Monday 21 September 2015

Distribution right encompasses advertisement for sale of copyright works, says the CJEU

Nedim Malovic
A few months ago the Court of Justice of the European Union (CJEU) issued a very interesting and definitely important decision concerning whether mere advertisement for sale of copyright-protected works falls within the scope of the right of distribution as per Article 4 of the InfoSoc Directive.

The decision in Dimensione Direct Sales and Michele Labianca v Knoll International, C-516/13 (Labianca) was noted by the IPKat here, but not by this very blog.

Thankfully talented IP enthusiast Nedim Malovic (Stockholm University) has come to our rescue with this thoughtful note that will be also published in the Journal of Intellectual Property Law & Practice soon.

Here's what Nedim writes: 

"This reference for a preliminary ruling arose from a dispute between two Italian companies, Dimensione Direct Sales (Dimensione) and Knoll International SpA (Knoll). Knoll manufactured furniture including chairs, stools, couches and tables - to which it also held the copyright, and sold it globally. Dimensione traded in furniture and distributed it around Europe, also offering it for sale on its website.

Knoll brought proceedings before a German court, claiming that the items offered for sale by Dimensione were counterfeit versions of its protected designs. Following Knoll’s victory at both first instance and in appeal, the Bundesgerichtshof (the German Federal Court of Justice) decided to refer a number of questions to the CJEU, these being whether: (1) the distribution right under Article 4(1) of Directive 2001/29 (the InfoSoc Directive) would include the right to offer the original or copies of a work to the public for sale and, if so, (2) the right to offer the original or copies of a work to the public for sale would include not only contractual offers, but also advertising measures; (3) the distribution right may be infringed even if no purchase of the original or copies of the work takes place on the basis of such offer.

Not just beautiful:
Knoll's Wassily chair,
one of the pieces of "high-value furniture"
at the centre of the national litigation ...
The CJEU response 

The CJEU answered all the three questions in the affirmative, finding that Article 4(1) of the InfoSoc Directive allows the copyright holder to distribute a protected work and prevent an offer for sale or a targeted advertisement of the original or a copy of that work.

This is the case even if it is not established that the advertisement in question gives rise to the purchase of the original or a copy of the copyright work by a buyer. It suffices that the advertisement invites a consumer to purchase it. The CJEU supported this reasoning on the basis of its previous judgments in Donner [here], and Blomqvist [here], in which it had held that the distribution to the public is characterised by a series of acts going, at the very least, from the conclusion of a contract of sale to the performance thereof by delivery to a member of the public.

According to the Court, use of the phrase "at the very least" in those judgments means that “it is not excluded that the acts or steps preceding the conclusion of a contract of sale may also fall within the concept of distribution and be reserved, exclusively, to the holders of copyright.” (para 26) 

It follows that even an invitation to submit an offer, or a non-binding advertisement for a protected object may be considered as falling under the scope of Article 4(1). As such, "[t]here may be an infringement of the exclusive distribution right, under Article 4(1) of [the InfoSoc Directive], where a trader, who does not hold the copyright, sells protected works or copies thereof and addresses an advertisement, through its website, by direct mail or in the press, to consumers located in the territory of the Member State in which those works are protected in order to invite them to purchase it.” (para 31)

To this end, “it is irrelevant, for a finding of an infringement of the distribution right, that such advertising is not followed by the transfer of ownership of the protected work or a copy thereof to the purchaser." (para 32).

... also makes a comfortable seat
(dog not referred to CJEU though)
The Court noted that this approach could be seen as a departure from its previous ruling in Cassina [here], in which it held that the distribution to the public only takes place where there is a transfer of the ownership of that object (paras 33, 36 and 41). However, similarly to what Advocate General Cruz Villalón held in his Opinion in Labianca (para 32) [here], the CJEU stressed how the particular outcome in that case was justified in light of its peculiar factual background, which consisted of displaying in public unauthorised reproductions of copyright works. In the case at hand, instead, Dimensione made unequivocally clear its intention to market the alleged infringing furniture. Even if no sale or actual delivery of infringing goods actually occurred, the fact that the consumers were invited, by targeted advertising, to acquire ownership of the original or copy of the work in question, would suffice to trigger application of Article 4(1).

What does this ruling mean?

Without the need for an actual sale to have an act of distribution, although seemingly in line with earlier rulings in Donner and Blomqvist, this CJEU decision appears to have extended the scope of the distribution right, up to the point of potentially blurring (further) the distinction between acts of distribution and acts of communication/making available to the public, the latter as per Article 3 of the InfoSoc Directive. The implications of this remain to be seen.

What however seems clearer is that this judgment may have made an (additional) aspect of UK copyright incompatible with EU law. Section 18 of the Copyright, Designs and Patents Act 1988 defines the distribution right as the “right to issue” to the public copies of a protected work, ie putting into circulation in the European Economic Area copies of such work not previously put into circulation therein. There seems to be consensus that the act of offering or exposing copies for sale could not be considered as akin to putting copies into circulation. As such, UK distribution right currently appears narrower in scope than its InfoSoc counterpart. Whether this is acceptable may be doubtful following this latest CJEU instalment on Article 4(1) of the InfoSoc Directive."

No comments: