October 31, 2012
If you read the news yesterday and skipped past all of the hurricane-related articles, you may have noticed that the Supreme Court heard oral arguments in Kirtsaeng v. John Wiley and Sons, Inc. this week.
Otherwise, here’s a quick summary:
Supap Kirtsaeng, a Thai national, had his family purchase textbooks in Thailand – where they were much cheaper – and ship them to the U.S.
Kirtsaeng would then sell the books for a tidy profit on eBay.
As eBay points out, the books “were not counterfeit, pirated, or stolen;” they were purchased legitimately in Thailand.
Publisher John Wiley and Sons sued Kirtsaeng for copyright infringement, and Kirtsaeng lost at the district court and the court of appeals; the Supreme Court agreed to hear the case back in April of this year, and, as mentioned earlier, oral arguments were heard on Monday.
“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 [emphasis added]”
In other words, you can sell or otherwise dispose of a legally purchased copyrighted work – let’s say, a DVD (oh wait, we’ve moved on to Blu-Ray, haven’t we?) okay then, a Blu-Ray – without permission from the copyright holder.
But what does that emphasized portion – “lawfully made under this title” – mean exactly?
Well…that’s what the Supreme Court is now deciding.
According to John Wiley, another section of the Copyright Act, 17 U.S.C. § 602(a), should be read to interpret § 109(a)’s “under this title” as “in the United States” (i.e. not abroad).
Section 602(a) holds that “[i]mportation into the [U.S.], without the authority of the owner of copyright under this title, of copies or phonorecords of a work that have been acquired outside the [U.S.]” is copyright infringement.
According to Kirtsaeng’s interpretation, § 109 trumps § 602.
And not just because he says so, but because the Supreme Court unanimously said so in 1998’s Quality King Distributors, Inc. v. L’anza Research International.
Kirtsaeng’s lawyer, E. Joshua Rosenkranz, actually gave a very convincing argument complete with citations to case law, statutory text, and legislative history, and I really can’t do it justice with the limited space I have available.
Of course, it doesn’t really matter what I think; it matters what the Justices think.
And by the end, the Justices seemed to be leaning much more towards Kirtsaeng’s argument than John Wiley’s.
Could the Court settle on some kind of middle ground ruling?
Speaking of which, the U.S. Government also argued on the side of John Wiley in favor of such a middle ground.
However, I highly doubt that the Court will espouse the government’s logic.
The Chief Justice himself called the government’s logic “an awfully difficult maze for somebody to get through” and Justice Alito closed out the oral arguments of the government’s lawyer by asking him, “If…that middle ground…were found to be not viable, which of the two sets of consequences is worse from the government’s perspective?”
Those “two sets of consequences” are basically each side’s list of horribles.
Rosenkranz argued, among other things, that secondary markets (eBay, craigslist, garage sales) would be shut down, and that people wouldn’t be able to resell cars because there are so many copyright-protected components contained within (GPS systems, stereo systems, etc).
John Wiley’s lawyer argued that Kirtsaeng’s “set of consequences” wouldn’t come to pass and that there are other defenses, such as the fair use defense, that would apply (I actually laughed out loud when I read that part).
The Court also seemed to collectively raise an eyebrow when John Wiley raised that argument.
Perhaps worse for its side, though, was the fact that its “set of consequences,” its list of horrible was… “the frustration of market segmentation” (in other words, that distributors wouldn’t have complete control of where their product is distributed).
That’s right, “frustration of market segmentation” is the worst thing that will happen if the Court rules for Kirtsaeng.
The Court seemed increasingly leery of John Wiley’s arguments as they progressed, but that last bit sealed the deal with them in my mind.
Before I make any conclusions about how the Court’s votes will come down, I should bring up 2010’s Costco v. Omega which, thanks to a 4-4 split (per curiam, so we don’t know who voted how), affirmed the Ninth Circuit’s decision.
Costco addressed an issue very similar to this one; Kagan was the missing Justice in Costco, and she’s present in Kirtsaeng.
Given that she seemed to come out mostly in favor of Kirtsaeng, it may be tempting predict a 5-4 split in favor of Kirtsaeng.
But after reading the oral arguments, I wouldn’t be surprised if the Court ruled unanimously for Kirtsaeng.
Either way, the Second Circuit will be reversed – and thankfully so, because I wouldn’t want to chance Kirtsaeng’s list of horrible coming to pass.
Under § 602(a)(1) of the Copyright Act, it is impermissible to import a work “without the authority of the owner” of the copyright. But the first-sale doctrine, codified at § 109(a), allows the owner of a copy “lawfully made under this title” to sell or otherwise dispose of the copy without the copyright owner’s permission. The question presented is how these provisions apply to a copy that was made and legally acquired abroad and then imported into the United States.
Lower Court’s Decision
A copy made abroad is never subject to the first sale defense.
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