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The Supreme Court recently heard oral arguments concerning the
global reach of domestic copyright law. At issue in
Kirtsaeng v. John Wiley & Sons is the first sale
doctrine, which permits the owner of a copyrighted item to resell,
rent, or otherwise distribute the physical item once it has been
initially purchased. The case specifically involves the
interplay of the first sale doctrine with a provision of the
Copyright Act making it unlawful to import copyrighted works
acquired abroad without permission from the copyright owner.
The facts of the Kirtsaeng case illustrate the
difficulty of the legal question before the Supreme Court. The
petitioner in Kirtsaeng was a graduate student who
subsidized his education by selling textbooks on eBay and other
online marketplaces. He was able to earn money from the
endeavor because the books were being shipped from his native
Thailand, where he had enlisted his family to purchase select
titles from local bookstores. Price variation between Thailand
and the United States allowed the student to earn approximately
$100,000 in profits from the textbooks over the course of about one
year. When the publisher learned of the scheme, it sued the
student in a New York federal court for infringing its copyright in
the textbooks. The student raised the first sale doctrine as a
defense, arguing that the initial sale to his family members in
Thailand provided a safe harbor for his activities.
To resolve the dispute, the Supreme Court must decide whether
goods manufactured outside the United States are subject to the
first sale doctrine, which is limited by statute to copies
"lawfully made under [the Copyright Act]." On the
one hand, the student has argued that the first sale doctrine
applies because the textbooks were not illegally produced
counterfeits, and therefore qualify as "lawfully made"
copies. On the other hand, the publisher argues that nothing
produced abroad can be "made under [the Copyright Act]"
because domestic law does not apply beyond our borders.
The implications of the forthcoming decision are potentially
far-reaching. Should the Court side with the publisher in
Kirtsaeng, a wide range of downstream distribution may be
jeopardized. Online marketplaces like eBay and Amazon could
experience a decline in merchant activity, and rental-based
entities—including public libraries and video rental
stores—may need to review their inventories of copyrighted
works made abroad and seek licenses where necessary. Even the
most innocent of activities, such as a yard sale, may be impacted
by the decision if merchandise is foreign-made.
The Kirtsaeng case, Supreme Court Docket No. 11-697,
was argued on October 29, 2012, and a decision is expected in early
2013.
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