by Frank L.
Bernstein and Jonathan D.
In a much-awaited decision, Kirtsaeng v. John Wiley
& Sons, Inc., (lexis.com subscribers may access Supreme Court briefs and the opinion for this case) the U.S. Supreme Court held that the copyright law's
"first sale" doctrine trumps the import restriction for a lawfully purchased
copyrighted work, lawfully manufactured outside the United States. As a result,
someone who purchases works outside the United States, with the copyright
owner's permission, can bring those works into the United States and resell
them as desired, without requiring the copyright owner's permission.
Publisher John Wiley & Sons, Inc., had sued a student, Supap Kirtsaeng, who
came from Thailand to pursue collegiate studies in the United
States. Kirtsaeng created a profitable business by reselling, in the
United States, textbooks lawfully purchased at much lower prices in Thailand.
These textbooks were editions directed by Wiley to the Asian market, and not
intended for sale in the United States. This "textbook arbitrage" by Kirtsaeng
cut into U.S. profits that Wiley enjoyed for the equivalent U.S. editions.
The Supreme Court's ruling in favor of Kirtsaeng means that this kind of arbitrage
is permitted under U.S. copyright law. The ruling relieves numerous U.S.
businesses, from libraries to used booksellers to art galleries - even
automobile and equipment manufacturers whose products run software - from
having to police their inventories to determine whether individual copyrighted
works-based on their situs of manufacture-require the copyright owner's
permission before being lent, resold, or displayed.
For international publishers like Wiley, one response, at least for physical works,
would be to increase prices abroad, thereby making arbitrage less attractive.
An alternative would be to "license" electronic copies of the textbooks for use
on e-readers, tablets, and personal computers, following the model adopted for
software, music, video, and books. This approach would not invoke the "first
sale" doctrine, because a license is, by definition, not a sale.
In Kirtsaeng, the Supreme Court noted that movie theater operators
lawfully acquire, but do not own, the movies they receive from the movie
studios. These operators are "bailees" or "lessees" (i.e. owners of
fewer than all rights in a work), and so are not entitled to do whatever they
please with the acquired works. Going to an electronic "licensing" model for
textbook distribution would similarly enable publishers to retain control and
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