Case law: Sale of ‘second-hand’ e-books and other digital content without permission of copyright owner is unlawful

Owners of copyright and other intellectual property rights in online digital content such as e-books, video games, etc can now prevent their unauthorised sale as ‘second-hand’ items by third parties as this is a breach of their rights, the European Court has made clear.

A business in the Netherlands sold second-hand e-books online without getting permission to do so from the owners of the copyright in those e-books. It argued that this was lawful because the principle of ‘exhaustion’ applied. This principle says that, once an item has been lawfully sold to a customer, the rights of the owner of intellectual property in that item (such as their right to control distribution of the item) no longer apply. The customer (or any other third party) can therefore sell the (now second-hand) item free of the copyright owner’s rights.

The Court of Justice of the European Union (CJEU) disagreed. It ruled that the business was ‘communicating’ the e-books it sold to its customers, not ‘distributing’ them. The exhaustion principle did not therefore apply.

The CJEU’s reasoning also applies to businesses selling someone else’s video games, music and visual media files and audiobooks online. The owners of the copyright in those types of digital content will therefore be able to go to court to stop anyone selling, say, a video game to a third party without their permission.

There is an exception where the ‘second-hand’ digital item is pure software – ie software that does not contain, for example, music, graphics and the like. In that case the principle of exhaustion does apply and the software can be resold as ‘second-hand’ without consent.

Operative date

• Now

Recommendation

• Owners of copyright and other intellectual property rights in online digital content such as e-books, video games, etc should consider taking steps to prevent their unauthorised sale as ‘second-hand’ items by third parties.

Case ref: Tom Kabinet, C-263/18