Tom Kabinet: the question of "online exhaustion" in the shadow of UsedSoft and VOB and in the light of ReDigi and Allposters
[This is an updated and modified version of my paper previously uploaded on this website under the title of ‘Tom Kabinet: there is no „online exhaustion” of the right of making available to the public even if it is characterized as distribution (as there is no real “e-lending” either)’. Now the judgement of the 2d Circuit adopted in the meantime is also analyzed, and certain corrections have been made.]
In the US, the Appeals Court for the Second Circuit has affirmed the District Court’s decision in ReDigi and rejected the idea of “online exhaustion” of intangible copies of phonograms by finding that, where a copy is transmitted from a computer to the servers of the system and from there to the computer of another member of the public, unauthorized copies are made, and the right of reproduction is infringed (the Court has also found that such acts cannot be qualified as fair use).
In contrast, the Court of Justice of the European Union (CJEU), in UsedSoft, introduced “online exhaustion” in those cases where “used” intangible copies of computer programs are transmitted online, and then in VOB found that “e-lending” of books is allowed. The Court applied “teleological” interpretation based on certain legal-political considerations with questionable harmony with the text and “preparatory work” of the relevant international and EU norms. It seemed, however, that the CJEU did not intend to extend “online exhaustion” to works other than computer programs and “e-lending” to works other than books. The optimism of commentators seemed to be justified because, in Allposters – although it concerned tangible copies – on the basis of a thorough analysis of the applicable provisions of the WCT and the Information Society Directive, the Court stated that the doctrine of exhaustion only applies to tangible copies.
As the preliminary questions of the Dutch court submitted in the Tom Kabinet case show, the optimism has not turned out to be justified. The court’s questions seem to reflect the position that, if the arguments presented by the CJEU in UsedSoft for “online exhaustion” of computer programs are valid, they may be considered valid also for other works.
In the paper, it is pointed out that, although it is possible to characterize interactive online making available to the public of intangible copies as distribution, rental or lending, this does not change the fact that, for the acts concerned, the provisions of the WCT and the Information Society Directive on the rights of (interactive) making available to the public and reproduction apply which do not exhaust. Only the right of distribution exhausts, but it only applies to tangible copies. This is acte clair and – in view of Allposters – also acte éclairé by the CJEU (at least, for works other than computer programs).
When the provisions of the WCT and the Directive – which limited the right of distribution, and thus the exhaustion of the right, to tangible copies – were adopted, it had been fully taken into account in what aspects the acts of interactive online making available of works show “equivalence” with communication to the public or distribution. The reference to such “equivalence” does not justify the introduction of “online exhaustion”.
The paper suggests that the legal-political objectives pursued by the CJEU in UsedSoft and VOB to make the secondary use of intangible copies possible could be (could have been) achieved more appropriately through the application of exceptions to and/or limitations of the rights of making available to the public and reproduction in certain special cases of the acts characterized by the Court as “distribution” or “lending”, provided that the cumulative criteria of the three-step test are duly fulfilled.