Can those holding copyrights gain more control over materials simply by dint of where they’re made, in the U.S. versus abroad? That’s the curious conundrum that now confronts the intellectual property world now that the Second U.S. Court of Appeals has weighed in with its thinking about the “first sale” doctrine in Wiley v. Kirtsaeng, in which analysts say the appellate court expanded the rights of copyright owners. The court examined whether purchasers of many items get certain legal protections from claims of copyright infringement when they sell their items — the “first sale doctrine,” finding this longstanding notion rooted in common law is inapplicable to copies imported and manufactured abroad. This would make first sale apply only to domestically made items.
The case before the court concerned the actions of Supap Kirtsaeng, a graduate mathematics student who bought books overseas, lesser quality texts (e.g. with different paper stock, soft covers) published by John Wiley & Sons. He then resold them in the U.S. without the publisher’s permission. The language regarding the first sale doctrine states that:
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.
While that language would seem to give Kirtsaeng first sale protections, a U.S. District Court in New York disagreed and ruled, among other things, that he owed $600,000 in statutory damages. The U.S. appellate court in New York, taking up the case, also ruled against Kirtsaeng, relying on the language in Section 602(a)(1) of the Copyright Act, which prohibits individals from buying copyrighted works abroad and importing them into the United States without the copyright owner’s permission, stating the statute “[i]s obviously intended to allow copyright holders some flexibility to divide or treat differently the international and domestic markets for the particular copyright item,” as Judge Jose Cabranes noted in the majority ruling.
This case sets up a conflict with important limits the U.S. Ninth Circuit of Appeals suggested in the 2008 case Omega v. Costco Wholesale Corp. There the different appellate court decided a factually similar case but created a limit, arguing the first sale doctrine applies if the initial sale occurs with copyright owners’ permission.
With two appellate courts seeing the issue in conflicting terms, and some analysts seeing such nettlesome outcomes as, say, copyright holders preventing purchasers from selling cars or electronics (with protected items in them) or anything else made abroad in the U.S. without explicit permissions, there’s now the potential for the next step — a clarifying case and ruling from the Supreme Court.