Nederlands Uitgeversverbond v Tom Kabinet is a 2019 preliminary ruling of the Grand Chamber of the Court of Justice of the European Union (CJEU) in Case C-263/18. The Court ruled that “the supply to the public by downloading, for permanent use, of an e-book is covered by the concept of ‘communication to the public’” within the meaning of Article 3(1) of Directive 2001/29 (the InfoSoc Directive).[1] Because exhaustion is excluded for communication to the public, the sale of “second-hand” e-books through Tom Kabinet’s website required the authors’ authorisation, and the software-specific rule of UsedSoft v Oracle did not apply.[2]
Background
Tom Kabinet launched an online market for “second-hand” e-books on 2014-06-24. Dutch publishers’ associations NUV and GAU sought an urgent injunction; the Amsterdam courts refused it, although the Court of Appeal in January 2015 prohibited Tom Kabinet from offering an online service allowing the sale of unlawfully downloaded e-books.[1]
From 2015-06-08 Tom Kabinet replaced the service with the “Tom Leesclub” (Tom reading club), in which it acted as an e-book trader. It offered members e-books that it had bought or that members had donated, in which case the member had to provide the download link and declare that no copy had been kept; Tom Kabinet then downloaded the e-book from the retailer’s website and placed its own digital watermark on it. E-books initially cost EUR 1.75 plus a monthly subscription of EUR 3.99, and from 2015-11-18 cost EUR 2 each plus “credits” obtained by supplying e-books to the club.[1]
The dispute
NUV and GAU applied to the rechtbank Den Haag (District Court, The Hague) for an injunction against making e-books available to reading club members or reproducing them, arguing that the club made an unauthorised communication to the public. Tom Kabinet argued that its activities fell under the distribution right, which is exhausted once the rightholder has sold a copy in the EU. The District Court referred questions to the CJEU.[1][2]
Decision or outcome
The Court held that the download of an e-book for permanent use is not a “distribution to the public” under Article 4(1) of Directive 2001/29 but a communication to the public under Article 3(1), for which Article 3(3) excludes exhaustion.[2] Relying on the WIPO Copyright Treaty and the directive’s travaux préparatoires, it concluded that the EU legislature intended exhaustion to be reserved for tangible objects.[2]
On UsedSoft, the Court said that “an e-book is not a computer program” and that Directive 2009/24 on computer programs “constitutes a lex specialis” which assimilates tangible and intangible copies of programs, an assimilation the legislature did not intend for works under Directive 2001/29. It added that a book on a material medium and an e-book are not economically equivalent, since digital copies “do not deteriorate with use” and are “perfect substitutes for new copies”.[1]
On the “public”, the Court counted persons with access at the same time or in succession, and held that because an e-book is generally supplied with a user licence authorising the user only to read it on their own equipment, Tom Kabinet’s communication reached a “new public” not taken into account by the rightholders, subject to verification by the referring court.[1][2]
Significance for software licensing and SAM practice
Tom Kabinet sets the boundary of UsedSoft. For computer programs covered by Directive 2009/24, a sale of a downloaded copy with a perpetual licence can exhaust the distribution right; for other digital works under Directive 2001/29, the Court treated download as communication to the public, where exhaustion does not apply.[1] See UsedSoft v Oracle for the software rule and Capitol Records v. ReDigi for the United States position on digital resale.
Lessons learned
- Software is a special case in EU resale law. The Court described the Software Directive as a lex specialis and held that the UsedSoft reasoning does not extend to e-books.[1]
- Classify the asset first. Because the outcome turned on whether the item was a computer program or another work, resale or transfer of digital assets should start by establishing which directive applies.[1]
- Licence scope defines the public. The Court used the user licence, limited to reading on the user’s own equipment, to find that resale reached a new public.[2]