The recent Supreme Court decision in Kirtsaeng v. John Wiley &
Sons represents a significant victory for college students in
their struggle with media companies over copyrighted media. In a
6-3 decision, the Supreme Court assented to college student Supap
Kirtsaeng's resale of textbooks in the United States that were
bought in Thailand at low cost, reasoning that the Copyright Act
does not create a right to divide foreign markets from domestic
markets. Effectively, this decision establishes international
copyright exhaustion, i.e., that the first sale of a copyrighted
article, whether manufactured domestically or abroad, is sufficient
to "exhaust" the copyright owner's rights to that
John Wiley & Sons (Wiley), a textbook publisher, filed suit
against Kirtsaeng based on § 602(a)(1) of the Copyright Act, which
prohibits importation of a copyrighted work into the United States
without the authority of the copyright owner. In his defense,
Kirtsaeng successfully asserted the "first sale doctrine"
of § 109(a) of the Copyright Act, arguing
that Wiley's rights had been exhausted by the first sale of the
textbooks in Thailand. Under the first sale doctrine, an owner of a
copyrighted article "lawfully made under this title,"
i.e., the Copyright Act, can sell or otherwise dispose of his or
her copy of the copyrighted article without interference from the
copyright owner. However, the first sale doctrine had not
previously been applied to articles manufactured abroad, and so the
issue came down to whether works manufactured abroad are made
"lawfully under this title." After delving into the text
and legislative history of the Copyright Act, the Court held that a
copyrighted work manufactured in any one of the nearly 180 nations
that have signed a copyright treaty with the United States is
"lawfully published under this title" and is therefore
subject to the first sale doctrine.
Of course, the implications of this decision reach far beyond
one college student's profit-making scheme. As the majority
opinion suggests, the ruling permits libraries to continue their
lending practices and museums to keep foreign works on display.
However, there is widespread speculation and concern as to the
negative consequences for media companies and their consumers. As
Justice Ginsburg points out in her dissent, the decision limits a
copyright owner's right to bar importation of copyrighted goods
to the rare circumstance where copyrighted articles are imported
from a possessor who is not an owner and thus has not acquired the
articles through a "first sale." This could result in
higher prices for copyrighted media, both in the U.S. and abroad,
and an increase in amateur sales of copyrighted media.
Although the consequences of the decision are still uncertain,
copyright owners may want to consider digital licensing of
copyrighted media as a supplement to the sale of physical copies.
In addition, copyright owners can consider additional intellectual
property protection for some copyrighted goods. For example, some
copyrighted articles may be eligible for a design patent or trade
dress protection, which are not covered by Kirtsaeng.
Along with speculation about the impact on copyrightable media,
there has been significant concern over the decision's impact
on patentable materials such as pharmaceuticals. To be sure, some
of the policy considerations underlying the Kirtsaeng
decision apply with equal force to patents. However, the majority
opinion is deeply rooted in the text and legislative history of the
Copyright Act. Moreover, patent law is far more country-specific
than copyright law, and lacks a comparable international scheme to
copyright law. Particularly given that the Supreme Court recently
passed up an opportunity to address international patent exhaustion
in the wake of Kirtsaeng by denying certiorari in Ninestar Technology Co. v. ITC, any impact
that Kirtsaeng may have on patent law is unlikely to be
seen anytime soon.
This update is for information purposes only and should not
be construed as legal advice on any specific facts or
circumstances. Under the rules of the Supreme Judicial Court of
Massachusetts, this material may be considered as
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In SmartGene, Inc. v. Advanced Biological Labs., S.A., No. 2013-1186 (Fed. Cir., Jan. 24, 2014), the Federal Circuit held that a patent claiming the use of a computer to implement routine mental information-comparison and rule-application processes to select a treatment for a patient fails patent-eligibility because the claims are directed to an abstract idea.
While the largest media companies have entire legal departments devoted to defending litigation, smaller companies may have only one in-house counsel, usually someone more familiar with business transactions than defending claims.