Selling Copyrighted Goods Manufactured Abroad is not Copyright Infringement

by Donna Ray Berkelhammer

The US Supreme  Court ruled 6-3 on March 19 that once you buy a work covered by U.S. copyright law, you may resell that product in the U.S., no matter where it was lawfully manufactured.  This is an important decision for second-hand shops, discounters, online auction sites, museums and libraries.

The case comes from a University of Southern California student (Supap Kirtsaeng) who had his family in Thailand purchase Thai versions of U.S. textbooks that were manufactured in Thailand.  The books were shipped to him in the U.S., where he was able to sell them for less than the U.S. edition and still make a profit.  He relied on the "Doctrine of First Sale under Section 109(a) of the US Copyright Act, which says that once you buy an authorized work (perhaps a book or a car or a laptop), you are free to resell it without worrying about further intellectual property rights of the author/manufacturer.  The intellectual property owner is presumed to have been adequately compensated by the first sale, and has no further rights to control or profit from later distribution of the work.  Section 109 does not mention geography at all.

Publisher John Wiley & Sons, however, sued Kirtsaeng for copyright infringement under Section § 602(a) of the Copyright Act, which says the exclusive right to distribute copyrighted works is infringed if the distributor acquired those works outside the U.S. and did not have authority to sell them here. Wiley argued that the Doctrine of First Sale did not apply to foreign-made goods, and the district court and Second Circuit agreed.

If this view were upheld it is possible that without obtaining express additional authorization from the copyright owner, libraries could not lend books published abroad, consumers could not resell cars or laptops  that contained software  manufactured abroad and museums could not display works by Picasso.

For background on the case, click here.

Different U.S. appellate courts ruled differently on the interplay between these two sections of copyright law, which led the Supreme Court to hear the case.

The Supreme Court determined there  there is no geographic restriction on the Doctrine of First Sale.  It acknowledged that this ruling would make it harder for copyright owners to charge different prices in different markets, but found no basic principle of copyright law that suggests that owners are entitled to such right.

Under this ruling, the Court held Section 602 would still apply in cases where copies are permitted to be made abroad, but no first sale has occurred before the permitted manufacturer, licensee or contracted party attempts to distribute or sell the copies in the US without authorization.

Read a Mealey's Legal News article on this case (includes links to the opinion and Supreme Court briefs accessible to lexisnexis.com subscribers)

Read more business law articles at North Carolina Law Life

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