ECPA Legal Update: First Sale Doctrine Dilemma
Monday, May 21, 2012
By Brian Flagler and Craig Gipson, Flagler Law Group
publishers control whether a third party purchases books produced abroad,
imports those books into the United States, and resells them for a profit? We should soon know the answer. The U.S. Supreme Court recently agreed
to hear a case on the application of the first sale doctrine to copyrighted
works produced abroad.
Supreme Court will decide the Kirtsaeng
case (1). Employing a technical
interpretation, the federal court hearing Kirtsaeng
essentially found that the copyright owner’s right to control distribution
overrides the purchaser’s right of resale when it comes to foreign-manufactured
products. In other words, the
first sale doctrine only applies to books produced in the U.S. – for any book
printed and bound outside the U.S., publishers retain the right to control the
distribution of each copy, even after the initial sale. If Kirtsaeng
stands, the purchaser of a copyrighted work may only resell or lend that
work if it was manufactured in the U.S. or the copyright owner grants
permission for its resale or lending.
reported in February 2011 that the Supreme Court’s split decision in Costco v.
Omega left open the question as to whether the first sale doctrine applies
to books manufactured abroad, imported into the U.S., and exported for sale
exclusively overseas. The Kirtsaeng court held thatthe first sale
doctrine does not apply in this situation, which is now the law for cases
litigated in the states of New York, Connecticut, and Vermont. However, another appellate court
reached a different conclusion, finding that the first sale doctrine applies
both to U.S.-manufactured goods and foreign-manufactured goods imported into the
U.S. with the copyright owner’s approval.
are other concerns regarding the long-term viability and practicality of the Kirtsaeng
decision as it currently stands.
The case could cripple resale and lending organizations. Imagine every used book-seller and
library in the country searching for proof that the books in their collections
were manufactured in the U.S. From
an economic perspective, the court noted that its interpretation creates an
incentive to move even more printing jobs overseas.
now, publishers desiring to retain the right to ban importation of editions of
their works intended for sale only outside the U.S. would be wise to continue
to manufacture the edition overseas and to "drop ship” that edition directly to
overseas accounts without importation into or warehousing in the U.S.
The Supreme Court should hear
the case in the fall of 2012 with an opinion expected in early 2013.
(1) John Wiley
& Sons v. Kirtsaeng, 654 F.3d 210
(2d Cir. 2011).
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