Five Little Words: New Ruling by the Supreme Court on the First Sale Doctrine and its implications for Libraries


supremecourt

On March 19, 2013, the Supreme Court of the United States ruled on the case of Kirtsaeng v. Wiley & Sons, INC.  Supap Kirtsaeng, a citizen of Thailand who had moved to the United States to study mathematics, had asked friends and family to purchase foreign editions of English language textbooks in Thai bookshops and ship the editions to Kirtsaeng in the United States. The foreign editions cost considerably less than the editions printed in the United States and Kirtsaeng was able to sell the textbooks for a profit. Kirtsaeng reportedly sold over 600 copies.  John Wiley and & Sons, INC. sued Kirtsaeng over copyright infringement citing Title 17 U. S. Code, §106(3) and §§107 through 122. Wiley and Sons had stipulated authorized foreign editions of their textbooks could not be sold in the United States.

Wiley filed suit, claiming that Kirtsaeng’s unauthorized importation for resale of its books was an infringement of Wiley’s §106(3) exclusive right to distribute and section §602’s import probation. Kirtsaeng replied that because the books were “lawfully made” and required legitimately, that §109(a) of the “first sale” doctrine permitted importation and resale without Wiley’s permission. [1]

In a 6-3 majority opinion, the court agreed with Kirtsaeng, overruling a Second Circuit decision that favored the respondent J. Wiley.  The particulars of the arguments came down to the five word phrase “lawfully made under this title” in particular the legal definition of the use of the word “under” in § 109(a).  The Court argued whether Congress had intended that § 109(a) was placing a geographic component in regards to Copyright Law. In essence, the majority opinion saw this creating a “half-geographical/half-non-geographical” interpretation that would be difficult for courts to reasonably decipher.

Justice Breyer, delivering the opinion of the Court stated:

In sum, we believe that geographical interpretations create more linguistic problems than they resolve.  And consideration of simplicity and coherence tip the purely linguistic balance in Kirtsaeng’s, non-geographical, favor. [2]

Justice Ginsburg, along with Justice Kennedy joining and Justice Scalia joining in part, dissented over the interpretation of the same five word phrase stipulating:

The text of the Copyright Act demonstrates that Congress intended to provide copyright owners with a potent remedy against the importation of foreign-made copies of their copyrighted works.  As the Court recognizes, ante, at 3, this case turns on the meaning of the phrase “lawfully made under this title” in § 109(a). In my view that phrase is most sensibly read as referring to the instances in which copy’s creation is governed by, and conducted in compliance with, Title 17 of the U. S. Code. [3]

What is the impact of this ruling for libraries? The Court majority did cite in its decision that, “Reliance on the First Sale Doctrine is a deeply embedded practice of booksellers, libraries, and retailers that have long relied on its protection.” The Court also pointed out that if they had sided with Wiley’s interpretation that it would require libraries to have to seek permission from publishers of copyrighted materials before circulating books in their collection that were printed overseas. Wiley had countered that this problem had not occurred in 30 years since the Federal Court first adopted a geographical interpretation. The Court countered that law has not favored Wiley’s interpretation historically. However, libraries should not breathe a sigh of relief.

In the dissenting opinion Justice Ginsburg argued that the foreign printed textbooks were not governed by Title 17 and that the textbooks were not “lawfully made.” The argument being that the Copyright Act does not apply extraterritorially.  In other words, Justice Ginsburg is supporting a long held legal belief that outside the United States, the Copyright Act does not have any “force.” Justice Ginsburg goes back to an interpretation of the word “under” to mean inter alia, subject to the authority, rule, or control of.

At the crux of this ruling are long term commercial concerns over “parallel importation” or the act of engaging in arbitrage, i.e. buying an item that is sold in one market at a lower price point, then importing it into another market with a higher price point. The party that imports the lower price point item sells it at a price point between the lower and higher price points. This practice undercuts the copyright owner’s ability to sell at a higher profit in a high price point market.   Parallel importation has long been a grey area in legal arguments over intellectual property. Therefore, the Court’s ruling will have long term impact in regards to trade agreements with other countries.

Given the power of lobbies in Washington, there may be considerable push by interested parties on both sides to find legislative ways around the Court’s ruling, or to expand its scope. For now, Kirtsaeng will enable libraries, book sellers and others to continue to engage in their common practice. However, those parties should continue to monitor future legislation, as Justice Ginsburg’s dissenting arguments are compelling and will set the stage for future challenges.

In regards to my earlier postings on the First Sale doctrine and e-publishing, sadly, there does not appear to be any cases heading toward the Court that would address the problems with current ways e-publishers are eroding First Sale Doctrine protections.

~Kim Allman~


[1] Kirtsaeng, DBA Bluechristine99 v. John Wiley & Sons, Inc., No. 11-697, slip op. at 1,2, (2d Cir. 654  F. 3d 210) reversed and remanded,   568 U.S._ (2013)

[2] Kirtsaeng, DBA Bluechristine99 v. John Wiley & Sons, Inc., No. 11-697, slip op. at 12,  (2d Cir. 654  F. 3d 210) reversed and remanded, 568 U.S. _( 2013)

[3] Kirtsaeng, DBA Bluechristine99 v. John Wiley & Sons, Inc., No. 11-697, slip op.  Ginsberg J. dissenting at 5, 6, 568 U.S. ___( 2013)

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