With its decision in the so-called “Tom Kabinet case”, the Grand Chamber of the Court of Justice of the European Union established that the sale of second-hand books (more precisely, the supply to the public by downloading, for permanent use, of e-books) should be considered an act of communication to the public for the purposes of Directive 2001/29/EC. Thus, any sale or different transfer of ownership must be authorized by the author of the e-book.
On December 19, 2019, the Grand Chamber of the Court of Justice of the European Union (the “CJEU”) delivered its judgement in response to the request for a preliminary ruling from the District Court of The Hague in the case “Nederlands Uitgeversverbond, Groep Algemene Uitgevers v. Tom Kabinet Internet BV, Tom Kabinet Holding BV, Tom Kabinet Uitgeverij BV” (C-263/18). This decision marks yet another important step taken by the CJEU toward establishing the scope of application of the rights of communication to the public and distribution to the public, as set forth in Directive 2001/29/EC on the harmonization of certain aspects of copyright and related rights in the information society (the “InfoSoc Directive”).
The dispute at the heart of the Tom Kabinet case first arose between NUV and GAU (two associations mandated by several Dutch publishers to ensure that the copyright granted to them by copyright holders by means of exclusive licenses is protected and observed) and a group of companies headed by Tom Kabinet Holding, a Dutch company offering, among others, an online service reselling e-books (“Tom Kabinet”). Specifically, members of the reading club platform on the website managed by Tom Kabinet could purchase for a given price second-hand e-books that had been either donated free of charge or sold to Tom Kabinet by other members of the reading club. When buying e-books from individual users, Tom Kabinet required that they delete their own copies. The company also placed digital watermarks on the copies it sold in order to ensure that the resold copies were legal. Tom Kabinet then resold those second-hand copies to individual users registered on its platform at prices lower than those charged by the official distributors of the same e-books.
Back in 2014 and 2017, NUV and GAU claimed that Tom Kabinet infringed upon their affiliates’ copyright by making available or reproducing e-books, because the service offered by Tom Kabinet represented an unauthorized communication to the public of the e-books (re)sold on the platform. According to NUV and GAU, Tom Kabinet should have obtained prior authorization from the legitimate rights holders in order to lawfully operate its service, as described above, but it failed to do so. The Dutch referring court stated that it was undisputed that such service did not constitute a communication to the public of those works within the meaning of Article 3 (1) of the InfoSoc Directive; however, it argued that it was uncertain whether the operation carried out by Tom Kabinet could qualify as an act of distribution for the purposes of Article 4 (1) of the InfoSoc Directive, as well as whether that right might be considered exhausted, as provided by Article 4 (2) of the InfoSoc Directive.
Yet, in addressing the referral the CJEU first noted that (contrary to what the referring court had stated) the case in point raised the question of “whether […] the supply by downloading, for permanent use, of an e-book constitutes an act of distribution for the purposes of Article 4 (1) of that directive, or whether such supply is covered by the concept of ‘communication to the public’ within the meaning of Article 3 (1) of that directive” (emphasis added). In particular, according to the CJEU, “the crux of that question […] is whether such supply is subject to the rule of exhaustion of the distribution right provided for in Article 4 (2) of that directive or whether, on the contrary, it falls outside such a rule, as expressly provided for in Article 3 (3) of the directive in the case of communication to the public” (emphasis added).
According to the CJEU, such questions cannot be answered by relying on the provisions of the InfoSoc Directive alone, as they do not provide any specific guidance or indication in this regard. Fully in line with the opinion issued by Advocate General Maciej Szpunar last September, the CJEU reiterated that interpreting such provisions requires taking many factors into account, namely their (i) wording, (ii) context, (iii) objectives pursued, and (iv) origins, as well as (v) international agreements that European legal texts are intended to render effective.
Firstly, the CJEU focused on the international context in which the contested provisions of the InfoSoc Directive operate, looking at the relevant provisions of the WIPO Copyright Treaty. On that basis, the CJEU asserted that a clear line could be drawn between the electronic and tangible distribution of protected material: interactive on-demand transmission was specifically intended to be covered by the right of communication to the public, and not by the distribution right. This was specifically intended to grant rights holders adequate and complete protection that also covers new forms of exploitation of intellectual property. If those new forms were not adequately covered by legislation, legal rights holders might be deprived of effective protection due to technological developments and enhancements.
Secondly, the CJEU observed that it is the aim of the InfoSoc Directive “to establish a high level of protection of authors, allowing them to obtain an appropriate reward for the use of their works, including when a communication to the public takes place”. In order to achieve that goal, the meaning of “communication to the public” must be interpreted in a broad sense to include any transmission or retransmission of a work to the public by wire or wireless means, and as such it is subject to the prior authorization of the legitimate rights holder.
Thirdly, the CJEU has taken into consideration the previous case law of the CJEU itself on interpretation of distribution and communication rights. The first is specifically designed to “give authors control over the initial marketing in the European Union of each tangible object incorporating their intellectual creation”. This conclusion is not contradicted by the previous ruling of the CJEU in the UsedSoft case concerning the right of distribution of copies of computer programs, as established by Article 4 of the Directive 2009/24/EC on the legal protection of computer programs. In that case, the CJEU made no distinction between tangible and intangible copies of a computer program because, according to the provisions specifically envisaged for such works, the first sale in either a material or immaterial medium exhausts the right of distribution for such items. It follows that any subsequent transfer of rights to such computer programs does not require any authorization from the rights holders. From an economic point of view, the CJEU upheld the concept that selling a computer program on a tangible medium and selling it by allowing the purchaser to download it from the Internet are similar, noting that in this case, the “online transmission method is the functional equivalent of the supply of a material medium”. Yet in the Tom Kabinet case, the opposite claim was made. In its Tom Kabinet decision the CJEU argued that this equivalency does not apply to e-books and, indeed, posited that a book on a material medium is not equivalent to the supply of an e-book, as dematerialized digital copies do not deteriorate with use.
In relation to the right of communication to the public, two cumulative criteria must be met in order for an act to qualify as a communication to the public. The first criterion is that there must be “an act of communication” of a work; this has been interpreted by the CJEU to mean making the work available to the public so that members of the public may access it from a place and at a time individually chosen by them, irrespective of whether members of the public avail themselves of that opportunity or not. According to the CJEU, this covers the service offered by Tom Kabinet: indeed, Tom Kabinet makes e-books available to anyone who is registered on the reading club platform on the Tom Kabinet website, and that person may access the website from a place and at a time individually chosen by him or her.
The second criterion is the “communication of the work to a public”: in order for an act to qualify as such, the number of persons able to access the same work at the same time should be taken into account, as well as how many may access it at a later time. Again, this applies to the service offered by Tom Kabinet: a substantial number of people may have access, at the same time or in phases, to the same work via the reading club platform on the Tom Kabinet website. Moreover, when an e-book is made available, it is accompanied by a user license authorizing the user who downloaded that e-book only to read it from his or her own devices. Therefore, in this case the work is communicated to a new public, unbeknownst to copyright holders.
In conclusion, the ruling of the CJEU in Tom Kabinet clarified that lawful copies of copyrighted works in digital format may not be resold without the authorization of the right holders because such an act should be construed as a “communication to the public” and, as such, is not subject to “digital” exhaustion. Otherwise, unexpected consequences may arise, paving the way for a secondhand market in e-books—or of digital copies of any other type of works, for that matter—that has the potential to impair the effective protection of copyright within the online environment and specifically in relation to digital items.
 Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonization of certain aspects of copyright and related rights in the information society, accessible here.
 Judgement of the Court of Justice of the European Union (Grand Chamber) of December 19, 2019, Nederlands Uitgeversverbond and Groep Algemene Uitgevers v. Tom Kabinet Internet BV and Others (C-263/18), paragraph 33.
 See judgment of December 19, 2019, Tom Kabinet (C‑263/18), paragraph 33.
 Opinion of Advocate General M. Szpunar delivered on September 10, 2019 in the case Nederlands Uitgeversverbond, Groep Algemene Uitgevers v. Tom Kabinet Internet BV, Tom Kabinet Holding BV, Tom Kabinet Uitgeverij BV (C-263/18), accessible here.
 World Intellectual Property Organization Copyright Treaty, adopted on December 20, 1996; accessible here.
 See judgment of December 19, 2019, Tom Kabinet (C‑263/18), paragraph 48.
 See judgment of December 19, 2019, Tom Kabinet (C‑263/18), paragraph 52.
 Judgement of the Court of Justice of the European Union of July 3, 2012, UsedSoft GmbH v. Oracle International Corp. (C-128/11), accessible here.
 Directive 2009/24/EC of the European Parliament and of the Council of April 23, 2009 on the legal protection of computer programs, accessible here.
 See judgment of 19 December 2019, Tom Kabinet (C‑263/18), paragraph 57.