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European IP Bulletin, Issue 35, October 2006 - Copyright

2. Laserdisk: European Court Rejects International Exhaustion (Again)

In its decision in Laserdisken ApS v Kulturministeriet (12.9.2006 Case C-479/04), the European Court of Justice confirmed that the exhaustion principle may not have international application.

The exhaustion principle has previously been applied mainly in connection with trade marks. In Silhouette International Schmied GmbH (Case C-355/96, 16.6.1996), the ECJ held that Member States could not, in light of the harmonising effect of the Trade Marks Directive, allow international exhaustion to subsist in national legislation. Rights holders had a valid right to divide markets and restrict the importation of their branded products to the community.

In this particular instance, Laserdisk was selling copies of cinematographic works in Denmark. Some of them were imported from outside the European Union and included special editions made for other markets and which had not been licensed to be sold in the European market. When Denmark implemented  Directive 2001/29 on copyright in the information society, it amended its national copyright legislation such that Laserdisk could not lawfully continue importing products from outside the European Economic Area. Laserdisk sued the Danish Ministry of Culture and claimed that the amendments of the copyright law and the relevant provisions of the Directive were invalid on several grounds including:

• They restricted competition
• The legal regulations were contrary to the international agreements concerning copyright
• The amended law was against the principal of proportionality in connection with combating piracy; and
• The new laws restricted freedom of expression.

The Court rejected all the claims and confirmed that the Directive precluded national rules providing international exhaustions of rights. The Court also confirmed the validity of the relevant provisions of the Directive

The result of this case was not unexpected. However, previous cases on this issue have mostly concerned trade marks, and this decision confirms the applicability of the principles of international exhaustion in the area of copyright law.

3. Tortious Liability For Links to Mp3 Files: Further Obstacles to Illegal Downloads In The Netherlands

In Stichting Bescherming Rechten Entertainment Industrie Nederland (BREIN) V Techno Design “Internet Programming” B.V. (Court of Appeal of Amsterdam), [2006] E.C.D.R. 21, 15 June 2006), the plaintiff, BREIN, was an organisation defending the interests of right holders in the music industry. BREIN’s activities are particularly directed towards anti-piracy initiatives for the benefit, and with the joint effort of, authors, artists and producers of music, film and interactive software.
 
The defendant, Techno Design, was the owner of the “zoekmp3.nl” website and a number of similar sites containing deep links redirecting to URLs from which infringing material could be downloaded. The defendant also kept a database that, through a specific search engine, provided information on the infringing material. Importantly, Techno Design was not an internet service provider and therefore the relevant legal provisions for ISPs were not applicable.

In the first instance, the District Court had found in favour of Techno Design. It rejected the claim that by linking to illegal materials Techno Design had infringed the copyright and neighbouring rights of the relevant right holders. Also, the District Court did not recognise that the owner of the website was acting tortiously.

On appeal, the organisation representing the right holders raised a number of objections which the Court discussed in the light of the 1912 Netherlands Copyright Act. The important part of the decision concerned the claim of tortious acts being committed by the defendant. The Court of Appeal indicated that, in theory, the defendant was in the position to operate a search engine tracking down mp3 files. However, elements of tortious acts were found. What emerged from the evidence was that the website owner knew that the material located through its search engine contravened copyright law.

The Court went on to point out that Techno Design gained income from advertising banners as well as from the sale of ringtones on its website. Clearly, the level of such income was directly connected to the volume of visitors of the website itself. The Court concluded that, by systematically taking advantage of the availability of unauthorised material, the defendant had acquired most of its income in breach of the principle of due care that it was required to observe.

Accordingly, Techno Design was required to cease any activity connected with the website, and pay damages as well as the costs of the litigation.

This case shows how illegal downloading is still very much a topical problem in the context of copyright enforcement. The relevance of the case is twofold. On the one hand, it demonstrates the efforts of national courts in fighting illegal music distribution over the internet is ongoing. On the other, it proves that while infringers will always try to find ways of making judicial decisions ineffective, the law  is sufficiently flexible to encompass many kinds of tortious activity.

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