Supreme Court Holds "First Sale" Doctrine Applies to Grey Market Goods -- Resale of Copyrighted Items Made Overseas Not Copyright Infringement

Supreme Court Holds "First Sale" Doctrine Applies to Grey Market Goods -- Resale of Copyrighted Items Made Overseas Not Copyright Infringement

 by Laura J. Borst, Rita Weeks and Shelby Knutson

Excerpt:

In a landmark ruling on March 19th, the Supreme Court held in Kirtsaeng v. John Wiley & Sons, Inc., No. 11-697, 2013 U.S. LEXIS 2371 (2013) [an enhanced version of this opinion is available to lexis.com subscribers], that the "first sale" doctrine - which permits lawfully acquired copies of copyrighted works to be resold by their owners - also applies to works manufactured overseas.

By holding that the first sale doctrine applies to goods manufactured abroad as well as those manufactured in the United States, the Court reversed a Second Circuit decision upholding a jury determination that Petitioner Supap Kirtsaeng was liable for willful copyright infringement and owed publisher John Wiley & Sons $600,000 in damages. See Mar. 19, 2013 Slip Op.

The Story Begins in Thailand

Supap Kirtsaeng, a Thai citizen who attended graduate school in the U.S., asked his friends and family in Thailand to purchase and ship him copies of foreign edition, English-language textbooks, that were less expensive than the U.S. editions. Kirtsaeng subsequently resold the textbooks to students in the U.S. for profit.

U.S. book publisher Wiley assigned the right to publish, print and sell its foreign versions of English-language textbooks abroad to its wholly owned Asian subsidiary. Each of Wiley's Asia-manufactured textbooks state that absent permission, the textbooks may not be taken into the United States. In 2008, Wiley sued Kirtsaeng in United States District Court for the Southern District of New York, alleging that Kirtsaeng's unauthorized importation and resale of the textbooks constituted copyright infringement.

The "first sale" doctrine in copyright law allows the owner of a "lawfully made" copy of a copyrighted work to sell or otherwise dispose of that copy without limitations imposed by the copyright owner. 17 U.S.C. §109(a) [an annotated version of this statute is available to lexis.com subscribers]. For example, once a copy of a copyrighted novel has been lawfully sold or transferred, the buyer has the right to sell or otherwise distribute that particular copy. Section 603(a)(1) of the Copyright Act, however, provides that importation, without the owner's permission, of a copyrighted work acquired abroad is an act of infringement.

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This article was prepared by Laura J. Borst (lborst@fulbright.com / (612) 321-2206), Rita Weeks(rweeks@fulbright.com / (212) 318-3213) and Shelby Knutson (sknutson@fulbright.com / (612) 321-2207) of Fulbright and Jaworksi's Intellectual Property and Technology Practice.