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IP-Watch interns talk about their Geneva experience in summer 2013. 2:42.

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    US Supreme Court Applies First Sale Doctrine Worldwide

    Published on 19 March 2013 @ 11:12 pm

    By for Intellectual Property Watch

    Today, the United States Supreme Court handed US copyright owners a stinging defeat. The decision in Kirtsaeng v. John Wiley & Sons [pdf] dramatically slashes the ability of US copyright owners to control copies of their works. And in so doing, the 6-3 decision blows a huge hole in the global marketing strategy of movie, TV, book and software companies.

    US law has long recognised that the rights of copyright owners are limited by the first sale doctrine. Written into Section 109 of the Copyright Act, this doctrine states that notwithstanding the rights of a copyright owner to control the sale, publication or distribution of a work, “the owner of a particular copy [of a work] … lawfully made under this title . . . is entitled, without the authority of the copyright owner, to sell or otherwise dispose of … that copy.”

    The US Supreme Court decision can be found here [pdf].

    Many US companies, however, have taken the position that this first sale doctrine applies only to copies made in the US. That was also the position of the US Supreme Court in Quality King v. L’Anza Research International, although the court’s statement in that 1998 case was merely dicta.

    This interpretation of the law has become an essential part of the global marketing strategy of US movie, TV, book and software companies. These companies have used copyright law to geographically segment their markets – selling copies of their works at much higher prices in the US than in places like India and China. If someone attempted to resell a low-priced foreign-made copy into the United States, the US copyright owner sued for copyright infringement. And the defendant couldn’t claim the protection of the first sale doctrine because the copy was made outside the US.

    That’s exactly what happened in this case. John Wiley published copies of some of its English-language textbooks in Thailand. Supap Kirtsaeng acquired some of these books and resold them at a profit in the US to help fund his university education in the US. These used textbooks were significantly cheaper than the textbooks Wiley published and sold in the US. Wiley sued Kirtsaeng for copyright infringement.

    The US Supreme Court held that Kirtsaeng was protected by the first sale doctrine. Writing for the court, Justice Stephen Breyer stated that that Section 109’s first sale doctrine was not limited by geography. So long as a copy was lawfully made with the consent of the US copyright owner, the first sale doctrine applies – no matter where in the world the copy was made.

    This ruling will make it much harder for US music, movie and software companies to stop copies intended for foreign sales from being resold into the US and undercutting domestic sales.

    Conversely, however, it protects the rights of resellers and consumers to dispose of copies as they see fit. Had the court ruled the other way, clever companies might have used copyright law to prevent resales of many items, simply by having them made overseas. Companies could thus wipe out the market for used books, music, tablets and even cars (which contain copyrighted software).

    The Kirtsaeng ruling is at odds with the position taken by the US government in the negotiations for the Trans-Pacific Partnership Agreement (TPP). A leaked text indicates that the US wants the TPP to grant copyright owners the ability to stop imports of works made outside the country. Now that the Supreme Court has decided Kirtsaeng, “the question remains of whether the [US] will continue to push for provisions that are contrary to current U.S. law,” Krista Cox, staff attorney at Knowledge Ecology International, has noted in a blog post.

     

    Steven Seidenberg may be reached at info@ip-watch.ch.

     

    Comments

    1. Pallante, Goodlatte Lay Framework For US Copyright Review | Intellectual Property Watch says:

      [...] When asked what copyright issues need the most attention, Goodlatte, who will lead the congressional discussion on copyright review, mentioned a few issues including: illegal downloading of music and harmonising royalties paid to musicians; redefining fair use; and the first sale doctrine applied in Kirtsaeng v. John Wiley & Sons (IPW, US Policy, 19 March 2013). [...]


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    We welcome your participation in article and blog comment threads, and other discussion forums, where we encourage you to analyse and react to the content available on the Intellectual Property Watch website. By participating in discussions or reader forums, or by submitting opinion pieces or comments to articles, blogs, reviews or multimedia features, you are consenting to these rules.

    We welcome your participation in article and blog comment threads, and other discussion forums, where we encourage you to analyse and react to the content available on the Intellectual Property Watch website.

    By participating in discussions or reader forums, or by submitting opinion pieces or comments to articles, blogs, reviews or multimedia features, you are consenting to these rules.

    1. You agree that you are fully responsible for the content that you post. You will not knowingly post content that violates the copyright, trademark, patent or other intellectual property right of any third party or which you know is under a confidentiality obligation preventing its publication and that you will request removal of the same should you discover that you have violated this provision. Likewise, you may not post content that is libelous, defamatory, obscene, abusive, that violates a third party's right to privacy, that otherwise violates any applicable local, state, national or international law, that amounts to spamming or that is otherwise inappropriate. You may not post content that degrades others on the basis of gender, race, class, ethnicity, national origin, religion, sexual preference, disability or other classification. Epithets and other language intended to intimidate or to incite violence are also prohibited. Furthermore, you may not impersonate others.

    2. You understand and agree that Intellectual Property Watch is not responsible for any content posted by you or third parties. You further understand that IP Watch does not monitor the content posted. Nevertheless, IP Watch may monitor the any user-generated content as it chooses and reserves the right to remove, edit or otherwise alter content that it deems inappropriate for any reason whatever without consent nor notice. We further reserve the right, in our sole discretion, to remove a user's privilege to post content on our site. IP Watch is not in any manner endorsing the content of the discussion forums and cannot and will not vouch for its reliability or otherwise accept liability for it.

    3. By submitting any contribution to IP Watch, you warrant that your contribution is your own original work and that you have the right to make it available to IP Watch for all purposes and you agree to indemnify IP Watch, its directors, employees and agents against all damages, legal fees and others expenses that may be incurred by IP Watch as a result of your breach of warranty or of these terms.

    4. You further agree not to publish any personal information about yourself or anyone else (for example telephone number or home address). If you add a comment to a blog, be aware that your email address will be apparent.

    5. IP Watch will not be liable for any loss including but not limited to the following (whether such losses are foreseen, known or otherwise): loss of data, loss of revenue or anticipated profit, loss of business, loss of opportunity, loss of goodwill or injury to reputation, losses suffered by third parties, any indirect, consequential or exemplary damages.

    6. You understand and agree that the discussion forums are to be used only for non-commercial purposes. You may not solicit funds, promote commercial entities or otherwise engage in commercial activity in our discussion forums.

    7. You acknowledge and agree that you use and/or rely on any information obtained through the discussion forums at your own risk.

    8. For any content that you post, you hereby grant to IP Watch the royalty-free, irrevocable, perpetual, exclusive and fully sub-licensable license to use, reproduce, modify, adapt, publish, translate, create derivative works from, distribute, perform and display such content in whole or in part, world-wide and to incorporate it in other works, in any form, media or technology now known or later developed.

    9. These terms and your posts and contributions shall be governed and interpreted in accordance with the laws of Switzerland (without giving effect to conflict of laws principles thereof) and any dispute exclusively settled by the Courts of the Canton of Geneva.

     

     
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