Wow. Just wow.

by liberal japonicus

This news from the Electronic Frontier Foundation really has me wondering. 

The “first sale” principle is what allows the purchaser of a copy of a book or CD or other copyrighted work to later resell that copy to someone else without infringing the copyright owner’s distribution right. It’s an important free-market limitation on copyright owners’ rights that most of us take for granted. In the recent Second Circuit case, Wiley v. Kirtsaeng, a graduate student lawfully acquired foreign editions of textbooks abroad and then resold them in the United States. The student was subsequently sued by the U.S. textbook owner for copyright infringement. Looking at the statutory language of the first sale provision together with another provision of the Copyright Act concerning importation of copyrighted works, the court concluded that the first sale doctrine applies only to copies that are manufactured domestically, and not to copies manufactured abroad.

I'm no lawyer and I don't even play one on this blog, but looking at the opinion, I find this

The Court explained that Wiley could not introduce evidence of profits earned by Kirtsaeng from the sales of textbooks produced by other publishers, but “in . . . anticipation that the net worth testimony [would indicate] that [Kirtsaeng did not have] significant net worth . . . [Wiley’s counsel had the] right to inquire about additional revenues and the profits therefrom and where they went in order to make sure that we had an accurate record about [Kirtsaeng’s] net worth.”

Reading down, there was this

In a factually similar case from 2008, the Ninth Circuit found that the mere presence of a copyrighted logo enabled a manufacturer to invoke the first sale doctrine to block the unauthorized sale of imported goods. But the court created a limitation on that principle: If the initial sale had occurred with the copyright owner’s authority, then the first sale doctrine would apply. The Wiley court established no such limitation. Under its holding, even a sale authorized by the copyright owner would not trigger first sale provisions. The breadth of the rule is striking.

It is indeed. 

Comments

[Model62]

I was all ho-hum until I followed the link and let the EFF spell it out for me:

The ruling has potentially far-reaching implications. In theory, it could give copyright owners full control to regulate or even prohibit resale of their works so long as the copies of those works are manufactured abroad. Imagine if Apple tried to argue that you couldn’t resell your iPhone that was manufactured in China, or if Toyota tried to argue that you couldn’t resell your Prius that was manufactured in Japan. If a product incorporates some copyrightable component—likely true for most electronics and many new cars, which include copyrightable software or firmware, though even a copyrighted logo will suffice (more on that below)—you might only be able to resell it, if at all, on the copyright owner’s terms.

[Bernard Yomtov]

It's absolutely clear that US intellectual property law is an utter mess. Copyrights, patents, you name it, the whole thing is incoherent.

Maybe if Congress could quit playing political games it could bring some sense to this. But I'm not optimistic.

[liberal japonicus]

A little more discussion here and here

When I was in Madison for a summer about 15 years, I remember a story about three teenage boys got into trouble (possibly arrested, I can't remember the precise details), because they had purchased some pants at a branch of one store in town where they were on sale, and then took them to another branch where they weren't on sale and made money when they asked for a refund.

Don't mean to be dumping on anyone here, but things like this make me quite doubtful when we talk about widget innovation

[Countme-In]

"or if Toyota tried to argue that you couldn’t resell your Prius"

On the other hand, this would put much of the used car grift out of business, collapse the market for over-sized American flags, and defund a good 9% of the rump 27% who want Obama dead.

[MobiusKlein]

buying in one place, getting a refund in another is a bit different. Refund != resell.

[Tony P.]

buying in one place, getting a refund in another is ...

arbitrage!

--TP

[publius]

Hello all - hope everyone is doing well!

This is a pretty hot area in copyright law, and there a few quick things to note:

1 - It's total bullshit. The law is being used to essentially limit trade under the guise of copyright. The Costco case is especially egregious b/c it was about WATCHES, which are otherwise completely unprotected.

2 - It's potentially a big chill to e-commerce. For instance, if you buy a book on eBay from a British reseller, you could potentially be violating the law depending on where the book was manufactured.

[McKinneyTexas]

Fortunately, IP wasn't and isn't on the bar exam, so I never had to study it. Seems to me the copyright laws should only apply to reproducing the copyright holder's work, not purchasing from the holder or the holder's licensee, which protects the holder's interest by capturing the profit off of the sale, but having done so, title to the single copyrighted work passes, allowing a resale. What about used book stores?

If this seems unusually dense for a lawyer, I'm a tort/contract guy.

[hairshirthedonist]

lj, please stop making my head hurt.

[Ugh]

IIRC the first sale doctrine was judicially derived in response to patent law. Patent law allows the holder to restrict the use and sale of a patent or patented article, but the courts decided that, obviously, you couldn't sell someone a patented article and then tell them they can't use it or sell it again.

Sometime in the last 20 years or so, again IIRC, patent holders were given the right to restrict the "importation" of their product, and thus its sale in the US if purchased abroad. This was a gift to pharma companies who could be assured that if they sold Pill X in Canada for $5 a pop, but sold the same pill in the U.S. for $50 a pop, there wouldn't be any cross-border arbitrage (each sale being profitable of course because the marginal pill production cost was far less than $5.*)

It sounds like this notion has now made its way into copyright law, which is traditionally supposed to be the weaker form of IP protection.

*there might be an exception to this rule specifically in the case of Canada, but my recollection of it is lost.

[Ugh]

All of which is to say that barring you from re-selling a product you purchased overseas in the U.S. is not unknown in IP law, and while there seems to be hints around the edges here in the post and comments that this sort of approach might be applied to products manufactured abroad but purchased in the U.S., it's not clear to me that that's the case (I'll cop to not having read the legal decisions).

[wj]

McTex, I would think that used book stores would now need to track who sold them every used book they have. That way, if it turns out that the book was manufactured overseas, they could point back at the original purchaser. Or would their required due diligence be to determine (somehow!) where the original purchase was made?

What a can of worms to have opened! I really hope that the Supreme Court gets the opportunity to smack down the Second Circuit. (Hey, there's nothing that says they only reverse 9th Circuit decisions.)

[nous]

Might as well just rename the US Federal Courts "The Magic Kingdom."

[White spots on skin]

I am usually to blogging and i actually admire your content.

[note: after cutting out the email address and url, I'm leaving this up so as not to make the following comments incomprehensible]

[bobbyp]

All of my posts are copyrighted.

[dr ngo]

By a professional copywriter?

[bobbyp]

Bootleg copywriters. They charge less.

[joel hanes]

I, too, am usual to blogging, but I can't say I've ever seen a link spammer with a bait-nym as repellent as "white spots on skin". The contemporary internet tradition is more along the lines of "ugg4cheap".

[McKinneyTexas]

All of my posts are copyrighted.

Let us know if there is a secondary market for your comments.

Smiley face, smiley face.

[bobbyp]

Secondary? Sheesh. We're still trying to get the primary one off the ground. All the marketing data has come back stamped "tertiary". So we're jumping right into options, futures, swaps, and CDO's.

If you want distribution rights, now's the time to get in.