Europe: E-books Can Be Lent In Same Way as Traditional Books, Says Court of Justice of the European Union

From World Intellectual Property Review:

The lending of an electronic book (e-book) can be treated in the same way as that of a traditional book under certain conditions, Europe’s highest court said today.
The Court of Justice of the European Union (CJEU) was ruling on Vereniging Openbare Bibliotheken v Stichting Leenrecht, referred by the District Court of The Hague, in the Netherlands.
Currently in the Netherlands, the lending of e-books by public libraries doesn’t fall under the public lending regime applicable to traditional books. Libraries make e-books available to the public via the internet, on the basis of licensing agreements with rights owners, said the court’s press release.
Vereniging Openbare Bibliotheken, an association to which every public library in the Netherlands belongs, brought an action against Stichting Leenrecht, a foundation that collects royalties owed to authors.

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From the CJEU:

In today’s judgment, the Court of Justice first notes that there is no decisive ground allowing for the exclusion, in all cases, of the lending of digital copies and intangible objects from the scope of the directive. That conclusion is, moreover, borne out by the objective pursued by the directive, namely that copyright must adapt to new economic developments. In addition, to exclude digital lending entirely from the scope of the directive would run counter to the general principle that a high level of protection is required for authors.
The Court then goes on to verify whether the public lending of a digital copy of a book under the ‘one copy, one user’ model is capable of coming within the scope of Article 6(1) of the directive. In that respect, the Court notes that, given the importance of the public lending of digital books, and in order to safeguard both the effectiveness of the exception for public lending referred to in Article 6(1) of the directive and the contribution of that exception to the promotion of culture, it
1 Directive 2006/115/EC of the European Parliament and of the Council of 12 December 2006 on rental right and lending right and on certain rights related to copyright in the field of intellectual property (OJ 2006 L 376, p. 28). cannot be ruled out that that article may apply where the operation carried out by a publicly accessible library, in view of, inter alia, the conditions set out in Article 2(1)(b) of that directive, has essentially similar characteristics to the lending of printed works. That is the case as regards the lending of a digital copy of a book under the ‘one copy, one user’ model. The Court therefore holds that the concept of ‘lending’, within the meaning of the directive, also covers lending of this kind.
The Court also notes that the Member States may lay down additional conditions capable of improving the protection of authors’ rights beyond what is expressly laid down in the directive. In the present case, the Netherlands legislation requires that the digital copy of a book made available by the public library must have been put into circulation by a first sale or other transfer of ownership of that copy in the EU by the holder of the right of distribution to the public or with that holder’s consent. According to the Court, such an additional condition must be considered to be in accordance with the directive.
Concerning the case where an electronic copy of a book has been obtained from an unlawful source, the Court emphasises that one of the objectives of the directive is to combat piracy and points out that allowing the lending of such a copy would be liable unreasonably to prejudice copyright holders. Consequently, the public lending exception does not apply to the making available by a public library of a digital copy of a book in the case where that copy has been obtained from an unlawful source.

Direct to Full Text of Judgment of the Court (via InfoCuria)
Direct to Full Text of Opinion (via EUR-Lex)
UPDATE
Reaction from the Federation of European Publishers

E-books offered for free by libraries might have a particularly heavy impact on smaller language areas, such as Lithuania, Latvia, Slovenia, Romania and others where the national book markets are limited due to small population and multilingual societies, and where currently, the e-book market doesn’t even constitute 1% of the book market.
Hence, the decision of the CJEU comes as a shock for the book publishing community. Today’s assessment runs counter to the letter and spirit of the Public Lending Right Directive and the Infosoc Directive. Both Directives prescribe the need to distinguish clearly between physical and electronic goods and services and to treat them differently.
The reasons for this distinction are evident. “Lending” an e-book is very different from lending a printed book since digital “lending” in fact means copying. One digital copy can for example potentially be “borrowed” by an indefinite number of users, whereas a physical copy can only be borrowed and read by one person at a time, and is subject to a degree of deterioration.

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