The IP Brief - October 2026

Background 

Anne Frank Fonds (the Fund) owns the copyright in certain parts of Anne Frank’s Diary in the Netherlands. That copyright lasts until 2037. The Diary is, however, already in the public domain in several other EU member states, including Belgium (PD Countries), with copyright having expired in those countries in 2016.

In 2021, the defendants published a new, scholarly edition of the Diary online, with access geo-blocked to restrict availability to the PD Countries. Any user who tried to access the Diary in the Netherlands was presented with an access denied message, and users accessing the website from elsewhere were required to confirm they were in a PD Country.

In spite of this, the Fund brought a copyright infringement action against the defendants before the Dutch courts, arguing that individuals could still access the Diary in the Netherlands using a VPN. The claim was initially dismissed by the Dutch courts, but the case progressed all the way up to the Netherlands Supreme Court which referred three questions to the CJEU. These can be summarised as follows:

1. Does online publication of a work have to be targeted at a particular country in order for there to be a communication to the public in that country under Article 3(1) of the InfoSoc Directive (Directive 2001/29/EC)? If so, what factors must be considered in that assessment?
2. Can there be a communication to the public in a particular country if, by means of (state-of-the-art) geo-blocking, it is ensured that the website on which the work is published can only be accessed by the public in that country by circumventing the blocking measure using a VPN or similar service?
3. If question 2 is answered in the affirmative, is that communication made by the party who published the work online?

AG Rantos’ Opinion

As we reported back in February (see our blog), AG Rantos’ opinion was that an online publication does not need to be addressed to the public in a specific country in order to constitute a communication to the public in that country. All that is required is that there is an “act of communication” of a work and that that act of communication is to a public.

He then went on to find that where content is published on a website which is subject to effective, state-of-the-art geo-blocking measures, there will be no communication to the public in those blocked territories.

That being the case, he did not need to answer the third question. However, he noted that if the possibility of circumventing geo-blocking measures did amount to a communication to the public, a VPN service provider could not be held liable for the acts of those who use its services to circumvent geo-blocking restrictions. In that scenario, the VPN service provider would simply be acting as an intermediary, unless they actively encourage such unlawful use.

CJEU decision

While the thrust of the CJEU’s decision aligns with AG Rantos’ Opinion, the court reformulated the first two questions in such a way that it didn’t, in fact, expressly address the first question about whether targeting a particular country is required in order for there to be a communication to the public in that country.

Instead, it focussed on answering the combined question, “whether Article 3(1) of [the InfoSoc Directive] must be interpreted as meaning that a work which is in the public domain in certain Member States, but is still protected by copyright in another Member State, and which is published free of charge on a website that incorporates a geo-blocking measure designed to ensure that access to that site is blocked for internet users visiting it from that other Member State, is the subject of a ‘communication to the public’ in that Member State, within the meaning of that provision, when those internet users can circumvent that geo-blocking measure using a VPN or similar service.”

The court’s answer to that question was no, provided that the geo-blocking measure in question is “effective”. In the context of this case, that meant that the geo-blocking measure must be “state-of-the-art” and suitable for achieving the objective of preventing access in those countries where the Diary is still protected by copyright. The fact that a geo-blocking measure can be circumvented (for example, via a VPN) is not decisive in this respect, nor is the fact that other technological measures may take greater account of the copyright holder’s interest (there being a need to balance the copyright holder’s interests with those of the public in enjoying access to the works in PD Countries). 

The court made clear, however, that simply asking the user to confirm that they’re accessing the site from a country in which the work is not protected by copyright will not be sufficient.

Turning to the third question, and given the court’s finding that whether there is a communication to the public in this context depends on the effectiveness of the geo-blocking measures that have been put in place, the court answered this from the perspective of cases where the measures used are ineffective rather than where the measures used can be circumvented. In those circumstances, the court found that the communication would be made by the person who published the work.

Comment

This decision will be welcomed by those looking to publish content online in a copyright-compliant manner. Had the court found otherwise, it would have made it very difficult to share works online without infringing copyright, where copyright has expired in some countries but not others, given no geo-blocking measures will be 100% effective. 

It’s important to note, however, that the judgment goes beyond finding that there will be no communication to the public where effective website geo-blocking is used. Indeed, the CJEU has seemingly imposed an obligation on online publishers who know (or ought reasonably to know) that a work is protected in some EU member states but not others “to adopt effective technological measures to restrict access to the website solely to those internet users [based in PD Countries], failing which, given the freely accessible nature of websites, that person would be giving access to the work concerned to all internet users and would thus be infringing that right”.

Perhaps unfortunately, due to the way the court reframed the questions before it, the CJEU didn’t directly answer the first question referred (about whether targeting a particular country is required in order for there to be a communication to the public in that country). AG Rantos had earlier opined that such targeting is not required (see our blog), but the CJEU did not explicitly confirm or deny that view. One could, however, read the decision (including the sentence quoted above) as implicitly agreeing with AG Rantos that targeting is not required in order for there to be a communication to the public in the EU. If that approach is adopted going forwards, it could lead to divergence with the UK on this point, with the English courts having noted on a number of occasions (including in the High Court’s recent decision in the Peppa Pig and Wolfoo dispute that was handed down on 25 June) that targeting is required in the UK.

The facts

JJH Enterprises (trading as ValueLicensing) (VL) is in the business of selling second-hand licences for Microsoft software products such as Microsoft Office and Microsoft Windows. 

VL claimed that Microsoft had stifled the resale of those licences through its actions in migrating customers from a perpetual licensing model to a subscription-based one, and by including certain restrictions in the underlying enterprise agreements, between 2014 and 2022. It brought a first-instance claim in the Competition Appeal Tribunal (the CAT) against Microsoft, arguing such actions breached competition law in the UK and the EEA (including the EU).

Part of Microsoft’s defence hinged on copyright law. It sought to argue that the copyright in its software products had not been exhausted, that VL had no right to resell the relevant licences in the first place and that VL was in fact itself infringing Microsoft’s copyright. If Microsoft were right on these points (which the parties agreed were to be determined under EU law in force at the time, in the form of the Software Directive, the InfoSoc Directive and relevant CJEU case law), it was common ground that VL’s competition claim would fail.

Microsoft also challenged the CAT’s jurisdiction to adjudicate the copyright issues, arguing that those issues should be determined by the High Court. The CAT found that it did have jurisdiction to hear the copyright aspects of the claim where (as here) doing so was necessary to resolve the competition claim before it, with the two substantive copyright points later being tried as preliminary issues. 

Issues at stake

Two core copyright questions were at the heart of this case. 

The first concerned the correct approach to digital exhaustion for so-called “complex matter” – that is, where works comprise both a computer program protected by the Software Directive and other non-program copyright works (such as icons and user interfaces) that are protected under the InfoSoc Directive.  

The second looked at whether VL could legitimately sub-divide bulk, or volume, licences sold by Microsoft and then resell them. For example, if Microsoft sells 1,000 licences in bulk, can those licences be split up so that VL can sell on a portion (e.g., 500) whilst keeping the rest (e.g., the remaining 500)?

At first instance, the CAT held that all copyright, including that of the non-program works, in the resold software products had been exhausted by virtue of their first sale by Microsoft.  It also found that VL’s sub-division of the relevant licences was permissible.

Microsoft appealed both points (as well as the CAT’s jurisdiction to determine the copyright aspects of the claim) and the Court of Appeal handed down its judgment on 7 July.

The Court of Appeal’s decision

The Court of Appeal upheld the CAT’s finding that it had jurisdiction to hear the copyright aspects of the claim.

Perhaps more importantly, however, is the Court of Appeal’s judgment on the two core copyright questions noted above. 

Approach to digital exhaustion for “complex matter”

As some readers will be aware, exhaustion of rights is treated differently under the Software Directive and the InfoSoc Directive. Under the Software Directive, first sale of a copy of a computer program by the rightsholder (or with their consent) exhausts the distribution right in that copy. This applies equally to tangible and intangible (i.e., downloaded) copies, as per the CJEU’s decision in UsedSoft v Oracle. The distribution right under the InfoSoc Directive, by contrast, is only exhausted on first sale of a tangible object. So, as an example, whilst the distribution right would be exhausted on first sale of a physical book, it would not be exhausted on the first sale of an e-book (as per the CJEU’s decision in Tom Kabinet).

Going back to the Microsoft case, the products in question were made up of computer programs (governed by the Software Directive) and certain non-program works, such as graphic works in the form of icons and user interfaces (governed by the InfoSoc Directive).

The Court concluded that the correct approach to dealing with these types of “complex” products is to consider the product as a whole and to make a judgment about its proper characterisation in order to determine which single regime governs it (Software or InfoSoc Directive), rather than apply both regimes to their respective components. 

Applying this to the Microsoft Office and Windows products in issue, the Court of Appeal agreed with the CAT that these are, in substance, computer programs, with the graphics, user interface and similar works being incidental or having only accessory character. As a result, the Software Directive was found to apply and Microsoft’s copyrights in both the program and non-program works were exhausted on first sale.

Division of bulk licences

The Court of Appeal also upheld the CAT’s decision on the second copyright issue, finding that Microsoft’s bulk licences could lawfully be sub-divided. 

Microsoft sought to argue that the CJEU had already found in UsedSoft that this sort of sub-division is not permitted. However, the Court of Appeal agreed with the CAT that UsedSoft could be distinguished from the facts before it. In UsedSoft, a single copy of the software was downloaded and stored on a central server, with that copy then accessed by individual users in a “hub and spokes” arrangement. Here, however, each copy of the software was found to be independent of the others, with no program running on a central server. 

The Court of Appeal also found that it makes no difference whether the software being licensed is contractually labelled as a single licence for multiple devices or as a bundle of separate licences. What really matters is what the first acquirer does with the original copies after resale. If they keep and retain one or more of the original copies (such that there are more copies in circulation than originally licensed), those retained copies will be unlicensed and infringing. As the Court of Appeal made clear, however, any such failure by the first acquirer will not affect a later purchaser’s right to use the copy it has bought.

Practical takeaways

The Court of Appeal’s decision is a helpful clarification of how copyright exhaustion principles apply in a digital software context. 

As the Court explained, complex products need to be considered in the round to determine which exhaustion rules (Software Directive or InfoSoc Directive) apply. Software providers should take note that bundling non-program works – such as icons, user interfaces and fonts – with program works will not, by itself, prevent exhaustion. 

When it comes to bulk software licensing, the Court of Appeal has made clear that there is no blanket ban on sub-division. Software vendors seeking to control the resale of their products should therefore carefully look at how their software deployment is structured. Contractual labels alone will not determine the outcome.

With public market research projecting strong growth in software resale markets over the years to come, there is a lot at stake here and it is clear to see why this is an important battleground for rightsholders and second-hand licence vendors alike. This remains a case to watch, with Microsoft reportedly looking to appeal to the Supreme Court.

Background and chain of title issues

Shein alleged that Temu had infringed its copyright in photographs used in 2,559 product listings that had been uploaded to Temu’s UK site by third-party merchants (many of whom were also Shein suppliers). The listing photographs fell into three buckets: those taken by Shein employees; those supplied to Shein by agencies (or freelance photographers); and those provided by Shein’s suppliers.

Temu denied infringement and, in the alternative, argued that if infringement was found, it could avail itself of the hosting defence in Regulation 19 of the E-Commerce Regulations.

To manage the scale of alleged infringements, the legal issues were to be tried via a sample-set of 20 product listings (the “trial sample”). By the time of trial, however, Shein had abandoned its claims in all but five of this set, largely due to difficulties in establishing a chain of title to the works, leaving four employee works and a single supplier work referred to as the “Strawberry Nightdress”.

Even then, Shein was found to have initially only held a non-exclusive licence to use the “Strawberry Nightdress” photographs. Shein and the relevant rightsholders had then executed a further agreement as a “catch-up” assignment, pursuant to which Shein also acquired equitable title to accrued rights of action. But, in the end, that still wasn’t enough to save Shein’s claim for copyright infringement in relation to the Strawberry Nightdress photos, as the Temu seller in question was found to have been given consent to use them.

No infringement of employee works

The Court also rejected each of Shein’s infringement claims in relation to the employee works. The key findings were as follows:

• Copying and authorisation: It was common ground that Shein could not bring a successful copyright infringement claim against Temu based on copying as Temu’s servers are located outside the UK. Any copying of the relevant photographs by Temu would therefore have been outside the territorial scope of UK copyright law. Instead, Shein argued that Temu had authorised users of its UK website to reproduce the trial sample photographs by viewing them on their browsers. That argument was given short shrift by the court, which held that such copies fell within the temporary copies exception in s.28A CDPA. Crucially, the court considered the temporary copies to have no independent economic significance to the website user, with the judgment describing the photographs as “the online equivalent of looking at products in a bricks and mortar shop window”.
• Communication to the public: Shein also argued that Temu had communicated the trial sample photographs to a ‘new public’ by making them available on its UK website. That claim also failed as the Court found that Temu’s conduct did not amount to “a deliberate intervention, in full knowledge of the relevant consequences, to give the public access to protected works”. Interestingly, in reaching this conclusion, the High Court followed the CJEU’s decision in Peterson v Google (C-682/18), which was handed down post-Brexit, noting the relevance of that decision to the case before it and the desirability of retaining consistency with the CJEU’s approach.
• Secondary infringement: Finally, Shein argued that Temu had committed secondary infringement of its copyright by exhibiting and distributing the trial sample photographs to users of its UK website whilst knowing (or having reason to believe) that those photos were infringing copies. This claim also failed as the Court found that Temu did not know, and had no reason to believe, that the relevant photographs were infringing copies before they were removed.

Hosting defence

Having found no copyright infringement, the Court was not obliged to consider the hosting defence. The Court nonetheless took the opportunity to note that Temu could have successfully relied on it.

The hosting defence broadly protects platforms from financial liability for storing copyright-infringing material, provided they meet certain criteria, including playing a passive intermediary role. Having surveyed the key CJEU and English authorities, the Court concluded that the core question before it was not the degree of Temu’s control over its general platform and dealings in the abstract, but rather its precise role over the specific disputed content.

Shein pointed to Temu’s alleged involvement in product pricing, product quality and selection, promotions, logistics and customer service, but relied on evidence that the judge deemed “very weak” (with heavy reliance placed on hearsay, third party articles and blog posts). Furthermore, the judge noted that such arguments, even if accepted, missed the mark. They did not demonstrate Temu’s active role over the specific trial sample works, which was instead found to be “of a mere technical, automatic and passive nature”. And, in any event, once aware of any alleged infringements, Temu had acted expeditiously to remove the relevant product listings.

Comment

This is a fascinating case that provides insight into a number of topical issues.

First and foremost, it highlights the importance of establishing chain of title before commencing a copyright infringement claim. Reliance on contractual warranties given by third parties will not be sufficient.

The decision also highlights the risks of diving in too quickly, with Shein itself being found liable under its cross-undertaking in damages for product listings that were wrongly taken down following notifications from Shein under interim injunction orders that had been granted by the Court.

Perhaps most interesting, though, are the Court’s findings on the hosting defence. While the High Court’s judgment can provide some comfort to platform operators that the hosting defence still carries teeth in the UK, in the period between oral argument and judgment, the CJEU issued its own decision in WebGroup Czech Republic and Coyote System (C-188/24 and C-190/24), which has caused concern that the hosting defence in the EU may have somewhat come to an end for most large online platforms. This is because the CJEU’s headline finding in that case suggests that platforms that use algorithms to determine, in their own interest, how, when and in what order users’ content is broadcast or displayed, exercise sufficient control to fall outside the hosting exemption. The CJEU judgment is a notable contrast to the Temu case, in which the hosting defence-related arguments and analysis did not focus on such algorithms or so-called ‘recommender systems’.

Shein has, however, recently received permission to appeal. Platform providers will therefore be watching closely to see how these issues are addressed at the appellate level.

Background 

IlliquidX, Altana and Brevent established a joint venture to set up a fund to invest in Venezuelan distressed debt. The parties entered into a JV agreement, together with a non-disclosure and non-circumvention agreement (NDA) based on a professionally drafted template.

The JV came to an end without launching a fund. Altana later set up its own fund focussed on distressed Venezuelan debt. IlliquidX claimed that, in setting up the fund, Altana and Brevent had misused its confidential information and trade secrets.

The NDA provided protection for broad categories of confidential information, subject to certain exceptions. In particular, the confidentiality undertakings did not apply to information which “at the time of supply is in the public domain” or “subsequently comes into the public domain other than as a result of breach of the undertakings contained in” the NDA.

Altana and Brevent accepted at trial that much of the information IlliquidX was seeking to rely on fell within the definition of “Confidential Information” in the NDA. However, they claimed that the public domain exception applied, arguing that “public domain” extended to any information which was available or had been disclosed without being subject to a duty of confidentiality, such that the exception would apply where (just) one other person was free in law and equity to use that information.

At first instance, the High Court found that the opportunity to set up a sanctions-compliant fund to exploit undervalued Venezuelan debt was confidential information within the meaning of the NDA, that it was not covered by the public domain exception and that Altana and Brevent had misused it.

Altana and Brevent appealed on a number of grounds, including: (i) the meaning of “public domain” in the NDA; and (ii) the judge’s conclusion that none of the information relied on was in the public domain.

Meaning of “public domain”

The Court of Appeal agreed with the High Court that where parties to a professionally-drafted contract use an expression with an accepted meaning in law, that expression will be presumed to bear that meaning unless the wording of the contract indicates that the parties intended otherwise.

The phrase “public domain” has a well-established meaning in the law of confidence - information is in the public domain where it is “so generally accessible that, in all the circumstances, it cannot be regarded as confidential”.

The Court of Appeal went on to find that the references to “public domain” in the NDA had to be construed in accordance with this meaning. There was nothing in the wording of the NDA or the wider factual matrix to suggest that the parties intended “public domain” to bear any other meaning; nor was the court persuaded by the appellants’ argument that the public domain exception should be interpreted broadly given the very broad definition of confidential information - there was no necessary correlation between the two.

Was IlliquidX’s confidential information in the public domain?

That left the Court of Appeal to determine if there were sufficient grounds to interfere with the High Court’s finding that the confidential information relied on by IlliquidX was not in the public domain. It concluded that there weren’t. Whilst certain facts and general information were within the public domain (e.g. that Venezuelan debt was distressed and that it could be traded in spite of US sanctions), the specific confidential information relied on was not.

In reaching that conclusion, the court agreed with the High Court that sending marketing materials to a relatively large number of selected investors (about 200), with appropriate confidentiality markings, did not make them “generally accessible”.

Comment

This decision demonstrates that, absent drafting to the contrary, references to “public domain” in NDAs will generally be interpreted in line with the expression’s established meaning in the law of confidentiality. That meaning focusses on accessibility, rather than secrecy, with the burden being on those seeking to rely on the public domain exception to prove that the information is in the public domain. Parties wishing to broaden or change the intended meaning of “public domain” will need to use clear drafting to do so.