Supreme Court and the First Sale Doctrine

In a recent Supreme Court case Kirtsaeng v. John Wiley & Sons, Inc., the justices were tasked with interpreting the first sale doctrine of the copyright act and how it applied to goods manufactured abroad. The pivotal question which the court decided was whether a person who lawfully obtains copyrighted work abroad and subsequently resells it violates the copyright owner’s distribution rights. This required the court to interpret the statutory language “lawfully made under this title” and whether the importation provision of the copyright act prohibited such resale in the United States. Luckily the court sided with the Kirtsaeng and held that the first sale doctrine applies to copies of copyrighted work lawfully made abroad and the import provision is limited by the first sale doctrine in a manner which does not prohibit the sale of lawfully purchased material.

The petitioner, Kirtsaeng, was studying in the United States and is a citizen of Thailand. While studying here he discovered, as nearly every penny pinching college student in America has, that books are quite expensive in the United States. As it turned out the books were much less expensive his native country. Therefore, he did what any Ramen eating dorm-dweller might do, he had his family buy the books in Thailand and mail them back to the United States at a substantial savings. It seems that saving money was not his only motivation because Kirtsaeng also bought the books and resold them in the United States at a higher price. This annoyed publisher enough to sue the student for violating its distribution rights.

John Wiley & Sons, Inc. publishes academic textbooks. Wiley often licenses its material to its Asian subsidiary to “publish, print, and sell Wiley’s textbooks abroad.” These books are printed in English and, from what I can tell, contain the same information as the books printed and sold in the United States; except they carry a notice which warning buyers that the books may not be sold outside the country of origin.

As I posted in my previous entry on the exclusive rights of copyright holders, the rights are limited by §§ 107-122. Section 109 is the first sale doctrine, which essentially says that if you buy a book, a CD (not a digital download *cough*), magazine, or any other copyrighted work the original owner loses any right to distribution they had. Therefore you are free to sell it, give it, throw it away, or take it on a trip with you to Canada and sell it to your friend there. You don’t need permission from the copyright owner; if you did it would create some pretty ridiculous results. The text of §109 says:

“Notwithstanding the provisions of section 106(3) [the section that grants the owner exclusive distribution rights], the owner of a particular     copy or phonorecord lawfully made under this title . . . is entitled, without the authority of the copyright owner, to sell or otherwise dispose of the possession of that copy” 17 U.S.C. § 109

As previously mentioned the case turned on the parties interpretation of “lawfully made under this title” in § 109.

Kirtsaeng contend that the because the books he sold were lawfully made in Thailand and lawfully purchased, the first sale doctrine applied and he could not be liable for violating the distribution rights of Wiley. The books were lawfully made because Wiley’s Asian subsidiary sold and manufactured the books in Asia; the books he was selling were not unlawfully copied without Wiley’s permission, and therefore were subject to the first sale doctrines limitation.

Wiley argued that the unauthorized importation and resale was a violation of its distribution rights and a violation of the copyright acts import prohibition. Previous courts and the solicitor general read the language “lawfully made under this title” to restrict the first sale doctrine geographically. Wiley asserted that these words are only effective where the United States Copyright Act is effective and therefore the first sale doctrine cannot apply to copies made outside the United States, regardless of whether the goods were lawfully manufactured. Furthermore, Wiley says petitioners actions are further limited by §602(a)(1) of the copyright act which says “[i]importation into the United States, without the authority of the owner of the copyright under this title, of copies…of a work that have been acquired outside the United States is an infringement of the exclusive right to distribute copies…under section 106…” . 17 U.S.C §602(a)(1). The court disagreed.

The court noted that §602(a)(1) may make it clear that importing a copy without permission violated the distribution right but that right is limited by the first sale doctrine, just as §106 of the copyright act. This was first discussed in Quality King Distributors, Inc. v. L’anza Research Int’l, Inc. 523 U.S. 135 (1998). However, the court had to decide whether the fact that the books were manufactured outside the United States created a distinction between this case and Quality King. The Court determined that it does not create an important distinction between the two cases. The import limitation does not apply to lawfully purchased materials and a person who purchases a book abroad may subsequently resell that book without the publisher’s permission. Therefore, Kirsaeng was free to resell the books and there is no geographical limitation to the first sale doctrine.

If you would like to read the entire case in all its 74 pages you may download it here. For further analysis and amicus briefs, check out the Kirtsaeng v. John Wiley & Sons, Inc. page on the SCOTUS blog.

Raptorchef

 

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