Out-Law News 4 min. read
22 Jun 2012, 2:34 pm
The Court said that EU free trade laws do not prevent such a prosecution being pursued.
It said that if EU businesses directly advertise copyright-protected works to cross-border consumers within a trading bloc and then use a delivery and payment system to facilitate the sale of those goods, including through a third-party, those businesses can be said to be making a 'distribution to the public' under EU copyright laws. Those laws state that generally copyright holders have "the exclusive right to authorise or prohibit any form of distribution to the public by sale or otherwise" and that therefore others need a licence to do so.
"A trader who directs his advertising at members of the public residing in a given Member State and creates or makes available to them a specific delivery system and payment method, or allows a third party to do so, thereby enabling those members of the public to receive delivery of copies of works protected by copyright in that same Member State, makes, in the Member State where the delivery takes place, a ‘distribution to the public’ under [the EU's Copyright Directive]," the ECJ ruled.
"[EU free trade laws and permitted restrictions on those laws] must be interpreted as meaning that they do not preclude a Member State from bringing a prosecution under national criminal law for the offence of aiding and abetting the prohibited distribution of copyright-protected works where such works are distributed to the public on the territory of that Member State in the context of a sale, aimed specifically at the public of that State, concluded in another Member State where those works are not protected by copyright or the protection conferred on them is not enforceable as against third parties," it said.
The ECJ was ruling in a case involving a freight company that delivered replica furniture from a warehouse in Italy to consumers in Germany.
A court in Germany had ruled that Mr Titus Donner, the "principal director and shareholder" of a freight forwarding company established in Italy who "essentially conducted his business from his place of residence in Germany" was guilty of aiding and abetting an offence of copyright infringement. However, before upholding his conviction the court asked the ECJ if such a ruling would interfere with EU free trade rules that generally prohibit any restrictions on the movement of goods within the trading bloc.
Donner's company, Inspem, transported replica furniture goods sold by Dimensione Direct Sales (Dimensione) from Italy to consumers in Germany. Dimensione was not licensed to market the goods in Germany but had specifically "used advertisements and supplements in newspapers, direct publicity letters and a German-language internet website" to offer the furniture to the German public, the ECJ's ruling said.
The furniture was protected by copyright under German law. However, in Italy the works were either not protected by copyright or there were no ways of enforcing any copyright that did apply against a freight company intermediary as a result of established case law in the country.
In Germany, though, it is an offence to aid and abet intermediaries that unlawfully distribute copyrighted works. Unlawful distributors can be criminally prosecuted, fined and jailed.
Under the Treaty on the Functioning of the European Union member states are generally prohibited from placing "quantitative restrictions on imports and all measures having equivalent effect." However, the Treaty also states that the rule "shall not preclude prohibitions or restrictions on imports, exports or goods in transit justified on grounds of ... the protection of industrial and commercial property" providing the member states do not use the rights as "a means of arbitrary discrimination or a disguised restriction on trade."
The ECJ said that the inconsistencies between the application of copyright law in Italy and Germany meant that it could be justified to restrict the free movement of the furniture in order to protect "industrial and commercial property" rights.
"The application of provisions such as those at issue in the [Donner case] may be considered necessary to protect the specific subject-matter of the copyright, which confers [among other things] the exclusive right of exploitation," the ECJ said.
"The restriction on the free movement of goods resulting therefrom is accordingly justified and proportionate to the objective pursued, in circumstances such as those of the main proceedings where the accused intentionally, or at the very least knowingly, engaged in operations giving rise to the distribution of protected works to the public on the territory of a Member State in which the copyright enjoyed full protection, thereby infringing on the exclusive right of the copyright proprietor," it added.
The Court said that the act of unlawfully distributing copyrighted material to the public can be said to occur not only in the physical delivery of goods in a single EU member state but also in directly targeting those sales from within the borders of another. It therefore said that the German court could consider a number of "factors" relating to Dimensione's business advertising activities when determining whether to prosecute Donner.
"In the context of a cross-border sale, acts giving rise to a ‘distribution to the public’ ... may take place in a number of Member States," the Court said. "In such a context, such a transaction may infringe on the exclusive right to authorise or prohibit any forms of distribution to the public in a number of Member States."
"A trader in such circumstances bears responsibility for any act carried out by him or on his behalf giving rise to a ‘distribution to the public’ in a Member State where the goods distributed are protected by copyright. Any such act carried out by a third party may also be attributed to him, where he specifically targeted the public of the State of destination and must have been aware of the actions of that third party," it added.
"In circumstances such as those at issue in the main proceedings, where the delivery to a member of the public in another Member State is not effected by or on behalf of the trader in question, it is therefore for the national courts to assess, on a case-by-case basis, whether there is evidence supporting a conclusion that that trader, first, did actually target members of the public residing in the Member State where an operation giving rise to a ‘distribution to the public’ ... was carried out and, second, whether he must have been aware of the actions of the third party in question," the ruling said.
"Factors such as the existence of a German-language website, the content and distribution channels of Dimensione’s advertising materials and its cooperation with Inspem, as an undertaking making deliveries to Germany, may be taken as constituting evidence of such targeted activity," it said.