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MPAA Eyes Supreme Court Re-Selling Case

23 Oct, 2012 By: Chris Tribbey

The First Sale Doctrine — which allows people to resell what they own without interference from copyright holders — is being challenged in a case before the Supreme Court, at least when it comes to items made outside of the United States.

The Motion Picture Association of America (MPAA) and the Recording Industry Association of America (RIAA) are among the groups that have weighed in on the case, arguing that the Supreme Court should uphold a lower court’s ruling deeming it illegal for unauthorized sellers to resell items bought overseas.

The case, Kirtsaeng v. Wiley, stems from 2008 when graduate student Supap Kirtsaeng bought textbooks from Thailand and resold them in the United States for cheaper than what they were being sold for here in the United States. A book publisher, John Wiley & Sons Inc., successfully sued Kirtsaeng, claiming he violated copyright law as it pertains to imported goods, winning a judgment of $600,000. Kirtsaeng cited the First Sale Doctrine as his defense.

In mid-2011 the U.S. Court of Appeals for the Second Circuit upheld a lower court’s ruling. The Supreme Court is set to hear oral arguments regarding the case Oct. 29.

The MPAA argues in a brief to the court that its entire home entertainment business could be undermined, should the court reverse the decision.

“Like the sale of ‘pirated’ copies, unauthorized importation of copies of protected works made overseas and intended only for sale in a foreign market can undercut or eliminate the economic benefit that Congress intended to provide under the Copyright Act,” the brief reads. “Were this court to reverse settled law and accept petitioner’s interpretation of the First Sale Doctrine, MPAA’s and RIAA’s members and affiliates could face a significant threat of harm from unauthorized importation, contrary to the balance of rewards and incentives Congress struck in the Copyright Act.”

The First Sale Doctrine should only apply to products made domestically, MPAA argues, and “This settled understanding of the First Sale Doctrine has long functioned effectively in conjunction with importation laws, contractual arrangements, and business practices to protect the rights of copyright owners while ensuring a free flow in commerce of copies of copyrighted works.”

Changing the law would hurt international windows for DVDs and Blu-ray Discs overseas, the MPAA argues.

However, Corinne McSherry, Electronic Frontier Foundation’s intellectual property director, said in a statement that upholding the lower court’s ruling could have unintended consequences, keeping libraries from loaning out foreign-made content.

“Not only is this bad for consumers, it could have significant consequences for libraries and other organizations and businesses that lend products,” she said.

Sherwin Siy, deputy legal director of Public Knowledge added: “If the lower court’s decision is upheld, it could mean that the owner of a good made outside the U.S., whether that owner is an individual or a business, may need to get permission from a copyright owner every time he or she decides to sell, or even give away, the good. It’s nonsensical.” 

Public Knowledge and the Electronic Frontier Foundation were among the groups who filed a brief urging the Supreme Court to strike down the lower court’s ruling.

“To be clear … the potential impact of the decision reaches well beyond redistributions of textbooks, or even classic copyright-protected works like sound recordings, audiovisual works, compositions, paintings, drawings and sculptures,” the brief reads. “Today, a wide range of other commercial products also contain copyright-protected computer programs, such as automobiles, microwaves, calculators, mobile phones, tablets and personal computers.”

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