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Supreme Court Affirms First Sale in Kirtsaeng Case March 20, 2013

Posted by Bill Rosenblatt in Law, Libraries, United States.
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The copyleft was jubilant, and Big Media disgruntled, at the Supreme Court’s opinion on Tuesday in Kirtsaeng v. Wiley, a case about the first sale doctrine in US copyright law.  First sale, known as “exhaustion” outside of the US, states that the publisher of a copyrighted work has no say or control in distribution of it after the first sale.  The law says that if you have obtained a copy of a work legally, you can sell it, lend it, give it away, use it to line a birdcage, or anything else, without consent of the original publisher.

The Kirtsaeng case existed firmly in the realm of physical products.  It concerned a tension in the law between first sale (section 109) and another provision (section 602) that makes it illegal to import copyrighted works from outside the US into the country without permission.

Supap Kirtsaeng, a Thai citizen living in the US, got his friends and family to buy textbooks published in his native land at prices that were much lower than those charged here.  They sent him the books; he resold them here and pocketed the difference.  The books were published by a subsidiary of John Wiley & Sons and were virtually identical to titles published by Wiley in the US.  (Disclosure: Wiley is the publisher of one of my books.)

Wiley sued, claiming that Kirtsaeng was infringing under section 602.  Kirtsaeng claimed first sale rights to resell the books.  Kirtsaeng lost in the lower courts, but the Supreme Court reversed.  Now the case goes back to the Second Circuit in New York for a re-hearing consistent with Tuesday’s decision.

Many people are asking me what impact this decision may have on digital first sale, and more specifically, the fortunes of the digital resale startup ReDigi, which is fighting a lawsuit brought by Capitol Records.  While I’m not in the business of reading Supreme Court tea leaves, I’d say there are two ways to look at it.

The narrower view is: not very much.  Justice Stephen Breyer’s opinion was an exemplar of judicial restraint.  It spent a lot of time analyzing key words in the first sale law (specifically that a copy had to be “lawfully made under this title” to qualify for first sale) and the factors specific to its geographic interpretation vis-a-vis section 602.  It also focused on divining Congress’s intent in making the law in the first place and emphasized the law’s “impeccable common law pedigree” dating back over 100 years.  It’s no wonder that the 6-3 majority crossed “party lines,” with conservative Justices Roberts, Thomas, and Alito joining liberals Breyer, Kagan, and Sotomayor.

The opinion also concerned itself with the decision’s impact on libraries and museums, saying that if the case went Wiley’s way, it would place undue burdens on them to get permission before they could lend or exhibit foreign-made works.

What Breyer did not do was spend much time discussing the business implications of the case.  He said little about both  the impact on publishers and Kirtsaeng’s right to carry on his resale business.  Justice Ruth Bader Ginsburg’s dissenting opinion focused much more on those aspects.

That leads me to believe that if and when the Supreme Court revisits first sale, it will be more receptive to arguments from the library and museum communities than those about industry factions, which often suffuse high-profile copyright litigation.  And libraries especially face difficulties without clear digital first sale rights.  The Owners Rights Initiative, a lobbying organization set up specifically to deal with this case, turns out to have done the right thing by enlisting library organizations to be part of its “public face” rather than the likes of CCIA and eBay.  (The list of organizations that submitted or signed on to amicus briefs in this case is a mile long.)

The other possible view of the Kirtsaeng decision is the bigger-picture one: that the Supreme Court is taking a broad view of first sale by refusing to weigh it down with exceptions like those in section 602, and therefore the Court may take the same broad view when it’s asked to opine on digital first sale — that is, when it’s asked to interpret another group of words in the copyright act: “‘Copies’ are material objects…”

(Props to Andrew Bridges of Fenwick & West for his insights.)

Comments»

1. John Erickson (@olyerickson) - March 21, 2013

Thanks as always Bill for your comments! I had been awaiting with interest to hear what you had to say on this decision; commentary by a few others shortly after the decision went down were a bit hyperbolic and not helpful.

Regarding “digital first sale,” I’ve felt for a long time that we either (a) need to start treating transactions for digital content as actual sales or (b) abandon the term “sale” w.r.t. digital content and stop talking about “digital first sale.” In my opinion, as consumers a transaction for digital content is not the kind of sale we are accustomed to; we instead are paying for a limited license to consume content that the provider may exit at any point when conditions change, including and especially the end user’s platform of choice. Its more like buying a movie (or subway) ticket…

If we users instead were instead able to buy access to digital blobs that we could use for perpetuity on our own terms, within the bounds of copyright in the abstract, then we could finally talk about a “sale” …of something… and start having a debate about how “first sale” should apply.

I would expect, or maybe just hope, that SCOTUS will clarify this when it finally enters into digital first sale fray…

2. US Supreme Court allows parallel importation of books | copyrightagency - March 21, 2013

[...] than digital files. There has, however, been some commentary about digital files: see for example here and [...]


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