CJEU extends copyright’s distribution right to cover advertising

In Dimensione Direct Sales Srl and another v Knoll International SpA: C-516/13 [2015] All ER (D) 109 (May) how did the Court of Justice of the European Union (CJEU) deal with a reference for a preliminary ruling on the scope of the distribution right concerning offers for sale and advertisements?

What was the background to this reference to the CJEU?

The Knoll companies own the rights to manufacture and sell furniture worldwide including furniture designed by Marcel Breuer and Ludwig Mies van der Rohe. The defendants in this German reference to the CJEU, Dimensione Direct Sales (DDS) and its managing director Mr Labianca, also sell furniture. They offered for sale furniture by the designers mentioned via a website and advertised in various German newspapers and magazines in the German language.

Knoll believed the items of furniture offered for sale by DDS to be counterfeit versions of its protected works and so sought an injunction to stop DDS from advertising or offering for sale furniture designed by Marcel Breuer and Ludwig Mies van der Rohe through its website.

What were the legal issues?

The first and main question was whether the distribution right under the InfoSoc Directive, art 4(1) included the right to ‘offer’ the original or copies of the work to the public for sale.

Follow up questions were:

• Question 2—does the right to offer the original or copies of the work to the public for sale include not only contractual offers, but also advertising measures?

• Question 3—is the distribution right infringed even if no purchase of the original or copies of the work takes place on the basis of the offer?

What did the Advocate General (AG) opine?

Declaring the second question inadmissible due to lack of information on the underlying facts, the AG grouped the first and third questions together. He decided that the InfoSoc Directive, art 4(1) must be interpreted as meaning that under the distribution right, the owner of the copyright in the original or copies of the work may prohibit a third party, who does not have his consent, from offering for sale to the public, originals or copies of the works (even where this offer has not led to an acquisition) so long as there was an intention to conclude a contract of sale or other action which would transfer ownership in the originals or copies of the work.

What did the CJEU decide?

The CJEU grouped the three questions together, finding:

Distribution is an independent concept

The notion of ‘distribution’ under the InfoSoc Directive, art 4(1) constitutes an independent concept of EU law (ie must be interpreted independently and uniformly rather than by reference to specific national laws).

Distribution may include steps preceding contract for sale

Distribution to the public is characterised by a series of acts going from the conclusion of a contract of sale, to the performance of the contract by delivery to a member of the public—applying the relevant case law, acts or steps preceding the conclusion of a contract of sale may fall within the concept of distribution and therefore be restricted by the holder of the copyright

Acts undertaken as part of ‘making a sale of an object’

Referring to Re Donner: C-5/11 [2012] All ER (D) 65 (Jul), the CJEU stated that:

• an invitation to submit an offer, or

• a non-binding advertisement for a protected object

may fall under the series of acts taken with the objective of making a sale of that object.

Infringement offers for sale or advertisements included by analogy

Referring to Blomqvist v Rolex SA: C-98/13 [2014] IP & T 938, [2014] All ER (D) 101 (Feb), the CJEU stated that when considering infringement of the distribution right, the concept of ‘intention to put goods on sale’ can be applied analogously to commercial acts such as an offer for sale or an advertisement targeted by a trader in one member state, through its website, to consumers located in another member state (where the works are protected).

Infringement of the exclusive distribution right

There can be infringement of the distribution right under the InfoSoc Directive, art 4(1) where a trader, without permission, sells protected works and addresses an advertisement inviting purchase, through its website, by direct mail or in the press, to consumers located in the member state in which works are copyright protected. It is irrelevant for a finding of infringement of the distribution right that such advertising was not followed by the transfer of ownership of the protected work or a copy of it, to the purchaser.

What message should lawyers take from this case?

The issue to the public of copies of a protected work is an act restricted by copyright. Following the CJEU’s decision in this case, issuing no longer requires an actual transfer of ownership. The right has been widened so that under the InfoSoc Directive, art 4(1) the mere offer for sale or a targeted advertisement of a work protected by copyright may result in infringement of the distribution right.

This ruling will be of interest to right holders who may wish to take this development into account when considering their enforcement strategies for on-line sales. Regular activity to monitor and take down offers for sale and adverts for infringing goods may minimise sales and encourage businesses, who are advertising and offering for sale ‘reproduction’ furniture and designs across borders (into territories where works are protected), to pick on less vigilant brands.

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