Last week, the Supreme Court granted certiorari in Kirtsaeng v. John Wiley & Sons, Inc., where the court will decide whether the first sale doctrine applies to foreign works legally acquired outside the United States but imported and resold in the United States.
Wiley & Sons, a U.S. based textbook publisher with foreign affiliates, originally filed suit in the Southern District Court of New York against a Thai individual studying in the United States who obtained cheaper foreign-made editions of Wiley textbooks, printed by Wiley Asia, that he then resold on eBay in the U.S. for a profit. The District Court held that the first sale doctrine applies only to works manufactured in the United States.
According to Wiley, the publisher’s textbooks printed for foreign sales differ from those made for domestic distribution. Specifically, the U.S. editions authorized for sale in the U.S. are “of the highest quality . . . generally printed with strong, hard-cover bindings with glossy protective coatings,” and are often supplemented with CD-ROMs, access to educational websites, and study guides; because of this difference, Wiley asserted that it makes more profit from the sale of the U.S. edition than from the foreign edition. By entering into a “Reprint Agreement” and assigning to one of its subsidiaries – Wiley Asia – its right to reprint and publish English-language foreign editions of its books in specified Asian territories, Wiley retained its U.S. copyright protection and its right to publish and sell its books in the U.S. The foreign editions also have a printed notice stating that they are to be sold only in a particular country or region.
Kirtsaeng argued that his reselling of the imported textbooks was protected under the first sale doctrine of the Copyright Act, which allows the purchaser to transfer, sell, or giveaway a particular, lawfully made copy of the protected work without permission once it has been obtained. Kirtsaeng also claimed that Wiley's assignment of its Asian copyrights to Wiley Asia deprived Wiley of its right to enforce its exclusive U.S. distribution rights.
On appeal, the 2ndCircuit Court of Appeals reviewed two key provisions under the U.S. Copyright Act: Section 602(a)(1), which prohibits the importation of a work without the authority of the copyright’s owner, and Section 109(a), which allows the owner of a copy “lawfully made under this title” to sell or otherwise dispose of the copy without the copyright owner’s permission. The Court held that that the phrase "lawfully made under this Title" in Section 109 refers specifically and exclusively to copies that are made in territories in which the Copyright Act is law, and not to foreign-manufactured works, and therefore the first sale doctrine does not apply to copyrighted works produced outside of the United States that are subsequently imported and resold in the United States. In affirming the District Court’s ruling, Circuit Judge Jose Cabana stated that Section 602 of the Copyright Act “is obviously intended to allow copyright holders some flexibility to divide or treat differently the international and domestic markets for the particular copyright item.”
Now the case moves to the Supreme Court which will review the purpose of the first sale doctrine as it applies to the sale of foreign-made goods resold in the United States and consider the following questions in its analysis: whether a foreign-made, copyrighted work may 1) never be resold within the United States without the copyright owner's permission, 2) sometimes be resold without permission, but only after the copyright owner approves an earlier sale in this country; or 3) always be resold without permission within the United States, so long as the copyright owner authorized the first sale abroad.
The Second Circuit Court’s full opinion can be found here.