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The end of the e-book's secondhand market - Court of Justice of the European Union forbids resale without rights holders' consent

White & Case Technology Newsflash

In a constantly growing number of sectors, the acquisition process is shifting more and more towards digital. This also applies to the book market. Whereas in the past, mainly physical books were sold and purchased, today e-books are gaining more and more importance. The differences between e-books and physical books, particularly in the secondhand market, have recently been addressed by the Court of Justice of the European Union.

The Court of Justice of the European Union has decided that the resale of used e-books via a website is a public reproduction and only permitted with the consent of the author or rights holder. On 19 December 2019, the court gave a judgment on the distinction between 'communication to the public' and 'distribution to the public' with regard to the sale of used e-books, C-263/18 - the full text of the judgment is published on: http://curia.europa.eu/juris/document/document.jsf?text=&docid=221807&pageIndex=0&doclang=EN&mode=req&dir=&occ=first&part=1 

In the case in question, two Dutch associations representing the interests of publishers brought an action before the District Court of The Hague, Netherlands. Their aim was to have, amongst others, a specific company prohibited from distributing used e-books, in which the members of the associations have the rights, on a website. From the point of view of the associations, this resale of used e-books constitutes a public communication of the e-books. The company, for its part, took the view that the rights to the e-books were exhausted by the original sale by the publishers. 

With the judgment, the Court of Justice of the European Union has now ruled that the sale and transfer of an e-book by the original rights holder does not involve its distribution to the public. It is therefore not Article 4(1) of Directive 2001/29, but Article 3(1) of the same Directive that is relevant. Consequently, it is a case of communication to the public, so that the exhaustion rule put forward by the defendant does not apply here.

The reasoning of the court is based in particular on the difference between the e-books at issue and physical objects. Exclusively for the latter, the exhaustion of rights is possible because, in contrast to e-books, physical objects already deteriorate through use in connection with the first sale to such an extent that they do not compete with new products in a further sale. The court takes that interpretation especially from the Copyright Treaty of the World Intellectual Property Organization and from the preparatory work on the directive expressing the will of the EU legislature.

The court also made more detailed comments on the definition of the concept of 'communication to the public'. It should be understood as covering any communication other than communication to the public present at the place of origin. Thus, all wired or wireless redistributions of a work are covered.

The term 'communication to the public' combines on the one hand the communication of a work as such and, on the other hand, the publicity of this communication. In the opinion of the court, the communication of the work takes place as soon as the work (here the e-books) is made available, for example on a website, regardless of whether the work is actually accessed. Consequently, the critical act already consists of making the work available to a public group. This is also the reasoning behind the proposal for Directive 2001/29.

With regard to the public nature of the communication, it is not only the possible number of simultaneous retrievals of the work that matters, but also how many times the work can be retrieved in succession. In the case of the e-books, the court held that a large number of users could retrieve the e-books simultaneously but also consecutively, so that it concluded that the provision of the e-books on the website constitutes public communication.

In addition, the court ruled that the use of a technical process is necessary to fulfil the characteristic of communication to the public. Applied to the present case, this means the following: Since the sale of e-books usually only grants a user license to the original buyer who has downloaded the e-book concerned solely to read that e-book from his/her own equipment, it must be assumed that a communication such as that effected by the company is made to a public that was not already taken into account by the rights holders and, thus, to a new public. 

In summary, the present decision has now clarified the difference between physical books and e-books. However, the decision is not only relevant for the book market: It also points the way forward in other areas of digital information. Thus, there is a market for used media also with regard to other downloadable, audiovisual media for entertainment purposes, such as music or video.

Moritz von Baumbach (White & Case, summer associate, Hamburg) contributed to the development of this publication. 

 

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