CJEU provides clarity in criminal copyright referral
The Court of Justice of the European Union (CJEU) yesterday ruled that a copyright owner’s exclusive distribution right can be violated by the storage of infringing goods, in a referral stemming from criminal proceedings in Sweden.
Imran Syed ran a shop in Stockholm, which was regularly restocked with products that had been kept in two storage facilities (one across the road and another in a different part of the city).
The retailer sold clothing and accessories with rock music motifs, but several of the items sold by Syed violated trademarks and copyright.
A public prosecutor (Åklagaren) brought criminal proceedings against Syed at a district court (Tingsrätten) for trademark infringement.
The Åklagaren also accused Syed of infringing copyright law through unlawfully making available to the public clothes and flags featuring protected motifs.
The Tingsrätten found Syed guilty of trademark infringement and of infringing copyright law, as the products stored in the units and sold in the shop violated copyright.
However, it found that goods which were held in the storage facilities but were not identical to those sold in the shop could not be regarded as having been offered for sale.
The Tingsrätten gave Syed a suspended custodial sentence and fined him.
On appeal, the Patent and Market Court of Justice (Patent- och marknadsöverdomstolen) found that Syed had infringed the law only in respect of the goods in his shop, not those which were in the storage facilities.
Although the goods had been stored for the purpose of sale, it cannot be said that they had been offered for sale, the court said. The court reduced Syed’s fine.
At the Supreme Court of Sweden (Högsta Domstolen), the prosecutor-general (Riksåklagaren) argued that the Tingsrätten’s ruling should apply.
Meanwhile, Syed claimed that the Patent and Market Court’s ruling was correct and that a different interpretation of the law would extend the scope of criminal liability.
He added that European law ( directive 2001/29/EC) does not expressly prohibit the storage of goods bearing a copyright-protected motif for the purpose of sale.
The Riksåklagaren referred the matter to the CJEU.
As explained by the CJEU: “The question arises whether goods bearing a protected motif which are kept, by a person, in storage facilities can be regarded as being offered for sale when that person offers identical goods for sale in a retail shop run by him.”
Yesterday, the court held that “an act prior to the actual sale of a work or a copy thereof protected by copyright, which takes place without the right holder’s consent and with the objective of making such a sale, may infringe the distribution right” of that copyright owner.
The court noted that carrying out the sale is not necessary to establish an infringement, but it must be proven that the goods are intended to be distributed to the public without the copyright owner’s consent.
Therefore, the storage of goods bearing copyright-protected motifs may constitute such an act if it can be shown that the goods are actually intended to be sold to the public, the court said.
But it cannot be inferred from the storing of goods which are identical to the goods sold in the shop alone, that the storage constitutes an act aiming to make a sale. The goods might be identical but, in principle, they could be intended for different purposes, the court explained.
The CJEU told the referring court to determine, in light of the evidence, whether the stored goods which are identical to those sold in the shop were intended to be marketed in that shop.
Factors such as the frequency with which the shop is restocked, accounting, and the volume of sales/orders compared with the volume of stored goods should be considered, the CJEU ruled, but the distance between the storage unit and the place of sale cannot, on its own, be a decisive element.
Storage of goods may constitute an infringement of a copyright owner’s exclusive distribution right when a retailer offers for sale products identical to those which the retailer is storing, where those goods are intended for sale in the member state where the copyright applies, the court concluded.
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