Exhaustion Online with regard to Database in the EU

Exhaustion Online with regard to Database in the EUSandro SandriEXHAUSTIONBefore explaining exhaustion online with regard to database in the European coupler, we should graduation exercise start by explaining what exhaustion in an Intellectual situationcontext is.1. a) DefinitionThe exhaustion of intellectual property rights is one of the limits of IntellectualProperty (IP) police force. After a product has been sold under the authorization of the IP owner,the reselling, rental, lending and other third party commercial uses of IP-protected goods in internal and outside(a) good deals is protected by the principle. Once a product is coveredby an IP right, such(prenominal) as by a patent right, has been sold by the Intellectual Property rightowner or by others with the consent of the owner, the Intellectual Property right is said tobe exhausted. It can no continuing be exercised by the owner. This limitation is also referred toas the Exhaustion Doctrine or First Sale Doctrine. F or example, if an inventor obtains apatent on a new kind of umbrella, the inventor (or anyone else to whom he sells his patent)can legally prohibit other companies from making and selling this kind of umbrella, savecannot prohibit customers who have bought this umbrella from the patent owner fromreselling the umbrella to third parties. There is a fairly broad consensus throughout theworld that this applies at least within the context of the domestic ticktocket. This is theconcept of National Exhaustion. However, there is less consensus as to what extent the deal of an Intellectual Property protected product abroad can exhaust the IP rights over thisproduct in the context of domestic impartiality. This is the concept of Regional exhaustion orInter content Exhaustion. The rules and legal implications of the exhaustion largely differdepending on the country of importation, i.e. the national jurisdiction.The paternity of the exhaustion possibility is ascribed to the German jurist Jos ephKohler.2 The word exhaustion seems, however, to have been low utilise by the GermanReichsgreicht in a arrive of judgments in the early years of the twentieth century. In ajudgment of 26 March 1902 the Reichsgericht held, for example, that the effect of the security measure conferred by a patent (i.e. the exclusive right to manuf influenceure products coveredwith regard to Database in the European Unionby the patent and to put them on the scoreet) was exhausted by the first off sale.3 In otherwords, once the patent be arr had transferred legal ownership of goods made inaccordance with the patent, by selling them to another person, he lost the power to controlthe further destiny of those goods subsequently.1. b) Exhaustion in the European UnionThe European Court of Justice (ECJ) has taken serious step to harmonize the rulesof a Community-wide/regional exhaustion doctrine in the field of duplicateright impartiality since the1970s. Schovsbo called the harmonization by the ECJ as 1.-phase development ofexhaustion or negative harmonization, and the humankind of directives by the competentbodies of the EEC (and later the EU) as 2.-phase development or positiveharmonization.The first-ever decision on the exhaustion of scattering rights was turn over over inthe famous Deutsche Grammophon case. Here, the ECJ based its decision on differentobjectives of the EEC Treaty the prohibition of partitioning of the market, free causeof goods, as come up as the prohibition of distortions of competition in the common market.The European Court of Justice highlighted that prohibitions and restrictions on administermight be applied by part States, also in cases of copyright law, if they do not constitutea means of arbitrary discrimination or a disguised restriction on trade between outgrowthStates6. Based upon these, the European Court of Justice concluded that if a right relatedto copyright is relied upon to prevent the marketing in a Member State of productsdistr ibuted by the holder of the right or with his consent on the territory of anotherMember State on the furbish up ground that such distribution did not take place on the nationalterritory, such a prohibition, which would legitimize the isolation of national markets,would be contrary to the essential purpose of the Treaty, which is to unite nationalmarkets into a single market. That purpose could not be attained if, under the various legalsystems of the Member States, nationals of those States were commensurate to partition the marketand bring about arbitrary discrimination or disguised restrictions on trade between MemberStates. Consequently, it would be in encroach with the purvey prescribing the free movement of products within the common market for a manufacturer of sound recordingsto exercise the exclusive right to distribute the protected articles, conferred upon him bythe legislation of a Member State, in such a way as to prohibit the sale in that State ofproducts placed on the market by him or with his consent in another Member State solelybecause such distribution did not occur within the territory of the first Member State.7In the EU, the principle of exhaustion of IP rights is as follows. The holder of anIntellectual Property right loses his absolute right with the first sale in the EU territory. Inother words, the first commercialization of a good in a territory of the European Unionmade by the holder of an industrial property right, or by a true licensee, has as aconsequence that that good whitethorn freely circulate in Europe, and the legitimate IP holderwhitethorn not oppose the successive acts of reselling. Using the wording of the Centrafarm scaleIt cannot be reconciled with the principles of free movement of goods under theprovisions of the Treaty of Rome if a patentee exercises his rights under the legalprovisions of one Member State to prevent marketing of a patented product in said Statewhen the patented product has been brought into c irculation in another Member State bythe patentee or with his consentAgain, this is a good example of the wreak of the lawas a system to solve conflicts on one side the traditional principle of territoriality of IPrights on the other side the dreaming to a common market in favour of internationaltrade. The aim of the exhaustion theory is to strike a balance between the free movementof goods on the one hand, and the proprietors exercise of exclusive intellectual propertyrights to distribute his goods on the other hand. The holder of an IP right holds thereforethe right to learn where, under which conditions and at which price his goods are put onthe market for the first time. No need to grade that international exhaustion allows parallelimports. The theory of exhaustion obviously improved in the course of time. In order to beapplicable, various conditions have to be met. It requires the consent of the legitimateholder (consent that may be express or implied). And it also requires that the legitimateholder receives, with the first sale, a reasonable remuneration. Depending on thejurisdiction concerned, one often distinguishes between national exhaustion andinternational exhaustion. In the European Union the term regional exhaustion isfrequently used. Regional exhaustion, in the EU member States, means that IP rights areconsidered exhausted for the territory of the EEA when the product has been put on themarket in any of the EEA Member States.Once the principle of exhaustion was established, the EU rectitude incorporated it inregulations, directives and conventions. For example, art. 7 n. 1 of the First CouncilDirective of 21 December 1988 to approximate the laws of the Member States relating totrade label (89/104/EEC states that The trade mark shall not entitle the proprietor toprohibit its use in relation to goods which have been put on the market in the Communityunder that trade mark by the proprietor or with his consent9. Art. 13 of the Councilregulatio n (EC) n. 207/2009 of 26 February 2009 on the Community trade mark states thatA Community trade mark shall not entitle the proprietor to prohibit its use in relation togoods which have been put on the market in the Community under that trade mark by theproprietor or with his consent10.The Information Society Directive (Directive 2001/29/EC) on the harmonizationof certain aspects of copyright and related rights in the information society refers to thisprinciple in paragraph 28 and 29. The Directive is a little old in relation to the high speedof technology, but is button up there.111. c) The principle of exhaustion in EU Case LawIn Germany, the German Supreme Court (BGH) has repeatedly acknowledged theexhaustion principle as a precautionary principle for the entire IP law (BGH, 22 January1964, Maja Case BGH, 10 April 1997, Sermion II Case).In France a large number of decisions were reported to deal with the exhaustionprinciple (Commercial Chamber of the Court of Cassation, 9 April 2 002 n 99/15428,Cass. Com., 20 February 2007, n 05/11088 Cass. Com., 26 February 2008, n 05/19087Cass. Com., 7 April 2009, n 08/13378 CA Paris, 15 June 2011, n 2009/12305).In Austria the principle of exhaustion within the EU was applied even before it wasexplicitly mentioned in the Austrian craftsmanship Mark Act (Austrian Supreme Court October 15,1996).9 89/104/EEC First Council Directive of 21 December 1988 to approximate the laws of the Member Statesrelating to trade marks10 COUNCIL canon (EC) No 207/200911 Directive 2001/29/ECExhaustion Online with regard to Database in the European Union2- DATABASEThe protection of electronic databases was first considered by the EC Commissionin the 1998 Green Paper. An initial proposal was adopted on January 29, 1992, and wasgreeted, at least in the United Kingdom (which has the largest database application in theCommunity) by a considerable degree of opposition, due to the perceived reduction inprotection for many factual and numerical data bases.12Regarding the concept of database, we should say that it is a collection ofindependent works, data or other naturals arranged in a systematic or methodical way andindividually tender by electronic or other means which can include literary, artistic,musical or other collections of works or collections of other material such as texts, sound,images, numbers, facts.13 Databases in the European Union are regulated through Directive96/9/EC, also known as the Database Directive. It is an European Union Directive in thefield of Intellectual Property Law, made under the internal market provisions of the Treatyof Rome. It harmonizes the treatment of databases under copyright law and the sui generisright for the creators of databases which do not qualify for copyright.The exhaustion principle does not allow the reproduction of data. The GermanSupreme Court has confirmed this it held that if there is ancestry of a demonstrable part ofthe database, there is no exhaustion as exhaustio n covers the right of distribution and notextraction.14 Online electronic databases cannot benefit from the exhaustion principle. Thedatabase essential have been sold. If it is given free of charge, the principle of exhaustion doesnot apply. The CJEU held this to be so in the field of trademarks in Peak Holding v Axolin-Elinor and later confirmed it in LOreal v eBay.15 There is no reason why these decisionswould not apply here by analogy as the term used in obligate 7(2)(b) is sale. The sameapplies to Article 5(c) in the copyright chapter of the Database Directive.Article 7 furthermore specifies acts of temporary or ephemeral copying asextraction.112 In contrast to the initial draft, which required a commercial intention,12 E.C. Intellectual Property Materials, Sweet Maxwells, 1994, 1 (F) Amended Proposals of 4 October 1993for a Council Directive on the legal protection of databases (COM (93) 464 final SYN 393) 1993 O.J.C308/1, p. 3613 Article 7(1) DDir (96/9/EC)14 Marktstudien (Market Surveys), 21 April 2005, Case I ZR 1/022005 GRUR 940 2006 IIC 48915 Case C-16/03 Peak Holding v Axolin-Elinor 2004 ECR I-11313 and Case C-324/09 LOreal v eBay 2011ETMR 52Exhaustion Online with regard to Database in the European Unionconsent is required for loading a database into a computer RAM, as this forget copy the entiredatabase. The consequences of prohibiting acts of temporary or even ephemeral copies such as caching is an inconsistency between online and offline databases. Whereas anoffline database such as a CD-ROM or a smaller database technically requires RAMstorage of a substantial part, accessing a large online database normally barely requires thecopy of the entries accessed to be copied.16Exhaustion only applies to databases in tangible format. If someone lawfullyacquired a tangible copy of the databases, the right holder depart not be able to control itsresale within the European Union. However, in two cases, there will arguably not beexhaustion. The re ason is the use of the cut word sale and resale. First, there will notbe exhaustion when the right holder gave rather than sold the database. In this case, theright to control distribution remains. Thus, the sale of a copy of a database distributedfreely by the maker, may infringe.17 The second case is when the purchaser wishes to givethe database instead of reselling it. It seems that, in that case, the gift of the database by theperson who acquired it can also be controlled by the right holder.It must be noted that, in a recent case, 18the Versailles Court of Appeal astonishinglyheld that, for a database producer to benefit from her rights of extraction and reutilization,she must have asserted it previously, before any infringement act is committed. Themention of the interdiction to extract or reutilize circumscribe from the database becomes acondition of opposability of the sui generis right granted to the database maker by Article L.342-2 of the IPC. The claimant lost her cas e since she did not make such mention on thewebsite she created. This decision seems to add a condition which does not exist in theDirective. The sui generis right is not dependant on any formality.Two German courts held that the creation of deep links is not an infringement ofthe sui generis right19. This is not surprising since it is difficult to see how a deep link is an actof extraction or reutilization. under Article 3, databases which, by reason of the selection or arrangement oftheir contents, constitute the authors own intellectual creation are protected by copyright16 Guido Westkamp, Protecting databases under US and European law methodical approaches to theprotection of investments between unfair competition and intellectual property concepts, 200317 Bently Sherman 2004, p. 30318 Rojo R. v Guy R., CA Versailles, 18 November 2004, unattached on http//www.legalis.net.19 SV on line GmbH v Net-Clipping, OLG Munich, 9 November, 2000 2001 ZUM 255 Handelsblatt v Paperboy,OLG C ologne, 27 October 2000 2001 ZUM 414 BGH, 17 July 2003 2003 Cri.as collections no other criterion may be used by Member States. This may be a relaxationof the criterion for protection of collections in the capital of Switzerland Convention for the Protection ofLiterary and Artistic Works,2 which covers collections of literary and artistic works andrequires creativity in the selection and arrangement of the contents in practice the battle is likely to be slight. Any copyright in the database is separate from and without injury to the copyright in the entries.Copyright protection is not available for databases which aim to be complete,that is where the entries are selected by objective criteria these are covered by suigeneris database rights. While copyright protects the creativity of an author, database rightsspecifically protect the qualitatively and/or quantitatively a substantial investment ineither the obtaining, verification or presentation of the contents if there has not beens ubstantial investment (which need not be financial), the database will not be protectedArt. 7(1). Database rights are held in the first instance by the person or corporation whichmade the substantial investment, so ample as the person is a national or domiciliary of aMember State or the corporation is formed according to the laws of a Member State andhas its registered office or principal place of business within the European Union.The holder of database rights may prohibit the extraction and/or re-utilization ofthe whole or of a substantial part of the contents the substantial part is evaluatedqualitatively and/or quantitatively and reutilization is subject to the exhaustion of rights.Public lending is not an act of extraction or re-utilization. The lawful user of a databasewhich is available to the public may freely extract and/or re-use insubstantial parts of thedatabase (Art. 8) the holder of database rights may not place restrictions of the purpose towhich the insubstantial pa rts are used. However, users may not perform acts whichconflict with normal exploitation of the database or unreasonably prejudice the legitimateinterests of the maker of the database, nor prejudice any copyright in the entries. Thesame limitations may be provided to database rights as to copyright in databases (Art. 9)extraction for private purposes of the contents of a non-electronic database extraction forthe purposes of illustration for teaching or scientific research, as long as the source isindicated and to the extent justified by the non-commercial purpose to be achievedextraction and/or re-utilization for the purposes of public security or an administrative orjudicial procedure.Database rights last for fifteen years from the end of the year that the database wasmade available to the public, or from the end of the year of completion for privatedatabases (Art. 10). Any substantial change which could be considered to be a substantialnew investment will lead to a new term of dat abase rights, which could, in principle, beperpetual. Database rights are independent of any copyright in the database, and the twocould, in principle, be held by different people ( in particular in jurisdictions which prohibitthe corporate ownership of copyright) as such, database rights can be compared to therights of phonogram and film producers.203- CONCLUSIONThe idea of digital first sale doctrine imploded into the mainstream copyrightdiscussion only a few years ago, although it has already been discussed for almost twodecades. The problem was reflected by academia, case law and legislative body as well. Althoughnotable sources take the see to it that the concept of digital exhaustion deserves support, themajority of commentators refused to accept this idea. Likewise, legislative proposals thatwere submitted to the German Bundestag and the Congress of the United States, wereultimately refused by the relevant national parliaments (or were not even discussed by them).Under the traditional, positivist vision of copyright law, any similar ideas are condemned todeath at the moment, especially in the light of the WCT Agreed Statement. Similarly, theCJEUs constructive interpretation of the international and regional copyright norms led toflawed argumentation. However, significant economic, social and technological argumentssupport the view that it is time to reconsider at international legislative level.It looks like it is time to adapt the principle of exhaustion on an online perspective.Technology goes faster than law, so when the law goes a step forward, a new problemarises. Streaming and cloud computing are good examples. The majority of Reportsacknowledge the problems, and underline various aspects. The first is that the principle ofexhaustion of intellectual property rights was elaborated and developed in a time whengoods and services were mainly material and sold and distributed through material andtraditional channels. This approach is overturned by th e new technologies. The second isthat it is no longer possible to distinguish, as far as the principle of exhaustion isconcerned, but also in general, among industrial property and intellectual property.Copyright is expanding. The third is that it is more and more difficult to separate anddistinguish traditional attention and online manufacturing as well as material and immaterial goods20 Intellectual Property Law, Trevor Cook, 2010Exhaustion Online with regard to Database in the European Unionand services. The majority of the Reports are of the opinion that on-line infringement ofintellectual property rights is normally dealt with the ordinary rules of civil procedure, andthat there is no particular necessity of elaborating new ones. The difficulties of enforcingdecisions abroad against foreign on line infringers in copyright cases are the usual ones,common in the legal praxis when a decision must be enforced against foreign infringers.21Dennis S. Karjalas thoughts serve as a g reat point to finish with. He stressed thateither we believe in the first-sale doctrine in the digital age or we do not. If we no longerbelieve in it, we should discard it openly and not through verbal gymnastics interpreting the explanation of copy for the purposes of the statutes reproduction right. Nor should ourdefinition of copy force systems engineers into unduly intricate or artificial designs simplyto protect the right of the owner of a copy of a music file to transfer that file, provided thatno copies derived from the transferred file are retained.2221 To what extent does the principle of exhaustion of IP rights apply to the on-line industry? Avv. Prof.Vincenzo Franceschelli, 2014.22 Dennis S. Karjala Copying and Piracy in the Digital Age, Washburn Law Journal, 2013 p. 255.Exhaustion Online with regard to Database in the European UnionBIBLIOGRAPHY Bently Sherman 2004, p. 303 David T. Keeling, Intellectual Property Rights in EU Law Volume 1 Dennis S. Karjala Copying and Pir acy in the Digital Age, Washburn LawJournal, 2013 Guido Westkamp, Protecting databases under US and European law methodicalapproaches to the protection of investments between unfair competition andintellectual property concepts, 2003 Jens Schovsbo The Exhaustion of Rights and Common Principles of EuropeanIntellectual Property Law. Sweet Maxwells, E.C. Intellectual Property Materials T. de las Heras Lorenzo, El agotamiento del derecho de marca, columnMontecorvo, Madrid, 1994, p. 47 Trevor Cook, Intellectual Property Law, 2010 Vincenzo Franceschelli, To what extent does the principle of exhaustion of IPrights apply to the on-line industry? 2014. Centrafarm B.V. and Adriaan de Peijper v. Sterling dose Inc., in 6 IIC 102 (1975). 89/104/EEC First Council Directive of 21 December 1988 to approximate thelaws of the Member States relating to trade marks Deutsche Grammophon Gesellschaft mbH v Metro-SB-Gromrkte GmbH Co.KG. 8 June 1971, European Court Reports Guajakol-Karbonat RGZ 51, 139 . LOreal v eBay Marktstudien (Market Surveys), 21 April 2005, Case I ZR 1/022005 GRUR 9402006 IIC 489 Peak Holding v Axolin-Elinor Rojo R. v Guy R., CA Versailles, 18 November 2004, available on COUNCIL REGULATION (EC) No 207/2009 Directive 2001/29/EC International Exhaustion and Parallel Importation1 International Exhaustion and Parallel Importationhttp//www.wipo.int/sme/en/ip_business/exportation/international_exhaustion.htm2 T. de las Heras Lorenzo, El agotamiento del derecho de marca, Editorial Montecorvo, Madrid, 1994, p. 47 F.-K.Beier, Grenzen der Erschpfungslehre im Markenrecht zur Beurteilung des Vertriebs umgepackter und neugekennzeichtner Originawaren in den Lndern der Europischen Wirtschaftsgemeinschaft.Exhaustion Online3 Guajakol-Karbonat RGZ 51, 139.4 Intellectual Property Rights in EU Law Volume 1, David T. Keeling, p. 75-765 Jens Schovsbo The Exhaustion of Rights and Common Principles of European Intellectual Property Law.In Ansgar Ohly Common Principles of European I ntellectual Property Law, Mohr Siebeck, Tbingen, 2010 p. 170.6 Case 78/70 Deutsche Grammophon Gesellschaft mbH v Metro-SB-Gromrkte GmbH Co. KG., 8June 1971, European Court Reports, 1971 pp. 499 500., para. 5-11. Compare to Article 36 of the EEC Treaty.On the application of Article 36 of the EEC Treaty see Nial Fennelly Rules and Exceptions Freedom of Movementand Intellectual Property Rights in the European Union. In Hugh C. Hansen International Intellectual Property Law Policy, Volume 5, Juris Publishing, Huntington, 2003 pp. 33-4 33-11.Exhaustion Online with regard to Database in the European Union7 Case 78/70, supra note 64, p. 500., para. 12-13.8 verbatim Centrafarm B.V. and Adriaan de Peijper v. Sterling Drug Inc., in 6 IIC 102 (1975).Exhaustion Online with regard to Database in the European Union