Foreign Textbook Sales May Skirt Copyright Law

     WASHINGTON (CN) – A man who financed his doctoral studies by selling foreign textbooks on eBay may qualify for an exemption of copyright law, the U.S. Supreme Court ruled Tuesday.
     Supap Kirtsaeng used his Bluechristine99 account on eBay to finance a doctorate in mathematics at the University of Southern California after graduating from Cornell University. Kirtsaeng said his friends and family back home in Thailand shipped him foreign-edition textbooks made by John Wiley & Sons, and that he kept the profits for himself after reimbursing the purchase costs. Today, Kirtsaeng is teaching in Thailand, a condition of one of the scholarships that also helped fund his education.
     In 2008, however, Wiley sued Kirtsaeng for selling eight foreign editions of its publications to U.S. consumers. The company relies on an Asian subsidiary to manufacture books for sale in foreign countries, and these editions are usually marked with a legend to designate that they are to be sold only in a particular country or region.
     Wiley said Kirtsaeng earned $1.2 million through the sales of its books, though Kirtsaeng put the figure at $900,000.
     The federal Copyright Act would usually exempt sales such as those that Kirtsaeng made under the first-sale doctrine, codified at Section 109, but application of that rule to foreign works is novel.
     Chief U.S. District Judge Donald Pogue, who presided over the Manhattan trial by designation from the Court of International Trade, refused to let Kirtsaeng use the first-sale doctrine as a defense.
     A federal jury then ordered Supap Kirtsaeng to pay Wiley $600,000 in damages, and a divided panel of the 2nd Circuit rejected Kirtsaeng’s appeal entirely in August 2011.
     After taking up the case in April 2012, the Supreme Court reversed, 6-3, on Tuesday.
     “Putting section numbers to the side, we ask whether the “first sale’ doctrine applies to protect a buyer or other lawful owner of a copy (of a copyrighted work) lawfully manufactured abroad,” Justice Stephen Breyer wrote for the majority (parentheses in original). “Can that buyer bring that copy into the United States (and sell it or give it away) without obtaining permission to do so from the copyright owner? Can, for example, someone who purchases, say at a used bookstore, a book printed abroad subsequently resell it without the copyright owner’s permission?
     “In our view, the answers to these questions are, yes. We hold that the ‘first sale’ doctrine applies to copies of a copyrighted work lawfully made abroad.”
     Since subsection A of the Copyright Act refers to works “lawfully made under this title,” Wiley argued that the law restricts the scope of the first sale doctrine geographically.
     Kirtsaeng on the other hand argued that the reference implicates the work’s manufacture in compliance with the Copyright Act, in other words a nongeographical interpretation.
     The Supreme Court took Kirtsaeng’s view, brushing off arguments from Wiley and the U.S. solicitor general as amicus curiae.
     “Associations of libraries, used-book dealers, technology companies, consumer-goods retailers, and museums point to various ways in which a geographical interpretation would fail to further basic constitutional copyright objectives, in particular ‘promot[ing] the progress of science and useful arts,'” Breyer wrote, quoting the U.S. Constitution. “The American Library Association tells us that library collections contain at least 200 million books published abroad … ; that many others were first published in the United States but printed abroad because of lower costs; and that a geographical interpretation will likely require the libraries to obtain permission (or at least create significant uncertainty) before circulating or otherwise distributing these books.
     “How, the American Library Association asks, are the libraries to obtain permission to distribute these millions of books? How can they find, say, the copyright owner of a foreign book, perhaps written decades ago? They may not know the copyright holder’s present address. And, even where addresses can be found, the costs of finding them, contacting owners, and negotiating may be high indeed. Are the libraries to stop circulating or distributing or displaying the millions of books in their collections that were printed abroad?”
     Breyer added that the geographical interpretation raises the possibility of infringement if a tourist “buys, say, at Shakespeare and Co. (in Paris), a dozen copies of a foreign book for American friends.”
     With more than $2.3 trillion worth of foreign goods imported to the United States in 2011, and about $220 billion in American sales of traditional copyrighted works, “a geographical interpretation would subject many, if not all, of them to the disruptive impact of the threat of infringement suits,” according to the ruling.
     The argument may also implicate the ability of museums to showcase foreign art without permission, the majority added.
     “Thus, we believe that the practical problems that petitioner and his amici have described are too serious, too extensive, and too likely to come about for us to dismiss them as insignificant – particularly in light of the ever-growing importance of foreign trade to America,” Breyer wrote.
     Trying to settle concerns that the new holding removes safeguards against unauthorized importation, Justice Elena Kagan took issue in a concurring opinion with the court’s 1998 holding Quality King Distributors Inc. v. L’anza Research International Inc. The ban appears at Section 602(a)(1).
     Quality King held that the importation ban does not reach any copies receiving first-sale protection under §109(a), but, in combination with the new holding, the scope of the ban becomes limited “to a fairly esoteric set of applications,” wrote Kagan, who was joined by Justice Samuel Alito.
     “But if Congress views the shrinking of §602(a)(1) as a problem, it should recognize Quality King – not our deci­sion today – as the culprit,” she added.
     Misconstruing Section 109(a) to restore Section 602(a)(1) “would swap one (possible) mistake for a much worse one, and make our reading of the statute only less reflective of congres­sional intent,” the opinion concludes. “If Congress thinks copyright owners need greater power to restrict importation and thus divide markets, a ready solution is at hand – not the one John Wiley offers in this case, but the one the court rejected in Quality King.”
     The 32-page dissent argues that today’s holding disregards congressional intent.
     “The court’s bold departure from Congress’ design is all the more stunning, for it places the United States at the vanguard of the movement for ‘international exhaustion’ of copyrights – a movement the United States has steadfastly resisted on the world stage,” wrote Justice Ruth Bader Ginsburg, who was joined by Justices Anthony Kennedy and Antonin Scalia.
     “To justify a holding that shrinks to insignificance copyright protection against the unauthorized importation of foreign-made copies, the court identifies several ‘practical problems.’ The court’s parade of horribles, however, is largely imaginary. Congress’ objective in enacting 17 U. S. C. §602(a)(1)’s importation prohibition can be honored without generating the absurd consequences hypothesized in the Court’s opinion.”
     Justice Scalia did not join in two sections of the dissent, Parts III and V-B-1.

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