Supreme Court Considers Rights To Resell Copyrighted Products

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The Supreme Court heard arguments this week in a copyright case that could put a considerable crimp in eBay, Craigslist and other online marketplaces.

The case deals with people's rights to resell copyrighted products, including  books, DVDs and CDs, as well as merchandise that people don't typically associate with copyright -- like watches with a copyrighted design, or cars with a copyrighted GPS system.

The matter heard Monday morning stemmed from a lawsuit by the publisher John Wiley & Sons against grad student Supap Kirtsaeng, who purchased textbooks in Thailand and then resold them in the U.S. Wiley alleged that Kirtsaeng infringed copyright. He countered that the copyright statute's "first sale" provisions gave him the right to resell material that he had purchased legally.

But Wiley successfully said the "first sale" doctrine only applies to products initially sold in the U.S. The company's argument relies on a phrase in the copyright statute saying that people have the right to resell material "lawfully made under this title.”

Unfortunately, that bit of legalese is inscrutable enough to defy easy interpretation.

Wiley wants it to mean that consumers don't have the right to resell products manufactured abroad.

Kirtsaeng's lawyer says the phrase should ban only resales of counterfeits. He argues that Wiley's interpretation -- equating "lawfully made under this title" with "made in the U.S.A." -- would give companies unprecedented new rights to ban resales of their product. "Any producer who sends jobs overseas will be rewarded with the manufacturer's Holy Grail -- the power to lock up, extract exorbitant rents from, or discriminate in any secondary market," he argues.

The case has drawn the attention of dozens of outside groups including eBay, Google and the digital rights group Center for Democracy & Technology. They weighed in with a friend-of-the-court brief on Kirtsaeng's side, while other organizations sided with Wiley.

A transcript of Monday's argument indicates that the judges are divided about what should happen in the case. Ruth Bader Ginsburg appeared to be leaning toward Wiley's position. At one point in the argument, she told Kirtsaeng's lawyer that most other countries restrict first sale rights to products manufactured in their country.

But Justice Stephen Breyer seemed more inclined toward Kirtsaeng's point of view. He asked Wiley's lawyer about the possibility that people would no longer be able to resell products made abroad.

"Under their reading," Breyer said, referring to Kirtsaeng, "the millions of Americans who buy Toyotas could not resell them without getting the permission of the copyright holder of every item in that car which is copyrighted," he said. The judge went on to ask how the ruling would apply to the "millions and millions of dollars' worth of items with copyrighted indications of some kind in them that we import every year," including used books, works of art, even luggage.

Wiley's lawyer responded that this particular lawsuit didn't pose those questions.

Justice Anthony Kennedy took issue with that answer. "You're aware of the fact that if we write an opinion with the… rule  that you propose, that we should, as a matter of common sense, ask about the consequences of that rule," he said.

The court is expected to issue a decision by next June.

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4 comments on "Supreme Court Considers Rights To Resell Copyrighted Products".

1. Chuck Lantz from 2007ac.com, 2013ac.com network
   

   commented on: October 30, 2012 at 8:13 p.m.
   If Wiley prevails, one way around not having the legal right to resell such items might be simply to rent or lease them, for a one-time payment, ... forever. And if that loophole is addressed in the ruling, there's always "suggested donation" and the old standby, "shipping and handling."
2. Nicole Phillips from Abornewords
   

   commented on: October 31, 2012 at 5:48 a.m.
   Who knew that Copyright Laws would stretch so deep? First, the case itself is not going to get the attention of a large portion of the population. Resellers are conducting business in a variety of ways on a local level. For instance, newspaper ads, paid and free postings, listing products for resale. Additionally, garage sales, thrift shops, and consignment stores. A lot of consumers live for those. Even if there is a win that favors Publisher John Wiley and Sons, it will be hard to enforce on local levels and very costly to do so. At auction and digitally, Etsy Stores, EBay, and Amazon may be affected more by the decision. However, smart marketing and clever pricing strategies will keep Amazon thriving in the digital world. Major manufacturers still look to sites like Amazon to increase product awareness and draw in t hose extra consumer dollars that may not be coming in at storefront locations. There is money still to be made. The case is really not a big deal.
3. Pete Austin from Triggered Messaging
   

   commented on: October 31, 2012 at 6:57 a.m.
   @Chuck: he case seems to cover renting and leasing, in addition to ordinary selling. @Nicole: it's a huge deal because it could basically ban a huge amount of commerce, including the examples you mention. The problem is that a lot of people are involved in producing even simple things, so there would be no practical way to get permission from every copyright holder involved. IANAL so here's a link: http://newsandinsight.thomsonreuters.com/New_York/News/2012/10_-_October/The_$63_billion_copyright_question/
4. Theresa M. Moore from Antellus
   

   commented on: October 31, 2012 at 3:48 p.m.
   Unfortunately that is already been played out in real life, in that Amazon considers the content posted for sales as its "property" to dispose of how it wishes, not the copyright holder. I have already had a shakedown artist steal the content I had posted in the form of an ebook and then have the item blocked, claiming that I owed him money. Consequently, I have closed my Amazon account and forwarded his email to the FBI. Scofflaws be warned.

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