Although e-books account for only 3-6%  of the book market in Poland, according to publicly available data, people choosing a digital book read almost three times more than readers of printed books. At this point, the question arises – can used e-books be legally purchased?
On 19 December 2019, the Court of Justice of the European Union (hereinafter „CJEU”) decided a proceeding concerning the sale of „second-hand” electronic books (C-263/18). The case, which is particularly relevant to the electronic book market, was initiated by the following questions from the Dutch court for a preliminary ruling:
– does the supply of electronic books by means of an online download for indefinite use fall within the scope of the distribution right within the meaning of Article 4 of Directive 2001/29 (hereinafter „The Directive”) ; and
– does this right is exhausted in connection with such a delivery made with the author’s consent and;
– whether the acts of reproduction necessary for the possible subsequent transfer of an electronic book acquired in this way are lawful.
According to Advocate General Maciej Szpunar, in his opinion from 10 September 2019 – all the above questions must be considered together since they form an integral part of a single complex question: should the supply of protected works to users by means of online downloading be regarded as covered by the distribution right, with the result that the right is exhausted because of the initial supply made with the author’s consent?
Tom Kabinet BV (hereinafter: „Tom Kabinet”) is a company offering online sales of used electronic books. As part of its services, Tom Kabinet resells electronic books that it has purchased from official distributors or third parties to persons registered on its website. The prices applied by Tom Kabinet are lower than those of official distributors. On the website, Tom Kabinet encourages people who have bought electronic books on this website to resell them after reading them, which gives the right to “credit” to buy more books. When buying e-books from individuals, Tom Kabinet requires them to remove their copy and places a digital watermark on the resold copies to confirm their legality.
The Nederlands Uitgeversverbond (hereinafter: „NUV”) and Groep Algemene Uitgevers (hereinafter: ”GAU”) – associations protecting the interests of Dutch publishers have brought proceedings against Tom Kabinet on the ground of alleged copyright infringement. The Dutch courts of both instances found no grounds for blocking sales during the trial. The Court of Appeal, however, had doubts in that regards, which found the answer to the question whether, for the purposes of Article 4 (2) of the Directive, first of all – making an electronic book available at a distance by means of downloading for indefinite use may constitute an act of distribution and secondly – whether the distribution right may be exhausted. For those reasons, The Court of Appeal decided to stay the proceedings and to apply to the CJEU with the preliminary questions referred to in the introduction.
There is no doubt that this case is of particular importance for the legal situation of the electronic book market. An affirmative answer to the Dutch court’s questions would de facto mean that the author would lose control over the downloaded electronic book. In turn, the purchaser of the e-book would be able to resell a copy of the downloaded book without the consent of the rightholder.
Clarification of the issue of „exhaustion of the right of distribution” is of key importance for the resolution of the proceedings. According to that principle, once a copy of a copyrighted work has been lawfully marketed, the rightholder can no longer oppose the resale of that copy by its purchaser. This is justified by the fact that copyright cannot take precedence over the right of ownership of the buyer’s copy of the work in question as an object. Furthermore, once a copy of a work has been put on the market by the author or with his or her consent, the author shall be deemed to have received the remuneration due for that copy. At this point, it is important to agree with the Advocate General that it was up to CJEU to decide whether, given the development of technology and the possibility of using a book in digital form, the principle of exhaustion of the right of distribution, established in the real world of copies – objects – could be applied in the virtual world of copies – digital files.
Conclusion of the CJEU
In its judgment, the CJEU ruled that the supply of e-books to the public by means of downloading, for the purposed of permanent use, falls within the concept of „making available to the public”, and more specifically within the concept of „making works available to the public in such a way that members of the public have access to them at a place and time of their choice”.
However, such provision of electronic books to the public does not constitute „public dissemination” and consequently does not result in the exhaustion of the law. Further resale of such a book is therefore not permitted.
Indeed, the exhaustion of the right to download digital copies of a work made available online is precluded by the right of reproduction. Downloading an e-book involves multiplying it on the buyer’s computer by creating a copy of the file. The same will apply to the resale of an electronic book. Each new reader, downloading a file, will make a new multiplication on their computer. The first reproduction by the purchaser of the original digital file is made with the consent of the copyright holder. However, this consent does not cover reproductions which occur when a copy of the work is resold.
In the light of the above considerations of the Court, it is not possible not to address the relations of this case to the judgment of Court of Justice of 3 July 2012 in the case of UsedSoft and Oracle International GmbH (C-128/11). This case concerned a similar problem, namely the marketing of second-hand computer software licenses. THE CJEU has ruled that a user who has downloaded a copy of a given computer program and entered into a license agreement authorizing him to use that copy for an unlimited time, in return for remuneration corresponding to the remuneration for the purchase of the copy, has the right to continue trading the copy. Moreover, the CJEU indicated that the user is obliged to delete or deactivate his copy of the program at the time of further resale. The Court added that such a license transaction must be regarded as a sale of a copy of the computer program concerned, since, from an economic point of view, the online transmission of a copy of a computer program is the functional equivalent of the release of a tangible medium. At the same time, it pointed out that, in the circumstances described, the provision of a copy of a computer program to a customer constitutes „the first sale of a copy of a computer program”. In the view of the CJEU, any other interpretation would allow software copyright holders to circumvent the principle of exhaustion of the distribution right and undermine its effectiveness – by classifying the contract simply not as a „sale” but as a „license agreement”.
The Court of Justice has explained in detail the differences between a computer program and e-book, resulting in a different legal interpretation of the resale of e-books. The CJEU, referring to an earlier judgment, indicated that an electronic book is not a computer program, i.e. a set of instructions for a computer to perform certain operations, but a digital file containing data to be processed by the computer. Therefore, the special provisions for computer programs, as defined by the CJEU on UsedSoft, should not apply. Consequently, it considered the resale of e-books as infringing the author’s copyrights and thus unacceptable.
It follows from the judgment under consideration that the reader’s rights to continue to dispose of the book he or she has purchased depend on the form in which he or she has acquired it – traditional or electronic. The supporter of traditional solutions can lend or resell the book without any major restrictions after reading it. However, such a possibility will not be available to a buyer of a book in a digital version, even if the content of both editions is the same.
 Article 4 of Directive 2001/29 – Distribution right
- Member States should provide for the exclusive right for authors to authorise or prohibit any form of distribution to the public of the original of their works or copies thereof by sale or otherwise.
- The distribution right in the Community of the original or copies of a work shall be exhausted only where the rightholder sells or otherwise transfers ownership of the object concerned within the Community for the first time or with his authorisation.