No exhaustion beyond software: Katfriend translates German decision on audiobooks

Katfriend Johannes Großekettler

A few days ago fellow Kat Alberto reported on the decision of the Court of Appeal of Hamm (Germany), which upheld the earlier ruling of the Regional Court of Bielefeld [here], and held that the right of distribution is not subject to exhaustion when it comes to digital subject-matter [audiobooks in that case] other than software. 

In so doing, the German court denied the applicability of the principles expressed by the Court of Justice of the European Union (CJEU) in Case C-128/11 UsedSoft [here] - "whether directly or by analogy" - beyond the (narrow) confines of the Software Directive, which is to be considered as lex specialis in relation to the provisions of the InfoSoc Directive. 

Given the uncertainty surrounding the possibility to apply the principles expressed in UsedSoft to digital subject-matter other than software, the decision of the Court of Appeal of Hamm is particularly interesting, although only available in German. At least until today.

Katfriend Johannes Großekettler [here and here] offered in fact to translate and summarise the decision, as you can see here. 

After becoming an IP enthusiast during his legal studies in Berlin, Johannes decided to study in the LLM in “Intellectual Property & the Digital Economy” at the University of Glasgow. He is fairly busy right now: besides writing his master thesis on 3D printing and working as a research assistant at CREATe, he is also the president of the newly established student IP Society.

The IPKat wishes to thank him warmly for his great work and overall rare generosity, which hugely impressed even Merpel.

According to Johannes's fantastic summary, the Court of Appeal of Hamm expressed the following principles:

1. The sale of audio files (audiobooks) over the internet in a way that allows customers to have the opportunity to download and save corresponding files locally on their own data carriers is not covered by the right of distribution within the meaning of § 17 UrhG [it should be instead considered as an act of making available to the public, which is not subject to exhaustion: see §19a UrhG, and also Article 3(3) of the InfoSoc Directive];
2. In respect of audio files (audiobooks) or copies thereof, the exhaustion of the distribution right within the meaning of § 17(2) UrhG is not caused if customers are given the opportunity to download and save corresponding files locally on their own data carriers and do so;
3. § 17(2) UrhG cannot be applied by analogy to cases in which audio files (audiobooks) are sold over the internet in a way which provides customers with the opportunity to download and save corresponding files locally on their own data carriers;
4. The case law of the CJEU (C-128/11) and German Federal Courts (I ZR 129/08) on computer programs, which are sold without allocating physical data carriers in a way that customers are given the opportunity to download and save corresponding files locally on their own data carriers, is neither directly nor in its principles applicable to similar offers of audio files (audiobooks). 

- "Aww, how lovely that you remembered
our anniversary!"
- "Ehm, actually, it's the UsedSoft
anniversary, too"

This Kat understands that this decision might not have come too much as a surprise in Germany, where both the Regional Court of Stuttgart and the Higher Regional Court of Stuttgart excluded exhaustion in a case involving audiobooks in 2011, and so did the Regional Court of Hamburg in a similar case, although relying on different arguments [all these national rulings were issued before UsedSoft: by the way, do not forget that the day after tomorrow is the second anniversary of this CJEU ruling].

The lex specialis nature of the Software Directive has been recently re-affirmed [and probably reinforced] by the CJEU in its decision in Nintendo [here and here]. 

There the Court upheld the Opinion of Advocate General Sharpston, and stated that the special nature of the Software Directive means that its provisions take precedence over those of the InfoSoc Directive, but only where the subject-matter at stake falls entirely within the scope of the former. 

This would not be the case of videogames, which "constitute complex matter comprising not only a computer program but also graphic and sound elements, which, although encrypted in computer language, have a unique creative value which cannot be reduced to that encryption. In so far as the parts of a videogame ... are part of its originality, they are protected, together with the entire work, by copyright in the context of the system established by [the InfoSoc Directive]".

Inspecting the
Software Directive territory?
Should not take too long

If the Software Directive is only applicable to subject-matter that falls entirely in its scope, one may wonder: 

• How many times this piece of EU legislation should be applied (from now on), considering that quite a few computer programs - not just videogames - may comprise graphic and sound elements that have a unique creative value?
• Should the answer to the first question be "Not so many", can the Software Directive be considered still meaningful?
• In adopting this interpretation of the Software Directive, did the Court implicitly warned against an extension of the principles expressed in UsedSoft to subject-matter other than "pure" software? 

While the CJEU has yet to be expressly asked to rule on the exhaustion of the right of distribution for digital subject-matter other than software [but see here our 2013 Katpoll], you should not expect any legislative response to all this any time soon either: in its leaked draft White Paper [here], the EU Commission stated in fact that policy initiatives regarding digital exhaustion are still premature. But are they?