The Expansion of the First Sale Doctrine

BY: ROSANGELY FRICK

On March 19th, the Supreme Court expanded the reach of The First Sale Doctrine to include products manufactured outside of the United States in a 6 to 3 decision in Kirtsaeng v. John Wiley & Sons.[1. Kristen Osenga, Kirtsaeng v. John Wiley & Sons, Inc., Post Decision SCOTUScast, SCOTUSCAST, (Mar. 27, 2013), http://www.fed-soc.org/publications/detail/kirtsaeng-v-john-wiley-sons-inc-post-decision-scotuscast.] Some have lauded the decision as a “victory” to consumers over copyright owners given that consumers now have legal protection to purchase copyrighted products from abroad and resell them in the U.S without prior authorization from the copyright owner.[2. Gary Shapiro, Supreme Court Gives American Consumers Victory Over Copyright Owners in Kirtsaeng v. John Wiley & Sons, FORBES, (Mar. 20, 2013, 9:16 AM), http://www.forbes.com/sites/garyshapiro/2013/03/20/supreme-court-gives-american-consumers-victory-over-copyright-owners-in-kirtsaeng-vs-john-wiley-sons/.]

The First Sale Doctrine “entitles [the consumer] to sell or otherwise dispose of possession of a copy or phonerecord” without authorization of the copyright owner.[3. 17 U.S.C. § 109(a)] Prior to the Supreme Court’s ruling in Kirtsaeng, importing a copyrighted product made abroad without the copyright owner’s permission was considered an infringement.[4. See Kirtsaeng v. John Wiley & Sons, Inc., 133 S.Ct. 1351, 1352 (2013).] In this case, John Wiley & Sons, Inc., a textbook publisher granted its subsidiary in Asia the right to print and sell Wiley’s books in foreign editions abroad.  Although the books explicitly stated that they were not to be taken into the U.S. without permission from the copyright owner, when Kirtsaeng moved from Thailand to the United States, he had his friends purchase the books on his behalf so that he could resell them in the United States for a profit.[5. Id.] The District Court ruled in favor of Wiley, reasoning that the defense did not apply to goods manufactured outside of the U.S. and the Second Circuit affirmed the lower Court’s decision.[6. Id.] But now that The Supreme Court has reversed, business owners and consumers like Kirtsaeng, are free to resell copyrighted items manufactured anywhere in the world without prior authorization from the copyright owner.

 

The Supreme Court’s decision has worried copyright owners, who filed an amicus brief explaining that this holding will severely undermine copyright protection in artistic fields like the music and movie industries and threaten the U.S. economy as a whole.[7. John Villasenor, The First Sale Doctrine and its Impact on the Music Biz, Billboard, (Apr. 1, 2013, 11:40 AM), http://www.billboard.com/biz/articles/news/digital-and-mobile/1555247/the-first-sale-doctrine-and-its-impact-on-the-music-biz.]  But those concerns are far fetched and have yet to materialize.  Soon after The Supreme Court ruling in Kirtsaeng, the Southern District of New York, limited the first sale defense, by holding against the operator of an online music marketplace noting that the first sale defense only applies to (1) material items like records (and not to digital files) and (2) to sales and not to the distribution of the copyrighted product.[8. Tamlin H. Bason, First Sale Doctrine Does Not Aply to Resale of Legally Downloaded Music Tracks, Bloomberg BNA, (Apr. 3, 2013), http://www.bna.com/firstsale-doctrine-not-n17179873156/.]

For now, at least as far as the music and motion picture industries are concerned, Kirtsaeng will have little impact on copyright owners but it has opened the global marketplace for consumers to resell copyrighted items.

 

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