October 29, 2012 | By Parker Higgins

A Parade of Horribles: Supreme Court Justices Consider the Limits of First Sale in Kirtsaeng v. Wiley

The Supreme Court today heard oral arguments in Kirtsaeng v. Wiley & Sons Company, a case that could further undermine the "first sale doctrine." First sale, described in section 109 of the US Copyright Act, gives people the right to resell, lend, or give away the works that they’ve bought, even if those works contain copyrighted elements.

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Textbook publisher Wiley claims that this doctrine only applies to goods that are manufactured in the U.S., and that the defendant, Supap Kirtsaeng, was infringing its copyright by purchasing books at a reduced rate in his native Thailand and selling them below list price in the States.

The effects of such a dubious interpretation could be far-reaching for American consumers, and it appears several Supreme Court Justices were appropriately concerned about the implications of Wiley’s proposed geographic limit on first sale. Of course, it’s unwise to predict how the Court will decide a case based solely on comments during the oral arguments, but they can provide insight into what factors the Justices are considering. Today the Court mirrored our concerns about the right of Americans to resell the goods that they’ve legally acquired — from books to smartphones to cars — just because those goods happen to contain copyrighted materials and were manufactured overseas.

Defenders of Wiley’s position are quick to denounce those concerns as overblown. It's curious, then, that Wiley’s own lawyer, former Solicitor General Ted Olson, was hard-pressed to explain why. Justice Breyer asked about specific examples — buying a book overseas to give to your wife in the U.S., or reselling a Toyota manufactured in Japan with numerous individually copyrighted components — and  did not seem impressed with the answers he got. And when Justices Breyer, Sotomayor, and Roberts questioned Olson about the "parade of horribles," raised by Kirtsaeng and supporting amici (including EFF), he asserted that, yes, indeed, sales of foreign made goods might require approval from the copyright holder, whether the seller is a Toyota distributor or a university library:

… if you’re going to use the product created by someone else in a way that’s contemplated by the copyright laws, maybe it’s required that you actually comply with the copyright laws by going to the owner of the copyright and saying, look, here’s what I propose to do, can I have a license to do this?

It goes without saying that a secondary market that exists only with the permission of innumerable copyright holders is a poor substitute for the genuine article. Consumers would be worse off for it, and it’s not what Congress intended.

Later, in questioning the Deputy Solicitor General arguing on behalf of the government, Justice Alito was even more explicit about the choice facing the Court:

Which of the following is worse: All of the horribles that the Petitioner outlines to the extent they are realistic, or the frustration of market segmentation, to the extent that would occur, if Petitioner’s position were accepted?

Pressed in this manner, the government conceded:

I would say that the consequence that all foreign-made goods, even if imported into the United States with the authorization of the U.S. copyright owner, are subject to continuing licensing requirements, etc., I would say that would be worse than the frustration of market segmentation that would occur under Petitioner’s view.

The Court also appropriately persisted in asking questions about the perverse incentive that Wiley’s interpretation would provide to manufacturers in moving their production overseas.

Critics of the Second Circuit’s decision in Kirtsaeng have been accused of exaggeration. Perhaps Justice Breyer put it best today:

The main point is that horribles haven’t occurred. Right? Sometimes horribles don’t occur because no one can believe it.

It’s gratifying that the Court seems to appreciate the ramifications of this case, even if Wiley’s attorneys do not. We’ll be watching closely as the Court releases an opinion.

But that’s not end of the story. Regardless of the Court’s decision, we need to be prepared to tell elected lawmakers that we stand up for first sale, whether the threat is through arcane import regulations or onerous EULAs. EFF has joined Demand Progress and the Free Software Foundation in giving you a platform to contact your legislators to urge them to stand up for first sale. Take action today.

And please show your support by embedding our graphic into your website. It's easy! Just copy and paste this code into the HTML of your site:

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