LASERDISKEN RULING

Laserdisken ruling

The Grand Chamber of the European Court of Justice has given its ruling today in Case C-479/04, Laserdisken ApS v Kulturministeriet, a reference for a preliminary ruling from the Østre Landsret (Denmark) concerning Article 4 of Directive 2001/29 on the harmonisation of certain aspects of copyright and related rights in the information society. That provision reads:

"1. Member States shall provide for authors, in respect of the original of their works or of copies thereof, the exclusive right to authorise or prohibit any form of distribution to the public by sale or otherwise.

2. The distribution right shall not be exhausted within the Community in respect of the original or copies of the work, except where the first sale or other transfer of ownership in the Community of that object is made by the rightholder or with his consent".

Laserdisken sold copies of cinematographic works to individual purchasers through its sales outlets in Denmark. Till the end of 2002, those copies were mostly imported from other EU Member States but some were also imported from non-member countries. Works imported included special editions, such as original American editions, and editions filmed using special techniques. Another major part of the product range consisted of cinematographic works that were not, or would not be, available in Europe. In February 2003 Laserdisken sued the Danish Ministry of Culture, claiming that section 19 of the Law on copyright, as amended through the implementation of Article 4(2) of Directive 2001/29, had a significant effect on its imports and sales of DVDs lawfully marketed outside the EEA. Laserdisken also pleaded invalidity of Directive 2001/29 on the ground that no appropriate legal basis had been for its enactment and attacked Article 4(2) as being contrary to the international agreements which bind the Community in matters of copyright and related rights, the rules of the EC Treaty concerning the establishment of a competition policy, the principle of proportionality in connection with combating piracy and, more generally, completing the internal market, freedom of expression, the principle of equal treatment and the provisions of the Treaty concerning the Member States’ cultural policy and educational policy. The Østre Landsret stayed the proceedings and referred two questions to the Court for a preliminary ruling:

"1. Is Article 4(2) of Directive [2001/29] invalid?

2. Does Article 4(2) of Directive [2001/29] preclude a Member State from retaining international exhaustion in its legislation?".

The ECJ has just ruled as follows:

"1. Consideration of the first question does not reveal any information such as to affect the validity of Article 4(2) ...

2. Article 4(2) of Directive 2001/29 is to be interpreted as precluding national rules providing for exhaustion of the distribution right in respect of the original or copies of a work placed on the market outside the European Community by the rightholder or with his consent".

The IPKat reckons this was inevitable. Even if the law didn't support the result, previous rulings relating to international exhaustion of trade mark rights have pointed to the same result. Merpel says, yes - but what about my cheap disks? Isn't it time the Fortress Europe principle came up for critical re-evaluation?