Supreme Court Considers Rights To Resell Copyrighted Products

• by Wendy Davis , Staff Writer @wendyndavis, October 30, 2012

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.