European Union: ECJ: Distribution Right Not Exhausted If A Reproduction Changes Medium

If a reproduction of a copyright-protected work has been marketed in the EU with the copyright holder's consent, it may not be remarketed through a new medium without the copyright holder's additional consent. This follows from a recent decision by the European Court of Justice in Art & Allposters v Pictoright. The ECJ ruled that the copyright holder's exclusive right to authorise or prohibit distribution of the work had not been exhausted under the Infosoc Directive. Selling the products in question – canvas transfers – therefore required the additional consent of the copyright holder. From a copyright holder's perspective, this ruling will be good news as the ECJ's narrow interpretation of the exhaustion doctrine has resulted in a stronger distribution right. In addition, the ECJ's decision has made clear that merely altering a work's medium could be regarded as a reproduction. Accordingly, distributors should realise such alterations might also be subject to the copyright holder's reproduction right.

Art & Allposters v Pictoright dealt with the sale of 'canvas transfers' by the company Art & Allposters. To produce a canvas transfer, a synthetic coating (laminate) is first applied to a paper poster. The image on the poster is then transferred from paper to canvas by means of a chemical process. Finally, the canvas is stretched over a wooden frame. The image of the work disappears from the paper backing during the process. Pictoright, a company looking after the interests of the copyright holder, opposed the sale of these canvas transfers. It had granted permission for the sale of the posters used for the canvas transfers, but no separate permission for the canvas transfers. Pictoright invoked its clients' distribution rights and held that Allposters could not sell the canvas transfers without its prior permission. Allposters, however, argued that the distribution rights of the copyright holder had been exhausted. The referring court's question was whether the copyright holder's distribution rights could prevent a distributor from selling a copy of a previously marketed reproduction on a new medium.

The ECJ had to further delineate the concept of exhaustion of distribution rights in Article 4 of the Infosoc Directive. Article 4(2) of the directive sets out the 'exhaustion doctrine' or 'first sale doctrine': the distribution right is exhausted when the first sale or other transfer of ownership of an object is made by the rightholder or with his consent. The ECJ first examined the concept of 'object' in Article 4(2). The court concluded that the purpose of the distribution right must be to give authors "control over the initial marketing in the European Union of each tangible object incorporating their intellectual creation." Exhaustion of the distribution right therefore only applies to the tangible object and not to the protected work which is incorporated in that object. Consequently, to successfully invoke the exhaustion doctrine, the altered object itself, taken as a whole, has to physically be the object that was placed onto the market. This means that if a protected work or a reproduction has undergone a change of medium – in this case, the transfer from a paper poster onto a canvas – the exhaustion doctrine does not apply and additional prior consent from the copyright holder is required.

Another interesting element of the ECJ's decision was that a replacement of the protected work's medium – substituting a poster for a canvas whilst using the same ink – could be sufficient to create a new reproduction of that work. Here, the court seems to introduce a 'functional copy concept' as no actual copy was made. Accordingly, such an alteration will also be subject to the copyright holder's permission pursuant to Article 2(a) Infosoc Directive, which covers the author's reproduction right.

The ECJ's decision in Art & Allposters v Pictoright will be good news for copyright holders as the ECJ's narrow interpretation of the exhaustion doctrine results in a stronger distribution right that overlaps with the broadly construed reproduction right. An author not only has the right to authorise the first time a protected work is sold within the European Union, permission will also be required if that work is subsequently sold in a new form. In this connection, it is important for distributors to realise that the mere altering of a work's medium could also be regarded as a reproduction and could, accordingly, be covered by the reproduction right, even if the author's 'intellectual creation' itself has – strictly speaking – not been changed.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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