OPINION OF ADVOCATE GENERAL
CAMPOS SÁNCHEZ-BORDONA
delivered on 3 October 2018(1)
Case C‑572/17
Riksåklagaren
v
Imran Syed
(Request for a preliminary ruling from the Högsta domstolen (Supreme Court, Sweden))
(Reference for a preliminary ruling — Copyright and related rights — Information society — Distribution right — Infringement — Clothing bearing signs identical with, or similar to, registered EU trade marks — Storage for commercial purposes — Storage separate from the retail shop)
1. The Högsta domstolen (Supreme Court, Sweden) has to decide on an appeal brought against a judgment at second instance, which found against a trader for having sold in his shop and stored in his warehouses, one adjacent to the shop and another located in a Stockholm suburb, a number of textile products that, without the authorisation of the rightholders, included rock music images and motifs protected by copyright.
2. The question that the national court is referring to the Court of Justice concerns the limits of one aspect of copyright, namely the right to authorise or prohibit distribution to the public of a work or copies thereof, which is covered by Directive 2001/29/EC. (2) Specifically, the lower court wishes to know whether, and to what extent, this right covers goods in storage, in addition to the articles sold.
I. Legal context
A. International law
3. The World Intellectual Property Organisation (WIPO) Copyright Treaty, adopted in Geneva on 20 December 1996 (‘the CT’), was approved on behalf of the European Community by Council Decision 2000/278/EC of 16 March 2000. (3)
4. Article 6 provides:
‘(1) Authors of literary and artistic works shall enjoy the exclusive right of authorising the making available to the public of the original and copies of their works through sale or other transfer of ownership.
(2) Nothing in this Treaty shall affect the freedom of Contracting Parties to determine the conditions, if any, under which the exhaustion of the right in paragraph (1) applies after the first sale or other transfer of ownership of the original or a copy of the work with the authorisation of the author.’
B. EU law. Directive 2001/29 (4)
5. According to recital 9 of that Directive:
‘Any harmonisation of copyright and related rights must take as a basis a high level of protection, since such rights are crucial to intellectual creation ...’
6. Recital 11 states:
‘A rigorous, effective system for the protection of copyright and related rights is one of the main ways of ensuring that European cultural creativity and production receive the necessary resources and of safeguarding the independence and dignity of artistic creators and performers.’
7. According to recital 28:
‘Copyright protection under this Directive includes the exclusive right to control distribution of the work incorporated in a tangible article. The first sale in the Community of the original of a work or copies thereof by the rightholder or with his consent exhausts the right to control resale of that object in the Community. This right should not be exhausted in respect of the original or of copies thereof sold by the rightholder or with his consent outside the Community ...’
8. Article 4 provides:
‘1. Member States shall provide for authors, in respect of the original of their works or of copies thereof, the exclusive right to authorise or prohibit any form of distribution to the public by sale or otherwise.
2. The distribution right shall not be exhausted within the Community in respect of the original or copies of the work, except where the first sale or other transfer of ownership in the Community of that object is made by the rightholder or with his consent.’
C. National law. Lagen (1960:729) om upphovsrätt till litterära och konstnärliga verk (5)
9. According to Paragraph 2 of the Law on copyright, a ‘measure’ that infringes copyright may consist, inter alia, of exploiting a work without the author’s consent, by making it available to the public, in particular when offering copies of the work for sale, rental or loan or when otherwise distributing such copies to the public (Paragraph 2, third subparagraph, point 4 of that Law).
10. According to Paragraph 53, anyone who intentionally or with gross negligence adopts ‘measures’ in relation to a literary or artistic work that infringe the copyright over that work, referred to in Chapters 1 and 2, shall receive a fine or a prison sentence of up to two years.
II. Background to the dispute, questions referred and procedure before the Court of Justice
A. Facts
11. Mr Syed ran a shop in the Gamla Stan area of Stockholm, in which he sold, inter alia, clothing and accessories bearing rock music motifs. These were pirated copies that infringed the trade mark rights and copyright of the respective rightholders. The goods were not only found in the shop, but also in an adjacent warehouse and in another warehouse located in the Bandhagen district, which is a suburb to the south of Stockholm.
12. On being accused in criminal proceedings of infringements of both trade mark rights and the Law on copyright, Mr Syed stated before the Tingsrätt (District Court, Sweden) that the shop was regularly supplied with goods from both warehouses.
13. According to the Riksåklagaren (Swedish Public Prosecutor), the infringement committed was twofold:
– On the one hand, the defendant was infringing trade mark rights by unlawfully using, in his economic activity of selling clothing and accessories, signs identical with, or similar to, trade marks registered in the Union. The infringement was committed when the goods were imported into Sweden, when they were offered for sale in his shop and when they were stored for commercial purposes, both in the shop as well as in an adjacent warehouse and in the Bandhagen warehouse. (6)
– On the other hand, the defendant was also infringing copyright by unlawfully making available to the public clothing and articles bearing images protected by the copyright of their rightholders. The infringement consisted of offering the goods for sale or engaging in any other form of distribution to the public in the shop, at the adjacent warehouse and at the Bandhagen warehouse. In the alternative, the defendant was accused of attempting or preparing to commit the same infringement against the Law on copyright.
14. The Tingsrätt (District Court) found Mr Syed guilty of infringing trade mark rights in relation to all the articles found. It also found him guilty of infringing the Law on copyright with regard to the articles displayed in the shop and those identical articles that were found in the warehouses (599 items of clothing). In its judgment, it imposed a suspended prison sentence and a daily fine in respect of 80 days.
15. That court indicated that the offer for sale made by Mr Syed was not limited to the articles that were in the shop, but also extended to those identical goods stored in both warehouses. However, with regard to those goods found solely in the warehouses that were not the same as those in the shop, it acquitted Mr Syed on the grounds that he had not placed them on sale or attempted or prepared to commit an infringement of the Law on copyright.
16. When the judgment was appealed, the Svea hovrätt, Patent- och marknadsöverdomstolen (Svea Court of Appeal, Stockholm, Sweden; Patent and Trade Mark Court of Appeal) partly allowed Mr Syed’s appeal and acquitted him of infringing the Law on copyright with regard to the goods stored in the two warehouses that were identical to those sold in the shop.
17. According to the Svea hovrätt (Svea Court of Appeal), although Mr Syed had stored articles for the purpose of sale, he had not offered them for sale or distributed them to the public in any other way, which meant that possession of the goods in the warehouses did not constitute an attempt or preparation to commit that offence. It therefore found that Mr Syed had infringed the Law on copyright only with regard to the clothing in the shop. Consequently, it imposed a suspended prison sentence and reduced the daily fine to 60 days.
18. The Public Prosecutor disagreed with the Appeal Court judgment and lodged an appeal with the Högsta domstolen (Supreme Court). In his view, the offer of goods for sale in a shop should also include the possibility of purchasing identical goods stored in warehouses. He therefore asked for Mr Syed also to be found guilty of an infringement of the Law on copyright with regard to the 599 items of clothing, found in the warehouses, that were identical to those displayed in the shop. In the alternative, he asked for the accused to be found guilty of attempting to commit this same infringement, although he did not indict him for preparing to commit that offence.
19. Mr Syed objected to the appeal on the grounds that, in accordance with the case-law of the Court of Justice, infringement of a distribution right by an offer for sale requires an act directed towards the public with the aim of transferring each specific item. Accepting that the purchase and storage of goods could constitute such an act would involve an excessively broad interpretation of the concept of distribution, incompatible with the principle of legality.
20. According to the Högsta domstolen (Supreme Court), in the legislative procedure transposing Directive 2001/29 into Swedish law, the Swedish Government stated that, for an act to fall within the scope of the distribution right regulated by Article 4(1) of that directive, it is not necessary for that act to have been consummated. It is sufficient for the copy to have been offered through an advertising measure, for example. It adds that neither the Law on copyright nor Directive 2001/29 explicitly prohibit the storage of protected works for the purpose of their sale. (7)
21. According to the referring court, it follows from the judgment in Dimensione Direct Sales and Labianca (8) that an infringement of exclusive copyright may exist, in accordance with Article 4(1) of Directive 2001/29, where a person adopts measures or carries out acts prior to concluding a contract of sale, for example by offering protected goods for sale. However, the question raised is whether the person who stores protected goods in his warehouse can be regarded as offering them for sale when he sells identical goods in a shop that he owns.
B. Questions referred for a preliminary ruling
22. In those circumstances, the Högsta domstolen (Supreme Court) has referred the following questions to the Court of Justice for a preliminary ruling:
‘(1) When goods bearing protected motifs are unlawfully offered for sale in a shop, can there also be an infringement of the author’s exclusive distribution right under Article 4(1) of Directive 2001/29 with regard to goods bearing identical motifs that are stored in warehouses by the person offering the goods for sale?
(2) Is it relevant whether the goods are stored in a warehouse adjacent to the shop or elsewhere?’
C. Proceedings before the Court of Justice
23. The request for a preliminary ruling was lodged with the Court Registry on 28 September 2017; only the Public Prosecutor and the Commission submitted written observations. It was not considered necessary to hold an oral hearing.
III. Summary of the arguments of the parties
24. According to the Public Prosecutor, who confirms his position expressed before the referring court, the consequences that an overly narrow interpretation of the distribution right could have on the application of Directive 2004/48/EC should be taken into account. (9) He asserts that the procedural measures and penalties provided for in that directive presuppose that an infringement has been committed or will be imminently committed.
25. The Public Prosecutor considers that, when a trader stores goods bearing copyright-protected motifs on his premises, he is attempting to obtain an economic or commercial advantage. (10) The offer of goods in a shop is intended to encourage consumers also to purchase those identical goods stored in the warehouse. According to the Public Prosecutor, any other interpretation would be irreconcilable with the principles of Dimensione Direct Sales and would not ensure a high level of effective and rigorous protection. (11)
26. He therefore suggests that the answer to the questions referred should be that the goods at issue infringe the author’s exclusive distribution right, laid down in Article 4(1) of Directive 2001/29, it being irrelevant whether the goods are stored in premises adjacent to the shop or in other more distant premises.
27. The Commission proposes to turn first in the analysis of the questions to Dimensione Direct Sales, specifically to the principles that give copyright holders the right to prohibit any form of distribution of goods bearing their work, as well as the concept of distribution as an autonomous concept under EU law. (12) According to that judgment, this concept can cover both a contract of sale and delivery of the article purchased to the customer, as well as other operations prior to the contract, (13) including advertising measures. (14)
28. It follows from those principles that goods stored in premises other than the shop infringe the rightholder’s distribution right if it is proven that they are being offered for sale or advertised to consumers. However, this conclusion does not really answer the questions of the referring court, as its query is whether stored goods can be assimilated to those actually offered for sale in the shop, regardless of whether they are sold or advertised.
29. The Commission does not consider that such assimilation is possible, as this would involve adopting an a priori position with regard to the commercial purpose of stored goods solely on account of the fact that other similar goods have been sold to the public. Consequently, the intention of the person concerned with regard to the goods, from the commercial point of view, should be examined.
30. In this respect, the Commission proposes a number of criteria for determining the commercial purpose of the goods: (a) the identity of the goods with others that are protected by copyright and displayed for sale in the shop; (b) a physical, financial or administrative link between the warehouse and the shop; and (c) the regular supply of the shop with goods from the warehouse.
IV. Analysis
A. Preliminary observation
31. The questions referred have arisen in criminal proceedings against Mr Syed, which requires me to make a preliminary clarification. The Swedish legislature has chosen to criminalise the infringement of copyright over a literary or artistic work, through Paragraph 53 of the Law on copyright, by referring to other provisions of the same Law. Express reference is not made, at least in its wording, to Directive 2001/29.
32. The EU legislature has not used, in this respect, the possibility of defining criminal offences or of approximating or harmonising the criminal laws of the Member States (Article 83(1) and (2) TFEU). In the absence of such legislation, the Court of Justice can provide the referring court with an appropriate interpretation of Directive 2001/29, but cannot intervene in the dispute with regard to the criminal aspects of the law of one of those Member States, since, I repeat, there is no harmonising legislation in this respect.
33. Directive 2004/48 lays down only ‘civil and administrative measures, procedures and remedies’ (Article 16) to protect intellectual property rights. Although it states that ‘criminal sanctions also constitute, in appropriate cases, a means of ensuring the enforcement of intellectual property rights’, (15) such sanctions are not included within its scope. Moreover, Article 2(3)(c) states that ‘this Directive shall not affect … any national provisions in Member States relating to criminal procedures or penalties in respect of infringement of intellectual property rights’.
34. Mr Syed has expressed his fear before the referring court that, as a result of using civil law instead of criminal law to define the criminal offence, the Court of Justice will interpret the concept of ‘distribution’ too loosely, by including goods stored but not yet sold, contrary to the principle that criminal offences should be clearly and precisely defined.
35. I do not believe that this argument is tenable. The Court of Justice has to interpret Article 4(1) of Directive 2001/29 regardless of the consequences that may be determined by the referring court from the point of view of Swedish criminal law. (16) That interpretation is limited to examining the scope of protection of the author’s right to authorise or prohibit the distribution of his works. If, in accordance with Swedish law, it is sufficient for that right to have been infringed in order to incur criminal liability, that is something that does not depend on Directive 2001/29 or its interpretation by the Court of Justice.
36. Mr Syed’s observation actually stems from a criticism of how the criminal offence laid down by Paragraph 53 of the Law on copyright is defined. This criticism censures a possible infringement of the principles of legality and legal certainty, as the provision allegedly does not respect the requirement that offences and penalties should be previously prescribed by law.
37. Such an argument is, I repeat, outside the scope of these proceedings, for which reason it must not be taken into account. The Court of Justice will have to confine itself, within the preliminary ruling dialogue maintained with national courts, to providing the referring court with an interpretation of the distribution right under Article 4(1) of Directive 2001/29.
B. Questions referred
38. It is evident from the account set out in the order for reference that Mr Syed works with goods bearing reproductions of works protected by copyright, without authorisation from their rightholders. In order to better understand the specific facts behind the questions of the referring court, it must be clarified that:
– some of the pirated goods were offered for sale in the shop of Mr Syed, who has been convicted of this act at both first and second instance, with regard to which the appeal court has no doubts;
– other such goods (namely 599 items of clothing identical to those displayed in the shop) were found in Mr Syed’s warehouses;
– the rest of the pirated goods were also found in the warehouses, but were not offered for sale and were not identical to the clothing displayed in the shop.
39. Therefore, the referring court is asking whether the distribution right extends to the second category of articles, namely those which bear the same ‘protected motifs’ as those sold in the shop but which are stored on other premises. It also wishes to know whether the greater or lesser proximity of the warehouses (one adjacent to the shop and the other located in a suburb to the south of Stockholm) has any bearing on the answer.
40. The referring court’s questions are best understood by referring to the case-law of the Court of Justice to date, which I will summarise below.
41. The Peek & Cloppenburg (17) judgment determined whether the distribution right in Article 4(1) of Directive 2001/29 was infringed when a chain of clothing shops placed, in a rest area for customers of one of its shops and in the window of another shop, armchairs and sofas designed by Charles-Édouard Jeanneret (Le Corbusier) and protected by copyright, but manufactured without the consent of their rightholder (an undertaking engaged in the production of upholstered furniture).
42. The Court of Justice replied, in essence, that ‘only acts which entail a transfer of the ownership of that object’ fall within the concept of distribution to the public of the original of a work or a copy thereof otherwise than through sale, within the meaning of the provision at issue. (18)
43. However, in two subsequent judgements, it broadened the concept of distribution by including acts that go beyond mere acts of transferring ownership.
44. Accordingly, in Donner, (19) a question was asked with regard to the behaviour of a carrier who acted as an accomplice in the unauthorised distribution of reproductions of furniture protected by copyright, which an Italian company supplied to its customers in Germany. (20)
45. On the basis that distribution to the public is characterised by ‘a series of acts going, at the very least, from the conclusion of a contract of sale to the performance thereof by delivery to a member of the public’, the Court of Justice held that a trader ‘in such circumstances bears responsibility for any act carried out by him or on his behalf giving rise to a “distribution to the public” in a Member State where the goods distributed are protected by copyright. Any such act carried out by a third party may also be attributed to him, where he specifically targeted the public of the State of destination and must have been aware of the actions of that third party’. (21)
46. In Dimensione Direct Sales, it was debated ‘whether Article 4(1) of Directive 2001/29 must be interpreted as meaning that it allows a holder of an exclusive right to distribute a protected work to prevent an offer for sale or an advertisement of the original or a copy of that work, even if it is not established that that offer or advertisement gave rise to the purchase of the protected object by an EU buyer’. (22)
47. Based on previous case-law, the Court of Justice accepted that the copyright holder was entitled to object to the seller’s advertising (which offered counterfeit items on its website, in newspapers and magazines, as well as in an advertising brochure). It stated in particular that:
– ‘as regards an invitation to submit an offer, or a non-binding advertisement for a protected object, those also fall under the series of acts taken with the objective of making a sale of that object’; (23)
– ‘it is irrelevant, for a finding of an infringement of the distribution right, that such advertising is not followed by the transfer of ownership of the protected work or a copy thereof to the purchaser’. (24)
48. Consequently, the Court of Justice rejected the argument that an act subsequent to the advertising, involving the transfer of ownership of the protected work or a copy thereof to the purchaser, was necessary in order to find that the distribution right had been infringed.
49. It follows from this case-law that the Court of Justice has expanded the concept of distribution contained in Article 4(1) of Directive 2001/29. It has evolved from the mere act of transferring ownership to include acts preparatory to the sale of the object, such as the trader’s offer (directly or via its website) or other acts for the purpose of making such a sale, including transport of the goods by a third party.
50. Of course, the solutions provided by the Court of Justice (25) are to be viewed in the context of those cases, which must also occur here. It only remains to determine whether the storage of clothing in warehouses, where this is identical to the clothing displayed for sale in the shop, forms part of the series of acts aimed at its marketing.
51. In order to determine the scope of the author’s exclusive right to prohibit any form of distribution to the public within the meaning of Article 4(1) of Directive 2001/29, it may be useful to refer to the economic background of the concept of ‘distribution’ of a product. In commercial practice, this is defined as all actions, processes and relationships by which a product is taken from its manufacture to its final use, either in a further production stage or by delivery to the final consumer. (26)
52. It is doubtful, however, that, from the legal perspective that is relevant in this case, the exclusive right to authorise or prohibit distribution referred to in Directive 2001/29 has such a wide scope. Contrary to the view that even the first transfer (from the producer to a wholesaler) falls within the scope of that right, it may be that this prerogative of the copyright holder only applies to the transaction between the retailer and the final consumer. (27)
53. In the light of international agreements concluded by the Union, (28) the Court of Justice has opted for the second view, interpreting the term ‘distribution to the public by sale’ in Article 4(1) of Directive 2001/29 as a synonym for the ‘making available to the public … through sale’ contained in Article 6(1) of the CT. As a result, ‘public’ is taken to mean the consumer or end user, but not the intermediaries in the distribution chain, in particular wholesalers, despite the fact that the CT does not define the term ‘public’, which leaves the legislature or courts of the Contracting Parties to clarify this term. (29)
54. It is not disputed that Mr Syed is a retailer selling to final consumers. He therefore operates in the final segment of the distribution chain to which the author’s right to authorise or prohibit the distribution of his protected works applies. On that basis, the scope of that right must be examined where goods identical to those displayed for sale in the shop are stored in the seller’s warehouses.
55. I have already indicated that the case-law includes, among distribution acts, ‘at the very least’ the contract of sale and delivery of the purchased good to the purchaser, (30) as well as the offer for sale and non-binding advertising. (31) I also believe that the offer for sale is not limited solely to goods displayed in a given commercial establishment, but also applies to those that, where identical, are temporarily stored in a warehouse of the seller, in readiness to replace those that are sold.
56. Goods are displayed inside the shop or in its window with the aim of selling the highest possible number of articles, which can of course be presumed for any trader. Clothing (in this case, T-shirts with rock music motifs) that is situated inside the shop represents pars pro toto the rest of the stock. They have a direct link with each other, which is none other than the act leading to their sale.
57. I consider, therefore, that the right to object to the distribution of articles bearing reproductions that infringe copyright extends not only to those items that are already in the shop, but also to those that, where they bear the same reproductions, are stored in the seller’s warehouses, pending their transfer to the shop.
58. This interpretation is consistent with the minimum protection enshrined in Article 6(1) of the CT, which includes preparatory acts for sale, (32) as well as with the aim of Directive 2001/29 of providing a high level of protection of intellectual property rights, as stated in recital 9 thereof.
59. In addition, this guarantees the practical effect of the provision, which seeks to prevent the marketing of goods manufactured in breach of copyright, which therefore makes the right to control distribution of the work or copies thereof preventive in nature. If this control could only be exercised once the sale was made, with the exercise of the distribution right being focused on each individual transaction (this seems to be Mr Syed’s position), this would in fact prevent its effective protection, given the difficulties in ascertaining the place and time where and when the articles were sold, particularly those in storage.
60. Although I agree with the Commission that, in this case, the intention to sell can be inferred from some products being offered in the shop and other similar products being located, in turn, in the warehouses, I do not consider it essential to generalise a test such as the one recommended, which is overly rigid. In particular, an assessment of the link (physical, financial or administrative) between shop and warehouse could be too formalistic, in addition to shedding little light on how this could be proven.
61. I also believe that, given the close link between the clothing that Mr Syed sold in the shop and the clothing that he stored in the warehouses, combined with his status as a trader, storage formed part of the series of acts leading to the sale. In summary, the right to prohibit or authorise distribution should be extended to those products, as a right inherent in the copyright.
62. In that context, the remoteness or proximity of the warehouses is irrelevant. If the size or colour requested by a customer is not available in the warehouse adjacent to the shop, there is nothing to prevent Mr Syed from undertaking to transfer the item, in a relatively short time, from the warehouse situated in the Bandhagen district (and in fact this is entirely logical and makes common sense). Such acts would still fall within the series of acts taken with the aim of selling that item.
63. Lastly, returning to the criminal context of the dispute before the Swedish courts, I must reiterate that the answer suggested in this case is provided within the strict context of the interpretation of Directive 2001/29. It is therefore the exclusive responsibility of those courts, based on the way in which their national law defines their criminal offences and the various stages of the iter criminis (intention; preparatory acts; acts of performance; attempt and consummation) to decide whether or not a crime has been committed and to what degree its perpetrator may be held liable.
V. Conclusion
64. In the light of the foregoing, I propose to the Court of Justice that the answer to the questions referred by the Högsta domstolen (Supreme Court, Sweden) should be as follows:
Article 4(1) 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 must be interpreted as meaning that the exclusive right to authorise or prohibit any form of distribution to the public of the original of works or of copies thereof, which that provision covers, applies to goods that are stored in the warehouses of a trader, which incorporate protected motifs identical to those borne by the goods offered for sale by the trader in a shop that he owns. For this purpose, the distance between the warehouses and the shop is irrelevant.