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WASHINGTON, D.C. - (Mealey's) The U.S. Supreme Court agreed April 16 to again address the question of whether a foreign-made work can be resold within the United States without the permission of a copyright holder (Supap Kirtsaeng, d/b/a BlueChristine99 v. John Wiley & Sons Inc., No. 11-697, U.S. Sup.).
(Orders list available. Document #16-120507-002R.)
Petitioner Supap Kirtsaeng, doing business as BlueChristine99, won certiorari in his effort to overturn an August 2011 Second Circuit U.S. Court of Appeals ruling that the first-sale defense is unavailable to defendants who purchase copyrighted works abroad for resale here.
In seeking review, Kirtsaeng noted that the issue presented in the instant dispute is similar to that presented in the Supreme Court's per curiam ruling in Costco Wholesale Corp. v. Omega S.A. (131 S. Ct. 565 ), which left intact a Ninth Circuit U.S. Court of Appeals decision that the first-sale doctrine does not apply to goods that are manufactured abroad and then imported to the United States.
Justice Elena Kagan took no part in Costco, however, leading to a 4-4 split.
"The first-sale doctrine, codified at § 109(a), allows the owner of a copy 'lawfully made under this title' to sell or otherwise dispose of the copy without the copyright owner's permission. The question presented is how these provisions apply to a copy that was made and legally acquired abroad and then imported into the United States. Can such a foreign-made product never be resold within the United States without the copyright owner's permission, as the Second Circuit held in this case? Can such a foreign-made product sometimes be resold within the United States without permission, but only after the owner approves an earlier sale in this country, as the Ninth Circuit held in Costco? Or can such a product always be resold without permission within the United States, so long as the copyright owner authorized the first sale abroad, as the Third Circuit has indicated?" Kirtsaeng's petition asks.
The Second Circuit, in affirming findings by the U.S. Court of International Trade, found in favor of respondent John Wiley & Sons Inc., a worldwide publisher of textbooks. Wiley obtains from authors assignment of their U.S. and foreign copyrights of reproduction and distribution. Wiley says the quality of its textbooks varies depending on where they are published, with those published in the United States being "of the highest quality." Kirtsaeng moved from Thailand to the United States in 1997 to obtain an undergraduate degree in mathematics. In 2009, he earned a Ph.D. Along the way, Kirtsaeng said, he received shipments of Wiley foreign edition textbooks, printed abroad, from friends and family, as part of what the Second Circuit called a "scheme" to "subsidize the cost of his education." Kirtsaeng sold the foreign edition textbooks online via the auction site eBay, using the screen name BlueChristine99.
In September 2008, Wiley filed the instant lawsuit, claiming copyright infringement and trademark infringement. In response, Kirtsaeng claimed that his sales were permissible pursuant to the first-sale doctrine. A trial was held, at the conclusion of which jurors found in favor of Wiley, awarding the respondent $75,000 for each of eight works willfully infringed by Kirtsaeng. The first-sale doctrine, codified at Section 109(a) of the Copyright Act, provides that "the owner of a particular copy . . . lawfully made under this title, or any person authorized by such owner, is entitled, without the authority of the copyright owner, to sell or otherwise dispose of the possession of that copy," the judge noted in upholding the verdict, before lamenting that Section 602(a) of the act "complicates matters." In that section, the Copyright Act states that importation into the United States "without the authority of the owner of copyright . . . of a work that has been acquired outside the United States is an infringement of the exclusive right to distribute copies or phonorecords."
Ruling Not Adopted
Affirming, the Second Circuit majority of Circuit Judges Jose A. Cabranes and Robert A. Katzman cited a "key factual difference" between the instant appeal and Quality King v. L'anza Research International Inc. (523 U.S. 135 ), in which the U.S. Supreme Court held that Section 109(a) limits the scope of Section 602(a). Quality King involved copyrighted items that had been manufactured in the United States, the panel said, and in dicta the high court suggested "that copyrighted material manufactured abroad cannot be subject to the first sale doctrine."
Reading the statute to mean that Section 109(a) applies only to domestically manufactured works, the Second Circuit said that although the Ninth Circuit ruled in Omega that Section 109(a) also applies to foreign-produced works sold domestically, that decision relied on precedents "not adopted by other courts of appeals.""Accordingly, while perhaps a close call, we think that, in light of its necessary interplay with § 602(a)(1), § 109(a) is best interpreted as applying only to works manufactured domestically," the Second Circuit held.
Kirtsaeng is represented by Sam P. Israel of Sam P. Israel PC in New York and E. Joshua Rosenkranz, Annette L. Hurst and Lisa T. Simpson of Orrick, Herrington & Sutcliffe in New York. Theodore B. Olson, Matthew D. McGill and Scott P. Martin of Gibson, Dunn & Crutcher in Washington represent Wiley.
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