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The Digital Scrapyard - An Examination of the Applicability of Copyright Exhaustion on Software License Agreements

Nordquist, Henrik LU (2013) JURM02 20131
Department of Law
Abstract (Swedish)
Denna uppsats belyser de ökande rättsverkningarna det digitala samhället har på upphovsrätten. Framför allt har principen om konsumtion av upphovsrätt, ett undantag på en författares ensamrätt att sprida sitt arbete, erhållit en ny tolkning. Principen innebär att när en rättighetshavare placerar dennes upphovsrättsskyddade verk på marknaden till försäljning, är spridningsrätten konsumerad, vilket innebär att kopian inte längre kan kontrolleras av skaparen. Traditionellt sett har ingen tillämpning av konsumtion varit möjligt på digitala varor, eftersom principen har ansetts endast omfatta fysiska kopior som säljs och inte licensieras.

EU-domstolen har emellertid slagit fast i det banbrytande rättsfallet UsedSoft att principen om... (More)
Denna uppsats belyser de ökande rättsverkningarna det digitala samhället har på upphovsrätten. Framför allt har principen om konsumtion av upphovsrätt, ett undantag på en författares ensamrätt att sprida sitt arbete, erhållit en ny tolkning. Principen innebär att när en rättighetshavare placerar dennes upphovsrättsskyddade verk på marknaden till försäljning, är spridningsrätten konsumerad, vilket innebär att kopian inte längre kan kontrolleras av skaparen. Traditionellt sett har ingen tillämpning av konsumtion varit möjligt på digitala varor, eftersom principen har ansetts endast omfatta fysiska kopior som säljs och inte licensieras.

EU-domstolen har emellertid slagit fast i det banbrytande rättsfallet UsedSoft att principen om konsumtion kan tillämpas på datorprogram eller programvara. EU-domstolen konstaterade att om en licens i själva verket är en överlåtelse av äganderätten i utbyte mot ett engångsbelopp, bör detta tillstånd räknas som en försäljning. Vidare ansåg EU-domstolen att en sådan överlåtelse kommer att förvandla en överföringsrätt till allmänheten till en spridningsrätt. Eftersom ingenting i mjukvarudirektivet hindrar en tillämpning av spridningsrätt på immateriella kopior, kunde principen om konsumtion utvidgas till att omfatta nedladdade exemplar av datorprogram.

Denna tolkning av EU-domstolen skapar en dikotomi med USA:s jurisdiktion, eftersom den senare har rört sig mot ett ökat skydd av rättigheterna för en upphovsrättsinnehavare. De amerikanska domstolarna har, i motsats till EU-domstolen, dragit slutsatsen att det beror på klausulernas innehåll i licensavtalet om licensen kan räknas som en försäljning eller inte. Dessutom, med den senaste, fortfarande pågående, rättsfallet ReDigi, har de amerikanska domstolarna vägrat att godta en utökad tillämpning av konsumtion på digitala överföringar, eftersom en sådan överföring innebär skapandet av nya exemplar, som kommer att bryta en författares ensamrätt till mångfaldigande.

Via rättspraxis framstår det europeiska ställningstagandet som mer lämpligt än den amerikanska motsvarigheten. Så länge licenserna i fråga är ägarbyten och därmed faktiskt säljs, kan konsumtion appliceras. En olöst fråga är den teoretiska tillämpningen av konsumtion på andra digitala verk som musik. Emellertid föreslår denna uppsats att den utvidgade principen om konsumtion av upphovsrätten kommer att vara tillämpliga på dessa arbeten.

Att använd programvara legitimt kan vara föremål för återförsäljning kommer att påverka lagstiftning, rättighetsinnehavaren och köparen. Även om osäkerheten kvarstår angående kravet på att göra kopian oanvändbart före återförsäljning, har UsedSoft-fallet en avsevärd potential i att totalt förändra den nuvarande affärsmodellen för mjukvara. Framtida rättspraxis från EU-domstolen kommer att leverera fler klargöranden på denna nya marknad. (Less)
Abstract
This thesis illustrates the increasing legal effects on copyright by the modern digital environment. In particular, the principle of copyright exhaustion, the exception to an author’s exclusive right to distribute his or her work, has been targeted with a novel interpretation. The principle ensures that when a right holder puts his/her copyrighted work on the market for sale, the distribution right is exhausted, meaning that the copy can no longer be controlled by the author. Traditionally, no application of exhaustion has been possible on intangible works since the principle has been regarded to only cover physical copies which are sold and not licensed.

However, with the recent case of UsedSoft, the CJEU has ruled that the principle... (More)
This thesis illustrates the increasing legal effects on copyright by the modern digital environment. In particular, the principle of copyright exhaustion, the exception to an author’s exclusive right to distribute his or her work, has been targeted with a novel interpretation. The principle ensures that when a right holder puts his/her copyrighted work on the market for sale, the distribution right is exhausted, meaning that the copy can no longer be controlled by the author. Traditionally, no application of exhaustion has been possible on intangible works since the principle has been regarded to only cover physical copies which are sold and not licensed.

However, with the recent case of UsedSoft, the CJEU has ruled that the principle of exhaustion can apply on computer programs, or software. The CJEU held that if license is in fact a transfer of ownership in return for a lump sum, that license should be regarded as sold. Furthermore, the CJEU stated that such transfer of ownership will transform an act of communication into an act of distribution. Since nothing in the Software Directive precluded the application of distribution onto intangible copies, the principle of exhaustion was extended to include downloaded copies of computer programs.

The novel interpretation of the CJEU creates a dichotomy with the US jurisdiction, since the latter has moved towards greater enforcement of the rights of an author. Contrary to the CJEU, the US courts have concluded that it depends on the content of the clauses in the license agreement if the license is a sale or not. Furthermore, with the recent, still ongoing, case of ReDigi, the US courts has refused to accept an extended application of exhaustion on digital transfers, since such a transmission involves the creation of new copies, which will infringe an author’s exclusive right of reproduction.

Looking into the case law, the European stance is emerging as more preferable than the US counterpart, as long as the licenses in question are transfers of ownership and therefore are actually sold. An unsolved question is the theoretical application of exhaustion on other digital works such as music. However, this thesis suggests that the extended copyright exhaustion created by the CJEU will be applicable on those works.

Making used software legitimate for reselling will have effects on legislation, right holders and purchasers. Although uncertainties remain regarding the requirement of rendering the copy unusable before resale, the UsedSoft case has considerable potential to re-shape the current business model in force by software proprietors. Future case law will bring more clarification to this new market. (Less)
Please use this url to cite or link to this publication:
author
Nordquist, Henrik LU
supervisor
organization
course
JURM02 20131
year
type
H3 - Professional qualifications (4 Years - )
subject
keywords
Immaterialrätt, Intellectual Property Law, EU-rätt, EU Law, IT-rätt, IT Law
language
English
id
3802769
date added to LUP
2013-10-11 11:23:02
date last changed
2013-10-11 11:23:02
@misc{3802769,
  abstract     = {This thesis illustrates the increasing legal effects on copyright by the modern digital environment. In particular, the principle of copyright exhaustion, the exception to an author’s exclusive right to distribute his or her work, has been targeted with a novel interpretation. The principle ensures that when a right holder puts his/her copyrighted work on the market for sale, the distribution right is exhausted, meaning that the copy can no longer be controlled by the author. Traditionally, no application of exhaustion has been possible on intangible works since the principle has been regarded to only cover physical copies which are sold and not licensed. 
 
However, with the recent case of UsedSoft, the CJEU has ruled that the principle of exhaustion can apply on computer programs, or software. The CJEU held that if license is in fact a transfer of ownership in return for a lump sum, that license should be regarded as sold. Furthermore, the CJEU stated that such transfer of ownership will transform an act of communication into an act of distribution. Since nothing in the Software Directive precluded the application of distribution onto intangible copies, the principle of exhaustion was extended to include downloaded copies of computer programs. 

The novel interpretation of the CJEU creates a dichotomy with the US jurisdiction, since the latter has moved towards greater enforcement of the rights of an author. Contrary to the CJEU, the US courts have concluded that it depends on the content of the clauses in the license agreement if the license is a sale or not. Furthermore, with the recent, still ongoing, case of ReDigi, the US courts has refused to accept an extended application of exhaustion on digital transfers, since such a transmission involves the creation of new copies, which will infringe an author’s exclusive right of reproduction. 

Looking into the case law, the European stance is emerging as more preferable than the US counterpart, as long as the licenses in question are transfers of ownership and therefore are actually sold. An unsolved question is the theoretical application of exhaustion on other digital works such as music. However, this thesis suggests that the extended copyright exhaustion created by the CJEU will be applicable on those works. 

Making used software legitimate for reselling will have effects on legislation, right holders and purchasers. Although uncertainties remain regarding the requirement of rendering the copy unusable before resale, the UsedSoft case has considerable potential to re-shape the current business model in force by software proprietors. Future case law will bring more clarification to this new market.},
  author       = {Nordquist, Henrik},
  keyword      = {Immaterialrätt,Intellectual Property Law,EU-rätt,EU Law,IT-rätt,IT Law},
  language     = {eng},
  note         = {Student Paper},
  title        = {The Digital Scrapyard - An Examination of the Applicability of Copyright Exhaustion on Software License Agreements},
  year         = {2013},
}