BREAKING NEWS: AG Cruz Villalón thinks that there can only be "analogue" exhaustion and suggests that the right of adaptation has not been harmonised

Not all alterations
are well-received

It is well-known that 2 opinions a day keep the doctor away. It is also well-known that this is true for both bloggers and Advocates General (AG). 

Following his Opinion earlier today in Pez Hejduk [here], AG Cruz Villalón has in fact just issued another one [once again, available in - amongst others - Italian but not English], this being the much-awaited Opinion in Case C-419/13 Art & Allposters International BV v Stichting Pictoright, a reference for a preliminary ruling from the Dutch Supreme Court seeking clarification as to the following:

1. Does Article 4 of the [InfoSoc] Directive govern the answer to the question whether the distribution right of the copyright holder may be exercised with regard to the reproduction of a copyright-protected work which has been sold and delivered within the European Economic Area by or with the consent of the rightholder in the case where that reproduction had subsequently undergone an alteration in respect of its form and is again brought into circulation in that form?

2(a). If the answer to Question 1 is in the affirmative, does the fact that there has been an alteration as referred to in Question 1 have any bearing on the answer to the question whether exhaustion within the terms of Article 4(2) of the Copyright Directive is hindered or interrupted?

2(b). If the answer to Question 2(a) is in the affirmative, what criteria should then be applied in order to determine whether an alteration exists in respect of the form of the reproduction which hinders or interrupts exhaustion within the terms of Article 4(2) of the Copyright Directive?

2(c). Do those criteria leave room for the criterion developed in Netherlands national law to the effect that there is no longer any question of exhaustion on the sole ground that the reseller has given the reproductions a different form and has disseminated them among the public in that form (judgment of the Hoge Raad of 19 January 1979 in Poortvliet, NJ 1979/412)?

To clarify, and as summarised by the AG himself, this very important case is just about this question: "Can the person who owns copyright to a painting and has previously consented to having the image represented therein marketed as a poster later object to the commercialisation of the same image transferred on canvas?"  

Background

As readers will remember, the background proceedings concern the unauthorised making and selling by Art & Allposters of altered versions of copyright-protected artworks, whose rights are managed by collecting society Pictoright. Art & Allposters used authorised posters of the artworks in question to transfer the images on canvas first, and sell them afterwards over the internet. It is worth adding that this process involves, first, the placing of a special cover on the poster and, secondly the transfer of the image from the poster to the canvas by means of a chemical process. 

Kat-inspired artistic adaptations

Following an unsuccessful outcome at first instance, Pictoright won before the ’s-Hertogenbosch Court of Appeal. This court relied on the 1979 Poortvliet judgment to exclude that the right of distribution had been exhausted as per Article 12b of the Dutch Copyright Act and Article 4(2) of the InfoSoc Directive. 

This Kat is not an expert in Dutch copyright law, but understands that in that ruling the Dutch Supreme Court had to deal with a very specific case, ie artist Poortvliet wishing to prevent the defendant who had purchased copies of his drawings embodied in calendars (for the realisation of which he had granted a limited licence) to sell them as separate reproductions after cutting them out from the calendars and fixing them on chipboard panels. The Supreme Court sided with Poortvliet and established the principle according to which a physical transformation of a physical copy prevents exhaustion. In other words: a transformation-preventing-exhaustion rule. 

In Art & Allposters the Court of Appeal held that, because of Poortvliet, an altered canvas transfer made from a poster lawfully sold in the European Economic Area is not subject to Article 4(2) of the InfoSoc Directive and its Dutch equivalent.

The litigation eventually reached the Supreme Court, that decided to stay the proceedings and seek guidance from the Court of Justice of the European Union (CJEU).

The AG Opinion

Following 21 paragraphs in which he summarised the positions of the parties, the French and UK governments and the Commission alike, the AG observed that - although the referring court formulated the questions with reference to the right of distribution and its exhaustion - an interpretation of the right of reproduction was implied.

But there was "right of adaptation"

Who cares about the right of adaptation here?

Starting with the first question, the AG clarified that this concerns whether what Art & Allposters did were adaptations of the original artworks. 

If this was the case, then "directive 2001/29 would not be applicable, since it does not concern the so called «right of adaptation», which, with regard to the Union, is guaranteed by the Berne Convention." [so the AG thought that this right has not been de facto harmonised, as suggested instead by the Commission. However, he also added that in this case "it is irrelevant [to determine whether] the right of adaptation has been harmonised or not". Whether or not the right of adaptation has been harmonised is not just an academic question, since the recent Modernising Copyright Report in Ireland suggested adopting national fair use and innovation exceptions, and did so on the assumption of the unharmonised nature of the right of adaptation]

The AG rejected the very idea that this is a case about adaptations, in that "«adaptation» properly concerns the «work» considered as the result of artistic creation. The typical case is the cinematographic adaptation of a literary work, which is a process through which the artistic product of literary creativity becomes a product of cinematographic art, which is to say the artistic manifestation that re-creates the content of that work through its own language and expressive spheres, which are different from those in which the work itself was originally conceived. It is indeed the diversity of the languages and artistic techniques that are at the basis of «adaptation» as a process that consists in adapting the content of artistic creation to the peculiar expressive ways of different arts. Another basic principle concerns adaptation as a technique of creative expression through which one does not pursue the adaptation of the work to the expressive features of a different artistic language, but rather the intervention on the work itself to make, through such language, a distinct work out of it, just vaguely recognisable in its original expression."

It's all about the demon
of artistic inspiration

This said, the AG concluded that the canvas transfer technique does not have any effect on the image thus reproduced. On the contrary, the value of what Art & Allposters did was indeed in the exact reproduction on canvas of the original artwork. The aim was in fact to create an impression of identity with the original artworks.

Therefore, the right at stake here is not the right of adaptation - whether harmonised or not - but rather the harmonised right of distribution as per Article 4 of the InfoSoc Directive, which provides for the exclusive right to authorise or prohibit any form of distribution to the public by sale or otherwise of a work or its copies thereof.

Therefore the answer to the first question is yes: the right at stake before the Dutch court is the right of distribution.

Exhaustion is about tangible supports (so no digital exhaustion?)

The AG turned to the second question which, according to him, is all about whether changing the material support of a reproduction avoids or eludes exhaustion of the right of distribution as per Article 4(2) of the InfoSoc Directive. 

With specific regard to this: does the term 'object' refer to the artistic creation or its material support?

It is the latter, said the AG: "It is apparent that the object in question is not the work intended as corpus mysticum, since copyright in the work thus intended is «exhausted» only with the transfer of ownership of that right, while exhaustion of the right of distribution occurs when ownership of something necessarily different takes place: indeed ownership of the object on which the work has been reproduced. In other words: once ownership of the object (material support) has been transferred, the right of distribution is exhausted, but not ownership of copyright, whose object continues to be the artistic creation".

At last Gregory has found
an acceptable tangible support

This interpretation would be confirmed by Recital 28 to the InfoSoc Directive, which states that copyright protection "includes the exclusive right to control distribution of the work incorporated in a tangible article" and "the first sale ... of the original of a work or copies thereof by the rightholder or with its consent exhausts the right to control resale of that object", with a clear reference to the need for a tangible support.

This part of the Opinion is extremely important, and prompts the question (not at stake in this case!) as to whether EU law would allow digital exhaustion for subject-matter other than software, say ebooks [watch this space because tomorrow there will be a post on the new Dutch reference to the CJEU on this]. 

According to the AG, changing the material support has a bearing in determining whether there has been exhaustion of the right of distribution. In the case at hand (which might also involve, he said, an infringement of the right of reproduction by the way) there could be no exhaustion because the alteration by Art & Allposters was particularly relevant. Such relevance follows from the fact that the alteration concerned the same support which was used for the original artworks, and this might create a likelihood of confusion [look: another reference to the language of trade mark law in a copyright case]

The AG did not consider necessary to say what in abstract the criteria referred to by the national court in Question 2(b) could be. The AG also said that it is left to the national court to determine whether Portlievet and its progeny are compatible with EU law (Question 2(c)).

Let's now wait for the CJEU judgment!