Digital exhaustion: a debate and a (policy) scandal

Eleonora, Mr Justice Arnold
and Hugo Cuddigan QC

Yesterday night The Intellectual Property Lawyers Organisation (TIPLO) hosted yet another fun event devoted to enjoying both the delicious food served (this time) at Lincoln's Inn and some IP-related discussion. 

As regards the latter, this Kat was honoured to have been invited to participate in a debate chaired by The Hon Mr Justice Arnold, meant to address the following question: "Digital Exhaustion: Can downloads be sold second-hand without a licence from the copyright owner?" 

The first to speak was Hugo Cuddigan QC (11 South Square), who argued against the proposition. 

Before explaining why from a policy perspective there should be no such thing as digital exhaustion (this is also because in principle digital copies are perfect replicas, said Hugo), Hugo recalled recent decisions, at both the levels of US courts (where the key case is ReDigi) and the Court of Justice of the European Union (CJEU), in particular UsedSoft [Katposts here, in which the CJEU held that there is such thing as digital exhaustion under the Software Directive], Nintendo [here, not a case on exhaustion, but relevant in this context because there the Court re-affirmed the lex specialis nature of the Software Directive, which suggests that the conclusions achieved in UsedSoft might possibly be inapplicable analogically to the InfoSoc Directive] and Art&Allposters [here, in which the CJEU stated that exhaustion under the InfoSoc Directive only applies to the tangible support of a work]. 

Hugo concluded that from both a legal and policy perspective the question at the heart of the debate should be answered in the negative.

A terrified Lucy has just been
told that perhaps the law
 prevents her from leaving her
Take That-filled iTunes
library to her kittens

It was not easy to speak after a charming and convincing advocate like Hugo. Nonetheless this Kat embraced the challenge and tried to demonstrate that: (1) it is not yet clear whether the InfoSoc Directive allows digital exhaustion; and (2) from a policy perspective it is right and just to envisage digital exhaustion, also on grounds of the peculiar internal market- building rationale that exhaustion has constantly had in the context of EU IP law. 

With particular regard to the first point, it is worth recalling that Art&Allposters was a decision originating from a very peculiar, analogue, factual background, in which the CJEU [similarly to what Advocate General Cruz Villalon had done in his Opinion, here] drew a pretty unhelpful distinction between the tangible support of a work (the corpus mechanicum, which would be subject to exhaustion), and the work as such (the corpus mysticum, not subject to exhaustion). Why this distinction is unhelpful is not just because it originates from a formal(-istic) interpretation of relevant provisions in the InfoSoc Directive, but also because - when it comes to digital works - it is difficult (if at all possible) to distinguish between the support of a work and the work itself.

Despite diverging views on the merits (and de-merits) of digital exhaustion, it seemed that everybody agreed as to the topicality of this issue, which is something that Mr Justice Arnold also emphasised at the beginning of the debate.

Yet, if one looks at the terms of current EU copyright reform debate [apparently a legislative proposal to reform the acquis should be tabled by the Commission right after the summer], digital exhaustion is mentioned nowhere. 

The fate of digital exhaustion
at the EU policy level?

Despite being one of the numerous questions in the Public Consultation on the review of the EU copyright rules that the previous Commission had last year [here and here], there has been no real follow-up since the last elections, whether at the levels of the new Commission or Parliament [see also draft report by MEP Julia Reda, here]. 

Is the question whether you should own (and be able to transfer) or not your digital downloads really less important than the question whether you should be able to watch BBC iPlayer while outside the UK, eg on holiday in Greece [but then another question would be why on earth one could possibly want to do that instead of sunbathing on a beach in Santorini]?

Possibly not, yet the latter is currently being considered for policy/legislative intervention, while the former seems to have been confined to oblivion ... at least until the CJEU is called to intervene and rescue once again EU copyright? 

But then is the issue of digital exhaustion something for the Court or - instead (as also both Judge Sullivan suggested in his decision in ReDigi, and US Register of Copyrights, Maria Pallante, indicated in her Columbia Law School lecture on The Great Next Copyright Act last year) - something for policy- and law-makers?