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Supreme Court Expands First Sale Interpretation

19 Mar, 2013 By: Chris Tribbey

The Supreme Court March 19 ruled 6-3 in favor of a graduate student who bought textbooks from Thailand and resold them in the United States, ruling that the first-sale doctrine under U.S. copyright law extends to products purchased internationally.

The first sale doctrine allows consumers to resell what they own without interference from copyright holders. The Motion Picture Association of America (MPAA) and the Recording Industry Association of America were among the groups arguing that the first sale doctrine should only apply to products purchased domestically.

Justice Stephen Breyer, writing the majority’s opinion, said that interpretation “could prevent a buyer from domestically reselling or even giving away copies of a video game made in Japan, a film made in Germany, or a dress (with a design copyright) made in China, even if the copyright holder has granted permission for the foreign manufacture, importation, and an initial domestic sale of the copy.”

“Can, for example, someone who purchases, say at a used bookstore, a book printed abroad subsequently resell it without the copyright owner’s permission?” Breyer wrote. “In our view, the answers to these questions are, yes. We hold that the ‘first sale’ doctrine applies to copies of a copyrighted work lawfully made abroad.”

Book publisher John Wiley & Sons Inc. successfully sued student Supap Kirtsaeng in 2008, claiming he violated copyright law when he purchased textbooks overseas, and sold them here for less than what the publisher was selling them for. A lower court ruled in favor of Wiley to the tune of $600,000. Kirtsaeng cited the first sale doctrine as his defense, but in mid-2011 the U.S. Court of Appeals for the Second Circuit upheld the lower court’s ruling.

The Supreme Court decision overturns the ruling, and could damage international release windows for DVDs and Blu-ray Discs, the MPAA argued in a brief filed with the court. The group argued that “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.”

However, the court ruled that the language of the first sale doctrine favors “a non-geographical interpretation.” “We also doubt that Congress would have intended to create the practical copyright-related harms with which a geographical interpretation would threaten ordinary scholarly, artistic, commercial, and consumer activities. We consequently conclude that Kirtsaeng’s non-geographical reading is the better reading of the Act,” the ruling reads.

Wiley expressed disappointment in the ruling, calling it “a loss for the U.S. economy, and students and authors in the U.S. and around the world.”

John Bergmayer, a senior staff attorney with Public Knowledge, which had supported Kirtsaeng, said the MPAA and other groups might next go to Congress to strengthen copyright holder’s ability to prevent imports.

“To change the law, they will have to make a compelling case that some kind of new legal protection is in the public interest — that it makes sense for Congress to pass laws that allow companies to sell products in the United States at higher prices,” he said. “This will be an interesting discussion to have. Luckily, it appears that the real agenda of some content interests — control over resale markets — is already off the table.”

The case could have had an affect on the vibrant home video resale market, causing sites such as ebay to side with Kirtsaeng. Many DVDs and Blu-rays are manufactured in Mexico.

Joining Breyer in the majority were justices Clarence Thomas, Samuel Alito, Sonia Sotomayor, Elena Kagan and Chief Justice John Roberts.

In the minority, justices Ruth Bader Ginsburg, Anthony Kennedy and Antonin Scalia believed that concerns over excessive copyright burdens relating to renting, loaning or reselling foreign-made goods were overstated.

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