Wednesday, 20 March 2013 14:33

SUPREME COURT HOLDS THAT FIRST SALE DOCTRINE IS APPLICABLE TO WORKS MADE ABROAD

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It its much anticipated 6-3 decision in Kirtsaeng v. John Wiley & Sons, Inc., the Supreme Court ruled  that “the first sale doctrine applies to copies of a copyrighted work lawfully made abroad.”

S. John Wiley & Sons, an academic textbook publisher, published foreign editions of its English-language textbooks overseas and sold them at lower prices that their U.S. counterparts.  The books state that they are not to be taken into the U.S. without permission, where the books are sold at higher prices.

Kirtsaeng is a student from Thailand who attended school in the United States.  His friends and family purchased lawfully made foreign editions of his textbooks in Thailand at low prices, and then mailed them to Kirtsaeng in the U.S.  for him to sell on online auctions. Kirtsaeng reportedly earned over $1 million in revenues over several years from the sales.

Wiley sued Kirtsaeng for copyright infringement claiming that the unauthorized importation and resale of its books was an infringement.   As a defense, Kirtsaeng asserted  the  first-sale doctrine codified  in Section 109(a) of the Copyright Act, which states that "the owner of a particular copy or phonorecord lawfully made under this title . . . is entitled, without the authority of the copyright owner, to sell or otherwise dispose of the possession of that copy or phonorecord."

The District Court held that the first-sale doctrine was inapplicable to foreign-manufactured goods and Wiley was awarded statutory damages in the amount of $600,000. This decision was affirmed by Second Circuit Court of Appeals.

On cert, the Supreme Court was to decide whether the words "lawfully made under this title" restrict the scope of § 109(a)'s "first sale" doctrine geographically.  The U.S. Supreme Court declined to read a geographic limitation into the statute because the plain language of Section 109(a) says nothing about geography, and nothing in the statutory history supports a geographic limitation.

The Court also considered the various ways associations of libraries, used-book dealers, technology companies, consumer-goods retailers, and museums  (whom all filed amicus briefs) rely on the first-sale doctrine.   The Court found that “[r]eliance upon the "first sale" doctrine is deeply embedded in the practices of those, such as booksellers, libraries, museums, and retailers, who have long relied upon its protection. Museums, for example, are not in the habit of asking their foreign counterparts to check with the heirs of copyright owners before sending, e.g., a Picasso on tour.. . . Thus, we believe that the practical problems that petitioner and his amici have described are too serious, too extensive, and too likely to come about for us to dismiss them as insignificant — particularly in light of the evergrowing importance of foreign trade to America.”

Accordingly, the Court concluded that the considerations supporting Kirtsaeng’s  nongeographical interpretation of the words "lawfully made under this title" are the more persuasive and reversed  the judgment of the Court of Appeals and remanded the case for further proceedings.

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Meredith Frank Mendez

Ms. Mendez earned her bachelor’s degree from the University of Michigan, with honors, and her law degree from the University of Florida, with honors. She is Board Certified as an Expert in Intellectual Property Law and concentrates her practice in Intellectual Property Litigation, Trademark Prosecution, Copyright Law and Entertainment Law. She is a member of the Florida Bar and is licensed to practice in the Southern, Middle and Northern Districts of Florida. Ms. Mendez is also Co-Chair of the Attorney's Network of the Greater Miami Jewish Federation and a member of the International Trademark Association, the Entertainment, Arts and Sports Law Section of the Florida Bar, and LegalArt.