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Wednesday, 23 October 2013

Still on Pinckney, the CJEU, offline distribution and Latin mottos

Ian is simply the best
at telling Brussels I-related jokes 
Private international law as applied to online IP infringements is notoriously a topic for endless discussions, whether during social gatherings or within more formal settings. 

Following yesterday's post on Case C-170/12 Pinckney, the IPKat has received an additional contribution from learned Dr Ge Chen (University of Cambridge), who will also present on this very topic during tomorrow's CIPIL Lecture (you can see the other events scheduled for what in Cambridge is knowns as the Michaelmas Term here). 

Here's what Ge writes:

"The CJEU is an exciting institution [Merpel has always thought so]. It often drops bombs in reference cases that pose thorny questions such as the application of Article 5(3) of the Brussels I. Last time it was in eDate/Martinez, where the Court broke through the jurisdiction rule long entrenched in Shevill, prioritising the “centre of interests” of personality rights as the place of damages and allowing full damages to be awarded there. This time, the CJEU again drops three dramatic bombs in Pinckney, dissenting with the AG’s Opinion and rendering somewhat unexpected answers to French Cour de Cassation’s seemingly irrelevant questions.
To understand Pinckney, a basic fact should never be overlooked: the reference questions were about online copyright infringement (online distribution of infringing CDs as conducted by UK dealers, which seemed not to be in dispute, and making infringing contents available online, which was completely hypothetical), whereas the infringement committed by the defendant in question was the reproduction of CDs (alas! the Austrian company admitted it to challenge French courts’ jurisdiction), plus an implied (but certain) act of offline distribution, without which the UK dealers could not make an offer. The latter fact was the key to the CJEU’s digression from the AG’s opinion.
Daily duties of CJEU trainees include
delivering CJEU bombs to Member States
The first bomb: admissibility
The first bomb dropped by the CJEU was the refusal of the AG’s Opinion to dismiss the case. Clearly the AG made a pertinent remark about the French Supreme Court’s far-fetching questions. The AG suggested inadmissibility, but proposed the need to address Internet jurisdiction in copyright infringement – an ambitious move towards future. However, the CJEU held that the outcome of the dispute depended on the answer to the questions at hand. No doubt the CJEU was more creative in making political gestures: the Cour de Cassation raised funny questions but, dear AG, your answer is too academic and metaphysical! We must make a politically correct, ie, down-to-earth decision by addressing irrelevant questions in a way that renders the questions relevant to the dispute.
The second bomb: offline distribution
Thus, the second bomb was (an intimation) about the offline distribution on the part of the defendant, rather than what the referring court and the AG argued was the online copyright infringement. The cool thing was that the CJEU did not make it explicit. Instead it gave face to both the referring court and the AG by constantly using the term of “copyright infringement”. But was it reproduction, or distribution, or making available? Was it offline or online distribution at stake? The CJEU didn’t say. But make an easy guess. Reproduction is spared, for damage comes when you reproduce. Making available online/online distribution? No need to make that dangerous rush. Facts do not support. Offline distribution is the only choice left.
At the beginning, nobody noticed this: at least in the statement of facts, neither party seemed to refer to distribution from Austria, nor the French courts, nor the AG. Presumably, everybody knows that: had the defendant not distributed their illegally reproduced CDs at least in offline environment, how can the CDs be sold online by the British dealers? Negligence of this fact by the referring court and the AG offered the CJEU a decent stair to get down from that embarrassing stage: either refuse a hypothetical question keenly expected (which makes the CJEU judgement banal), or venture to answer it and violate established rule (risk losing judges’ sang-froid). The loophole came at the right moment: offline distribution was, in this case, conducive to the subsequent online act.
The third bomb: damages in resale
Following this logic, the third bomb was that there is no exhaustion rule to an unauthorised act such as distribution. The CJEU applied mere accessibility rule to identify the place of damages in this instance: where the online offer of the said CDs is accessible, there is damage, as long as copyright is protected there (the answer is certainly ‘Yes’ in Europe under the Information Society Directive and even in most countries under the Berne Convention). Practically, the damage can be anywhere. The implication behind this rule is: infringers, be careful, once you distribute without permission, there will be a global chase after the cumulative damages to your first sale.
These three bombs are not surprising at all. After all, they are common sense statements deriving from Shevill. But they just came off a bit unexpected, or unexciting, given the AG’s prior opinions and the wide hope for the CJEU’s guidance on Internet jurisdiction in copyright infringement that turns out to have come too early. Whether the targeting approach adopted in Sportradar [Katposts here and here] will be really  applicable, as affirmed by the AG in Pinckney, will be revealed in the next reference case Pez Edjduk [on which see here], hopefully. If that happens, the CJEU’s strategy in interpreting Article 5(3) so far, from Shevill to Pinckney, is to treat different sorts of rights (personality, trade mark, database, reproduction, online/offline distribution, making available) all in different ways that fit into the EU’s public policies. A Latin proverb finds this well: divide et impera."

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