Copyright Exhaustion Rationales and Used Software: A Law and Economics Approach to Oracle v. UsedSoft

This article aims to provide courts and policymakers with an analytical framework that, building upon the traditional rationales of IP exhaustion doctrine, identifies factors which advocate for a modulation or flexibilization of the role of exhaustion in copyright law. Factors include (i) the personal features of acquirers of copies of copyrighted works, distinguishing between consumers and commercial users; (ii) whether post-sale restrictions have been adequately communicated to acquirers and have been agreed in the contract or license; (iii) the degree of complexity of the acquired goods and their prospects of productive uses and interoperability; (iv) the role of other exclusive rights in providing rightholders with indirect control over uses of the copies in the aftermarket; (v) the impact of post-sale restraints in preventing opportunism in long-term contracts and in reducing deadweight losses created by IP pricing; and (vi) the temporal scope of post-sale restraints. After setting out this analytical framework, the ECJ Judgement in Oracle v. UsedSoft is discussed.

UsedSoft and the Big Bang Theory: Is the e-Exhaustion Meteor about to Strike?

Since the UsedSoft ruling of the CJEU in 2012, there has been the distinct feeling that – like the big bang - UsedSoft signals the start of a new beginning. As we enter this brave new world, the Copyright Directive will be read anew: misalignments in the treatment of physical and digital content will be resolved; accessibility and affordability for consumers will be heightened; and lock-in will be reduced as e-exhaustion takes hold. With UsedSoft as a precedent, the Court can do nothing but keep expanding its own ruling. For big bang theorists, it is only a matter of time until the digital first sale meteor strikes non-software downloads also. This paper looks at whether the UsedSoft ruling could indeed be the beginning of a wider doctrine of e-exhaustion, or if it is simply a one-shot comet restrained by provisions of the Computer Program Directive on which it was based. Fighting the latter corner, we have the strict word of the law; in the UsedSoft ruling, the Court appears to willingly bypass the international legal framework of the WCT. As far as expansion goes, the Copyright Directive was conceived specifically to implement the WCT, thus the legislative intent is clear. The Court would not, surely, invoke its modicum of creativity there also... With perhaps undue haste in a digital market of many unknowns, it seems this might well be the case. Provoking the big bang theory of e-exhaustion, the UsedSoft ruling can be read as distinctly purposive, but rather than having copyright norms in mind, the standard for the Court is the same free movement rules that underpin the exhaustion doctrine in the physical world. With an endowed sense of principled equivalence, the Court clearly wishes the tangible and intangible rules to be aligned. Against the backdrop of the European internal market, perhaps few legislative instruments would staunchly stand in its way. With firm objectives in mind, the UsedSoft ruling could be a rather disruptive meteor indeed.

Digital First Sale Doctrine Ante Portas – Exhaustion in the Online Environment

The purpose of the article is to provide first a doctrinal summary of the concept, rules and policy of exhaustion, first, on the international and EU level, and, later, under the law of the United States. Based upon this introduction, the paper turns to the analysis of the doctrine by the pioneer court decisions handed over in the UsedSoft, ReDigi, the German e-book/audio book cases, and the pending Tom Kabinet case from the Netherlands. Questions related to the licence versus sale dichotomy; the so-called umbrella solution; the “new copy theory”, migration of digital copies via the internet; the forward-and-delete technology; the issue of lex specialis and the theory of functional equivalence are covered later on. The author of the present article stresses that the answers given by the respective judges of the referred cases are not the final stop in the discussion. The UsedSoft preliminary ruling and the subsequent German domestic decisions highlight a special treatment for computer programs. On the other hand, the refusal of digital exhaustion in the ReDigi and the audio book/e-book cases might be in accordance with the present wording of copyright law; however, they do not necessarily reflect the proper trends of our ages. The paper takes the position that the need for digital exhaustion is constantly growing in society and amongst businesses. Indeed, there are reasonable arguments in favour of equalizing the resale of works sold in tangible and intangible format. Consequently, the paper urges the reconsideration of the norms on exhaustion on the international and EU level.