Exhaustion of rights on digital content under EU copyright: positive and normative perspectives

Abstract

Although the distribution right, under EU copyright, is exhausted after the first sale of works in the EEA with the rightholders’ consent, exhaustion does not apply to the right of communicating works to the public and hence to the online resale of digital goods. This impacts on consumer welfare and market economy as it does not allow the development of secondary markets for digital goods. However, two cases of the Court of Justice, UsedSoft and Svensson, leave the question of ‘digital’ exhaustion open. Should digital exhaustion apply and, if so, to what extent would this be normatively feasible? In anticipation of the Tom Kabinet judgment, which is expected to shed light to these questions, this chapter argues that there would be much to be gained from ensuring that the traditional benefits of the exhaustion principle are preserved online. Exhaustion has longstanding benefits in protecting the EU freedoms of movement, ensuring access, enhancing competition and innovation, and enabling transactional freedom. Despite these benefits, there are normative impediments towards the application of digital exhaustion, mostly because the notion of exhaustion is attached to tangibility. These may be overcome through a purposive understanding of tangibility, leading in certain cases to a meaningful equivalent of ownership of content in the online environment.