Selling second-hand paper books is regular business for thousands of companies around the world, but what if those books are digital? A ruling just handed down by Europe's highest court has determined that the unauthorized sale of second-hand copyrighted eBooks via a website constitutes a communication to the public and an infringement of the owners' rights.

In 2014, we reported on a lawsuit filed against Tom Kabinet, a Netherlands-based online marketplace for used eBooks.

Fearing that the sale of such content would undermine their business model, the Dutch Publishers Association (NUV) and the General Publishers Group (GAU) sought an injunction to restrain Tom Kabinet from further sales. The request was denied and went to appeal, with a succession of local courts seemingly unable to determine whether the sale of used eBooks is permissible under EU law.

So, in common with other complex copyright matters, questions were sent to the Court of Justice of the European Union (CJEU) to determine whether the principle of exhaustion, whereby a copyright holder’s right of distribution is exhausted after the first sale of a product, applies to eBook content as it does software (pdf).

In September 2019, Advocate General Szpunar delivered his non-binding opinion, advising that exhaustion under Article 4 of the InfoSoc Directive does not exist and that the provision of eBooks falls under the copyright holder’s right of communication to the public.

The CJEU has now handed down its decision which broadly concurs with the opinion of the Advocate General.

“The Court found that the supply by downloading, for permanent use, of an e-book is not covered by the right of ‘distribution to the public’ provided for by Article 4(1) of Directive 2001/29, but that it is covered by the right of ‘communication to the public’ provided for in Article 3(1) of that directive, in which case exhaustion is excluded under paragraph 3 of that article,” the CJEU release reads.

The CJEU decision references an underlying World Intellectual Property Organisation (WIPO) Copyright Treaty, noting that the EU legislature intended that the rule of exhaustion be reserved for the distribution of physical objects, such as paper-based books.

“By contrast, the application of that rule of exhaustion to e-books would be likely to affect the interests of rightholders in obtaining appropriate reward much more than in the case of books on a material medium, since dematerialized digital copies of e-books do not deteriorate with use and are, therefore, perfect substitutes for new copies on any second-hand market,” the Court notes.

In respect of whether the supply of used eBooks represents a “communication to the public”, the Court said it considered whether technical means different to those previously used were deployed, or whether the communication was made to a “new public”, i.e an audience that wasn’t taken into account by the copyright holders when they authorized the initial communication to the public.

“In the present case, since the making available of an e-book is generally accompanied by a user license authorizing the user who has downloaded the e-book concerned only to read that e-book from his or her own equipment, it must be held that a communication such as that effected by Tom Kabinet is made to a public that was not already taken into account by the copyright holders and, therefore, to a new public,” the decision reads.

On those grounds, the Court (Grand Chamber) ruled as follows:

The supply to the public by downloading, for permanent use, of an e-book is covered by the concept 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 Article 3(1) of Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonization of certain aspects of copyright and related rights in the information society.

The ruling was welcomed by publishing group GAU.

“Now that the European Court of Appeal has followed the argument of the GAU / Media Federation and the conclusion of its AG, it is clear that what Tom Kabinet has done for all these years is contrary to copyright,” a GAU statement reads.

“The decision is not only important for the book sector, but also for the music and film industry, because now also for music and film, downloaded copies may not be resold. The GAU / Media Federation is happy that after many years there is finally clarity about the application of copyright to e-books.

“The GAU / Media Federation will now investigate with authors and publishers what recoverable damage Tom Kabinet has caused,” GAU concludes.