Under the first sale doctrine, if you buy a book in the U.S., then copyright law does not limit your right to resell that book. The U.S. Supreme Court has extended the first sale doctrine to apply to books sold anywhere (as long as they are not “piratical” – unauthorized copies). A U.S. copyright holder cannot prevent importation and sale of “gray market” works lawfully manufactured abroad.
The Asian subsidiary of American publisher Wiley & Sons manufactured and sold copyrighted textbooks abroad. College student Kirtsaeng imported and re-sold Wiley’s textbooks in the United States without authorization. Wiley sued Kirtsaeng for copyright infringement. The trial court and the 2nd Circuit both concluded that Kirtsaeng infringed Wiley’s U.S. copyrights reasoning the first sale doctrine does not apply to copyrighted works made abroad.
The Supreme Court’s analysis turned on five words in the statute enacting the first sale doctrine -- “lawfully made under this title”. 17 U.S.C. § 109(a). Because copyright law is territorial, Wiley argued “made under this title” means made in the U.S. and restricts the first sale doctrine geographically. Kirstsaeng argued there is no geographical limitation and textbooks are “lawfully made under this title” if authorized by the copyright owner.
The majority opinion finds the language of § 109(a), its context, the legislative history and common law favor a non-geographical interpretation of “lawfully made under this title.” Wiley authorized printing the textbooks, the printing complied with U.S. law, and thus the textbooks were “lawfully made under this title.” The first sale doctrine applies.
The Court’s interpretation (made “in accordance with” copyright law) promotes a traditional copyright objective- to combat piracy. The alternative “geographical interpretation would threaten ordinary scholarly, artistic, commercial, and consumer activities.” Bookstores and libraries could not buy and sell books, museums could not display art, and commerce in any product with a copyrighted component would be impaired.
The dissent was less impressed with this parade of “horribles”. The dissent interprets the importation provision to prohibit the unauthorized importation of foreign-made copies, even if those copies were made and sold abroad with the copyright owner’s authorization. The dissent also warns that the majority’s decision undermines U.S. credibility on the world stage by embracing an international-exhaustion rule that is self-serving (benefiting U.S. consumers at the expense of higher prices for foreign consumers of U.S. copyrighted goods) and contrary to the expressed policy of the Executive branch.
The copyright law first sale doctrine prevents a copyright owner from segmenting domestic or foreign markets by controlling resale of the works. The licensing of electronic media, however, does not necessarily invoke the same limitations because there is no “sale”. Subject to antitrust constraints, copyright owners still have the power to divide markets by licensing the works.