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CJEU Clarifies Law on Form Shifting and the Exhaustion of Distribution Rights in the EU – Arts & Allposters (Case C-419/13)

On the 22 January 2015 the CJEU delivered its judgment in Arts & Allposters International BV v StichtingPicoright, a decision that directly addresses the question the limits of copyright protection afforded to copyright works first marketed in the EU that have subsequently been the subject of an unauthorised shift in its physical form prior to onward sale in the EU.

The factual background to the case was as follows.

Allposters’ business is essentially selling poster reproductions of famous artistic works - including those mounted on wooden frames or transferred onto canvas.  Whilst Pictoright is a Netherlands copyright collection agency whose role is to exploit copyrights in artistic works – such as those sold be Allposters – and where necessary bring infringement proceedings to protect their clients’ rights.

The origins of the dispute between Allposters and Pictoright did not arise in relation to its sale of posters per se but in respect of those posters that had been transferred onto canvas by Allposters – in circumstances where Allposters did not have permission to carry out such form shifting of the work.

The transfer of the image from the paper poster to the canvas backing involves a chemical process and results in the copyright work being entirely removed from the original paper version. The resulting canvases were regarded as being of a higher quality and of more value to customers. Pictoright objected to this canvas transfer process as an unlawful reproduction of a copyright work – whilst Allposters took the view that the rightholder’s rights in the paper version of the work had been exhausted and consequently it was free to make and sell the canvas transfer versions of the posters without infringing any right in the underlying artistic work.

The Questions Referred to the Court

The CJEU took the view that the two questions asked of it by the Hoge Raad der Nederlanden needed to be answered jointly and in a form modified to avoid ruling on the compatibility of national law with EU law, which the Court reminded itself was outside the scope of its jurisdiction.

As such the question addressed by the court was this “…whether the rule of exhaustion of the distribution right set out in Article 4(2) of Directive 2001/29 applies in a situation where a reproduction of a protected work, after having been marketed in the European Union with the copyright holder’s consent, has undergone an alteration of its medium, such as the transfer from a paper poster onto a canvas, and is placed on the market again in its new form”.

It should be noted that the Court carefully side-stepped coming to any conclusion as to whether the paper to canvas transfer fell within the “adaptation right” provide for under Article 12 of the Berne convention – a right that has no equivalent under Directive 2001/29 – by simply concluding that the case fell squarely with the distribution right under Article 4(2) of the Directive.

The CJEU’s Conclusions

Having been satisfied that the paper to canvas transfer process did in fact alter the image’s physical medium the Court stated that “…What is important is whether the altered object itself, taken as a whole, is, physically, the object that was placed onto the market with the consent of the rightholder. That does not appear to be the case in the dispute on the main proceedings.”

And, consequently, where the object incorporating a copyright work was not that originally placed into the market in the EU, the rightholder’s Article 4(2) distribution right could not be said to be exhausted. A shift in its physical form before its first marketing in the EU - in that new form – would mean that the rightholder’s consent would now be necessary prior to the marketing of the work in the new form: irrespective of whether the distribution right in the underlying work had been exhausted (as explained by the CJEU in Laserdisken C—479/04 – see in particular paragraphs 23 and 24) prior to the shift in form.

Comment

The CJEU’s decision in Allposters throws up an important issue for those exploiting copyright works; namely, unless your licence expressly permits you to undertake ‘form shifting’ of the work prior to onward sale you will caught in the same ‘distribution right’ infringement trap as Allposters. You cannot simply assume such a right is to be implied into a licence to sell the original work.

It is also to be assumed that the question of what does (or does not) amount to a permissible ‘adaptation’ of a work for the purposes of Article 12 of the Berne Convention is one that will have to be addressed in some future case.

Dr Tim Sampson / 1st Jul 2015


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