The Supreme Court of the United States of America decided 6 to 3 this week that a person who owns copyright in a book subsisting under US law cannot restrict the importation and resale of legally produced foreign copies, in the landmark decision Kirtsaeng v John Wiley & Sons, Inc. 568 U.S. ___ (2013) on the US doctrine of “first sale”. The Court’s judgment is available here.
Copyright law ordinarily gives an exclusive right to the copyright owner to import and distribute their work. Under United States copyright law, the doctrine of first sale states that once a copyright owner sells a copy of their copyrighted work for the first time, they are prohibited from enforcing those rights to control distribution of that particular copy. That is, if someone buys a copy of your novel, you cannot stop them from giving it away or selling it second-hand to someone else.
The respondent in this case, John Wiley & Sons, Inc. (“Wiley”), is a company that publishes academic textbooks and distributes them around the world. Wiley produced multiple versions of their textbooks – there were versions made and sold in the US, and versions of the same textbooks made and sold in other countries (but still in English). The US versions sold in the USA for much higher prices compared to the foreign versions sold overseas, and the foreign versions contained statements forbidding the non-US versions from being exported to the United States.
The appellant, Supap Kirtsaeng (“Kirtsaeng”) was a Thai-born student who moved to the USA to study mathematics at Cornell University, and then went on to complete a PhD at the University of Southern California. While studying in the USA, Kirtsaeng had his contacts in Thailand buy many foreign versions of Wiley textbooks and mail them to him in the US where he resold them at a significant profit.
In 2008, Wiley sued Kirtsaeng for copyright infringement for the importation and distribution of their foreign textbooks. Wiley’s argument was that §109(a) of the US Copyright Act (17 U.S.C.), the provision that sets out the first sale doctrine, only applied to the versions of the textbooks produced in the USA, because the section states it applies to “a particular copy … lawfully made under this title”. If a copy was printed overseas, Wiley argued, the US Copyright Act would not apply to it and therefore it could not be “lawfully made under [the Act]“. In short, they said §109 contained a geographical limitation. Kirtsaeng, on the other hand, argued “lawfully made under this title” simply meant “in accordance with this Act”, so the section applied to any copies made in compliance with the US Copyright Act, wherever they happened to have been printed.
At first instance, a jury decision in the 3rd Circuit Federal Court agreed with Wiley’s geographic interpretation, and awarded US$600,000 against Kirtsaeng. That decision was upheld on appeal in the 2nd Circuit. But when it came before the Supreme Court, the decision was overturned.
Justice Breyer, delivering the opinion of the majority, stated that the words “lawfully made” were intended to contrast against copies that were not lawfully made (i.e. pirate copies), and the words “under this title” set the standard of lawfulness as the US Copyright Act. The Court found this interpretation to be supported by the congressional report produced when Congress passed the relevant amendment. The geographic interpretation favoured by Wiley rendered “lawfully” linguistically meaningless, and was inconsistent with the use of the phrase “lawfully made under this title” in other parts of the Act. He went on to say Wiley’s assertion that a nongeographic interpretation would make it difficult or impossible for publishers to divide foreign and domestic markets was irrelevant. While it might well be true that publishers would find it difficult to charge different prices in different markets, “no basic principle of copyright law … suggests publishers are especially entitled to such rights”.
What is the position in Australia? Under sections 37 and 102 of the Copyright Act 1968 (Cth), if it would be infringement for a person to make a copy of a copyrighted work or article in Australia, it is infringement for that person to import a copy of the work or article for the purposes of trade (including selling, hiring, or display). However, there are special exemptions for books in sections 44A and 112A. The exceptions are:
- For any overseas book published after December 1991.
- For any book first published in Australia, or overseas book first published earlier than December 1991; where a person orders a copy from the copyright owner or licensee, and the order is not filled within 90 days, or the owner/licensee did not give written notice to the person (within 7 days of the order) that it would take up to 90 days to fill the order.
- For any book, where a single copy is imported by a retailer to fill an order from a consumer who has stated that they are not going to use the copy for trade.
- For any book, where 2 or more copies are imported by a retailer to fill the order of a not-for-profit library.
The upshot of all this is that in Australia, it is infringement for a person to import pre-December 1991 books to resell them (except to fill existing orders that have not been filled by the copyright owner or their licensee), but it is not infringement to import and resell books first published after December 1991.
The Kirtsaeng decision is a major blow against US-based international publishers who like to change their prices to suit regional markets, and it may well lead to an upheaval in the marketing practices of publishers around the world. Perhaps wily publishers will now simply up their prices in foreign markets to close down any opportunities for profitable imports. Only time will tell.