[A2k] BREAKING - Copyright exhaustion does not apply to digital goods other than software, Hamm Court of Appeal

Claire Cassedy claire.cassedy at keionline.org
Fri Jun 13 11:11:07 PDT 2014


BREAKING - Copyright exhaustion does not apply to digital goods other than
software, Hamm Court of Appeal

A peculiar building in Hamm
Good news for digital content providers come from a German Court of Appeal
ruling that excluded exhaustion of the distribution right for digital
subject-matter other than software.

As readers will remember, the Court of Justice of the European Union
(CJEU)’s ruling in Case C-128/11 Oracle v UsedSoft [on which see Eleonora’s
first historical post as a guest Kat here] established that, under certain
circumstances, exhaustion of the distribution right within Article 4(2) of
the Software Directive may take place for both software copies incorporated
in physical media (like a CD or DVD) and digital files downloaded from the
internet with the rightholder’s consent, being the on-line transmission
functionally equivalent to the supply of a material medium. So stating, the
CJEU smoothed the way to the sale of second-hand software, which is not the
thing that some original software providers appreciate the most.

Following that ruling, the IP community has been racking its brain(s) over
that CJEU decision, in particular whether the principles stated there might
be extended beyond the boundaries of the Software Directive and applied to
other copyright-protected subject-matter, such as digital movies, music, or
other audio-video files. This very weblog hosted an exciting poll, in
response to which the majority of readers said that yes, the CJEU could
rule that exhaustion of the right of distribution concerns all kinds of
digital contents via Article 4(2) of the InfoSoc Directive 2001/29.

With some relief for digital content providers, the first national decision
on the topic after UsedSoft was rendered by the District Court of Bielefeld
(Germany) [on which see here], that concluded differently from the majority
of the Katpoll participants. Ruling on a case concerning audiobooks, the
District Court took the view that the UsedSoft decision only concerned
computer programs and the Software Directive, while the InfoSoc Directive -
which is the one applicable to ebooks and audio books - clearly and
consciously excludes exhaustion for all the other digital contents.

>From the seasoned observer and Katfriend Ben Ja Min (digital Katpat!) comes
the breaking news that the Court of Appeal of Hamm just upheld the
Bielefeld District Court decision (Urt. v. 15.05.2014, Az. 22 U 60/13).

This Kat has not yet read the full text of the decision [and likely nothing
would change if he did, being the German he learned at secondary school
even worst than Giovanni Trapattoni’s]. According to the Legal Tribune's
note on the decision, however, the Court of Appeal seems to have confirmed
that the Software Directive is lex specialis, and therefore not applicable
to subject-matter other than software. As a consequence, the Court
continued, exhaustion of the distribution right under S 17 of German
Copyright Law does not apply to digital files like audiobooks downloaded
from the internet, even if their download is made with the consent of the
rightholder and it amounts to a transfer of property.

In light of that, providers of digital audio files can validly include in
terms and conditions clauses that prohibit customers from reselling
audiobooks. Further, the Court of Appeal concluded that such kind of
prohibition could validly apply to the transfer of ‘newly saved’ versions
of a file, ie new copies of files necessary for the resale to take place –
whose reproduction the CJEU in UsedSoft considered justified under Article
5(1) of the Software Directive.

Stay tuned on the IPKat for more complete comments to come.

Posted By Alberto Bellan to The IPKat on 6/13/2014 05:05:00 pm

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