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Exhaustion of distribution rights

Posted: Fri Nov 23, 2012 12:21 am
by Boomers
Hi, I'm struggling to understand something re. Exhaustion of distribution right (UK CDPA88 s.18 )

As I understand it:

A UK/EU copyright owner can prevent parallel importing by objecting to their goods marketed outside EEA being imported into EEA.

If a UK/EU copyright owner puts their work on sale/transfers ownership within EEA- their rights are Exhausted with regard to further distribution in the EEA.

What I'm trying to understand is:
Does this mean that the copyright owner has a right of further distribution outside the EEA? For example can a UK copyright owner object to me selling on a copy of their goods in the USA, purely on the basis that I'm re-selling/exporting to outside the EEA something that was originally marketed inside the EEA.

I'm quite new to copyright and I'm struggling to find a clear answer to this point! I'd be grateful for any help.



Posted: Fri Nov 23, 2012 12:32 pm
by AndyJ
Hi Ben,
As you have found this is not the easiest part of Copyright law to understand. The best way to explain it is to break things down chronologically.
The original 1988 CDPA had this to say on the subject:
18 Infringement by issue of copies to the public
(1) The issue to the public of copies of the work is an act restricted by the copyright in every description of copyright work.
(2) References in this Part to the issue to the public of copies of a work are to the act of putting into circulation copies not previously put into circulation, in the United Kingdom or elsewhere, and not to—
  • (a) any subsequent distribution, sale, hiring or loan of those copies, or
    (b) any subsequent importation of those copies into the United Kingdom;
except that in relation to sound recordings, films and computer programs the restricted act of issuing copies to the public includes any rental of copies to the public.
In other words, the exhaustion of the copyright owner's distribution right occurred once the goods had been issued to the public "in the United Kingdom or elsewhere", save for some restrictions on renting sound recordings, films and computer programs.
The current text of ss 18 and 18A is the result the 1992 EC 'Rental Directive' (92/100/EEC) which was transposed into UK law by the Copyright and Related Rights Regulations 1996 (SI 1996/2967). As the name of the Directive suggests it was mainly concerned with the harmonisation of rental and lending rights across the EU. It did not directly address the issue of sales of legitimate copyright goods. Thus the underlying law with regard to sales as enacted in 1988, remains the same.
You clearly understand quite a bit about exhaustion of rights or as it is called in the US, First Sale Doctrine, but for the benefit of other readers, there is a useful general explanation of the subject in this Wikipedia article. A word of warning about the article: it's written very much from the US perspective and does not examine the legal position in the EU.
That neatly leads me on to the second part of your posting. Whilst you may be entitled to resell goods which have legitimately been put on sale in the UK or EEA, to the US, US law on the importation of such goods is very protectionist. Broadly speaking goods made in the US come under the First Sale doctrine, but goods manufactured elsewhere in the world do not, and so a company in the US who is already manufacturing and distributing the same goods under licence can prevent any parallel importation. The caselaw on this is explained here in the Wikpedia article already mentioned. But bear in mind that the latest case - John Wiley & Sons Inc. v. Kirtsaeng - is currently being appealed to the US Supreme Court, so it is not yet settled law.

Posted: Fri Nov 23, 2012 5:15 pm
by Boomers
Thanks Andy,

That's a great answer and really clears things up for me (nice to know I wasn't too far off!). I appreciate your time in helping me out. Thanks again,