On 19 December 2018, the Court of Justice of the European Union (the "ECJ") handed down its judgment in case C-572/17, Riksåklagaren v. Imran Syed on the interpretation of the concept of distribution contained in Article 4(1) of Directive 2001/29 of 22 May 2001 on harmonisation of specific aspects of copyright and related rights in the information society (the "InfoSoc Directive"). The ECJ departs from the Opinion of AG Campos of 3 October 2018 which was previously discussed in VBB on Belgian Business Law and where a full overview of the facts can be found (see VBB on Belgian Business Law, Volume 2018, No. 10, p. 8, available at www.vbb.com).
Briefly, Mr. Syed ran a retail shop in Stockholm (Sweden) in which he sold copyright infringing clothes and accessories with rock music motifs. In addition to offering the items for sale in that shop, Mr. Syed stored identical goods in a storage facility adjacent to the shop and in another storage facility located in Bandhagen (Sweden), in a suburb of Stockholm. Having been prosecuted for the sale of copyright infringing goods, those in the shop as well as the stored goods, Mr. Syed's case made its way through the national court system and reached the Högsta domstolen (Supreme Court) which stayed the proceedings and referred the following questions to the ECJ for a preliminary ruling:
- When goods bearing protected motifs are unlawfully offered for sale in a shop, can there also be an infringement of the author's exclusive right of distribution under Article 4(1) of the InfoSoc Directive as regards goods with identical motifs, which are held in storage by the person offering the goods for sale?
- Is it relevant whether the goods are held in a storage facility adjacent to the shop or in another location?
In examining these questions, the ECJ confirmed AG Campos' opinion that EU legislation must be interpreted in a manner that is consistent with international law, in particular if its provisions are intended specifically to give effect to an international agreement concluded by the European Union. It follows that the concept of "distribution to the public by sale" in Article 4(1) of the InfoSoc Directive should have the same meaning as the expression "making available to the public... through sale" in Article 6(1) of the WIPO Copyright Treaty, adopted in Geneva on 20 December 1996.
Similarly to AG Campos, the ECJ recalled that distribution to the public is characterised by a series of acts going, at the very least, from the conclusion of a contract of sale to the performance thereof by delivery to a member of the public. The words "at the very least" used by the ECJ indicate that it is not excluded that the acts or steps preceding the conclusion of a contract of sale may also fall within the concept of "distribution" and be reserved, exclusively, to the holders of copyright, as previously found in Case C-516/13 Dimensione Direct Sales (see VBB Belgian Business Law, Volume 2015, No. 05, p. 11, available at www.vbb.com).
Therefore, an act prior to the actual sale of a work or a copy thereof protected by copyright, which takes place without the right holder's consent and with the objective of making such a sale, may infringe the distribution right as defined in Article 4(1) of the InfoSoc Directive. The ECJ emphasised that although carrying out the sale is not a necessary element for the purpose of establishing an infringement of the right of distribution, it must nonetheless be proven that the goods concerned are actually intended to be distributed to the public without the right holder's consent, inter alia, by their being offered for sale in a Member State where the work at issue is protected.
In essence, the ECJ had to establish whether warehouse storage can be considered to be an act prior to a sale which may constitute an infringement of the exclusive distribution right, as defined in Article 4(1) of the InfoSoc Directive. Unlike AG Campos who answered the question in the positive, the ECJ provided a more nuanced reasoning in holding that the storage of goods bearing copyrighted motifs may be considered such an act if it is established that those goods are actually intended to be sold to the public without the right holder's authorisation.
In this respect, the fact that a person stores copyright infringing goods which are identical to those which he sells in a shop may be an indication that the stored goods are also intended to be sold in that shop. Accordingly, that storage may constitute an act prior to a sale being made, which is liable to infringe that right holder's distribution right.
However, according to the ECJ, it cannot be inferred from the mere fact that the stored goods and the goods sold in the person's shop are identical that the storage constitutes an act carried out with the aim of making a sale on the territory of the Member State in which those goods are protected by copyright.
The ECJ explained that it cannot be ruled out that all or part of the goods stored in circumstances such as those in the main proceedings are not intended to be sold on the territory of the Member State in which the motif displayed on the goods is protected, even if those goods are identical to those which are offered for sale in the retailer's shop.
In explaining its position, the ECJ observed that a different interpretation (like the view embraced by AG Campos) would result in extending the protection conferred by the exclusive distribution right beyond the framework established by EU law. According to the ECJ, inferring distribution from the mere fact of storing identical copyright infringing goods would lead to ignoring the actual purpose of the goods at issue and treating all the stored goods identically, although they may, in principle, be intended for different purposes.
The ECJ ultimately left it to the referring court to determine, in the light of the evidence available to it, whether all of the stored goods identical to those sold in the shop at issue, or only some of them, were intended to be sold in that shop.
In assessing the intention of the seller, the ECJ offered guidance to the national court. The ECJ indicated that account should be taken of all the factors which may demonstrate that the goods concerned are stored with a view to being sold. Although the distance between the storage facility and the place of sale may constitute evidence that can be used in seeking to establish that the goods concerned are intended to be sold in that place of sale, that evidence cannot, on its own, be decisive. The proximity of the storage facility may only be considered in a concrete analysis of all the factors likely to be relevant, such as, for example, the regular restocking of the shop with goods from the storage facilities at issue, accounting elements, the volume of sales and orders as compared with the volume of stored goods, and current contracts of sale.
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