Marcia Coyle is chief Washington correspondent for The National Law Journal, an American Lawyer affiliate.
Libraries, museums, retailers and others who buy copyrighted goods made abroad can resell them without violating federal copyright law, the U.S. Supreme Court ruled on Tuesday.
The justices’ 6-3 ruling in Kirtsaeng v. John Wiley & Sons handed a huge victory to organizations, institutions and individuals whose reliance on the so-called first sale doctrine, wrote Justice Stephen Breyer, is "deeply embedded" in their practices.
"How, the American Library Association asks, are the libraries to obtain permission to distribute these millions of books?" wrote Breyer. "How can they find, say, the copyright owner of a foreign book, perhaps written decades ago? And even where addresses can be found, the costs of finding them, contacting owners, and negotiating may be high indeed."
The court’s decision stemmed from a copyright infringement lawsuit filed by Wiley, publisher of academic textbooks manufactured and sold both in the United States and abroad. Wiley prohibits copies of its foreign versions of textbooks to be imported into the United States without its permission. The publisher sued Supap Kirtsaeng, a Thai student studying in the United States, who asked friends and family to buy copies of foreign edition-English language textbooks in Thai bookstores—sold at low prices—and mail them to him. Kirtsaeng then resold them on eBay, reimbursed his friends and family, and kept profits totaling nearly $100,000. Wiley won in the district court and the U.S. Court of Appeals for the Second Circuit, which affirmed $600,000 in damages.
Although federal copyright law prohibits distribution of a copyrighted work without the copyright owner’s permission, the law also states that once a copy has been lawfully sold, the buyer and subsequent owners are free to dispose of it in any way. The "first sale" has extinguished the copyright owner’s exclusive right. The issue before the justices was whether the first-sale doctrine protected the lawful owner of a copyrighted good manufactured abroad and brought into the United States.
The court’s majority rejected Wiley’s argument that language in the copyright law—"lawfully made under this title"—restricted the scope of the first sale doctrine geographically to copies manufactured domestically.
Breyer said the law’s language, its context and the common-law history of the first-sale doctrine, taken together, favored 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," added Breyer who was joined by Chief Justice John Roberts Jr. and justices Clarence Thomas, Samuel Alito Jr., Sonia Sotomayor and Elena Kagan.
Justice Ruth Bader Ginsburg, joined by justices Anthony Kennedy and, in part, by Antonin Scalia, dissented. She wrote that the majority’s decision "shrinks to insignificance" copyright protection against the unauthorized importation of low-priced, foreign-made copies.
"The Court’s bold departure from Congress’ design is all the more stunning, for it places the United States at the vanguard of the movement for ‘international exhaustion’ of copyrights—a movement the United States has steadfastly resisted on the world stage," said Ginsburg.
However, Kirtsaeng’s Supreme Court counsel, E. Joshua Rosenkranz of Orrick, Herrington & Sutcliffe, called the ruling "an important win" for consumers.
"For 400 years the law has been that if you bought it, you own it," he said. "But somehow manufacturers have managed to persuade courts that this sensible rule does not apply to goods that have copyright protection-which is practically everything these days. The Supreme Court has restored balance to this very large sector of commerce. If manufacturers want to gouge U.S. customers with higher prices, they have to accept the reality that the marketplace will respond – as it always does – by buying the goods where they are cheap and selling them where they are more expensive."
Wiley was represented in the high court by Theodore Olson of Gibson, Dunn & Crutcher and also drew support from the solicitor general’s office.