In November 2012, we discussed two separate cases regarding copyright law's "first sale doctrine" and how
their decisions could affect the future of content creation and distribution.
Section 106 of the Copyright Act grants copyright holders the exclusive right
to distribute copies of their works, but Section 109 allows the owner of a copy
of a work "to sell or otherwise dispose of" that copy without
permission of the copyright owner. Yesterday, the US Supreme Court issued its
decision in Kirtsaeng v. John Wiley & Sons, in which it held, by a
6-3 decision, that the first sale doctrine applies to copyrighted goods that
are manufactured abroad.
The case involved Supap Kirtsaeng, a Thai
student studying in the US, who resold English-language textbooks that were
purchased abroad. John Wiley & Sons ("Wiley"), the publisher of
some of those textbooks, filed suit, claiming that Kirtsaeng's importation and
resale was unauthorized and violated its exclusive rights under Section 106.
The main issue was how the Court would
interpret Section 109 of the Copyright Act, specifically the language stating
that the first sale doctrine only applies to works "lawfully made underthis title." Wiley argued that the language implied a geographical
limitation, suggesting that "under this title" means "in
conformance with the Copyright Act where the Copyright act is applicable."
It also argued that Section 602(a)(1) of the Copyright Act, which makes the
importation into the US, without permission, of copies acquired outside the US
a violation of Section 106, would be undercut without such a geographical
limitation. Kirtsaeng, on the other hand, argued that "lawfully made under
this title" simply means that a copy was manufactured according to the
requirements of US copyright law, meaning, in this case, that the copies were
manufactured abroad with the permission of the copyright owner.
Writing for the majority, Justice Stephen
Breyer stated that a textual analysis of the clause and the common-law history
of the first sale doctrine "favor a nongeographical interpretation."
Breyer also revisited the potential problems with Wiley's interpretation of the
rule (which he hinted at during oral arguments, as noted in our original post). Breyer feared that if Wiley's interpretation was accepted, then the
copyright status of at least 200 million library books published abroad could
be called into question, selling a used car might require the permission of the
copyright holders of every software component in the car, and art museums would
need to receive permission from a copyright owner to display a painting even if
the owner already donated the painting to a foreign museum.
In dissent, Justice Ruth Bader Ginsburg
stressed how this ruling will prevent copyright holders from charging different
prices for works in different territories. The ability of rightsholders
"to engage in such price discrimination," she wrote, "…is
undermined if arbitrageurs are permitted to import copies from low-price
regions and sell them in high-price regions." According to Ginsburg,
Congress's importation ban in Section 602(a)(1) intended "to grant
copyright owners the right to control the importation of foreign-made copies of
their works," but that right was effectively destroyed by the majority's
Until then, content owners will likely be
re-evaluating global content distribution strategies in light of this decision.
Of course, the DigitalHHR team will continue to monitor the development of the
first sale doctrine and are available to answer any questions you might have.