated was considerably more affected by the resale of e-books than in the case of resale of printed books. One reason for this is that, unlike printed books, a digital copy does not deteriorate with successive uses. Thus, an electronic book can be resold ad infinitum, so as to constitute a perfect substitute for newly created copies, which is clearly not the case for printed books. The ECJ also stated that the resale of digital books in this case constitutes a communication to the public, taking into account, on the one hand, the considerable number of persons who may simultaneously have access to the works in question and, on the other hand, the number of them who may successively have access to them, which in this case was particularly high.
The difference between e-books and software
Why did the ECJ not follow its decision on computer software in UsedSoft?
The answer is somewhat technical. Unlike computer software, which it had subjected to the exhaustion of the distribution right (a theory according to which the author can no longer oppose the free circulation of his work, including in the form of resale, once he has authorized its reproduction or commercialization), the ECJ considered that this theory could not be applied to e-books, since they fall under the right of communication to the public, which is not subject to exhaustion. Under these conditions, any new communication to the public, such as resale, will have to be subject to the authorization of the copyright owner.
Regardless of the legal arguments, the ECJ also considered that, unlike software that is quickly obsolete, literary works without a physical medium retain their full utility, notwithstanding the passage of time and the number of successive purchasers.
For their part, the French judges, in authorizing the resale of video games, preferred to follow the UsedSoft solution. Nevertheless, as video games can be characterized as protected works in the same way as e-books, we cannot exclude that this position will be reversed in the second instance and that the Court of Appeal, seized of the case, will transpose the Tom Kabinet decision to video games. To be continued...
E-books and innovative business models?
The Tom Kabinet decision will undoubtedly encourage publishing houses to find creative solutions, like streaming in music, movies or TV series (Spotify, Netflix, etc.), providing streaming of works, without transfer of ownership, while the e-book market does not currently offer this type of access.
(1) CJEU, 19 December 2019, Tom Kabinet, C-263/18, ECLI:EU:C:2019:1111.
(2) TGI Paris, September 17, 2019, No. 16/01008.
(3) Capitol Records, LLC v. ReDigi Inc, 934 F. Supp. 2d 640 (S.D.N.Y. 2013).
(4) CJEU, July 3, 2012, UsedSoft, C-128/11, C-128/11.
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