Case C-516/13, Dimensione Direct Sales and Labianca – furniture adverts and the distribution right in copyright law

The EU’s InfoSoc Directive 2001/29 grants authors a raft of rights to enable them to control the use of their original works or reproductions. For example, Article 4 allows an author to control ‘distribution’, ‘by sale or otherwise’. But does this mean the author’s distribution right extends as far as adverts, and if so, does it matter that no purchases actually result from the sales advert?

Facts
An Italian branch of a company called Knoll manufactures designer furniture. The company has showrooms across Europe, and its parent company is the Pennsylvanian-based ‘Knoll Inc’.

A part of Knoll’s product range includes not only specific pieces of furniture designed by Marcel Breuer but also specific pieces designed by Ludwig Mies van der Rohe.

However, the Italian company is not the only one to sell those pieces of furniture. Dimensione Direct Sales et Labianca is another Italian company which also sells those pieces as part of its product range, and it sells them direct to consumers’ homes.

The spark to this dispute is the three-pronged marketing and sales strategy of Dimensione Direct Sales and Labianca. First, it runs a website, which can be consulted in various European languages, including German. Second, it places adverts in the traditional print media; indeed, between 2005 and 2006 its adverts were regularly to be seen in several German magazines and newspapers. And third, the company also produces a sales catalogue, which in the German version also contains this little piece of text that roughly translates as: ‘Although you buy your furniture in Italy, you only pay on collection or delivery by means of a bank transfer which, if you would like, we can arrange.’

Knoll objected to Dimensione’s adverts in Germany. It sued for breach of copyright and unfair competition. In respect of its copyright claims, it asserted that the furniture was applied art, which was protected by copyright. It enjoyed exclusive rights to use those particular pieces of furniture that were designed by Breuer. Its parent company enjoyed the exclusive rights on those particular pieces of furniture that had been designed by van der Rohe. Together then, it enjoyed the exclusive rights over the right to offer the original or copies of the those particular works to the public for sale, pursuant to Article 17(1)(2) of the German Copyright Act.

Therefore, Knoll sought an injunction to stop Dimensione from offering for sale, furniture that originated from either it or its parent company, or which corresponded to the particular designs of specific designers. It also sought damages from Dimensione. At first instance, Knoll was successful but there was an appeal.

At the German Supreme Court
Knoll’s action was based on Article 17(1) of the German Copyright Act. The provision governs the control over originals or reproductions of works that are either offered to the public or put into circulation. It corresponds to the distribution right enshrined in Article 4(1) of the InfoSoc Directive (2001/29), which provides:

Member States shall provide for authors, in respect of the original of their works or of copies thereof, the exclusive right to authorise or prohibit any form of distribution to the public by sale or otherwise.

This plank of EU law was designed to offer a maximum rather than a minimum level of protection.

That said, the success of the appeal seemed to turn on three issues which to date had not been addressed in the CJEU’s case law.

The first issue was whether the ‘distribution right’ in Article 4(1) of the Directive included the right to offer the original or copies of the work to the public for sale. The German Supreme Court turned to the CJEU’s judgments, and it recalled that in Case C-456/06 Peek & Cloppenburg, the CJEU had held that there would be a distribution to the public of an original or copies only where there was a transfer of the ownership of that object. As a result, neither granting to the public the right to use reproductions of a work protected by copyright nor exhibiting to the public those reproductions without actually granting a right to use them could constitute this form of distribution.

Now according to the German Supreme Court, the CJEU’s reasoning would not preclude an assumption that an author’s distribution right included an offer to purchase either the original work or copies of it. A distribution by way of sale, within the meaning of Article 4(1) of the Directive, required a transfer of ownership. Indeed, the CJEU had said this at paragraph 36 of its judgment:

It follows that the concept of distribution to the public, otherwise than through sale, of the original of a work or a copy thereof, for the purpose of Article 4(1) of Directive 2001/29, covers acts which entail, and only acts which entail, a transfer of the ownership of that object. The information provided by the referring court shows that that clearly does not apply to the acts at issue in the main proceedings.

In view of that paragraph, the German Supreme Court noted that the inference could be drawn that the distribution right would not cover preparatory acts of transferring ownership, but it would only cover acts that were linked to a transfer of ownership of the object. Thus, an offer to acquire either the original, or reproductions of it, would constitute a ‘transfer of ownership linked to the object’ if there was an intention to transfer ownership. That would not be the case if a work was either used or exhibited and there was no such intention to transfer property. Therefore, an author’s ‘distribution right’ in Article 4(1) of the Directive might well be interpreted as including the right to offer the original or copies of the work to the public for sale.

The second issue was then whether the distribution right covered only sales contracts or extended as far as advertising. In that context, the German Supreme Court recalled the operative part of the CJEU’s judgment in C-5/11, Donner where the CJEU had held:

A trader who directs his advertising at members of the public residing in a given Member State and creates or makes available to them a specific delivery system and payment method, or allows a third party to do so, thereby enabling those members of the public to receive delivery of copies of works protected by copyright in that same Member State, makes, in the Member State where the delivery takes place, a “distribution to the public” under Article 4(1) of [the] Directive …

The German Supreme Court read this together with paragraph 26 of the CJEU’s reasoning in Donner, where it had explained:

It must be observed that the distribution to the public is characterised by a series of acts going, at the very least, from the conclusion of a contract of sale to the performance thereof by delivery to a member of the public. Thus, in the context of a cross-border sale, acts giving rise to a ‘distribution to the public’ under Article 4(1) of Directive 2001/29 may take place in a number of Member States. In such a context, such a transaction may infringe on the exclusive right to authorise or prohibit any forms of distribution to the public in a number of Member States.

The difficulty for the German court was that the CJEU had used the phrase ‘at the very least’. Now the Advocate General in that case was Niilo Jääskinen and he had said:

54. Making available to the public through sale covers the chain of activities from offers of sale through to the conclusion of sales contracts and their implementation. On the other hand, in my opinion the mere advertising of copies of copyright protected works falling short of the making of an offer for sale is not included in the exclusive distribution right of authors, even though protection extends to this under trade mark law.

In other words, he had defended the view that the author’s exclusive right would only cover acts from the sales offer but not, as the German Supreme Court put it, ‘advertising measures’.

According to the German Supreme Court, and in light of the views of the CJEU and the Advocate General, there was doubt whether the distribution right in Article 4 of the Directive covered offers to sell reproductions of the work and whether, as the case may be, such an offer would include not only contractual offers but also ‘advertising measures’. Further doubt arose as to whether the distribution right would also be infringed even where offers did not actually result in the purchase of the reproductions.

Here, the German Supreme Court flagged up its earlier judgment in Wagenfeld-Leuchte, and was minded to answer its own questions in the affirmative.

However, Article 4 of the Directive needed interpretation. Besides a literal interpretation, the provision also had to be interpreted in light of its aims and structure of the rules of which it formed a part. In that respect, Recitals 4 and 9 talked about a high level of protection. And Recital 11 talked of the need for ‘A rigorous, effective system for the protection of copyright and related rights is one of the main ways of ensuring that European cultural creativity and production receive the necessary resources and of safeguarding the independence and dignity of artistic creators and performers’.

If those goals were going to be attained, then according to the German Supreme Court’s judgment in Wagenfeld-Leuchte, and a whole host of legal commentary written by leading specialists on German copyright law, then when Article 4 referred to ‘the exclusive right to authorise or prohibit any form of distribution to the public by sale or otherwise’, it would be essential to interpret this as encompassing offering reproductions for sale.

Equally, the German Supreme Court remarked that if the aims of the Directive were going to be achieved, the distribution right should also be infringed even if the ‘advertising measures’ did not result in purchases being made at the end of the day. This was because the judges felt that a mere offer could in and of itself constitute a threat to the commercial opportunities of the right holder.

Because of the uncertainties surrounding the correct interpretation of EU law, IP law specialist President Bornkamm, and four other judges of the German Supreme Court, decided to make a reference to the CJEU.

Questions Referred
According to the UK’s Intellectual Property Office, the German Supreme Court has asked:

1. Does the distribution right under Article 4(1) of Directive 2001/29/EC include the right to offer the original or copies of the work to the public for sale?
If the first question is to be answered in the affirmative:
2. Does the right to offer the original or copies of the work to the public for sale include not only contractual offers, but also advertising measures?
3. Is the distribution right infringed even if no purchase of the original or copies of the work takes place on the basis of the offer?

Comment
The scope of the distribution right in copyright law in the context of websites and E-Commerce has also been raised in a recent trade mark reference from Denmark, see further Case C-98/13, Martin Blomqvist – deliberately purchasing a fake Rolex from China.

The scope of the distribution right and the ability of an author to control ‘adaptations’ of a work arises in the context of a reference from The Netherlands, see further Case C-419/13, Art & Allposters International – from paper art poster to canvas picture.

Update – 23 July 2014
The Fourth Chamber is due to hear this case on 11 September 2014.

Update – 5 November 2014
The Opinion of Advocate General Cruz Villalón is expected on 4 December 2014.

Update – 26 April 2015
The judgment of the Fourth Chamber is due on 13 May 2015.

Update – 13 May 2015
Judgment
A version of the CJEU’s judgment in Case C-516/13, Dimensione Direct Sales and Labianca ECLI:EU:C:2015:315 is reproduced below. The reproduction is not authentic. Only the versions of the document published in the ‘Reports of Cases’ or the ‘Official Journal of the European Union’ are authentic. The source of the reproduction is the Eur-Lex Europa web site. The information on that site is subject to a disclaimer and a copyright notice.

 

JUDGMENT OF THE COURT (Fourth Chamber)

13 May 2015 ( )

(Reference for a preliminary ruling — Copyright — Directive 2001/29/EC — Article 4(1) — Distribution right – Concept of ‘distribution to the public’ — Offer for sale and advertising by a trader of a Member State on its website, by direct mail and in the press in another Member State — Reproductions of protected furniture for sale without the consent of the holder of the exclusive distribution right — Offer or advertising not leading to the purchase of the original or copies of a protected work)

In Case C‑516/13,

REQUEST for a preliminary ruling under Article 267 TFEU, from the Bundesgerichtshof (Germany), made by decision of 11 April 2013, received at the Court on 27 September 2013, in the proceedings

Dimensione Direct Sales Srl,

Michele Labianca

v

Knoll International SpA,

THE COURT (Fourth Chamber),

composed of L. Bay Larsen, President of the Chamber, K. Jürimäe (Rapporteur), J. Malenovský, M. Safjan and A. Prechal, Judges,

Advocate General: P. Cruz Villalón,

Registrar: K. Malacek, Administrator,

having regard to the written procedure and further to the hearing on 11 September 2014,

after considering the observations submitted on behalf of:

–        Dimensione Direct Sales Srl, by H.-C. Salger, Rechtsanwalt,

–        Labianca, by S. Dittl, Rechtsanwalt,

–        Knoll International SpA, by M. Goldmann, Rechtsanwalt,

–        the Spanish Government, by L. Banciella Rodríguez-Miñón, acting as Agent,

–        the European Commission, by F.W. Bulst and J. Samnadda, acting as Agents,

after hearing the Opinion of the Advocate General at the sitting on 4 December 2014,

gives the following

Judgment

1        This request for a preliminary ruling concerns the interpretation of Article 4(1) of Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society (OJ 2001 L 167, p. 10).

2        The request has been made in proceedings between, on the one hand, Dimensione Direct Sales Srl (‘Dimensione’), a company incorporated under Italian law, and Mr Labianca and, on the other, Knoll International SpA (‘Knoll’), a company incorporated under Italian law, concerning an alleged infringement of Knoll’s exclusive distribution right resulting from offers for sale, made by Dimensione, of reproductions of furniture protected by copyright in Germany through a targeted advertising campaign directed at that Member State.

 Legal context

 International law

3        On 20 December 1996 the World Intellectual Property Organisation (WIPO) adopted in Geneva the WIPO Copyright Treaty (‘CT’), which was approved on behalf of the Community by Council Decision 2000/278/EC of 16 March 2000 (OJ 2000 L 89, p. 6).

4        Article 6 of the CT, headed ‘Right of distribution’, provides, in paragraph 1:

‘Authors of literary and artistic works shall enjoy the exclusive right of authorising the making available to the public of the original and copies of their works through sale or other transfer of ownership.’

 EU law

5        Recitals 9 to 11 and 28 in the preamble to Directive 2001/29 state:

‘(9)      Any harmonisation of copyright and related rights must take as a basis a high level of protection, since such rights are crucial to intellectual creation. …

(10)      If authors or performers are to continue their creative and artistic work, they have to receive an appropriate reward for the use of their work. …

(11)      A rigorous, effective system for the protection of copyright and related rights is one of the main ways of ensuring that European cultural creativity and production receive the necessary resources and of safeguarding the independence and dignity of artistic creators and performers.

(28)      Copyright protection under this Directive includes the exclusive right to control distribution of the work incorporated in a tangible article. The first sale in the [European Union] of the original of a work or copies thereof by the rightholder or with his consent exhausts the right to control resale of that object in the [European Union]. …’

6        Article 4 of that directive, entitled ‘Distribution right’, provides:

‘1. Member States shall provide for authors, in respect of the original of their works or of copies thereof, the exclusive right to authorise or prohibit any form of distribution to the public by sale or otherwise.

2. The distribution right shall not be exhausted within the [European Union] in respect of the original or copies of the work, except where the first sale or other transfer of ownership in the [European Union] of that object is made by the rightholder or with his consent.’

 German law

7        In accordance with Paragraph 15(1)(2) of the Law on copyright and related rights (Gesetz über Urheberrecht und verwandte Schutzrechte — Urheberrechtsgesetz) of 9 September 1965 (BGBl. 1965 I, p. 1273), the author is to have the exclusive right to exploit his work in material form. That right is to include in particular the right of distribution.

8        Paragraph 17(1) of that Law, as amended, provides:

‘The right of distribution is the right to offer to the public or to put into circulation the original or copies of the work.

…’

 The dispute in the main proceedings and the questions referred for a preliminary ruling

9        Knoll belongs to the Knoll group, whose parent company, Knoll Inc., has its headquarters in Pennsylvania (United States). That group manufactures high-value furniture and sells it worldwide. Knoll distributes, inter alia, ‘Wassily’ chairs and ‘Laccio’ tables designed by Marcel Breuer and ‘Barcelona’ chairs, stools, couches and tables, ‘Brno’ and ‘Prague’ chairs, and a ‘cantilever’ chair designed by Ludwig Mies van der Rohe (together, ‘the protected designs’). Knoll is authorised to assert the exclusive copyright, held by its parent company, in those designs protected in Germany.

10      Dimensione is a private limited company whose Managing Director is Mr Labianca. Dimensione distributes designer furniture by direct sale in Europe and offers furniture for sale on its website.

11      In 2005 and 2006, Dimensione advertised furniture similar to the protected designs on its website, which is available in German, and in various German daily newspapers and magazines and in an advertising brochure, stating as follows:

‘Buy your furniture from Italy, but pay nothing until collection or delivery by a forwarding agent authorised to take payment (service arranged on request).’

12      Since it believed that the items of furniture offered for sale by Dimensione were imitations or counterfeit versions of the protected designs, Knoll brought an action against Dimensione and Mr Labianca before the Landgericht Hamburg (Regional Court, Hamburg) seeking an order prohibiting them from offering that furniture for sale in Germany. In support of its action, Knoll submitted that those items of furniture are protected under copyright law as works of applied art. In its view, by advertising copies of the protected designs in Germany, Dimensione infringed its rights and those of its parent company under Paragraph 17(1) of the Law on copyright and related rights of 9 September 1965, as amended.

13      The Landgericht Hamburg granted Knoll’s application. The Hanseatisches Oberlandesgericht Hamburg (Higher Regional Court, Hamburg), ruling on the appeal brought by Dimensione and by Mr Labianca, upheld the judgment given at first instance. Dimensione and Mr Labianca then brought an appeal on a point of law (‘Revision’) before the Bundesgerichtshof (the referring court).

14      The Bundesgerichtshof observes that the success of that appeal is dependent on the interpretation of Article 4(1) of Directive 2001/29 and in particular the question whether the distribution right laid down in that provision includes the right to offer the original or a copy of a protected work to the public for sale. If that question is to be answered in the affirmative two further questions arise, namely, first, whether the right to offer the original of a work or copies of it also includes the exclusive right to advertise those objects, and, second, whether the distribution right is infringed where no purchase of such an original or such copies takes place on the basis of the offer for sale of them. The referring court takes the view that those questions must be answered in the affirmative.

15      In those circumstances, the Bundesgerichtshof decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:

‘1.      Does the distribution right under Article 4(1) of Directive 2001/29 include the right to offer the original or copies of the work to the public for sale?

If the first question is to be answered in the affirmative:

2.      Does the right to offer the original or copies of the work to the public for sale include not only contractual offers, but also advertising measures?

3.      Is the distribution right infringed even if no purchase of the original or copies of the work takes place on the basis of the offer?’

 Consideration of the questions referred

 Admissibility

16      At the outset, it must be noted that Dimensione and Mr Labianca claim, in essence, that the first question is hypothetical because, by using the word ‘offer’, it refers to the contractual offer which, by its nature, is binding on the seller, whereas the facts at issue in the main proceedings concern only advertising measures which, under German law, are not binding on the seller, but constitute merely an invitation, sent to potential buyers, to submit an offer to buy to the seller.

17      In that regard, suffice it to note that, according to settled case-law of the Court, questions relating to the interpretation of EU law, referred by the national court in the legal and factual context which it defines under its jurisdiction, enjoy a presumption of relevance (see, inter alia, judgment in X, C‑651/11, EU:C:2013:346, paragraph 20 and the case-law cited). The Court may refuse to rule on a question referred by a national court only where it is quite obvious that the interpretation of EU law that is sought is unrelated to the actual facts of the main action or its purpose, where the problem is hypothetical, or where the Court does not have before it the factual or legal material necessary to give a useful answer to the questions submitted to it (judgment in Chartered Institute of Patent Attorneys, C‑307/10, EU:C:2012:361, paragraph 32 and the case-law cited).

18      However, that is not the case here. In fact, the case in the main proceedings concerns Dimensione’s commercial practice consisting both of offers to sell and advertising measures which do not give rise to the purchase of protected designs.

19      Therefore, the first question must be found to be admissible.

 Substance

20      By its questions, which should be examined together, the referring court asks, in essence, whether Article 4(1) of Directive 2001/29 must be interpreted as meaning that it allows a holder of an exclusive right to distribute a protected work to prevent an offer for sale or an advertisement of the original or a copy of that work, even if it is not established that that offer or advertisement gave rise to the purchase of the protected object by an EU buyer.

21      In accordance with that provision, an exclusive right is granted to authors, in respect of the original of their works or of copies thereof, to authorise or prohibit any form of distribution to the public by sale or otherwise.

22      It should be borne in mind that the notion of ‘distribution’ under that provision, constitutes an independent concept of EU law, the interpretation of which cannot be contingent on the legislation applicable to transactions in which a distribution takes place (see, to that effect, judgment in Donner, C‑5/11, EU:C:2012:370, paragraph 25).

23      It also follows from the case-law of the Court that, since Directive 2001/29 serves to implement in the European Union its obligations under, inter alia, the CT and, according to settled case-law, EU legislation must, so far as possible, be interpreted in a manner that is consistent with international law, in particular where its provisions are intended specifically to give effect to an international agreement concluded by the European Union, the notion of ‘distribution’, contained in Article 4(1) of that directive, must be interpreted in accordance with Article 6(1) of the CT (judgment in Donner, C‑5/11, EU:C:2012:370, paragraph 23).

24      The notion of ‘distribution to the public … by sale’ in Article 4(1) of that directive therefore has the same meaning as the expression ‘making available to the public … through sale’ in Article 6(1) of the CT (see, to that effect, judgment in Donner, C‑5/11, EU:C:2012:370, paragraph 24).

25      Taking that context into account, the Court specifically found that distribution to the public is characterised by a series of acts going, at the very least, from the conclusion of a contract of sale to the performance thereof by delivery to a member of the public. A trader in such circumstances bears responsibility for any act carried out by him or on his behalf giving rise to a ‘distribution to the public’ in a Member State where the goods distributed are protected by copyright (judgments in Donner, C‑5/11, EU:C:2012:370, paragraphs 26 and 27, and in Blomqvist, C‑98/13, EU:C:2014:55, paragraph 28).

26      It follows from that line of case-law, including the words ‘at the very least’ used by the Court, that it is not excluded that the acts or steps preceding the conclusion of a contract of sale may also fall within the concept of distribution and be reserved, exclusively, to the holders of copyright.

27      Although the Court has already held that distribution to the public must be considered proven where a contract of sale and dispatch has been concluded (judgment in Blomqvist, C‑98/13, EU:C:2014:55, paragraph 29), the same is true of an offer of a contract of sale which binds its author. In fact, such an offer constitutes, by its very nature, an act prior to a sale being made.

28      As regards an invitation to submit an offer, or a non-binding advertisement for a protected object, those also fall under the series of acts taken with the objective of making a sale of that object. Indeed, the Court held in paragraph 30 of the judgment in Donner (C‑5/11, EU:C:2012:370) that a trader who directs his advertising at members of the public residing in a given Member State and creates or makes available to them a specific delivery system and payment method, thereby enabling those members of the public to receive delivery of copies of works protected in that Member State, makes, in the Member State where the delivery takes place, a ‘distribution to the public’ under Article 4(1) of Directive 2001/29.

29      The Court has also held, concerning goods coming from a non-member State which are copies of goods protected in the European Union by copyright, that those goods may infringe that right where it is proven that they are intended to be put on sale in the European Union, such proof being provided, inter alia, where it turns out that the goods have been sold to a customer in the European Union or offered for sale or advertised to consumers in the European Union (see, to that effect, judgment in Blomqvist, C‑98/13, EU:C:2014:55, paragraph 32).

30      The same interpretation applies by analogy in the case of a commercial act, such as an offer for sale or an advertisement addressed by the trader of a Member State, through its website, to consumers located in the territory of another Member State in which the objects concerned are protected by copyright.

31      There may be an infringement of the exclusive distribution right, under Article 4(1) of Directive 2001/29, where a trader, who does not hold the copyright, sells protected works or copies thereof and addresses an advertisement, through its website, by direct mail or in the press, to consumers located in the territory of the Member State in which those works are protected in order to invite them to purchase it.

32      It follows from that conclusion that it is irrelevant, for a finding of an infringement of the distribution right, that such advertising is not followed by the transfer of ownership of the protected work or a copy thereof to the purchaser.

33      Indeed, although it is true that the Court has held, in its judgment in Peek & Cloppenburg (C‑456/06, EU:C:2008:232, paragraphs 33, 36 and 41), which concerned the option of using reproductions of a protected work, that the concept of distribution to the public of the original of a work or a copy thereof, for the purpose of Article 4(1) of Directive 2001/29, entails a transfer of the ownership of that object, the fact remains that an infringement of the distribution right can be observed where consumers located in the territory of the Member State in which that work is protected are invited, by targeted advertising, to acquire ownership of the original or a copy of that work.

34      That interpretation is consistent with the objectives of that directive set out in recitals 9 to 11, which state that the harmonisation of copyright must take as a basis a high level of protection, that authors have to receive an appropriate reward for the use of their work and that the system for the protection of copyright must be rigorous and effective (see judgment in Peek & Cloppenburg, C‑456/06, EU:C:2008:232, paragraph 37).

35      In the light of the foregoing considerations, the answer to the questions referred is that Article 4(1) of Directive 2001/29 must be interpreted as meaning that it allows a holder of an exclusive right to distribute a protected work to prevent an offer for sale or a targeted advertisement of the original or a copy of that work, even if it is not established that that advertisement gave rise to the purchase of the protected work by an EU buyer, in so far as that that advertisement invites consumers of the Member State in which that work is protected by copyright to purchase it.

 Costs

36      Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.

On those grounds, the Court (Fourth Chamber) hereby rules:

Article 4(1) of Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society must be interpreted as meaning that it allows a holder of an exclusive right to distribute a protected work to prevent an offer for sale or a targeted advertisement of the original or a copy of that work, even if it is not established that that advertisement gave rise to the purchase of the protected work by an EU buyer, in so far as that advertisement invites consumers of the Member State in which that work is protected by copyright to purchase it.

[Signatures]


Language of the case: German.

 
 
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