The U.S. Supreme Court decision in Kirtsaeng v. Wiley & Sons will impact the right to resell copyrighted goods and the pricing policies of copyright owners.

A copyright owner has the exclusive right to distribute copies. The “first sale doctrine” of the Copyright Act allows the “owner” of “a particular copy” to resell that individual copy.  Software is licensed not sold, and usually the licensee does not own and can not resell the licensed copy.  But books are sold, not licensed, at least in print media.

The first sale doctrine only permits resale of a copy “lawfully made under this title.” 17 U.S.C. § 109(a). Another section of the Copyright Act prohibits importation for sale in the United States without authority of the copyright owner (private use by the importer is permitted). Id. § 602(a)(1). Is unauthorized importation of books bought outside the US for resale in the US copyright infringement? 

Background:

Wiley & Sons publishes college textbooks in the United States and abroad, often charging less for sales abroad.  Supap Kirtsaeng, a student from Thailand, came to the U.S. to attend college.  Kirtsaeng’s family purchased textbooks in Thailand published by the Asian subsidiary of Wiley & Sons.  Kirtsaeng imported and resold the textbooks on commercial websites, such as eBay, at a substantial profit.

The Lawsuit:

When Wiley sued for copyright infringement, Kirtsaeng asserted the first sale doctrine.  Wiley argued successfully that the first sale doctrine does not apply to goods manufactured in foreign countries.  The court found Kirtsaeng in violation of the Copyright Act and awarded $600,000 in statutory damages to Wiley.  The Second Circuit affirmed. 

Inconsistent rulings in the Second, Third and Ninth Circuits have appropriately positioned the case for Supreme Court review.  The Supreme Court will now decide whether the first sale doctrine applies to copies of copyrighted works manufactured and sold abroad then imported into the U.S.  The Court must interpret the statutory phrase “lawfully made under this title” to determine whether this phrase includes copyrighted goods manufactured abroad.

Twenty-eight amicus briefs have been filed by organizations such as Goodwill, eBay, Costco, and the Motion Picture Association of America.  The secondary resellers, which include eBay and Goodwill, are concerned they may lose the right to freely resell copyrighted goods.  The movie and music industries, software companies, and book publishers argue that differential pricing schemes are vital to their success and baring importation is necessary to support their segmented market pricing.

The Bottom Line:

Until the Supreme Court, or Congress, clarifies the interplay between these two sections of the Copyright Act, a buyer takes a risk by importing a copyrighted item (book, painting, sculpture, etc.) for sale in the U.S. without the permission of the copyright holder. 

The patent exhaustion doctrine (analogous to the copyright first sale doctrine) is also before the Supreme Court and will be the subject of an upcoming article.