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Nintendo Judgment Puts UsedSoft Back in the PC Box




by:
Nicholas C.A. Bolter
Gareth Dickson
Edwards Wildman Palmer LLP - London Office

 
January 31, 2014

Previously published on January 2013

There was excitement and consternation is roughly equal measure when the Court of Justice of the European Union ruled in UsedSoft v. Oracle that developers could not use copyright to prevent the resale of “second-hand” copies of software downloaded from the Internet. The Court came tantalisingly close to finding that its reasoning applied to all types of downloads and not merely to computer programs, but ultimately stopped short of opening up lucrative markets for the sale of “used” music, videos and ebooks. Just over a year later and perhaps more than a year wiser, however, the Court has suggested that such a marketplace is not so imminent after all.

Background: UsedSoft v. Oracle

In Case C-128/11 UsedSoft v. Oracle, which we covered in our Advisory “Customers Can Resell Copies of Downloaded Software; Developers Can Try To Stop Them”, the Court of Justice held that although copyright enables the author of a computer program to prevent the first distribution of a copy of his program within the European Union, it cannot be used to prevent any subsequent distributions of that copy, or even of a further copy of that copy. The decision that a software developer’s distribution right is “exhausted” in this manner relied upon the fact that computer programs are governed by the Software Directive (Directive 2009/24) and not the Copyright Directive (Directive 2001/29), but the Court gave what appeared to be strong hints that their reasoning would also apply to digital forms of other copyright-protected works.

Extending UsedSoft to other machine-readable works

The problem for such an extension, however, is that even before it had decided UsedSoft the CJEU had held, in Case C-393/09 Bezpecnostní softwarová asociace, that the Software Directive only applies to those expressions of a computer program “which permit reproduction [of the program] in different computer languages, such as the source code and the object code”. It held that the Software Directive does not cover mere “elements” of a program, such as its graphic user interface, which do not in themselves lead to the reproduction or creation of a computer program: “the graphic user interface does not enable the reproduction of that computer program ... It follows that that interface does not constitute a form of expression of a computer program within the meaning of Article 1(2) of [the Software Directive] and that, consequently, it cannot be protected specifically by copyright in computer programs by virtue of that directive.”

This appeared to create an unhelpful and presumably unintended outcome: while a consumer could resell a program’s source and object code (UsedSoft), the re-distribution of its remaining literary and audio-visual elements may still require the copyright owner’s permission (Bezpecnostní).

The Nintendo proceedings presented the Court with an opportunity to reconcile these cases in one of two ways, either by pointing out that Bezpecnostní applies only where elements of a program are dealt with separately to the remainder of the program, or by finding that a product combining a computer program with multimedia content is no longer simply a “computer program” for the purposes of the post-UsedSoft distribution right. This reconciliation is important for developers, e-tailers and consumers, as well as for the future development of e-commerce in Europe.

The Current Proceedings: Case C-355/12 Nintendo v. PC Box

Although principally about technical protection measures and restrictions on their circumvention under EU legislation, Nintendo v. PC Box appears to confirm that UsedSoft does not apply to complex multimedia works. The Court’s Advocate General had stated that:

“Where complex intellectual works comprising both computer programs and other material are concerned - and where the two cannot be separated - it seems to me that the greater, and not the lesser, protection should be accorded”.

Such a conclusion is, according to the Advocate General, difficult to call into question under EU law. The CJEU appears to agree, holding that:

“The protection offered by [the Software Directive] is limited to computer programs. As is apparent from the order for reference, videogames, such as those at issue in the main proceedings, constitute complex matter comprising not only a computer program but also graphic and sound elements, which, although encrypted in computer language, have a unique creative value which cannot be reduced to that encryption. In so far as the parts of a videogame, in this case, the graphic and sound elements, are part of its originality, they are protected, together with the entire work, by copyright in the context of the system established by [the Copyright Directive]”.

Comment

Whether a digital product can be resold in a digital secondary market under the UsedSoft principle now requires an assessment of whether that product is “complex matter comprising elements which have a unique creative value that cannot be reduced to encryption”. That is a very broad definition and is likely to apply not only to videogames but also to ebook, music and video downloads. It also means that UsedSoft may not apply to software products comprising a graphical user interface, provided of course that that GUI has some “unique creative value” (presumably by being its author’s own intellectual creation: see Case C-5/08 Infopaq International).

That does not mean, however, that there is no possibility of a digital secondary market in Europe under another principle. Nintendo was not specifically about the distribution right and in UsedSoft itself the Court did appear sceptical that the Software and Copyright Directives would provide for different resale rights, as Oracle had argued. Ultimately, however, the Court has not yet had to address the issue in detail and it remains an open question for the time being.



 

The views expressed in this document are solely the views of the author and not Martindale-Hubbell. This document is intended for informational purposes only and is not legal advice or a substitute for consultation with a licensed legal professional in a particular case or circumstance.
 

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