Hot Docs: In copyright ruling, Supreme Court chooses “first sale” rights over importation rights

March 20, 2013

Supreme Court BuildingOn Tuesday, the Supreme Court handed down its ruling in Kirtsaeng v. John Wiley & Sons.

The facts of the case involve Supap Kirtsaeng, a Thai national, who had his family purchase textbooks legally 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.

The publisher, John Wiley & Sons, didn’t like this, and sued Kirtsaeng for copyright infringement.

The issue at the heart of Kirtsaeng is whether the “first sale” doctrine applies to copyright-protected goods purchased abroad and imported into the United States. 

The “first sale” doctrine is a principle of copyright law that allows you to sell or otherwise dispose of a legally purchased copyrighted work (e.g. a book, music CD, or movie) without permission from the copyright holder.  The Copyright Act of 1976 also contains a provision (17 U.S.C. § 602(a)) that forbids importation without authorization of the copyright holder into the U.S.

The Supreme Court sorted out these two seemingly conflicting provisions in Kirtsaeng.

I discussed the case in a bit more detail in this post from back in October of 2012, a post in which I also offered a prediction of the outcome of the case.

Although I correctly predicted that the Supreme Court would reverse the court of appeals’ ruling, I was a bit off by the actual voting.

Here’s the specific breakdown: Justice Breyer wrote the majority opinion, in which Chief Justice Roberts and Justices Thomas, Sotomayor, Alito, and Kagan joined.  Justice Kagan also filed a concurring opinion, in which Justice Alito joined.  Justice Ginsburg wrote a dissenting opinion, with which Justices Kennedy and Scalia joined (Scalia, however, did not join the parts of the dissent that addressed legislative history).

Although I was wrong on the voting – I said that it would be a unanimous vote, but it was 6-3 instead – the majority’s reasoning was pretty much in line with my prediction.

Hot Doc: Kirtsaeng v. John Wiley & Sons Inc

Source: Thomson Reuters News & Insight – National Litigation

The first part of the majority opinion discussed how Kirtsaeng’s statutory interpretation of the two statutory sections at issue was more persuasive (the interpretation adopted by the Court: the copyright holder’s exclusive right to importation is, like the rest of the holder’s rights to exclusive distribution, extinguished after the “first sale”).

As I look back over my October 2012 post, I realize that I didn’t actually include specifics on this point due to space constraints…so I have no way of proving that I thought that this is how the majority was going to rule.

I did, however, give specifics on the next part of the majority opinion: the respective potential consequences in ruling for each side.

As I predicted in my other post, the Kirtsaeng majority ended up finding “that the practical problems that [Kirtsaeng] and his amici have described are too serious, too extensive, and too likely to come about for us to dismiss them as insignificant.”

In addition, the majority addressed John Wiley’s concerns about “frustration of market segmentation” in an almost dismissive fashion:

A publisher may find it more difficult to charge different prices for the same book in different geographic markets. But we do not see how these facts help Wiley, for we can find no basic principle of copyright law that suggests that publishers are especially entitled to such rights.

Kagan’s brief concurrence is seemingly directed at Congress, stating that if the legislative body finds the narrowing of copyright holder importation rights to be a problem, it’s not because of the Kirtsaeng ruling, but because of 1998’s Quality King v. L’anza,  which, Kagan argues, is actually responsible for the diminution of importation rights (Quality King held that a product made in the U.S., then sold abroad, then imported back to the U.S. by the purchaser was covered by the first sale doctrine).

The dissent, consisting of an odd ideological combination of Ginsburg, Scalia, and Kennedy, argued for the opposite statutory interpretation as the majority, but, interestingly, sought to narrow their approach as to minimize the parade of horribles that would purportedly come about had the Court ruled in favor of John Wiley (I discuss these in more detail in my previous post).

This means that all of the Justices were convinced that they couldn’t risk ruling completely in favor of John Wiley lest that set of consequences came to pass (e.g. secondary markets (eBay, craigslist, garage sales) would be shut down; and people wouldn’t be able to resell cars because of the copyright-protected components contained therein (GPS systems, stereo systems, etc)).  It’s nice to see that the Court still has a level head on its collective shoulders.

But it’s even nicer to see the Court rule in favor of Kirtsaeng – with such a broad ideological coalition, nonetheless.