In Kirtsaeng v. John Wiley & Sons, Inc., No. 11-697 (Mar. 19, 2013), the U.S. Supreme Court held that the Copyright Act’s first-sale doctrine extends to products made outside the U.S., protecting resellers of copyrighted goods from infringement lawsuits. The case started when then Cornell University student Supap Kirtsaeng, a student who moved from Thailand to the U.S. for college, started a business reselling low-priced foreign editions of textbooks that his family purchased in Thailand and mailed to him. When John Wiley & Sons sued him alleging willful copyright infringement, Kirtsaeng argued that he was allowed to resell the books under the first-sale doctrine. The district court and the Second Circuit, however, disagreed finding Kirstaeng liable for copyright infringement because the first-sale doctrine did not apply to foreign-sold goods. Kirstaeng was then assessed $600,000 in damages for willful infringement. The Supreme Court reversed these decisions.
Writing for the majority, Justice Breyer opined that if the firstsale doctrine did not apply, American copyright holders would be allowed to make copies abroad while someone who bought a copy of any such book or other copyrighted work abroad could not resell, or in any way dispose of, that particular copy without further permission from the copyright holder. Booksellers, libraries, museums, and retailers have long assumed the right to resell was protected under copyright law, and relied on this protection. Under the rule followed by the district court and Second Circuit, individual libraries might have needed permission from the copyright holders of millions of volumes, including those of works written decades ago by foreign authors, an all-but insurmountable task. Likewise, resellers would have been restricted from importing goods with copyrighted packaging or logos absent specific authorization. Justice Breyer noted that reliance on the first-sale doctrine is deeply embedded in the practices of these groups, who have long relied upon the doctrine’s protection. By extending the rule to distant shores, the Supreme Court declined to make pirates out of all whose businesses involve merchandise sold abroad and then brought to the U.S.
In dissent, Justice Ginsburg noted that the ruling shrinks to insignificance copyright protection against unauthorized importation of foreign-sold copies, though if those copies were previously authorized, as here, this concern seems misplaced. More cogent are fears that this decision could lead to a reevaluation of foreign pricing structures, which may reduce foreign demand by pricing out foreign markets to U.S. creative works. Beyond the short-term profits lost from dropping foreign sales, this ruling may open up opportunities for the development of intellectual property internationally, which may hurt U.S. producers in the longer term. Developing nations, where educational resources are sparse, may also have their development scuttled. Aid in the form of inexpensive access to textbooks for impoverished communities may trickle to a halt as the companies affected by this ruling try to protect their core markets. Given the significance of the Supreme Court’s decision, it seems likely that the publishers may turn to Congress seeking new laws addressing this issue.