CJEU, 3rd chamber, October 12, 2016, No C-166/15

THE COURT (Third Chamber),

1 This request for a preliminary ruling concerns, formally, the interpretation of Article 4(2) and Article 5(1) and (2) of Directive 2009/24/EC of the European Parliament and of the Council of 23 April 2009 on the legal protection of computer programs (OJ 2009 L 111, p. 16).

2 The request has been made in the context of criminal proceedings brought by the Finanšu un ekonomisko noziegumu izmeklešanas prokoratura (Department for the Prosecution of Economic and Financial Offences, Latvia) against Mr Aleksandrs Ranks and Mr Jurijs Vasilevics, charged with the unlawful sale, as part of a criminal organisation, of objects protected by copyright, intentional unlawful use of another person's trade mark, thereby causing serious harm to the lawfully protected rights and interests of that person, and carrying on unregistered economic activities, by reason of having sold, through an online marketplace, used copies of computer programs stored on non-original media.

Legal context

EU law

Directive 2009/24

3 Article 4(1)(a) and (2) of Directive 2009/24 provides as follows:

'1. Subject to the provisions of Articles 5 and 6, the exclusive rights of the rightholder within the meaning of Article 2 shall include the right to do or to authorise:

(a) the permanent or temporary reproduction of a computer program by any means and in any form, in part or in whole; in so far as loading, displaying, running, transmission or storage of the computer program necessitate such reproduction, such acts shall be subject to authorisation by the rightholder;

...

2. The first sale in the Community of a copy of a program by the rightholder or with his consent shall exhaust the distribution right within the Community of that copy, with the exception of the right to control further rental of the program or a copy thereof.'

4 Under Article 5(1) and (2) of that directive:

'1. In the absence of specific contractual provisions, the acts referred to in points (a) and (b) of Article 4(1) shall not require authorisation by the rightholder where they are necessary for the use of the computer program by the lawful acquirer in accordance with its intended purpose, including for error correction.

2. The making of a back-up copy by a person having a right to use the computer program may not be prevented by contract in so far as it is necessary for that use.'

Directive 91/250/EEC

5 Article 4 of Council Directive 91/250/EEC of 14 May 1991 on the legal protection of computer programs (OJ 1991 L 122, p. 42) provided:

'Subject to the provisions of Articles 5 and 6, the exclusive rights of the rightholder, within the meaning of Article 2, shall include the right to do or to authorise:

(a) the permanent or temporary reproduction of a computer program by any means and in any form, in part or in whole. In so far as loading, displaying, running, transmission or storage of the computer program necessitate such reproduction, such acts shall be subject to authorisation by the rightholder;

...

(c) any form of distribution to the public, including the rental, of the original computer program or of copies thereof. The first sale in the Community of a copy of a program by the rightholder or with his consent shall exhaust the distribution right within the Community of that copy, with the exception of the right to control further rental of the program or a copy thereof.'

6 Under Article 5(1) and (2) of that directive:

'1. In the absence of specific contractual provisions, the acts referred to in Article 4(a) and (b) shall not require authorisation by the rightholder where they are necessary for the use of the computer program by the lawful acquirer in accordance with its intended purpose, including for error correction.

2. The making of a back-up copy by a person having a right to use the computer program may not be prevented by contract in so far as it is necessary for that use.'

7 Article 7(1) of that directive provided as follows:

'Without prejudice to the provisions of Articles 4, 5 and 6, Member States shall provide, in accordance with their national legislation, appropriate remedies against a person committing any of the acts listed in subparagraphs (a), (b) and (c) below:

(a) any act of putting into circulation a copy of a computer program knowing, or having reason to believe, that it is an infringing copy;

(b) the possession, for commercial purposes, of a copy of a computer program knowing, or having reason to believe, that it is an infringing copy;

...'

8 Directive 91/250 was repealed by Directive 2009/24.

Latvian law

9 Article 32 of the Autortiesibu likums (Law on copyright), entitled 'Exhaustion of distribution rights', provides that the right to distribute a work is exhausted from the moment at which that work is sold or otherwise transferred for the first time in the European Union, if this is done by the author himself or with his consent. That provision applies only to works in tangible form or copies thereof.

The dispute in the main proceedings and the questions referred for a preliminary ruling

10 Mr Ranks and Mr Vasilevics are charged with having sold various copyright-protected computer programs published by Microsoft Corp., such as versions of the Microsoft Windows software and the Microsoft Office suite, on an online marketplace between 28 December 2001 and 22 December 2004.

11 The number of copies of computer programs sold, estimated at more than 3 000, could not be precisely determined in the course of the investigation, nor could the total amount obtained from those sales be precisely determined. The amount of material damage caused to Microsoft by the activities of Mr Ranks and Mr Vasilevics was, however, evaluated, on the basis of the sums credited to their PayPal accounts, at 293 548.40 United States dollars (USD) (approximately EUR 265 514).

12 Mr Ranks and Mr Vasilevics are charged with several infringements of Latvian criminal law and, specifically, with (i) the unlawful sale, as part of a criminal organisation, of objects protected by copyright, (ii) intentional unlawful use of another person's trade mark and (iii) carrying on unregistered economic activities.

13 By judgment of 3 January 2012, they were found guilty, at first instance, of the unlawful sale, as part of a criminal organisation, of objects protected by copyright, and intentional unlawful use of another person's trade mark, offences defined and penalised, respectively, by Article 149(3) and Article 206(2) of the Latvian Criminal Code, and were ordered to pay partial compensation to Microsoft for the damage suffered by it and to bear all the legal costs incurred in the proceedings.

14 The public prosecutor, Mr Ranks and Mr Vasilevics, as well as Microsoft, appealed against that judgment to the Rigas apgabaltiesas Kriminallietu tiesu kolegija (Criminal Law Division of the Riga Regional Court, Latvia), which, by judgment of 22 March 2013, set aside that judgment in so far as it found Mr Ranks and Mr Vasilevics guilty of the unlawful sale, as part of a criminal organisation, of objects protected by copyright, and in so far as it imposed a penalty on them.

15 The public prosecutor, Mr Ranks and Mr Vasilevics each lodged an appeal on a point of law before the Augstakas tiesas Senats (Senate of the Supreme Court, Latvia), which, by order of 13 October 2013, set aside the judgment of the Rigas apgabaltiesas Kriminallietu tiesu kolegija (Criminal Law Division of the Riga Regional Court) in its entirety and referred the case back to the appeal court for re-examination.

16 In the course of the re-examination of the case, Mr Ranks and Mr Vasilevics asked the Rigas apgabaltiesas Kriminallietu tiesu kolegija (Criminal Law Division of the Riga Regional Court) to submit a request for a preliminary ruling to the Court of Justice on the interpretation of Article 4(2) and Article 5(1) and (2) of Directive 2009/24.

17 In those circumstances, the Rigas apgabaltiesas Kriminallietu tiesu kolegija (Criminal Law Division of the Riga Regional Court) decided to refer the following questions to the Court of Justice for a preliminary ruling:

'(1) Under Article 5(1) and Article 4(2) of Directive 2009/24, may a person who has acquired a computer program with a "used" licence on a non-original disk, which works and is not used by any other user, rely upon the exhaustion of the right to distribute a copy of that computer program, the first purchaser of which acquired it from the rightholder with the original disk, [where that disk] has been damaged, if the first purchaser has erased his copy and no longer uses it?

(2) If the answer to the first question is in the affirmative, then, does a person who may rely upon the exhaustion of the right to distribute a copy of the computer program have the right to resell that computer program on a non-original disk to a third person, in accordance with Article 4(2) and Article 5(2) of Directive 2009/24?'

Consideration of the questions referred

18 As a preliminary point, it must be noted that, as the Advocate General pointed out in point 4 of his Opinion, Directive 2009/24 - Article 10 of which repealed Directive 91/250 - entered into force, pursuant to Article 11 thereof, on 25 May 2009. It is apparent from the order for reference that Mr Ranks and Mr Vasilevics are charged with offences allegedly committed between 28 December 2001 and 22 December 2004. It follows that the dispute in the main proceedings is covered by Directive 91/250 and not by Directive 2009/24.

19 Consequently, the two questions referred, which concern the interpretation of Article 4(2) of Directive 2009/24, establishing the rule of exhaustion of the copyright holder's distribution right, and of Article 5(1) and (2) of that directive, laying down exceptions to that rightholder's exclusive right of reproduction, must be interpreted as referring to the equivalent provisions of Directive 91/250, namely Article 4(c) thereof, on the one hand, and Article 4(a) and Article 5(1) and (2) thereof, on the other.

Admissibility

20 The Latvian Government has expressed doubts as to the admissibility of the questions, submitting that the referring court appears to take the view that Mr Ranks and Mr Vasilevics lawfully acquired objects protected by copyright, even though, as is evident from the order for reference, the computer programs in question are counterfeits.

21 As to those submissions, it should be borne in mind that, in proceedings under Article 267 TFEU, it is solely for the national court before which the dispute has been brought, and which must assume responsibility for the subsequent judicial decision, to determine, in the light of the particular circumstances of the case, both the need for a preliminary ruling in order to enable it to deliver judgment and the relevance of the questions which it submits to the Court. Consequently, where the questions submitted concern the interpretation of EU law, the Court is, in principle, bound to give a ruling (see judgment of 12 October 2010, Rosenbladt, C 45/09, EU:C:2010:601, paragraph 32 and the case-law cited).

22 It is settled case-law that questions on the interpretation of EU law referred by a national court in the factual and legislative context which that court is responsible for defining, and the accuracy of which is not a matter for the Court to determine, enjoy a presumption of relevance. The Court may refuse to rule on a question referred for a preliminary ruling from a national court only where it is quite obvious that the interpretation of EU law that is sought bears no relation to the actual facts of the main action or its purpose, where the problem is hypothetical, or where the Court does not have before it the factual or legal material necessary to give a useful answer to the questions submitted to it (see judgment of 12 October 2010, Rosenbladt, C 45/09, EU:C:2010:601, paragraph 33 and the case-law cited).

23 In the present case, the main proceedings concern the question whether the resale of used copies of computer programs carried out by Mr Ranks and Mr Vasilevics is lawful in the light of the requirements of Directive 91/250. The answer to that question therefore depends directly on the interpretation of Article 4(c) of that directive, establishing the rule of exhaustion of the copyright holder's distribution right, and of Article 4(a) and Article 5(1) and (2) of that directive, granting that rightholder an exclusive right of reproduction and laying down exceptions to that right.

24 It follows that the questions referred are admissible.

Substance

25 By its two questions, which it is appropriate to examine together, the referring court asks, in essence, whether Article 4(a) and (c), and Article 5(1) and (2), of Directive 91/250 must be interpreted as meaning that the acquirer of a used copy of a computer program, stored on a non-original material medium, may, under the rule of exhaustion of the rightholder's distribution right, resell that copy where (i) the original material medium of that program, acquired by the initial acquirer, has been damaged and (ii) that initial acquirer has erased his copy or ceased to use it.

26 In that respect, it must be noted, first of all, that, under Article 4(c) of Directive 91/250, the first sale in the European Union of a copy of a computer program by the rightholder or with his consent exhausts the right to distribute that copy within the European Union.

27 It follows from that provision that the exhaustion of the right to distribute the copy of a computer program is subject to two conditions: (i) the copy must have been placed on the market and, more specifically, sold by the rightholder or with his consent, and (ii) it must have been placed on the market in the European Union (see, by analogy, with regard to Article 4 of Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society (OJ 2001 L 167, p. 10), judgments of 12 September 2006, Laserdisken, C 479/04, EU:C:2006:549, paragraph 21, and of 22 January 2015, Art & Allposters International, C 419/13, EU:C:2015:27, paragraph 31).

28 The Court has already held that the term 'sale' in that provision, which must be given a broad interpretation, encompasses all forms of marketing of a copy of a computer program characterised by the grant of a right to use that copy, for an unlimited period, in return for payment of a fee designed to enable the copyright holder to obtain a remuneration corresponding to the economic value of that copy (see, to that effect, judgment of 3 July 2012, UsedSoft, C 128/11, EU:C:2012:407, paragraph 49).

29 It is common ground that the first marketing in the European Union, by the copyright holder, of a copy of his computer program stored on a material medium such as floppy discs, CD-ROMs or DVD-ROMs, constitutes a first sale of that copy within the meaning of Article 4(c) of Directive 91/250. In addition, it must be considered that, in the absence of any indication to the contrary in the order for reference, that sale is accompanied by an unlimited licence to use that copy.

30 It follows from the foregoing that, under Article 4(c) of Directive 91/250, the holder of the copyright in a computer program who has sold, in the European Union, a copy of that program on a material medium, such as a CD-ROM or a DVD-ROM, accompanied by an unlimited licence for the use of that program, can no longer oppose the resale of that copy by the initial acquirer or subsequent acquirers of that copy, notwithstanding the existence of contractual terms prohibiting any further transfer (see, to that effect, judgment of 3 July 2012, UsedSoft, C 128/11, EU:C:2012:407, paragraph 77).

31 However, the questions referred do not concern the resale of the used copy of a computer program, stored on an original material medium, by its initial acquirer, but rather the resale of the used copy of a computer program, stored on a non-original material medium, by a person who acquired it from the initial acquirer or from a subsequent acquirer.

32 In their observations, Microsoft, the Italian and Polish Governments and the European Commission submit, in that respect, that the rule of exhaustion of the distribution right laid down in Article 4(c) of Directive 91/250 applies only to the original material medium (floppy disc, CD-ROM or DVD-ROM), sold to the first acquirer, containing the copy of the computer program placed on the market by the rightholder or with his consent, and not to the non-original material medium of that copy.

33 That line of argument cannot be accepted as such.

34 The exhaustion of the distribution right laid down in Article 4(c) of Directive 91/250 concerns the copy of the computer program itself and the accompanying user licence, and not the material medium on which that copy has, as the case may be, been first offered for sale in the European Union by the copyright holder or with his consent.

35 In that respect, it follows from the Court's case-law that Article 4(2) of Directive 2009/24, which reproduces the content of Article 4(c) of Directive 91/250, refers, without further specification, to the 'sale ... of a copy of a program' and thus makes no distinction according to the tangible or intangible form of the copy in question (see, to that effect, judgment of 3 July 2012, UsedSoft, C 128/11, EU:C:2012:407, paragraph 55).

36 The Court concluded from this, in particular, that the exhaustion of the distribution right laid down in Article 4(2) of Directive 2009/24 takes effect after the first sale of a copy of a computer program in the European Union by the copyright holder or with his consent, regardless of whether the sale relates to a tangible or an intangible copy of that program (judgment of 3 July 2012, UsedSoft, C 128/11, EU:C:2012:407, paragraphs 55 and 61).

37 However, Article 4(a) of Directive 91/250 also grants the holder of the copyright in a computer program the exclusive right to do or to authorise the permanent or temporary reproduction of that program by any means and in any form, in part or in whole, subject to the exceptions laid down in Articles 5 and 6 of that directive.

38 The lawful acquirer of a copy of a computer program, placed on the market by the rightholder or with his consent, may, consequently, resell that program, under the rule of exhaustion of the distribution right laid down in Article 4(c) of Directive 91/250, provided that that sale does not adversely affect the rightholder's exclusive reproduction right under Article 4(a) of that directive and therefore subject to the condition that any acts of reproduction of that program must be authorised by that rightholder or be covered by the exceptions laid down in Articles 5 and 6 of that directive.

39 Mr Ranks, Mr Vasilevics and the Commission submit in their observations that the rule of exhaustion allows the resale of a copy of a computer program stored on a non-original material medium if the original material medium has been damaged, subject to the conditions set out by the Court in its judgment of 3 July 2012, UsedSoft (C 128/11, EU:C:2012:407). According to those conditions, the initial acquirer of the copy of a program stored on an original material medium must have an unlimited licence for the use of that program and must make any copy of that program remaining in his possession unusable at the time of its resale. Making a copy of a computer program on a non-original material medium would, in that case, be authorised under the exceptions to the exclusive reproduction right laid down in Article 5(1) and (2) of that directive.

40 In that respect, it must be recalled, in the first place, that Article 5(2) of Directive 91/250 provides that the making of a back-up copy by a person having a right to use the computer program may not be prevented by contract in so far as it is necessary for that use. Article 9(1) of that directive provides that any contractual provisions contrary to Article 5(2) are to be null and void.

41 As is apparent from Article 5(2) of that directive, the making of a back-up copy of a computer program is therefore subject to two conditions. That copy must (i) be made by a person having a right to use that program and (ii) be necessary for that use.

42 That provision, laying down an exception to the exclusive reproduction right of the holder of the copyright in a computer program must, in accordance with the settled case-law of the Court, be interpreted strictly (see, by analogy, judgment of 1 December 2011, Painer, C 145/10, EU:C:2011:798, paragraph 109).

43 It follows that a back-up copy of a computer program may be made and used only to meet the sole needs of the person having the right to use that program and that, accordingly, that person cannot - even though he may have damaged, destroyed or lost the original material medium - use that copy in order to resell that program to a third party.

44 Consequently, as Microsoft and the Italian and Polish Governments submit in their observations, the lawful acquirer of a copy of a computer program accompanied by an unlimited licence for the use of that program, who seeks to resell it, after the exhaustion of the copyright holder's exclusive distribution rights under Article 4(c) of Directive 91/250, cannot, without the authorisation of that rightholder, transfer to the new acquirer the back-up copy of that program made under Article 5(2) of that directive, on the ground that he has damaged, destroyed or lost the original material medium sold to him by or with the consent of that rightholder.

45 In the present case, although it is apparent from the order for reference that Mr Ranks and Mr Vasilevics resold copies of computer programs stored on non-original material media, it is not indicated whether they themselves made the copies resold, as the initial acquirers of those programs, or whether those copies were made by the persons from which they acquired those programs, whether those persons were initial lawful acquirers or not.

46 It must be noted, however, that, whatever may be the circumstances in which Mr Ranks and Mr Vasilevics acquired the copies of computer programs that they resold, they come within the ambit of Article 7(1)(a) and (b) of Directive 91/250 if it is established that they put into circulation and possessed for commercial purposes infringing copies of computer programs.

47 It is, however, for the referring court alone to determine, in view of the evidence which it has identified, as regards each computer program copy resold by Mr Ranks and Mr Vasilevics, whether it is an infringing copy within the meaning of Article 7(1) of that directive and to draw, as appropriate, the necessary conclusions.

48 In the second place, it must be recalled that, under Article 5(1) of Directive 91/250, where the reproduction is necessary for the use of the computer program by the lawful acquirer in accordance with its intended purpose, he does not require the rightholder's authorisation, in the absence of specific contractual provisions.

49 In that respect, it follows from the case-law of the Court that when an acquirer of a copy of a computer program purchases and downloads that copy from the rightholder's website, this constitutes a reproduction which is authorised under Article 5(1) of Directive 91/250, since it is necessary for the use of the program by the lawful acquirer in accordance with its intended purpose (see, to that effect, judgment of 3 July 2012, UsedSoft, C 128/11, EU:C:2012:407, paragraph 75).

50 The Court has also held that, in the event of a resale of the copy of the computer program purchased and downloaded by the first acquirer from the rightholder's website, the new acquirer of that copy, who is a lawful acquirer within the meaning of Article 5(1) of Directive 91/250, is also entitled, under that provision, to download that copy onto his computer, since that download constitutes a reproduction that is necessary to enable him to use that program in accordance with its intended purpose (see, to that effect, judgment of 3 July 2012, UsedSoft, C 128/11, EU:C:2012:407, paragraphs 80 and 81).

51 It must, however, be noted that the circumstances of the case before the referring court differ from those of the case that gave rise to the judgment of 3 July 2012, UsedSoft (C 128/11, EU:C:2012:407). It is apparent from the documents before the Court that Mr Ranks and Mr Vasilevics sold, on the internet, copies of computer programs on non-original material media and there is nothing to suggest that they initially purchased and downloaded those copies from the rightholder's website.

52 Nevertheless, the situation of the lawful acquirer of a copy of a computer program, sold stored on a material medium which has been damaged, destroyed or lost, and that of the lawful acquirer of a copy of a computer program purchased and downloaded on the internet are comparable with regard to the rule of exhaustion of the distribution right and the exclusive reproduction right granted to the rightholder.

53 The lawful acquirer of the copy of a computer program, who holds an unlimited licence to use that program but who no longer has that original material medium on which that copy was initially delivered to him, because he has destroyed, damaged or lost it, cannot, for that reason alone, be deprived of any possibility of reselling that copy to a third party, since this would render ineffective the exhaustion of the distribution right under Article 4(c) of Directive 91/250 (see, to that effect, judgment of 3 July 2012, UsedSoft, C 128/11, EU:C:2012:407, paragraph 83).

54 Thus, as Microsoft acknowledged in its written reply to the questions put to it by the Court, the lawful acquirer of an unlimited licence for the use of a used copy of a computer program must be able to download that program from the copyright holder's website, since that downloading constitutes a reproduction of a computer program that is necessary to enable the new acquirer to use the program in accordance with its intended purpose, as the Court held in the judgment of 3 July 2012, UsedSoft (C 128/11, EU:C:2012:407, paragraph 85).

55 It must be borne in mind, however, that the initial acquirer of a copy of a computer program - in respect of which the copyright holder's distribution right is exhausted in accordance with Article 4(c) of Directive 91/250 - who resells that copy must, in order to avoid infringing that rightholder's exclusive right of reproduction of his computer program, laid down in Article 4(a) of that directive, make any copy in his possession unusable at the time of its resale (see, by analogy, judgment of 3 July 2012, UsedSoft, C 128/11, EU:C:2012:407, paragraph 70 and 78).

56 It should also be specified that it is for the acquirer of an unlimited licence for the use of a used copy of a computer program who, relying on the rule of exhaustion of the distribution right, downloads a copy of that program onto his computer from the rightholder's website to establish, by any available evidence, that he acquired that licence in a lawful manner.

57 It follows from all of the foregoing that Article 4(a) and (c) and Article 5(1) and (2) of Directive 91/250 must be interpreted as meaning that, although the initial acquirer of a copy of a computer program accompanied by an unlimited user licence is entitled to resell that copy and his licence to a new acquirer, he may not, however, in the case where the original material medium of the copy that was initially delivered to him has been damaged, destroyed or lost, provide his back-up copy of that program to that new acquirer without the authorisation of the rightholder.

Costs

58 Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.

On those grounds, the Court (Third Chamber) hereby rules:

Article 4(a) and (c) and Article 5(1) and (2) of Council Directive 91/250/EEC of 14 May 1991 on the legal protection of computer programs must be interpreted as meaning that, although the initial acquirer of a copy of a computer program accompanied by an unlimited user licence is entitled to resell that copy and his licence to a new acquirer, he may not, however, in the case where the original material medium of the copy that was initially delivered to him has been damaged, destroyed or lost, provide his back-up copy of that program to that new acquirer without the authorisation of the rightholder.