## Facts

- Warner Brothers Inc. held film copyright in the United Kingdom for *Never Say Never Again* and assigned management of Danish video rights to Metronome Video ApS.
- Videocassettes of the film were lawfully manufactured and first sold in the United Kingdom with Warner’s consent.
- Erik Viuff Christiansen, a Copenhagen video-shop operator, bought a cassette in London and imported it into Denmark to rent it out.
- Danish copyright law granted film authors (and their assignees) the right to prevent the hiring-out of videocassettes, even after authorized sale of the cassette.
- Warner and Metronome obtained an injunction in Denmark prohibiting Christiansen from renting out the cassette.
- Christiansen argued the right to control hiring-out was exhausted by the authorized sale in the United Kingdom, where national law did not recognize an exclusive rental right.
- The Danish appellate court (Østre Landsret) stayed proceedings and sought a preliminary ruling on whether EEC Treaty provisions on free movement of goods barred Denmark’s enforcement of the rental right.

## Issues

1. Whether Articles 30 and 36 EEC allowed Denmark to enforce a copyright-based right to prohibit hiring-out of videocassettes imported from another Member State where the cassette was lawfully marketed with the rightholder’s consent.
2. Whether authorized first sale in a Member State lacking an exclusive rental right exhausted, for other Member States, the rightholder’s ability to oppose hiring-out under national law.
3. Whether applying the Danish rule to imports constituted arbitrary discrimination or a disguised restriction on intra-Community trade.

## Decision

- The Court ruled that Articles 30 and 36 EEC did not preclude Denmark from applying national legislation requiring the author’s permission for hiring-out of videocassettes in these circumstances.
- The right to prohibit hiring-out formed part of protected “industrial and commercial property” for purposes of Article 36.
- The rental market was treated as economically distinct from the sales market; control of rentals was viewed as necessary to secure appropriate remuneration from that market.
- Authorized marketing in a Member State that did not protect a rental right did not eliminate the author’s ability to invoke a rental right conferred by another Member State.
- The Danish measure was justified under Article 36 because it applied without distinction to domestic and imported videocassettes and did not amount to arbitrary discrimination or a disguised restriction on trade.
- The case was returned to the referring Danish court to resolve the dispute consistent with the Court’s interpretation.

## Legal Principles

- Copyright and related exploitation rights, including a right to control the hiring-out of videocassettes, may fall within “industrial and commercial property” justifying trade restrictions under Article 36 EEC.
- Free-movement rules do not require a Member State to treat a rightholder’s consent to first sale in another Member State as exhausting a distinct national right to control hiring-out where that right is tied to core author’s rights and targets a separate rental market.
- A national intellectual-property measure may be compatible with Articles 30 and 36 EEC when it applies equally to domestic and imported goods and is not a disguised restriction on intra-Community trade.

## Conclusion

The Court held that EEC free-movement provisions did not bar Denmark from enforcing a film copyright rental right against a trader who imported, for rental, videocassettes lawfully first sold in another Member State with weaker rental-right protection, because the rental right was protected property under Article 36 and the Danish rule was non-discriminatory.


Warner Brothers Inc. & Metronome Video ApS v. Christiansen, Case 158/86 (C.J.E.C. 1988)