Distribution right only infringed when goods are intended to be sold to the public



Copyrights: Distribution right

19 Dec 2018

The matter at hand

Mr Syed ran a retail shop in Stockholm (Sweden) in which he sold, without the rightholder’s authorization, clothes and accessories with copyright protected rock music motifs. Mr Syed’s shop was regularly restocked with merchandise from a storage facility adjacent to the shop and from another storage facility located in a suburb of Stockholm. Identical contested goods were offered for sale in the shop and kept in stock at both storage facilities.

Criminal proceedings were brought against Mr Syed for (among other things) copyright infringement. Both the sale and offering for sale of the goods in the shop were found to be infringing. The referring court, the Högsta domstol, did however raise the question whether goods bearing a protected motif can be regarded as being offered for sale when they are kept in storage facilities, when identical goods are offered for sale in a retail shop run by the same person. The referring court moreover raised the question whether it is relevant, in that regard, to consider the distance between the place of storage and the place of sale.

The judgment of the ECJ

The ECJ first reiterates its findings in Dimensione Direct Sales and Labianca (C‑516/13) and earlier judgments, where it held that an act prior to the actual sale of a copyright protected work with the objective of making such a sale, may infringe the distribution right of Article 4(1) 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, but that it must be proven, to that end, that the goods concerned are actually intended to be distributed to the public.

In this regard, the ECJ finds that the storage of goods bearing copyright protected motifs “may be considered such an act if it is established that those goods are actually intended to be sold to the public without the rightholder’s authorization” (paragraph 30). The fact that identical goods are being sold may be an indication that the stored goods are also intended to be sold in that shop, but it cannot be inferred from this mere fact. As the ECJ puts it: “It cannot be excluded that all or part of the goods stored in circumstances such as those in the main proceedings are not intended to be sold on the territory of the Member State in which the motif displayed on the goods is protected, even when those goods are identical to those which are offered for sale in the retailer’s shop” (paragraph 33).

Whether all of the stored goods identical to those sold in a shop are intended to be marketed in that shop, or only some of them, is for the referring court to determine, in the light of the evidence available to it (paragraph 36). In this regard, “account must be taken of all the factors which may demonstrate that the goods concerned are stored with a view to their being sold, without the rightholder’s consent, on the territory of the Member State where the motifs displayed on the goods are protected by copyright” (paragraph 38). The ECJ highlights some examples of factors it considers likely to be relevant in this regard: “the regular restocking of the shop with goods from the storage facilities at issue, accounting elements, the volume of sales and orders as compared with the volume of stored goods, or current contracts of sale” (paragraph 39).

Then, with regard to the distance between the place of storage and the place of sale, the ECJ – not surprisingly – considers that, “although this may constitute evidence that can be used in seeking to establish that the goods concerned are intended to be sold in that place of sale, that evidence cannot, on its own, be decisive” (paragraph 39).

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