By a recent judgment of 19 December 2019 the Court of Justice of the EU ruled, in substance, that there is no “digital exhaustion” of the right of distribution under the EU InfoSoc Directive. The dispute involved the provision of an online service consisting in a virtual market for “second-hand” e-books.
Exhaustion provision
According to Art. 4 of the EU InfoSoc Directive the first sale in the EU of a copy of a program by the rightholder or with his consent exhausts the distribution right within the EU of that copy (with the exception of the right to control further rental of the program or a copy thereof). Effectively this means that, with respect to software, copyright holders in the EU cannot prohibit the “second hand” re-sale of software that has been legally acquired by the re-seller. It must be underlined that the exhaustion, as a form of limitation of the copyright holder’s rights, applies strictly and only to the right of distribution of the particular legally acquired copy of the resold software.
The e-book case
Essentially, the Court of Justice of the EU was confronted with the question whether the making available for download of an e-book constitutes an act of distribution (i.e. the first sale of the e-book exhausts the right to distribution and the making available of the e-book for download IS an act of distribution and is thus freely permitted) or whether such supply is covered by the concept of “communication to the public” within the meaning of the InfoSoc Directive (i.e. the first sale of the e-book exhausts the right to distribution, but the making available of the e-book for download IS NOT an act of distribution and thus requires consent of the copyright holder).
Conclusion
The Court of Justice of the EU concluded that the making available for download of an e-book is covered by the notion of “communication to the public” and, more specifically, by that of “making available to the public of [authors’] works in such a way that members of the public may access them from a place and at a time individually chosen by them” within the meaning of the InfoSoc Directive. In this way the court denied the existence of a “digital exhaustion” related to e-books.
In practice this means that, unlike the re-sale of printed books, legally acquired e-books cannot be re-sold by relying on the exhaustion of the distribution right and making them available for downloading without the rightholder’s permission. This conclusion seems in line with other case-law of the court which considered that e-books are electronically supplied services, rather than goods to which the act of distribution normally applies.