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Supreme Court Upholds First Sale Doctrine

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Joined: 04 Mar 2009

PostPosted: Thu Mar 21, 2013 11:04 pm    Post subject: Supreme Court Upholds First Sale Doctrine Reply with quote


The importation of copyrighted goods made abroad has been an increasingly contentious issue in recent years. Easy access to Internet resale markets like eBay and Amazon have made it possible for a new breed of entrepreneurs to buy low and sell high in a wide array of areas. The Supreme Court handed these resellers a major victory today, issuing a decision [PDF] that makes it clear that the "first sale" doctrine protects resellers, even when they move goods across national boundaries.

Those upstarts have peeved a lot of corporations, and some of them used copyright law to fight back. Textbook maker John Wiley & Sons sued a Thai student-entrepreneur named Supap Kirtsaeng, who had been buying cheaper (but non-pirated) versions of various textbooks in his home country, bringing them to the US, and selling them to his fellow students stateside on eBay. The price differentials were so big that there was quite a bit of money to be made; at trial, the publishing company's lawyers hammered home the fact that they had counted up $1.2 million in receipts over the life of Kirtsaeng's business.

Wiley argued those profits should be barred by copyright law. Their right to control prices abroad was actually part of their copyright grant, they argued. The textbook company won a jury verdict against Kirtsaeng, which was upheld by the US Court of Appeals for the 2nd Circuit, and Kirtsaeng appealed to the Supreme Court, arguing that his business was protected by the "first sale" doctrine.

Today's decision vindicates the "first sale" doctrine, which allows the owner of a particular copy of a work to do whatever she wants with it after purchasing it. It overrides first sale losses in both the 9th and 2nd Circuits and makes it clear that digital commerce can flourish in the Internet era, even when it crosses borders.

The 6-3 opinion was authored by Justice Steven Breyer, perhaps the justice most skeptical of intellectual property rights. The dissent was authored by Justice Ruth Ginsburg, who has long favored powerful copyright privileges. Justices Antonin Scalia and Anthony Kennedy also joined the dissent.

The decision throws out a $600,000 damages award that was granted to Wiley.


Putting section numbers to the side, we ask whether the “first sale” doctrine applies to protect a buyer or other lawful owner of a copy (of a copyrighted work) lawfully manufactured abroad. Can that buyer bring that copy into the United States (and sell it or give it away) without obtaining permission to do so from the copyright owner? Can, for example, someone who purchases, say at a used bookstore, a book printed abroad subsequently resell it without the copyright owner’s permission?

In our view, the answers to these questions are, yes.

As someone who frowns on the general way copyright is handled in our society, I for one am glad to hear it.
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Joined: 22 Jun 2010

PostPosted: Thu Mar 21, 2013 11:10 pm    Post subject: Re: Supreme Court Upholds First Sale Doctrine Reply with quote

Fox wrote:
The textbook company won a jury verdict against Kirtsaeng, which was upheld by the US Court of Appeals for the 2nd Circuit, and Kirtsaeng appealed to the Supreme Court, arguing that his business was protected by the "first sale" doctrine.

While I'm glad the Supreme Court decided as it did, it's disturbing that a jury ruled in favor of the company in an earlier hearing.
I can think of quite a few people (myself included) who would have raised some of hell on that jury.
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PostPosted: Thu Mar 21, 2013 11:17 pm    Post subject: Reply with quote

Well, the article makes it clear that there is something of a contradiction in copyright laws on this topic, so they weren't exactly wrong, right? Expecting the average citizen to strike a blow for justice on this issue is probably expecting too much given the average dupe on the street has been convinced that copyright violation is morally tantamount to theft.
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PostPosted: Thu Mar 21, 2013 11:22 pm    Post subject: Reply with quote

The Supreme Court's First Sale Ruling Will Spur Price Competition in the Short Run, But Enjoy It While It Lasts.

Yesterday, in Kirtsaeng v. John Wiley & Sons ($JW-A), the U.S. Supreme Court ruled that U.S. copyright law doesn’t restrict the importation of legitimate copyrighted works manufactured and sold overseas. As a result, publishers cannot use U.S. copyright law to enforce their price discrimination schemes of pricing copyrighted works on a per-nation basis.

This ruling is a legal victory for U.S. consumers, who should see cheaper prices in the short run. This ruling is also a win for museums, libraries and other institutional collectors of copyrighted works, who face less risk now when acquiring copyrighted works (especially those initially sold overseas). Still, amidst the good news, it’s impossible to ignore the rapid and probably irreversible demise of copyright’s First Sale doctrine, meaning this legal victory is likely short-lived at best.


Why the First Sale Victory Will Be Short-Lived

It’s hard to be too sympathetic to publishers deploying international price discrimination. Culturally, U.S. consumers intuitively oppose price discrimination; and U.S. consumers are paying higher prices due to price discrimination against them. Still, to the extent that price discrimination helps put more money overall in publishers’ hands, the current price discrimination schemes (in theory) have been encouraging publishers to publish more content, so without international price discrimination, at the margins some of that content will go unpublished. At least, that’s the story copyright owners like to tell.

Don’t cry for publishers just yet. Copyright’s First Sale doctrine has become increasingly less useful to consumers over the past couple of decades due to changes in technology and business practices, and I anticipate this ruling will accelerate the trend. Some of the ways publishers may strike back without seeking any changes to the law:

Localization. Publishers can localize their offerings for local markets such that different countries’ versions can’t substitute for each other. For example, if John Wiley releases a Thai-language textbook, it won’t be very interesting to most U.S. consumers. Publishers have numerous other ways of localizing copyrighted works (beyond translations) to restrict trans-border substitutability.
Versioning. Publishers can quickly issue new editions of their works that moot prior editions. We’re already seeing this in the textbook market. Publishers are increasingly releasing new textbook editions on a 3-year (or even 2-year) schedule to eliminate competition with used books.
Shrinkwrapping.” Instead of relying on copyright law, publishers can try to impose and enforce contract restrictions on resale. It’s clear that software can be sold subject to a contract that restricts transfer (see Vernor v. eBay), but it’s less clear if the resale of other physical items containing copyrighted works–such as books, CDs or DVDs–can be restricted by copyright law. The seminal Supreme Court case Bobbs-Merrill Co. v. Straus, 210 U.S. 339 (1908) could be read to say that such shrinkwrapped contracts are ineffective, but I consider that issue legally unresolved.
Geographic Coding. Publishers can encode electronic media in geographic-specific technical formats. For example, DVDs currently have “region codes” that do not permit DVDs sold in one region to be played on equipment built for that region.
Tethering/DRM. Increasingly, physical versions of copyrighted works are “tethered,” i.e., they require an interaction with a central server to operate. For example, with some videogames and software, consumers need to input an “unlock code” to access the game or software; and the unlock code can be limited to the initial buyer or to a particular machine in a way that restricts transfer. Even textbooks may be subject to tethering if they have an integrated online component, which is increasingly the case.
Even without any of those efforts, the long-term movement from publishing content in physical items to electronic publication has been effectively shrinking the importance of copyright’s First Sale doctrine. There is no “digital” First Sale doctrine, meaning that a buyer of an electronic file cannot resell or transfer “possession” of that electronic file under the First Sale doctrine. So as consumers buy fewer physical copies of copyrighted works and more electronic versions, consumers implicitly forego the First Sale rights associated with the physical goods. Plus, as fewer physical goods enter the market, the copyright owner feels less price competition from them.

In addition, copyright owners might assault the First Sale doctrine legislatively. One possibility is that publishers will simply ask Congress to statutorily reverse the Kirtsaeng opinion. More likely, publishers will advance their interests via negotiations over international treaties or Free Trade Agreements (FTAs). Coordinated special interests can game international negotiations more easily than Congress–the publishers have direct financial payoffs from participating in the process, while the interests of consumers, libraries, museums and other “buyers” are more diffuse. Anticipate more publishers showing up at the negotiations, and don’t be surprised if publishers overturn the Kirtsaeng decision without ever approaching Congress directly.

So, as a content consumer, enjoy the upcoming price competition while it lasts. The First Sale doctrine is dying rapidly, and we as consumers are becoming poorer as that happens.
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Joined: 17 Aug 2011

PostPosted: Fri Mar 22, 2013 1:59 am    Post subject: Reply with quote

So if the first sale doctrine allows you sale something that you bought afterwards, how is it not protecting movies and music? How about reselling cellphones for that matter.
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