The matter at hand
Allposters sells canvases reproducing the works of famous painters. In order to produce these canvases Allposters uses existing posters that have been put on the market in the Community with the relevant copyright owners’ consent and transfers the images on these posters to a canvas by means of a chemical process. The images on the original posters disappear from the paper during this process.
Article 4(2) of the Copyright DirectiveDirective 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society provides, in short, that the first sale in the Community of an object reproducing a copyright-protected work with the copyright holder's consent exhausts the right to control the resale of that object within the Community. Invoking this provision, Allposters in essence took the position that copyright owners could not prevent the sale of the canvases as the ink depicting the copyright protected work was put on the market with the right holder’s consent.
The judgment of the ECJ
The ECJ first of all establishes that “exhaustion of the distribution right applies to the tangible object into which a protected work or its copy is incorporated if it has been placed onto the market with the copyright holder’s consent” (paragraph 40).
This rule is then applied by holding that “a replacement of the medium […] results in the creation of a new object incorporating the image of the protected work, whereas the poster itself ceases to exist. Such an alteration of the copy of the protected work […] is actually sufficient to constitute a new reproduction of that work, within the meaning of Article 2(a) of the Copyright DirectiveDirective 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society, which is covered by the exclusive right of the author and requires his authorisation” (paragraph 43). “The fact that the ink is saved during the transfer cannot affect the finding that the image’s medium has been altered. 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” (paragraph 45).
The ECJ concludes by explaining that this interpretation is supported by the principal objective of the Copyright DirectiveDirective 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society to establish a high level of protection of authors, allowing them to obtain an appropriate reward for the use of their works (paragraph 48).