Economic Rights : Notion of Communication to the Public, First Sale Doctrine and Peter Pan

In the continental system, the privileges of the author’s rights are both economic and moral.

The copyright system does include moral rights; however they were inserted very late: in 1998 for the United Kingdom, and in 1990 for the United States (following its accession to the Bern Convention). These rights, however, seem to have to have been designed more as limits of the exploitation of the works, rather than powers allocated to the author, for reasons explained in a news in brief to come. Here we will discuss economic rights distinguishing the CDPA (UK) and the Copyright Act (USA).

According to section 16 (1) of the CDPA, the copyright holder is invested with the following rights: reproduction right, distribution right, rental right, performance right, right of communication of the work to the public, adaptation right. The difficulty of definition of the economic rights listed in the CDPA is partially due to the fact that they do not always concern the same works. For example, the adaptation right exists only for the literary, dramatic and musical works, but not for the plastic art works. The British judges, especially, have adopted a definition of the communication to the public different from the one established by the Court of justice of the European Union. The right of communication of the work to the public is set in section 20 of the CDPA. This right, which implements the information society directive, concerns every work enumerated regarding the broadcasting right. This right distinguishes itself from the performing right, or representation right as it does not involve the presence of the public where the work is broadcasted. It means that a concert in the Barbican theatre falls within the performing right while radio listening falls within the right of communication to the public. The peculiarity of the British law is due to the fact that communication is restricted to electronic communication, itself defined restrictively in the section 178. Thus it contradicts the very wide jurisprudence of the Court of justice of the European Union on the notion of communication to the public (and it is very unlikely that changes appear in the position of the British judges after Brexit). Let us specify, before discussing American law, that the CDPA dedicates a curious perpetual (!) exploitation right for the benefit of the Great Ormond Street Hospital for the use of the work of Peter Pan (see the section 301). James Matthew Barrie, author of the Peter Pan character, indeed transferred his rights to this institution in 1919. The protection of the work expired in 1987. On the occasion of the adoption of the CDPA, the legislator conferred to the Great Ormond Street Hospital a perpetual right of remuneration for any exploitation of the Peter Pan character. Even though the purpose is praiseworthy, the process consisting in reviving protection of works fallen in the public domain (or to avoid their fall, we remember the example of Mickey in the United States) is rather awful.

In the Copyright Act, it is section 106 which gives the list of the exclusive rights reserved to the copyright holder. As in the British system, certain rights are attached to all types of works, whereas others concern only certain types of creations. It is indeed a characteristic of the copyright legislation to aim at determining a specific regime for every type of work. Among five main rights (reproduction, production of the derivative works, public distribution, public representation and public performance), our attention will be focused on the distribution right and its exhaustion or “first sale doctrine”. The doctrine of the first sale is set in section 106 (3). Considered from the point of view of the author, this doctrine means that the right holder loses the right to control the copies of the work after the first commercialization. Seen from the side of the property right holder of the support it means that he has the right to freely resell the copies of the work. One of the questions to be asked to the first sale doctrine is to know whether it applies to digital copies. A negative answer has been clearly given by the American judge in the ReDigi case at the same time the European Court of justice decided the opposite.

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The ReDigi case of March 30 2013

To fully understand the decision of the ReDigi case of March 30 2013¹, facts must be presented.

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a) Presentation of the facts

‍ReDigi is the first worldwide websites for digital second-hand music. The technology which it offers is the following: the users are invited to “sell” the musical files which they legally acquired and to “buy” second-hand files at a reasonable price. The sellers do not in reality perceive money but obtain “credits” which allow them to buy other files. To sell, the user must, first of all, download a software which analyses its computer to establish a list of musical files which can be sold (these must have necessarily been bought on iTunes or from another user of ReDigi). Then, the software makes sure that the file sold disappeared from the computer of the seller not to reappear on it anymore. Once the list is established, a user can choose the pieces on a server which contains all the available files.

Capitol assigned ReDigi on the basis of the Copyright Act.

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b) The decision of the CJEU

The judge considered that there was a violation of the reproduction right and of the distribution right which could not be exhausted through the doctrine of the first sale. According to the judge, a musical file sold on ReDigi did not satisfy the condition established in article 109 (a) of the Copyright Act (the work must be legally fabricated in the sense of the law). The judge especially states that the exhaustion doctrine cannot, in application of the current legislation, be applicable to immaterial distribution. This position is in every respect different from the one adopted on July 3rd, 2012 by the European Court of justice.

Let us remind, indeed, that the Court of justice considered, that the distribution right of the copy of a software was exhausted when the right holder, who had authorized the download from internet of this copy on an IT support, had also agreed against the payment of a fee to the right of use of the aforementioned copy, without any time limit². In the strictness of civil-law principles (notion of sale), this solution could be criticized.

In a more economical logic, the online mode of transmission can be considered as the functional equivalent of the transfer of a material support (it is specified by the CJEU). We can see here that the copyright logic prevails in Europe and that the civil-law strictness predominates in the United States.