Freedom to redistribute software, UsedSoft, C-128/11

 
On 03/07/2012 the Grand Chamber of the European Court of Justice interpreted in case UsedSoft GmbH, C-128/11, that a software copyrights holder (Oracle International Corp.) cannot oppose redistribution of the software by a buyer of the license (§ 80).
 

The copyrights holder Oracle supported by French, Irish and Italian Governments argued that the contractual terms prohibit further transfer of the software, requiring each new user to enter into a direct contractual relationship with the copyrights holder (§§ 77 and 82). The Grand Chamber found that this view would render ineffective the exhaustion of the copyrights holder’s distribution right (§ 83). This right becomes exhausted at the moment of selling the license to the very first user.

Oracle maintained that it sells only one license and not an unlimited number. The judges replied that the original acquirer of the license must delete her copy of the software when decides to redistribute it (§ 78). Oracle argued that it is impossible to verify whether she would delete her copy. The ECJ replied that the copyrights holder remains free to search for a technical solution (§ 79).

ECJ liberates software functionality and programming language from copyrights, SAS Institute, C-406/10

The SAS Institute Inc. sued the World Programming Ltd. in the UK for infringing its copyright in analytical software. World Programming copied the manuals for the SAS System when creating the “World Programming System” (§ 27). However the Grand Chamber of the European Court of Justice found yesterday that software functionality and programming language are not literary or artistic works, and therefore not covered with copyrights.

The judges made a policy argument in writing that functionality copyrights would make it possible to monopolise ideas to the detriment of technological progress and industrial development (§ 40). The Grand Chamber referred to point 3.7 of the explanatory memorandum to the Proposal for Directive 91/250 stating that only the individual expression of the work should be protected, and leaving other authors the latitude to create even identical programs provided that they refrain from copying (§ 41).

The SAS Institute tried to use the proportionality remedy in arguing that the copyright should be protected at least to some degree having regard to the nature or extent of the copied functionality, to the skills, judgment and labour which had been expended, and to the level of detail reproduced (§ 28). However this attack was dismissed as such.

ECJ: contractual clause prohibiting Internet trade is illegal, Pierre Fabre, C-439/09

Pierre Fabre Dermo-Cosmétique SAS manufactures and markets cosmetics and personal care products under brands Avène, Galénic, Ducray and Klorane. Their general contractual clause imposed an obligation on distributors was that the products have to be sold in a “physical space” in the presence of a person with a diploma in pharmacy, which de facto excluded internet trade (§§ 13-14).

Pierre Fabre tried to justify the clause with an intention to provide a personalized advice in order to ensure “cosmetovigilance” (§§ 17, 25), avoiding the risks of counterfeiting and free-riding between authorized pharmacies (§ 23), need to maintain the prestigious image of the products (§ 45). The French Competition Authority decided that the real aim of the clause is to prevent selling the goods to non-authorised distributors, to reduce considerably the ability of an authorized distributor to sell the contractual products to consumers outside its contractual territory, and to restrict competition (§§ 19, 38). Pierre Fabre got a fine of € 17 000.

The ECJ adjudicated that the reasons given by Pierre Fabre did not have a legitimate aim for restricting competition (§§ 44, 46).

ECJ extends the applicability of EU law to foreign Internet intentions, L’Oréal v eBay, C-324/09

While analyzing applicability of EU law, we are used to structure the deduction according to location, time, person, and matter.  This time, the Grand Chamber of the ECJ made a new development: in order to say whether EU trademark law is applicable to Internet trade, one must answer whether the seller intended to attract EU consumers (§§ 61-62).

eBay International AG was attacked by L’Oréal SA for providing online market place for the goods covered with the trademarks of the latter (including advertising them through Google).  Those goods were sold by sellers established outside the EU, and were not forwarded to the EU territory. The UK, Italy, Portugal, Poland and, of course, the Commission supported L’Oréal.