In separate Amicus briefs filed with the Supreme Court last week, both the Association of American Publishers (AAP), and the Software and Information Industry Association (SIIA) argue that the doctrine of first sale does not apply to foreign-made works.
The briefs, filed in connection with the case Kirtsaeng v. Wiley & Sons, support a 2011 Second Circuit Court of Appeals decision which held that the doctrine of first sale, the provision which allows a legal purchaser of a copyrighted work to re-sell or share that copy, applies only to copies manufactured in the United States. That principle, AAP officials say, was correctly articulated by the Appeals court, and overturning it would pave the way for domestic markets to be “superseded by lower-priced copies created for and previously sold in foreign markets,” to be “collected and resold en masse in the U.S.”
The Supreme Court case in question stems from an August, 2011, ruling in John Wiley & Sons, Inc. v. Supap Kirtsaeng, in which Kirtsaeng, a Thai-born U.S. student was successfully sued by Wiley for importing and reselling in the U.S. foreign editions of Wiley textbooks made for exclusive sale abroad. In its verdict, a three-judge panel affirmed, by a 2-1 margin, that Kirtsaeng could not avail himself of the first sale doctrine because the law says that products must be “lawfully made.” The court ruled that those two words—“lawfully made”—limit first sale “specifically and exclusively” to works that are made in territories in which the U.S. Copyright Act is law, and “not to foreign-manufactured works.”
That verdict was the second recent decision effectively limiting the First Sale doctrine. In December, 2010, the Supreme Court deadlocked 4-4 (with Justice Elena Kagan abstaining) in the case of Costco Wholesale Corporation v. Omega, S.A., the net effect of which was to affirm a Ninth Circuit Court of Appeals decision that enjoined big-box store Costco from selling in The U.S. copyrighted, foreign-made Omega watches authorized for sale exclusively in foreign territories. Because the Supreme Court deadlocked, however, the Ninth Circuit ruling is non-binding on other circuits. The Ninth Circuit, however, ruled that first sale did apply to a foreign manufactured copy if it was imported “with the authority of the U.S. copyright owner.”
The Second Circuit decisio has raised alarms for libraries and the used book trade, as well as for online sellers like Amazon, and eBay. In an amicus brief filed with the Supreme Court on July 3, the Library Copyright Alliance (LCA) argued that the Second Circuit’s ruling, if left to stand, could strip libraries of their first-sale right to lend copies of not only published, but merely printed abroad. Although the LCA brief acknowledges that libraries could likely assert the right to lend foreign-manufactured books based on other, more limited exceptions in the Copyright Act, such as “fair use or implied license,” the uncertainty created by the Second Circuit could deter many libraries from lending materials in question.
Both the AAP brief and the SIIA brief downplay the possible effects on libraries, used booksellers, and other businesses. “As Kirtsaeng tells it,” the AAP brief states, “every American manufacturer will hasten overseas in search of ‘the manufacturer’s Holy Grail'—the power to lock up, extract exorbitant rents from, or discriminate in any secondary market.” But there is “no evidence whatever that John Wiley (or other publishers) plan to transfer manufacturing abroad so as to engage in the hyper-control petitioner feverishly imagines.”
The AAP argues that the Court should not be swayed “extravagant hypotheticals,” and suggests that a reversal would render U.S. copyrights “radically insecure.”
