Supreme Court Hears Copyright Case

In today’s global economy many businesses purchase goods made abroad for redistributed within other countries, including the U.S. If the good involves copyrights, many purchasers have relied upon the doctrine of First Sale Exhaustion. The doctrine of First Sale, indicates that when a copyright holder sales a copy they have exhausted their rights to control the sale of that good. However, there is another right under copyright law which prohibits the importation of copyright goods.

The Supreme Court’s will hear oral arguments in Kirtsaeng v. Wiley on October 29, 2012. The case involves the right to resell purchased goods which are purchased abroad under the first sale doctrine, and the right of copyright owners to control distribution of their works, often referred to as “grey market” goods. Mr. Kirtsaeng ran a business purchasing and importing foreign versions of textbooks that had been made and sold abroad, intended for foreign resale only (and marked as such), and then reselling those purchased textbooks to U.S. students for less than the price offered by the copyright holders. The S.D.N.Y. and Second Circuit found the reseller liable for copyright infringement under the section 602(a)(1)’s exclusive right to import copies. The court further held that the first sale doctrine does not apply to foreign-made copies because they are not “made under this title” (made in the U.S.) as the doctrine (section 109) requires.

This case will revisit some of the same issues which were left open two years ago when the Supreme Court split 4-4 in Costco v. Omega, in which Justice Kagan recused himself. The full court will now decide the issue, which may have a substantial impact on copyright owners, retailers, and users.