A Plea for Digital Exhaustion in EU Copyright Law

With the Dutch referral of the Tom Kabinet case (C-263/18) in July 2017, the CJEU will soon have its final say on the admissibility of digital exhaustion under Art. 4(2) InfoSoc. Until now, years of national decisions and CJEU’s obiter dicta have provided a patchwork of inconsistent answers, and seemingly rejected the extension of the principle to digital works upon a strict literal interpretation of EU and international sources. Yet, the changed characteristics of digital markets have outdated the InfoSoc Directive and the classificatory dichotomies (sale vs license, distribution vs communication to the public, good vs service) on which the boundaries of exhaustion have been drawn. At the same time, the exclusion of digital exhaustion has tilted the balance between copyright and the protection of competition, secondary innovation, fundamental freedoms and other conflicting fundamental rights, while the direct and indirect rulings on the matter have departed from the principles developed in the earlier CJEU’s case law on Community exhaustion and caused systematic and teleological inconsistencies in the judicial development of EU copyright. Building on these premises, and on the basis of a set of legal and economic arguments, this paper advocates for the introduction of a general principle of digital exhaustion in EU copyright law and, awaiting for an unlikely legislative intervention, it proposes two routes to achieve its judicial recognition: one uses a contextual/teleological interpretation to maintain the effectiveness of Article 4(2) InfoSoc; the other theorizes the possibility of a claim of invalidity of the provision under Article 52(1) CFREU, for disproportionate violation of Articles 7, 16 and 17 CFREU