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Copyright infringement by manufacturer due to carrier’s acts

Copyright infringement by manufacturer due to carrier’s acts

Liability for infringement on copyright can also exist if someone else carries out (a part of) the infringing actions, as the European Court of Justice ruled in the Donner ruling of 21 June 2012. The following was at stake. Before 2008, Italy did not actually have any copyright protection for designer goods. This meant the Italian manufacturer Dimensione in Bologna was able to make and sell illegal copies of famous design furniture by Charles and Ray Eames, Le Corbusier and other Bauhaus-style designers in Italy without consequences. However, the manufacturer also advertised in Germany and had a transport company deliver the sold design furniture to customers in Germany. This furniture was protected in Germany. According to the Court, the delivery by the carrier should be seen as an act of infringement in Germany by the Italian manufacturer. Consequently, the manufacturer is liable for infringement in Germany. This meant the case had an unpleasant aftermath for the carrier because it was punishable in Germany for complicity in this infringement.

This case concerns a special situation but has led to a number of remarkable generally applicable considerations of the Court on the exclusive right accruing to the author (designer) to sell its work to the public. This is called the ‘distribution right’ and is regulated in Article 4 of the European Copyright Directive (Directive 2001/29). It states: ‘Member States shall provide for authors, in respect of the original of their works or of copies thereof, the exclusive right to authorise or prohibit any form of distribution to the public by sale or otherwise.’ Article 4(2) says that once a protected work has been put onto the market in the EU with the right holder’s consent further distribution thereof is free.

In this case, the Italian manufacturer had not given consent for the manufacture and sale of the design furniture but Italian law did not offer adequate protection for the copyright holders. Therefore, legal action on grounds of infringement of copyright could not be taken against the manufacturer in Italy. However, the design furniture had been offered and sold to customers living in Germany. This meant the manufacturer had a German website, advertised in Germany, distributed German-language brochures and sent out direct mailings. It also had an agreement with a transport company to deliver the sold furniture to German customers. The carrier delivered it to customers and took payment for the purchase sum and transport costs. The manufacturer had affixed the customer’s name and address to the furniture. However, in Germany, the design furniture was copyright protected.

The highest German Court first put the question to the European Court of whether sale and delivery in German constituted infringement of the copyright on the furniture. The departure point for this assessment is the aforementioned exclusive distribution right of the holder of copyright. This right must be uniformly interpreted throughout the EU. The earlier Peek & Cloppenburg ruling from the European Court (17 April 2008, C-456/06) determines that this distribution right can only be invoked if transfer of ownership of the products takes place.

The defence was put forward that the ownership transfer of the furniture took place in Italy because it was sold to the German customer in Italy and the handing-over of the goods in Italy to the carrier, which accepted them on behalf of ascertained customers, gave rise to a change of possession so that, from that point of view as well, the relevant facts occurred in Italy. In the absence of protection in Italy, there was therefore no infringement according to the defence. The Court does not follow this line of reasoning.

According to the Court, ‘distribution amongst the public’ consists of a series of acts going, at the very least, from the conclusion of a contract of sale to the performance thereof by delivery to a member of the public. These acts can take place in several member states and constitute infringement there. These may be acts carried out by the seller or for its account or acts of a third party. The seller can also be liable for such infringement acts of a third party in a member state if the seller specifically focuses on the public in that member state and could not have been unaware of the acts of this third party. In other words: it is not necessarily required that the seller carries out all acts which lead to the (infringing) transfer of ownership.

The Court gives some specific indications for liability of the Italian manufacturer for the acts of the transport company in the case:

  1. the German-language website of the Italian manufacturer;
  2. the content and manner of distribution of the manufacturer’s advertising material;
  3. the collaboration between the manufacturer and the carrier.

The Court concludes that under these circumstances the Italian manufacturer Dimensione infringed in Germany on the copyright of the design furniture.

The highest German court had put a second question to the Court of whether assuming copyright infringement in Germany in this manner violates the principle of free movement of goods in the EU. The Court answered in the negative because a restriction of this freedom can be justified pursuant to protection of intellectual property rights. This is at stake here and moreover that right has not been exhausted in this case because the furniture was not placed on the market within the EU with consent of the copyright proprietor.

Ultimately this case was about not only whether the Italian manufacturer was infringing but also whether the carrier in Germany had acted criminally. In Germany, anyone who knowingly helps a third party in intentional infringement is punished as an accomplice. According to the German court, this was the case, assuming infringement on copyright in Germany. The Court confirms that this departure point was correct by attributing the actions of the carrier to the Italian manufacturer. This had some very unpleasant effects for the carrier. Pursuant to the circumstances of this case, it was established that it had knowingly helped the Italian manufacturer, which makes it punishable in Germany based on complicity. This would probably not be different in the Netherlands in light of Sections 31 and 33 of the Copyright Act and Article 48 of the Penal Code. Attributing the acts of the carrier to the manufacturer takes away the intentionally helpful carrier’s defence that it was not acting criminally because there was no infringement in the country of origin. In principle, a carrier transporting illegal copies of copyright-protected works is incidentally not infringing on copyright.

Even though this decision refers to a very specific case, it does provide some general formulated rules, which may have potential farther-reaching effects. Such as the situation that a supplier from outside the EU offers illegal copies in the EU and uses a carrier to deliver these items in the EU. Based on this decision it can be assumed that in principle this results in infringement of the right holder’s exclusive right of distribution. Previously such acts were generally dealt with by the right holder based on Article 3 of the directive that prohibited offering protected works without the right holder’s consent. Now there is a second ground for pleading infringement, namely the distribution of the protected work in the country destination.

The Italian manufacturer Dimensione had already been convicted in 2009 in The Netherlands by the Court of Appeal in Amsterdam for infringement of copyright on design furniture by offering it for sale on a website targeted at the Netherlands, in a catalogue and in direct mailings. The Court of Appeal of Amsterdam concluded that not only was there infringement pursuant to Article 3 of the directive (offering for sale) but also pursuant to Article 4 (distribution). The latter incidentally was according to the Court of Appeal not due to acts of the carrier being attributed to the manufacturer but due to its (improperly) stretched interpretation of the term distribution to such an extent that it covered handing over of the goods to the carrier in Italy. With the European Court’s Donner ruling, this improper reasoning no longer has to be followed.

This case confirms that via the attribution of the acts of the carrier to the manufacturer any infringing manufacturer can be dealt with in the country of destination also on grounds of the exclusive distribution right of the copyright holder. The carrier engaged by the manufacturer in some circumstances moreover runs the risk of criminal prosecution pursuant to complicity in this infringement.

Jaap Kronenberg

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