Kirtsaeng decision of the US Supreme Court

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Just a quick note on a big US copyright case that was decided a couple of days ago in the Kirtsaeng case. It concerns the jurisdictional scope of the ‘first sale doctrine’ and from it I think we could quite soundly contemplate the emergence of an international first sale doctrine. Unfortunately it only concerns physical copies of books so does nothing to clarify the position of resold downloads (eBooks, Mp3s); for that we will have to wait for the Redigi case to develop, or continue to speculate about the impact of the UsedSoft decision of the ECJ.

The decision is available here:

The facts of the case were that Kirtsaeng, a Thai student studying in the US, had imported and resold foreign (Thai) editions of textbooks. Publisher John Wiley & Sons sued him for importing these textbooks and reselling them in the US, since the editions were supposed to only be for sale abroad. Price discrimination between countries, as we know, was of course a strategy adopted by the publisher to maximise profit in each market.

In simple terms, the case concerns the US ‘first sale doctrine’, first recognised by the US Supreme Court in the Bobbs-Merrill Co. v. Straus decision of 1908. The concept is now codified in section 109 of the US copyright act: (a) “Notwithstanding the provisions of section 106 (3), the owner of a particular copy or phonorecord lawfully made under this title, or any person authorized by such owner, is entitled, without the authority of the copyright owner, to sell or otherwise dispose of the possession of that copy or phonorecord.”

As you can probably guess, a major caveat is the phrasing “lawfully made under this title” and Wiley argued that the imported textbooks did not fulfil this prerequisite since the books were bought and sold in Thailand, where the US Copyright Act does not apply. The Second Circuit court sided with the publisher, finding that the first sale doctrine only allowed for books to be resold without authorisation of the copyright holder IF they had been manufactured in the US (‘under’ the US Copyright Act).

On Tuesday, the Supreme Court reversed this decision. It found instead that the wording of the CA did not limit the application of the first sale doctrine to books published in the US. In very clear terms, the Court said (at p.3) that :

“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. We hold that the “first sale” doctrine applies to copies of a copyrighted work lawfully made abroad.”

In the copyright sphere, this judgment is very important for many reasons, but in my view for libraries in particular. This is because they have a number of collections from abroad; if the Supreme court had ruled otherwise, this would have meant that these collections – being acquired by the library from abroad without the authorisation of each copyright owner – would not be ‘lawfully acquired’. It is also a possible step towards a doctrine of international exhaustion (applying the first sale doctrine between different States), which has not existed in the past. On this note though, we do have our own mini-intra-state exhaustion doctrine which applies between different states in Europe, allowing for goods legally purchased in one Member State to be resold in another.

A doctrine of exhaustion has not been taken up on the international plane and is likely to be a controversial issue, with many countries siding with Wiley’s interpretation which allows authors to retain distribution rights unless they specifically market a good in that country. The impact of an international exhaustion doctrine could indeed be significant and impact upon revenues of publishers, record companies and -perhaps most significantly- pharmaceutical firms if we assume the doctrine will cover all intellectual property and not just copyrights. Needless to say, the legitimisation of parallel trade in pharmaceuticals into countries where the products are not authorised by the patent holder is not only risky for profits, but also for policy makers seeking to regulate which drugs can and cannot be sold on their national market.