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SCOTUS “first sale” ruling a big win for everyone but content publishers and software makers

Attorney Dana Newman on the implications of the Supreme Court ruling in Kirtsaeng v. John Wiley & Sons, Inc.

The U.S. Supreme Court ruled in Kirtsaeng dba Bluechristine99 v. John Wiley & Sons, Inc. yesterday, upholding the “first sale” doctrine in the case of copies of copyrighted materials lawfully made outside the United States. O’Reilly GM and publisher Joe Wikert (@jwikert) quoted from the majority decision in a post about his surprise at SCOTUS’ decision:

“Putting section numbers to the side, we ask whether the ‘first sale’ doctrine applies to protect a buyer or other lawful owner of a copy (of a copyrighted work) lawfully manufactured abroad. Can that buyer bring that copy into the United States (and sell it or give it away) without obtaining permission to do so from the copyright owner? Can, for example, someone who purchases, say at a used bookstore, a book printed abroad subsequently resell it without the copyright owner’s permission?

“In our view, the answers to these questions are, yes. We hold that the ‘first sale’ doctrine applies to copies of a copyrighted work lawfully made abroad.

I reached out to transactional and intellectual property attorney Dana Newman (@DanaNewman) to find out what the ruling means in the short term and what broader implications the decision might hold. Our interview follows.

What are the immediate copyright implications from the Kirtsaeng decision?

Dana NewmanDana Newman: The Court held that the “first sale” doctrine, which allows the resale of legally purchased content without the authorization of the copyright holder, applies to copies of a copyrighted work lawfully made outside the U.S. It was a question of statutory interpretation, and the majority found that “lawfully made” under the stature means made “in accordance with” or “in compliance with” the Copyright Act, and that there were no geographical limitations.

The decision is a win for consumers, small businesses, online marketplaces, retailers and libraries — basically, everyone but the content publishers and software makers. Had the court ruled the other way, the burden of having to verify the origin of goods would have killed the resale market for goods sold online and in discount stores, and made it very difficult for museums and libraries that contain works produced outside the U.S.

Do you anticipate the ruling shaping other first sale/copyright rulings? Could it have an effect on digital resale, such as in the Capitol Records vs. ReDigi case?

Dana Newman: While the decision didn’t address the difference between the resale of physical copies and digital copies directly, the majority opinion did note the concerns of technology companies that other products such as cars, appliances, mobile phones, tablets and computers contain copyrightable software programs made abroad, and found that “A geographical interpretation would prevent the resale of, say, a car, without the permission of the holder of each copyright on each piece of copyrighted automobile software.”

The Kirtsaeng ruling is definitely a win for resellers and online marketplaces, and represents an expansive view of the “first sale” doctrine. However, the ReDigi case focuses on a different issue: whether the resale of digital materials is a license or a sale — is the seller an “owner” of that media or a licensee, and is she merely making a copy, which is not protected under the first sale doctrine.

What are the big-picture considerations of the decision — do you think it will have an effect on how/where copyrighted goods are produced, for instance? Something else?

Dana Newman: Yes, from the content producers’ perspective, this ruling could have a big impact on the pricing of copyrighted works around the world. There is now a disincentive for publishers to sell versions of their works at different prices in different regions, which may result in higher prices overall. The Court recognized this, but basically stated that copyright law doesn’t protect rights holders on that point, leaving it up to Congress to address.

Could ebook lending be affected by this or other “first sale” case rulings?

Dana Newman: Certainly, how the courts decide the application of the “first sale” doctrine in the digital environment will impact ebook lending. Currently, libraries (and individuals) are constrained by license terms in the ways they are able to provide access to their ebooks. The Copyright Office established a committee to review the copyright law exceptions for libraries under Section 108 to make it better suited to the digital age, so change may come through legal reform rather than a court ruling.

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  • http://www.facebook.com/people/Steven-Hutson/645729819 Steven Hutson

    This is a win for everyone but the publishers? I don’t see it that way. What the pubs lose in one department, they will certainly have to recover elsewhere. Higher prices? Lower royalties? Fewer foreign rights sales? This can’t be good for anyone, in the long view.

    Seems to me, this could end up a short-term pyrrhic victory for the plagiarizers. No business will tolerate this type of end run for long. I sniff a zealous lobbying campaign to change the law.