October 17, 2016

Mr Aleksandrs Ranks and Mr Jurijs Vasiļevičs are currently facing criminal proceedings in Latvia in relation to the sale of various copyright-protected computer programs published by Microsoft on an online marketplace in 2004.  It is estimated that they sold more than 3,000 copies of programs and the material damage caused to Microsoft has been evaluated at €265,514.

The Criminal Law Division of the Riga Regional Court in Latvia asked the CJEU whether, under EU Law, the acquirer of a back-up copy of a computer program, stored on a non-original material medium, may, under the principle of exhaustion in the Computer Programs Directive (91/250/EEC) resell that copy where: (i) the original material medium of that program, acquired by the initial acquirer, has been damaged; and (ii) that initial acquirer has erased his copy or ceased to use it.

The CJEU reiterated the principle that the holder of the copyright in a computer program (in this case, Microsoft) who has sold, in the EU, a copy of that program on a material medium (such as a CD-ROM or a DVD-ROM) with an unlimited user licence can no longer oppose the subsequent resale of that copy by the initial acquirer or subsequent acquirers of that copy, notwithstanding the existence of contractual terms prohibiting any further transfer.

However, the questions referred by the Latvian court concerned the resale of the used copy of a computer program, stored on a non-original material medium (i.e. a “back-up copy”), by a person who had acquired it from the initial acquirer or from a subsequent acquirer.

The CJEU noted that the Directive grants the holder of the copyright in a computer program the exclusive right to do or to authorise the permanent or temporary reproduction of that program by any means and in any form, in part or in whole, subject to certain specific exceptions.  The lawful acquirer of a copy of a computer program, placed on the market by the rights holder or with his consent, may therefore resell that copy, provided that that sale does not adversely affect the rights holder’s exclusive reproduction right and that any acts of reproduction of that program are authorised by that rights holder or are covered by the exceptions set out in the Directive.

The CJEU pointed out that the Directive provides that the making of a back-up copy by a person having a right to use the computer program may not be prevented by contract in so far as it is necessary for that use.  Any contractual provisions contrary to that rule are null and void.

The making of a back-up copy of a computer program is therefore subject to two conditions.  The copy must be: (i) made by a person who has the right to use that program; and (ii) necessary for that use.  This is essentially an exception to the exclusive reproduction right of the holder of the copyright in a computer program and must be interpreted strictly.

It followed, the CJEU said, that a back-up copy of a computer program may be made and used only to meet the needs of the person having the right to use that program.  Accordingly, that person cannot, even if he has damaged, destroyed or lost the original material medium, use that copy in order to resell that program to a third party.

Under the Directive, therefore, although the initial acquirer of a copy of a computer program with an unlimited user licence is entitled to resell that copy and his licence to a new acquirer, he may not, where the original material medium of the copy that was initially delivered to him has been damaged, destroyed or lost, provide his back-up copy of that program to that new acquirer without the authorisation of the rights holder.  (Case C-166/15 Aleksandrs Ranks and Jurijs Vasiļevičs EU:C:2016:762 (12 October 2016) — to access the judgment in full, go to the curia search form, type in the case number and follow the link).