July 6, 2012
Previously published on July 2012
Summary The CJEU has ruled that a trader will have made a "distribution to the public" of a copyright-protected work in the Member State where delivery takes place, if there is evidence that the trader has simply targeted consumers in that Member State through advertising the provision of delivery systems or payment methods. In addition, the Court further ruled that the concept of free movement of goods would not prevent a Member State bringing a prosecution for the aiding and abetting of such a distribution. This would be the case even where the sale was concluded in another Member State where the works in question were not copyright-protected or where the protection was unenforceable as against third parties. The Court has therefore clarified that the "distribution to the public" offence under copyright law should be construed broadly which puts the onus on companies to consider which consumers they are targeting and to ensure that all relevant copyright laws are complied with in each Member State where their consumers reside.
Discussion Mr Donner, a German national, was the principal director and shareholder of In.Sp.Em. Srl (Inspem), a freight forwarding company established in Italy. Inspem transported goods sold by another Italian company, Dimensione Direct Sales Srl (Dimensione). Dimensione used advertisements in German newspapers and a German-language internet website to sell replicas of "Bauhaus"-style furniture to customers in Germany. The goods were protected works under copyright law in Germany. However, in Italy, the goods either received no copyright protection or the copyright protection was unenforceable as against third parties. Mr Donner was prosecuted under German criminal law for aiding and abetting the distribution of goods in breach of German copyright law which had implemented the Copyright Directive. Article 4(1) of the Copyright Directive requires Member States to provide authors of works "the exclusive right to authorise or prohibit any form or distribution to the public by sale or otherwise." Mr Donner appealed, arguing, that a "distribution to the public" under Article 4(1) of Directive 2009/21 presupposed a transfer of ownership of the goods and this transfer, and therefore the distribution, had taken place in Italy rather than Germany; and that his conviction was contrary to the principle of the free movement of goods under Article 34 TFEU as it created an artificial portioning of markets. The Bundesgerichtshof (the Federal Supreme Court of Germany) referred the following questions to the CJEU: (1) Had there been a distribution to the public under Article 4(1) of the Copyright Directive? (2) Did Articles 34 and 36 of the TFEU preclude a Member State from prosecuting the aiding and abetting of such a distribution where the copyright-protected works were distributed to the public in that Member State but the sale had been concluded in another Member State where the works were not copyright-protected or where the protection was unenforceable as against third parties? The interpretation of Article 4(1) of the Copyright Directive
The CJEU said that under Article 4(1) of the Copyright Directive a distribution to the public could be characterised by a series of acts going from the conclusion of the contract to delivery to members of the public. Therefore, in the context of a cross-border sale, a copyright owner's exclusive right to authorise or prohibit any form of distribution to the public could be infringed in a number of Member States and, in this case, a distribution could have taken place in both Italy and Germany. The CJEU ruled that a trader will have made a "distribution to the public" in the Member State where works protected by copyright are delivered if there is evidence that the trader was targeting consumers in that Member State. Relevant evidence will include the language of websites (where the language is different to that used in the trader's Member State), the content and distribution channels of advertising materials, and the provision of specific delivery systems or payment methods. The interpretation of Articles 34 and 36 TFEU
The CJEU ruled that while the offence of aiding and abetting the distribution of copyright-protected works was a restriction on the free movement of goods and prima facie contrary to Article 34 TFEU it could be justified under Article 36 TFEU. National laws could be used to restrict the free circulation of works within the European Union where the works had only been placed on the market because of the disparity between the copyright laws of different Member States (on the period of protection or enforceability against third parties for example) and not as a result of the copyright owner's consent. Therefore Articles 34 and 36 TFEU was not to be interpreted as precluding a Member State from bringing a prosecution under national criminal law for the offence of aiding and abetting the prohibited distribution of copyright-protected works, even if the sale had been concluded in another Member State where the works in question were not copyright-protected or where the protection was unenforceable as against third parties. Comment The CJEU's decision is helpful for copyright owners in that it provides usual clarification on the definition of a "distribution to the public" under Article 4(1) Copyright Directive in the context of cross-border transactions. A trader may infringe the copyright owner's exclusive right of distribution to the public in a Member State where goods are delivered if there is evidence that the trader has targeted consumers in that Member State, regardless of the copyright protection (or lack thereof) afforded to the goods in the trader's own Member State. The decision also provides further assistance for copyright owners by confirming that traders must comply with copyright laws in all of the Member States in which they make a distribution for the purposes of Article 4(1) Copyright Directive and that such a requirement does not contravene the free movement of goods rules under Articles 34 and 36 TFEU.
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