The U.S. Supreme Court heard arguments this week in a copyright infringement case involving textbooks resold on eBay. The outcome could have lasting effects for those who sell products in the U.S. that were made abroad.
The case centers around Thai student Supap Kirtsaeng, who partially financed his education in U.S. universities by reselling textbooks on eBay. Kirtsaeng had friends and family buy copies of the international version of some textbooks in Asia, where the nearly identical editions were cheaper. He then resold them online at a profit.
Publisher John Wiley & Sons sued Kirtsaeng on copyright infringement charges and the jury ruled in favor of Wiley, finding that Kirtsaeng sold eight of the publisher’s textbooks without permission. The jury awarded Wiley US$600,000 in the case, and the Supreme Court is now considering Kirtsaeng’s appeal.
Kirstsaeng’s attorneys argue that once the books were bought legally, he owned them and was free to do what he wanted, including resell them. That rule currently exists for products made in the United States and is often referred to as the “first-sale doctrine.” For instance, if someone purchases an American-made CD, they are free to sell or lend it or give it away.
Wiley won its case in the lower court, though, based mainly on one phrase in section 109 of the Copyright Act. It states the first-sale doctrine applies to products “lawfully made under this title.” In the original case, the court found that items made outside the U.S. were not manufactured under domestic laws and therefore still belonged to the owner of the copyright, in this case Wiley.
The Supreme Court is considering arguments about whether that decision should be upheld, or if the first-sale doctrine should also apply to items made overseas. It’s a question that needs to be answered as the world is getting smaller and the publishing industry expands its borders, said Los Angeles attorney Jonathan Kirsch.
“The publishing industry is globalizing,” he told the E-Commerce Times. “This is a battle to determine whether the first-sale doctrine is an antique and obsolete legal concept in a global and digital age, or if it still has some life and utility. It’s a question as to whether the laws of the U.S. can reach beyond the U.S. borders to illegalize something abroad that would be perfectly legal here.”
This case highlights the struggle of a paper-age industry to stay relevant in a digital era, said Kirsch.
“The fact that this case was filed and has gone all the way to the Supreme Court is just another measure of how distressed the American publishing industry truly is,” he noted. “It’s a sign the old measure of the industry is endangered, and they are now having to fight these new fights.”
The last time the Supreme Court heard a similar case, a 2010 lawsuit involving Costco and Omega, Justice Elena Kagan recused herself and the court was divided 4-4. She heard the case Monday, and her potentially deciding vote could lean toward Wiley, said James Hetz, attorney at Hetz, Jones & Goldberg.
“I do believe the Supreme Court will rule in favor of the publisher in this case,” he told the E-Commerce Times. “Quite simply, the U.S. Copyright law does not apply to acts occurring outside of its territory.”
Kirtsaeng’s legal team argued in court Monday that a copyright infringement law that places too many restrictions on foreign-made items could have wide-ranging consequences.
Some of the justices and members of Kirtsaeng’s legal team brought up potential examples of the harm that would result from an overreaching law. Would a music teacher be allowed to play a Beethoven record for her class if it happened to have been made in Asia? Could someone buy a book from overseas and give it as a gift? Would a library be prohibited from lending or reselling the volumes it bought from abroad?
With such strong control over copyrighted material that was made abroad, manufacturers would have a greater incentive to move jobs overseas., Kirtsaeng’s team also argued.
New Times, New Laws
It is senseless to get into hypotheticals, argued Wiley’s attorneys, who urged the court simply to consider the case at hand. The publisher’s legal team is correct on that count, said Kirsch.
Libraries and educational settings will continue to have certain copyright privileges, he noted, so the larger question is how the publishing industry will cope as the global marketplace expands. No matter which way it decides the Wiley case, he predicted, the Supreme Court can expect to hear another one involving digital copyright protections in the near future.
“Right now they’re debating whether the first-sale doctrine applies to products made overseas, but soon these arguments are going to be made about digital copies,” he pointed out. “The rationale behind the first-sale doctrine is that a publisher selling a brand-new book can have it be more valuable than the next seller, but that doesn’t apply in the digital age. Once again, the question will be whether this is an antique idea or if the industry needs it.”