Why is this important to me?
Under the first sale doctrine, the owner of a copyrighted work “lawfully made under” U. S. copyright law can “sell or otherwise dispose of” it without getting permission from the holder of the copyright. Basically, if you legally purchased a Aerosmith CD in the United States, you’re free to lend it to a friend or sell it at your garage sale. However, there is a separate provision of U.S. copyright law that prohibits the importation into the United States of copies of a work ‘acquired outside the U.S. Even though Aerosmith and their record label are American, the company that manufactured the CDs might be foreign.
Who would have thought that selling textbooks on eBay would result in a copyright dispute that is now being decided by the U.S. Supreme Court?
It happened to Supap Kirtsaeng, a graduate student who arranged to import textbooks legally purchased in his native Thailand and then resold them to U.S. buyers on eBay to help pay for his school expenses. The publisher, John Wiley & Sons, filed a lawsuit, arguing that the first-sale doctrine — the right to resell copyrighted works purchased in a legitimate transaction without first obtaining permission from the rights owner — does not apply to works purchased overseas in a so-called gray market.
Because the books weren’t made in the U.S., a federal judge rejected Kirtsaeng’s claim that he was protected under the first-sale doctrine. The U.S. 2nd Circuit Court of Appeals agreed. The appeals court cited a provision in the Copyright Act of 1976 that limits the first-sale doctrine to goods “lawfully made under this title.” The panel said foreign-made goods don’t fit that description.
Federal law states that the owner of any lawfully made copy of a work may “sell, display or otherwise dispose of that particular copy” without the copyright owner’s authorization. But the law also states that importing copies made overseas violates the copyright owner’s exclusive right to distribute that work in the U.S., with limited exceptions.
The outcome of this decision could affect the future of second-hand sales of other intellectual property that is copyright-protected. eBay joined the Owners’ Rights Initiative (ORI), a coalition advocating for a liberal interpretation of the first-sale doctrine, cautioning that a ruling against Kirtsaeng would result in a substantial restriction of the flow of commerce.
Andrew Shore, executive director of the Owners’ Rights Initiative, said in a statement he “hopes that the Supreme Court will take this opportunity to defend owners’ rights and clarify that if you buy something, you own it.” Shore said a ruling in favor of Wiley means “libraries may be unable to lend books, individuals could be restricted from donating items to charities, and businesses and consumers could be prevented from selling a variety of products” like books, electronics or used cars.
“Just as the music industry once limited itself to going after only extreme cases of individuals who illegally downloaded music, the potential is there for this case to pull in a wide swatch of Americans who resell used books and other copyrighted material. The police officer or prosecutor who wants to exert leverage on someone could have this tool at his or her disposal, depending on the outcome of the Court case,” says attorney Martin Sweet of legal information website THELAW.TV.
Kirtsaeng’s attorney argued that allowing copyright holders to sue would give them “endless, eternal downstream control over sales and rentals” of their goods, while also encouraging companies to send manufacturing overseas. Manufacturers balk at the gray market because it undercuts their U.S. sales.
The Association of American Publishers filed an amicus brief supporting Wiley’s position.
“There has been a great deal of ill-founded speculation and fear-mongering about the potential consequences of this case, mainly driven by retail and digital industries whose business models are built on the availability of an unlimited marketplace for used products,” the group stated. “And there’s also a big difference between your resale of a book or device purchased in the U.S. and produced for the U.S. market as compared to hugely-profitable businesses such as Supap Kirtsaeng’s which are created and operated on a mass scale of copyright infringement.”
The high court is expected to deliver its ruling next year.