The paper – as it can be seen on its first page – had been prepared for the 21st Fordham IP Conference in 2013. At that time, the Nokia v. PC Box case was still pending. The Court of Justice of the European Union adopted its judgment (C-355/12 . ECLI:EU:C:201425) on 23 January 2014. The paper is uploaded in December 2018, taking into account that the issues of unauthorized circumvention of video games continue beeing on the agenda and the analysis and findings still seem to be relevant.

The short paper had been prepared for the Central and Eastern European Copyright Alliance (CEECA) - with permanent observer capacity at WIPO - in preparation of the participation of its representives in the 25th session of the WIPO Standing Committee on Copyright and Related Rights (SCCR) held in Geneva from November

In 2000, within about four months, two WTO panels interpreted the three-step test – as provided in Article 13 (for copyright) and in Article 30 (for patent rights) of the TRIPs Agreement – in accordance with the provisions of the Vienna Convention on the Law of Treaties (which also binds Canada); the first panel, where the author of this paper was a member, in a patent case between the European Communities and Canada and then a second one in a copyright case between the European Communities and the United States of America. The two panels agreed on the basic aspects of interpretation; inter alia, on that the three conditions apply on a cumulative basis; thus, failure to comply with any of them results in an exception being disallowed. As the copyright panel has confirmed it, “Article 13 cannot have more than a narrow or limited operation. Its tenor… discloses that it was not intended to provide for exceptions or limitations except for those of a limited nature.” In contrast with the WTO panels, the Supreme Court of Canada (SCC) has not analyzed the provisions of the treaties at all; it has only based its „user rights” doctrine (for the application of fair dealing) on certain comments in a book of a Canadian academic quoting two US academics. The Court has interpreted the doctrine – in the CCH case – in a special way combining it with three elements: (i) the understanding that „user rights” does not only mean that the performance of certain acts are permitted, it also means that those “rights” are at least on an equal level but rather even superior to author’s rights; (ii) the principle of „large and liberal” interpretation of fair dealing and other exceptions (although the adjectives „large” and „liberal” are just the antonyms of the criteria of the three-step test according to which exceptions may only be applied in limited, confined, special cases); (iii) six factors to be taken into account to find fair dealing, all suggesting the superiority of „user rights” (among them the impact of fair dealing on the market (normal exploitations) of works, which also is only to be taken into account; a conflict with such exploitations – in contrast with the three-step text – is not supposed to be an obstacle to find fair dealing). The paper discusses in detail why and how the Canadian copyright law has got into conflict with the international treaties due to this pro-user case law – which became particularly conspicuous when applied in the Alberta (Education) case. By the 2012 Copyright Modernization Act, amending the Canadian Copyright Act (CCA), adopted nearly in parallel with Alberta (Education), the allowable fair dealing purposes have been extended to education in general without any specification whatsoever. This differs from the provisions of the international treaties (in particular Article 10(2) of the Berne Convention) and the national laws of Canada’s main trading partners where educational exceptions are limited to special cases, and – combined with the principle of „large and liberal” interpretation of fair dealing – has the potential of getting into even more serious conflict with the three-step test. The York decision of the Federal Court has raised the hope for reestablishing the concordance of the Canadian copyright law with the international treaties. It seems, however, that for this it would also be necessary to amend the CCA by limiting the application of educational fair dealing to special cases in accordance with the three-step test. The copyright laws of Canada’s key trading partners offer appropriate examples how this may be achieved.

Under the WIPO “Internet Treaties” (the WCT and the WPPT) and the EU Information Society Directive, the right of distribution only applies to tangible copies and it may only be exhausted as such. In case of uploading, making available on the Internet and downloading of works, along with the right of reproduction for the related acts of copying, the right of (interactive) making available to the public applies which do not exhaust even where, in a national law, it is characterized as distribution. Optimism prevailed that the UsedSoft and VOB judgements of the Court of Justice of the European Union (CJEU) would not create any major conflicts with these provisions of the Treaties and the Directive. The source of optimism was that, in UsedSoft, the CJEU had only introduced online exhaustion of intangible copies for computer programs and, in VOB, the Court only found that the right of lending is applicable for making available of intangible copies of e-books for a limited period of time without any economic or commercial advantage; it recognized that the rights of distribution and rental only apply to tangible copies. Therefore, it was hoped that there would not be attempts at extending the doctrine of exhaustion to online making available of intangible copies (and to the related acts of reproduction) of mainstream categories of works. The Allposters judgment of the Court strengthened the optimism. However, as it could be expected, it has turned out to be unfounded. In the Tom Kabinet case, the District Court of the Hague has submitted preliminary questions to the CJEU the essence of which is to ask whether online exhaustion introduced by the CJEU in UsedSoft may be applied to online making available any “used” works also others than computer programs (in the given case, books). In the paper it is pointed out that there has been no justified reason for the Dutch court’s preliminary questions. It is an acte clair on the basis of the Information Society Directive (and the WIPO Copyright Treaty (WCT)), and also an acte éclairé on the basis of various judgements of the Court of Justice – not only in Allposters, but even in UsedSoft and VOB – that the answer to the Dutch court’s basic question must be in the negative. First, those arguments of Dutch court are reviewed which served as a basis for the preliminary questions. Second, the relevant norms of the WCT and the Information Society Directive are presented and discussed under which there is no “online exhaustion” nor free “e-lending”. Third, the somewhat contradictory judgments of the CJEU – the UsedSoft, Allposters, VOB tryptic – are analysed along with the ReDigi decision adopted by a district court in the United States. Finally, an alternative solution is outlined; namely, applying those provisions for the acts characterised as “distribution” in the way they truly qualify under the international and EU law – that is, acts of online (interactive) making available to the public and related acts of reproduction – and, instead of trying to extend the doctrine of exhaustion, applying certain exceptions or limitations to these rights where it is justified and is in accordance with the three-step test.

The paper was prepared in October 2010 in the middle of the debates on Bill C-32 to amend the Canadian Copyright Act. At that time, it was not published. The reason for its present publication is that recently certain documents of the European Commission have raised the idea of a possible amendment to the acquis with the purpose of facilitating the creation and use of adaptations of works protected by copyright in the form of "user generated content" (UGC), and the new Canadian legislation (the amendments have been adopted in the meantime) has been referred to as a possible model. The paper may be useful to point out to what kinds of unintended negative consequences - and potential problems with certain international norms - the Canadian model might lead. It reflects the position that it is only in respect of the freedom of creating and using parodies where there may be truly a need for legislative clarification but that the new provision of the Bill on parody would have been sufficient to address and settle the issue. It goes without saying that the author's position is the same in respect of the acquis; in view of Article 5(3)(k) of the Information Society (Copyright) Directive on an exception for the purpose of charicature, parody or pastiche it is quite doubtful that a specific "UGC exception" might be necessary and justified.