Digital exhaustion after Tom Kabinet: a non-exhausted debate

After years of controversial national decisions and CJEU’s dicta, the Grand Chamber’s ruling in the Tom Kabinet case (C-263/18) seems to have excluded once forever – save for an ad hoc legislative intervention – the admissibility of digital exhaustion under Article 4(2) InfoSoc. The CJEU’s rejection of an extension of the principle of exhaustion of the right of distribution from material to digital copies is based upon a strict literal and contextual interpretation of EU and international sources, which is relatively immune from critiques. However, with its simplistic answer the Court has still failed to tackle the most important interpretative questions raised by the evolution of digital markets. In fact, the Tom Kabinet decision does not update the classificatory dichotomies on the basis of which the InfoSoc draws the borders between exclusive rights. It does not intervene on the tilt in the balance between copyright, competition, fundamental freedoms and other conflicting fundamental rights triggered by new digital business models. Last, it does nothing to solve the systematic and teleological inconsistencies which have affected the judicial development of EU copyright in the field, while suggesting through underdeveloped hints that digital exhaustion may still operate if specific technological solutions are put in place. This chapter provides an overview of the legislative (§2.1) and judicial debate (§2.2) that led to the Grand Chamber’s decision, analyzing the most relevant legal (§3) and economic (§4) arguments advanced in favor and against the extension of Article 4(2) InfoSoc to cover digital copies. Then, it comments on the Tom Kabinet ruling (§5), commenting on its strength and weaknesses (§6) to draw the path that should be followed in order to tackle the most dangerous pitfalls the decision has engendered (§7).