Advocate General wants libraries to lend e-books (Opinion of AG Szpunar in C- 174/15, Vereniging Openbare Bibliotheken)
By Bernd Justin Jütte
On 16 June 2016 Advocate Geneal (AG) Szpunar, who recently is very active in the field of European copyright (see also on this blog here), published his Opinion in Vereniging Openbare Bibliotheken v Stichting Leenrecht. The case deals with the question whether public libraries are entitled to lend electronic versions of books (e-books) and, if so, under which conditions. The AG takes a favourable position regarding the lending of e-books under the Rental and Lending Rights Directive (Directive 2006/115/EC). Yet, what is more interesting than the actual outcome of his opinion is his very daring argumentation to treat e-books and printed books alike for the purpose of the said Directive. The opinion, if followed by the Court of Justice (CJEU), could also have an influence on the interpretation of the Information Society Directive (Directive 2001/29/EC) and more far-reaching questions of digital exhaustion.
It is quite noteworthy that AG Szpunar highlights in a rather long introduction the important role of libraries and their difficulties to adapt to the changing circumstances of book consumption. He identifies the case as one which would enable the Court “to help libraries not only to survive, but also to flourish.” (para. 1) This, so the AG, would be possible by answering the question whether libraries are allowed to lend e-books.
The Dutch reference for a preliminary ruling is based on the following facts: A report commissioned by the Dutch Ministry of Education, Culture had opined that the lending of e-books did not fall within the scope of application of Directive 2006/115 (as transposed into Dutch law) and, as a result, libraries could not benefit from an exception to the exclusive lending right to lend e-books to the public. The Vereniging Openbare Bibliotheken sought a declaratory judgment against Stichting Leenrecht, a collecting society, stating that the relevant provisions do apply to e-books and that, accordingly, public libraries can lend e-books if a fair remuneration is paid to authors.
The (important) question
The Rechtbank Den Haag (District Court, The Hague, Netherlands) referred four questions to the CJEU, but only the first of which related directly to the lending of e-books. This question was whether the lending of certain works of literature (excluding e.g. academic textbooks) falls within the scope of application of Directive 2006/115 if:
- a digital copy of a book is placed on the server of a public library
- which, when downloaded (reproduced) by a user, is made unusable after a certain period of time
- and that only one user can download a copy of that e-book at any given time.
AG Szpunar tackles the question in two steps, but advanced one important qualification. Whereas the referring court had limited its questions to “copyright-protected novels, collections of short stories, biographies, travelogues, children’s books and youth literature”, the AG argues that the provisions of the Directive should apply to “works of all types that exist in the form of an electronic book.” (para. 22) Foreshadowing his rather forward-looking interpretation of the relevant provisions of the Directive, he suggests that it is “vital that the interpretation of Directive 2006/115 should meet the needs of contemporary society and make it possible to reconcile the various interests at stake.” (para. 23)
In a first step AG Szpunar establishes what he calls his “axiological basis” for the interpretation of Directive 2006/115. This basis, he argues, reflects current interests and rests on three sets of reasons.
Legal interpretation must evolve with technology
The first set of reasons suggests that the law must adapt to technological developments. Because technology develops rapidly, the law, which is limited in its ability to anticipate innovative technology, must be subjected to an adjusted interpretation to avoid it becoming obsolete. (para. 28) The AG supports this reasoning by reference to Recital 4 of Directive 2006/115 which, he argues, expresses exactly this idea by stating that “copyright […] must adapt to new economic developments”. (para. 29) In more practical terms, he refuses the arguments that e-books and physical books are fundamentally different in their nature and that their functional differences (e.g. that e-books offer search functions) would not alter this finding (para. 30). With regard to lending e-books, this process can therefore not be distinguished in its effects from the lending of physical books if the borrower cannot retain a copy of the work at home (para. 31). As a result, the legal framework that was designed for the lending of physical media should equally apply to the lending of e-books.
Better protection for authors
Second, in the case the provisions of Directive 2006/115 were not to apply, authors would not participate in the exploitation of their works by way of e-lending. By virtue of the exception in Article 6(1) the Directive establishes a remuneration right for authors whose works are lent by public libraries. However, if the provision does not apply to e-lending, publishers usually contract with libraries and the revenue is collected (and often retained) by the publishers. Hence, an application of the relevant provision also to e-books would strengthen the position of authors and provide them with better protection (para. 36).
The importance of libraries
Third, picking up on his introduction, AG Szpunar underlines the historically (“[s]ince time immemorial”) important role of libraries (as repositories for books) “for the preservation of, and access to culture and scientific knowledge”. (para. 37) In order to be able to continue to fulfil this role, libraries should be permitted to lend e-books without prior authorization, based on a statutory exception, as opposed to being required to negotiate (expensive) licenses with publishers. In the latter case, AG Szpunar submits, libraries would no longer be able to exercise their functions in a digital environment in the same way as they have done in the “era of printed books.“ (para. 39)
For these three reasons, AG Szpunar suggests to depart from the ideas the EU legislator had in mind when adopting this legal instrument, but to fill its definitions with a meaning that can keep up with technological developments.
The EU (and international) legal framework
In light of the above, AG Szpunar considers that the arguments brought forward by the parties, who would prefer not to apply Directive 2006/115 to e-books, should be refuted. First, he disagrees with the argument that the formulation “originals and copies of copyright works” in Article 1(1) of the Directive would be limited to physical reproductions (paras 43-5). Second, he rejects the idea that the first question would require a strict interpretation of Article 6(1). It is often argued by the Court that exceptions to the exclusive rights of copyright must be interpreted strictly, and more recently it completed this reasoning with the requirement that the interpretation of an exception must also take its purpose into consideration (see FAPL/Murphy, para. 163, Deckmyn, para. 23). The AG points out that the question does not pertain primarily to the exception but to the rule whether e-lending falls within the scope of the Directive.
Furthermore, with regard to the relationship between the lending right and the right to communication to the public under Article 3(1) of Directive 2001/29 the AG dismisses the parties’ arguments that the latter would apply. He argues that Directive 2006/115 constitutes a lex specialis in relation to Directive 2001/29 as regards the applicable exclusive rights. He also adds that the reproductions necessary (which fall outside the scope of Directive 2006/115) were exempted from an authorization requirement by virtue of Article 5(2)(c) read in conjunction with the CJEU’s judgment in TU Darmstadt.
An interesting argument raised by the parties relates to the question whether certain terms that appear in the copyright acquis must receive the same interpretation in this context. Some parties indeed alleged that an extension of the scope of the lending right to e-lending would be incompatible with the “principle of perfect terminological consistency”. (para. 50) The use of certain terms, such as ‘copy’, ‘sale’ and ‘distribution’ in the context of the Software Directive (Directive 2009/24) in the UsedSoft case, would prevent the application of Article 5(2)(c) in the context of e-lending. Nevertheless, AG Szpunar does not see any merit in this argument, as even in UsedSoft the Court found that the term ‘copy’ also applies to digital reproductions, e.g. such reproductions that occur when a computer program is downloaded to a hard drive.
In addition, AG Szpunar also discusses the compatibility of his findings with the international legal framework for copyright. The disregard for certain provisions had provoked criticism in academic circles in relation to the UsedSoft judgment, in particular the non-consideration of the agreed statement concerning Article 6 and 7 of the WIPO Copyright Treaty (see e.g. Rognstad). But again, the AG distinguishes Directive 2006/115 from other directives of the copyright acquis, and in particular the lending right (for which no such agreed statement exists) from the distribution right under Article 4(1) of Directive 2001/29.
All in all, probably the most remarkable aspect of this opinion is the introduction and the arguments AG Szpunar builds on these general observations. These arguments, which highlight the importance of the lending right for the existence of public libraries, do not have a strictly legal dimension, but are more of a cultural and political nature. But they do have a significant impact on the first part of the opinion and the axiological arguments presented there. These arguments could easily be regarded as a cultural bias of AG Szpunar, but one should nevertheless value his subsequent diligent and very clear discussion of the legal arguments. These legal arguments help overcome one of the few stumbling blocks, namely that the EU legislator, when adopting the precursor of Directive 2006/115 (which replaced Directive 92/100/EEC), did not intend to extend the scope to e-lending.
From AG Szpunar’s legal arguments one line of reasoning stands out, which is the one based on the lex specialis principle. He clearly reasons why, with regard to the scope of application of Directive 2006/115, but also with regard to the relation between the lending right and the distribution right, e-lending should find its place within the EU copyright acquis as a separate, independent right. The diligence with which he positions his arguments demonstrates the highest respect for established case-law and the economic structure as reflected in current EU copyright law.
However, some interesting questions that the referring court raised, or which resulted from the AG’s discussion of these questions, remain unanswered. One is whether terms used in different directives of a related field must receive the same interpretation, a question that AG Szpunar elevates to the “principle of terminological consistency”. This would also have implications on other pertinent questions, e.g. the question of digital exhaustion (see pending case Ranks and Vasiļevičs). The AG avoids precisely this question by retreating to a more general statement based on his strict distinction between the scope of application of the different directives and their respective exclusive rights. But the question whether certain terms do have the same meaning throughout the directives constituting EU copyright law is of fundamental importance. If fundamental terminology within a certain subject area is incoherent, legal uncertainty ensues, in particular as regards elementary questions such as digital exhaustion and digital lending. These questions have only partly been answered so far, but terminological consistence could provide legal certainty and could, to a certain extent, make constant legislative intervention unnecessary.
A more flexible interpretation of the EU copyright rules and an interpretation of the copyright acquis in a more harmonious way would already contribute much to addressing the issues raised by the Digital Single Market Strategy of the European Commission, which tackles as one of its goals the modernization of the EU copyright rules.
In substance, AG Szpunar suggests what has already been demanded by leading academics (e.g. Dussollier) for some time, but without necessitating a legislative intervention, a firm positioning of an electronic lending right within the EU copyright acquis. If the Court follows his argumentation, libraries will be able to offer e-books for lending without being required to negotiate costly contracts with publishers. This would enable also smaller libraries to engage into public lending of e-books, the concrete implications on the relevant market and business models related to public e-lending are difficult to predict. The legal certainty provided by an interpretation of Directive 2006/116 to include e-lending would be instrumental to the certainly idealistic ambitions AG Szpunar developed in his introduction. Without doubt, the opinion provokes policy considerations, which is probably what AG Szpunar intended, but this helps overcome the few potential legal obstacles that stand in the way of e-lending within the scope of Directive 2006/115. Whether the Court will follow, is yet another question.