Out-Law News 2 min. read

Transferring copyrighted works to alternative mediums re-sets owners' right to control distribution, rules EU court


Rights holders can prevent others selling copies of their work in the EU if the copies being sold are available in an alternative medium from those which have already been sold in the market with their consent, the EU's highest court has ruled.

EU copyright laws give rights holders an element of control over how their works are sold in the EU. However, the rules state that rights holders lose the right to control the distribution of their works following the first sale of their goods that they consent to in the trading bloc.

However, the Court of Justice of the EU (CJEU) has ruled that rights holders can prevent others selling copies of their work already marketed in the EU where the copies are in a different medium from the originals.

"[EU copyright laws] … must be interpreted as meaning that the rule of exhaustion of the distribution right … does not apply in a situation where a reproduction of a protected work, after having been marketed in the European Union with the copyright holder’s consent, has undergone an alteration of its medium, … and is placed on the market again in its new form," the CJEU said in its judgment.

Intellectual property law expert Iain Connor of Pinsent Masons, the law firm behind Out-Law.com, said the ruling represents "a great result for rights holders”.

"This case is not only in line with other EU cases which have looked at when a distribution right is exhausted but also in line with US principles of intellectual property protection which considers whether an act would amount to ‘fair dealing’," Connor said. "When determining questions of fair dealing US courts look at whether the new use impacts on the ability of rights holder to exploit a particular commercial opportunity. The CJEU clearly looked at the new opportunities being exploited here and said that these should be reserved to the owner of the copyright; in my view, this must be correct."

The CJEU was ruling in a case referred to it from the Netherlands where a copyright collecting society has taken legal action against a website selling reproductions of copyrighted prints of artist works.

Allposters sells copies of the artists' work in the form of posters but also reproduces the works on canvases by transferring copies of the images in poster form onto a canvas through a "chemical process", the CJEU's judgment said. However, Pictoright took issue with Allposters selling the canvases without having rights holders' permission to do so.

A Dutch court found that the paper posters sold by Allposters with the consent of copyright holders had undergone a "major alteration" allowing the online retailer "new opportunities" to exploit the copyrighted works, according to the CJEU's judgment. As a result, it ruled that Allposters' "marketing of canvas transfers" without permission was unlawful, rejecting the retailer's claim that the rights holders' distribution rights had been exhausted when the posters were first sold in the market.

Allposters appealed that ruling but the Dutch Supreme Court asked the CJEU for guidance on how to interpret EU copyright laws before deciding the outcome of the case.

The CJEU said that transfer of copies of the artists' work from paper posters onto a canvas was an example of reproduced copyrighted work undergoing "an alteration of its medium".

"The consent of the copyright holder does not cover the distribution of an object incorporating his work if that object has been altered after its initial marketing in such a way that it constitutes a new reproduction of that work," the CJEU said. "In such an event, the distribution right of such an object is exhausted only upon the first sale or transfer of ownership of that new object with the consent of the rightholder."

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