From enthusiastic and talented
Katfriend and Phd researcher at the European University Institute (Florence) Emma Linklater comes
news of an interesting German ruling which touches upon many topics which are
dear to IPKat readers, including eBooks, digital resale (eg here),
the InfoSoc and Software directives,
and the controversial decision of the Court of Justice of the European Union
(CJEU) in Case
C-128/11 Oracle v UsedSoft (here).
Here's what Emma has to say:
March was a busy month for
digital resale with a largely-unnoticed ruling from the ‘Landgericht Bielefeld’ (German Regional Court) on downloads of eBooks and audiobooks
and the much anticipated ReDigi ruling of
the US District Court for the Southern District of New York on digital music [noted here and here].
If we face facts, neither the German decision nor ReDigi bring
us any legal surprises – in fact they’re pretty predictable given the legal
landscapes on both sides of the Atlantic. Both blow digital exhaustion out the
water for the time being. But call this guest Kat a dreamer, she’s still not so
sure who will get the cream if this resale kerfuffle works its way up the court
systems or legislature.
This post focuses on the German
decision, available here für deutsch sprechende Katzen only.
In short, the German
Court reiterated that the CJEU in UsedSoft considered the
Software Directive as lex specialis and because the more general InfoSoc
Directive, applicable to downloadable eBooks and audiobooks, explicitly
disallows resale of intangibles the CJEU’s reasoning cannot be transferred.
Ultimately, the Court underlined that for precedential purposes, UsedSoft can only be
used where the Software Directive applies; the reasoning is not applicable
to other digital content.
Although not revelatory from a
legal perspective, there are some interesting parts to the German decision
stemming from the consumer-focussed analysis the Court makes. The
applicant was an ‘umbrella’ consumer organisation which considered that
purchasers were unreasonably disadvantaged by contractual clauses limiting what
they could do with their downloads, in particular as regards further ‘lending
and resale’. The complaint centred firstly on the ‘product placement’ of
downloadable eBooks and audiobooks in the same menu as print books and secondly
on the contractual clauses which used ‘physical’ product language (‘sale’,
‘purchase price’, ‘delivery’) but restricted use. Essentially, they argued that
this deceived consumers into thinking they would have the same usage rights
over digital purchases as for physical ones, that this was unreasonable, and
that such divergences should be remedied by allowing for digital exhaustion
(thereby bringing the contract in line with one for physical goods).
The Court disagreed.
 |
UsedSoft: You can resell all legally purchased software but can't get your claws into a second-paw ebook |
With some rather sweeping
generalisations, it considered that consumers were well aware of the
media-hyped piracy problem. Consumers know, it said, that digital files
can be passed along more easily and without them having to delete their own
copy, thus facilitating infringement. With this knowledge, consumers expect their
usage of digital files to be restricted. (Perhaps the Court is
unaware that some publishers (e.g. O’Reilly) do currently allow resale of eBooks, which could muddy the
waters for consumers?).
The Court also made an
interesting point on price:
“Given the lower price of an audiobook, or
e-book compared to the physical work, the average customer will be satisfied
with the use of the file for his own purposes only.”
To the
present author, this can be read as a signal to publishers (note that in
Germany publishers set eBook and audiobook prices by de facto extension of the
print book law) that the price of eBooks has to be lower than
for print books - only then will the average consumer be satisfied with the
restricted use. It’s a predictable pity the Court doesn’t say what price
point makes a satisfied customer, but perhaps this could be seen as a
Court-mandated warning that publishers should not price as they would for the
print market.
 |
It's a good idea to know thy enemy, but you thought you were buying a book? Nope, you're licensing an eBook. Easy slip of the tongue, iTunes. |
Also, Court seems to assume that
the consumer will illegally try to pass on his eBook or audiobook to multiple
other parties without letting go of his own file. No mention is made of
‘forward and delete’ methods to reign in resale.
In a sense, the plea to permit
exhaustion in this case is therefore more extensive than in both UsedSoft and ReDigi where
the defendants used such technologies to bring digital exhaustion closer to the
resale of physical goods; only one legally obtained copy could
be resold, so the first sale channel was not completely eroded. The Court – and
the parties - here seemed unaware of such technologies which are becoming a
business priority for retailers and, in the view of this guest Kat, could be
used influence the future legal landscape too. This is for two reasons – one
innocent, and one not quite so.
Firstly, both ReDigi and the
German consumer organisation have indicated they will appeal. The innocent
unfolding of events in Europe would be through a preliminary reference to the
CJEU on the combined application of recital 29 and Art. 4(2) of the Infosoc
Directive (disallowing exhaustion of intangibles). This could force a rethink
based on the changing technological landscape: adopted in 2001, the Infosoc
Directive could not foresee the closer assimilation of physical and digital
channels through the use of ‘forward and delete’ methods. An evolutionary
approach to the law could therefore see some change. However, a more contrived
vision could leave legislators looking like they swallowed a canary. A
cynic's view would be that the entry of big shot tomcats Apple and Amazon with
their patents granted earlier this year could lead policymakers at all
levels to scramble to amend the digital exhaustion ‘problem’ to cater for their
wants.
In the US, Maria Pallante has
already called on Congress to update the first sale doctrine [here and here]. Whether with innocent, or not-so-innocent, motives, it is
submitted that assimilating physical to digital markets should not be done
without querying whether e-exhaustion is really needed to preserve the balance
between copyright holders and the public interest. Do we need resale to be
contented consumer kittens? Or, as the German Court seemed to indicate, should
we be satisfied with the increased accessibility and affordability offered to
us through licensing (rather than outright sales) models?
From where this Kat sits,
exhaustion, though exhausting, is certainly not exhausted.
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