September 19, 2006
On 12 September 2006, the European Court of Justice (ECJ) delivered an important judgment on the interplay between national and EU copyright law, a judgment which also has implications for the interplay between IP and antitrust in the EU. The Laserdisken case concerned the import and sale in Denmark of DVDs lawfully marketed outside the European Economic Area (EEA).
The key legal provision is Article 4(1) of EU Copyright Directive (2001/29) which enshrines the exclusive right for authors, in respect of the original of their works or of copies thereof, to authorise or prohibit any form of distribution to the public by sale or otherwise. Article 4(2) of the Directive provides that the distribution right is not to be exhausted except where the first sale or other transfer of ownership in the Community of that object is made by the rightholder or with his consent.
It follows that for the right in question to be exhausted, two conditions must be fulfilled:
first, the original of a work or copies thereof must have been placed on the market by the rightholder or with his consent and,
second, they must have been placed on the market in the Community.
The ECJ found that
Article 4(2) of the Directive did not leave it open to the Member States to introduce or maintain in their respective national laws a rule of exhaustion in respect of works placed on the market not only in the Community but also in non-member countries.
The WIPO Copyright Treaty does not affect the contracting parties’ power to determine the conditions governing how exhaustion of that exclusive right may apply after the first sale.
The harmonisation of national copyright laws promotes competition in the internal market.
The rule of exhaustion in the Community is not a disproportionate measure in view of the fact that legal protection of intellectual property rights
is necessary in order to guarantee an appropriate reward for the use of works and to provide the opportunity for satisfactory returns on investment, and
is a way of ensuring that European cultural creativity and production receive the necessary resources and of safeguarding the independence and dignity of artistic creators and performers.
That the principle of equal treatment does not apply as between a producer and a licence holder established in a non-member country and a producer and a licence holder established in the Community, since the two are manifestly not comparable.
© 2006 Gibson, Dunn & Crutcher LLP
The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.