e-books with a second life?

If you finish an e-book, you may not resell it. This is what the Court of Justice of the European Union ruled in the Tom Kabinet case: resale of e-books constitutes copyright infringement.

In intellectual property (IP) law there is a doctrine which is called the exhaustion doctrine. That doctrine implies that when a copy of a product protected by IP rights has been put on the market, the owner of the IP rights can no longer invoke his IP rights with regard to that copy. Example: a book by Dan Brown is protected by copyright. If I buy a paperback of the Da Vinci Code in a bookstore, I may resell that copy: the copyrights are exhausted. The idea behind the theory of exhaustion is that the owner of a (book) copy must be able to dispose of it freely and does not need permission from the rightholder to use or sell the copy. So why is that different for e-books?

First some background on the conflict that ended up before the Court of Justice. Since 2014, Tom Kabinet has been offering second-hand e-books online for only €2. The Dutch Publishers' Union (NUV) believes that Tom Kabinet is infringing copyright by these sales and cannot invoke the exhaustion doctrine.

The Court of Justice follows NUV's reasoning. The Copyright Directive shows that exhaustion only applies to tangible objects, such as books or a design lamp. According to the Court, the second-hand sale of an e-book is not the same as the second-hand sale of a physical book. Unlike physical books, the quality of e-books does not deteriorate as a result of use. Second-hand copies are therefore perfect replacements for new copies. According to the Court, a parallel second-hand market will have serious consequences for the adequate remuneration of authors of books. Therefore, the author may prohibit the second hand sale of his e-book.

The Court's ruling is not only relevant for e-books. It is unlikely that movies and music purchased from iTunes can be resold. The case between NUV and Tom Kabinet is now going back to the Dutch court, but it already seems that Tom Kabinet can start thinking about a new business concept.

Mathijs Peijnenburg