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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Copyright Basics: The Exclusive Rights of Copyright Holders

Copyright law can be confusing. As my last post focused what material is subject to copyright I wanted to focus this post on the next basic concept: The exclusive rights in copyrighted works.

The rights of copyright holders are outlined in 17 §106 and subject to restrictions laid out in §§ 107-122. Because these posts are meant to be short I will not dive deeply into the restrictions, suffice to say they are filled with nuisances that could fill several copyright textbooks.

Copyright holders have the exclusive rights as outline below

1. The reproduction Right

The reproduction right is the right of the author to make copies of his or her work. Thus the owner of a copyright is the only one authorized to make copies of the work and the right is violated when someone other than the holder of the copyright creates a copy of the work. There are certain situations where the statute allows “unauthorized” copying of work such as in the case of libraries making copies for archival purposes, home video recording, and, more recently, recording of copies onto a home DVR device.

2. The right to prepare derivative works

A “derivative work” is another work which is based on a preexisting work. These can be a “musical arrangement, dramatization, fictionalization, motion picture” or other forms of the original work.  Essentially it means that any work which is based on the original that in itself an original work of authorship. It gives the copyright holder the exclusive right to create new works based on the original. Therefore, making a movie version of a book is an excellent example. The copyright in the derivative work in no way extends or enlarges the “scope, duration, ownership, or subsistence of copyright protection in the preexisting material”. Additionally, the copyright in a derivative work extends only to the material “contributed by the author of such work, as distinguished from the preexisting material employed in the work”. Creating a derivative work does not give the author any right in the material on such the derivative work is based.

This means that only the copyright holder is authorized to make derivative works and anyone who wishes to create such work must obtain the appropriate rights from the author in order to do so.

3. The distribution right

The distribution right can be described as the right of the author of a work to distribute to the public copies of work “by sale or other transfer of ownership, or by rental, lease, or lending.” This means that only the copyright holder has the right to sell or distribute their work. This is an area that sees a lot of action these days as lawsuits involving torrent sites and file sharing often assert that this  right violated by hosting the files or allowing others to download them via torrent programs. Therefore, you do not have the right to share music through computer systems as this it can result in some pretty huge lawsuits.

4. The public performance right

This right applies, as indicated by §106, in the case of “literary, musical, dramatic, and choreographic works, and pantomimes, and motion pictures and other audiovisual work”.

For this right to be infringed the work has to be “performed” and it has to be to the “public”. The statute doesn’t define performance but it is not limited to someone standing there and singing a song or preforming a play; it also can apply to playing music in a café.  Performing a work publically means to “perform or display it at a place open to the public or at any place where a substantial number of persons outside of a normal circle of a family is gathered.

Really this just means that the copyright holder has the exclusive right to perform the work or authorize the performance of the work publically; if someone wants to play music at their bar or restaurant they have to obtain these rights and pay royalties to a performing rights society such as the American Society of Composers, Authors and Publishers (ASCAP), and Broadcast Music, Inc. (BMI).

5. The right to display the work publically

This right applies in the case of literary, musical, dramatic, and choreographic works, pantomimes, and pictorial, graphic, or…sculptural works.” This right also applies to individual images of motion picture or other A/V work.  §101 defines displaying a work as showing “a copy of it, either directly or by means of a film, slide, television image, or any other device or process…”

This right is quite similar to the public performance right. That is, the holder of the copyright has the exclusive right to display the work except as limited in §109 and the first sale doctrine

I have decided not to include two rights listed under § 106, the right to perform work by means of digital audio transmission and the right of attribution and integrity. I did this not only for the sake of length but also because the digital performance right is exceedingly complicated by §114 of the act. The right of attribution and integrity, also known as the moral rights, are infrequently enforced and only a part of the copyright act because of the provisions of the Berne convention, most likely I will return to “moral rights” in a subsequent post.

As always, this information is not legal advice. Should you have a legal issue related to copyright please contact an attorney.

Raptorchef’s Weekly Soft IP Round-up. Week of April 8, 2013

This week was quite slow in Soft-IP related news. Below find links to this week’s most interesting stories on Soft IP Law.

Should your company in South Korea be worried about the tense situation with North Korea? A great post by Sean Hayes at the Korean Law blog.  Full Story

In a move to streamline international trademark registration, India joins he Madrid Protocol. This will enable rights holders in India to obtain cost effective registration. The treaty will be effective in India on July 8, 2013. Full Story

In a short news week this story seems to have dominated any Trademark related news.  Texas restaurant chain Trademarks the term “Breastaurant” used in relation to food ordered with a “scenic” view. Full Story

USTPO apologizes to Apple and determines its initial refusal of a trademark for “IPAD Mini” was premature. The trademark examiner has decided to allow the mini mark as long as Apple disclaims the right to use the word mini. Full Story

Fifty Shades of Grey and a grey area of Copyright law. Movie studio asserts material for movie adaptation is in the public domain because most of the content of the book was user submitted fan-fiction. Full Story

As always, China Law Blog has good advice on protecting your Trademarks in the dynamic market. Counterfeit goods and working in China. Full Story

As Maria Pallante testifies for comprehensive changes to the copyright law the need for protection and the purpose of copyright remains the same. Protection encourages creativity and new work. Full Story

A new study shows that having a Trademark attorney greatly increases the chances your trademark will be approved. Full Story