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Reforming of copyright in EU and one of the questions concerned: two rights for a single transmission

In the light of coming copyright reforms in EU the draft impact assessment concerns some important copyright issues. One of them is two rights for a single transmission.

Online services imply for the purposes of the Infosoc Directive, in a single economic transaction, both the right of communication to the public (including the right of making available) and the reproduction right.

Indeed, each digital transmission of copyright protected content entails, in the current state of technology and law, several reproductions including at the start of a transmission (e.g. the uploading of the work to a server prior to its making available) (this reproduction at the start of the transmission needs to be differentiated from the permanent reproductions a service provider may undertake to build a database for the provision of its services) and at its end, notably when content is downloaded by the final user.

Some of these reproductions are, however, covered by the mandatory exception provided for in Article 5(1) of the InfoSoc Directive, and thus do not need to be licensed. The cumulative application of the two rights may increase transaction costs for the licensing of works for online use, since the reproduction right is autonomous and independent, and may be held by a person other than the holder of the communication to the public right. Problems are less likely to arise when both the rights are in the hands of single right holder.

An area of uncertainty relates to the question of whether the principle of exhaustion of the distribution right applies in the digital environment, as it does for physical goods. Consumers and other users who purchase a physical copy of a work or other subject-matter are generally free to dispose of that copy e.g. via reselling or giving it as a gift. This is possible because of the principle of exhaustion of the distribution right according to which right holders cannot oppose the resale of a copy when the first sale in the EEA was made with their consent.

So-called “download-to-own” services allow the customer to use the acquired content (e.g. the digital copy of a film) for an unlimited period of time, and therefore resemble, to a certain extent, sales contracts in the physical world e.g. the purchase of a film on a DVD. The question arises whether customer should equally be able to dispose of a copy acquired via the online service.

With regard to computer programs, the CJEU ruled in Case C-128/11 (Oracle vs UsedSoft) that a right holder who has concluded a contract including a licence where a transfer of ownership occurs cannot oppose the resale of that licence that allows downloading his computer program from his website and using it for an unlimited period of time on condition that the re-seller make his own copy unusable. The Court however stressed the lex specialis character of the Software Directive.

Exhaustion in the online environment for other types of content raises issues, however, that do not arise in the physical environment. Firstly, it remains to be seen how persons disposing of a digital copy, e.g. by re-selling it, can be prevented from keeping and using a copy of the work afterwards. Effective technical protection measures such as “forward-and-delete” systems have hardly been deployed and, probably more importantly, may not be accepted by users.

Secondly, the implications of the possible creation of a second hand market for copies of perfect quality that never deteriorate are difficult to assess. Finally, the digital market is in a state of flux, and there are indications that there may be a shift from “download-to-own” services to “access-based-services” (financed by e.g. a periodically paid subscription fee). Such access-based services do not resemble sales contracts at all and, in the absence of any transactional purchase, the question of reselling digital content, for example, simply does not arise.

It is also important to note that many services offer the possibility for subscribers to share digital files (e.g. the sending of a newspaper article or the sharing of a play list with friends) as they would do in the “physical world” with physical copies.