Shades of Gray: the Internet Market of Copyrighted Goods and the First Sale Doctrine

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In light of the recent John Wiley & Sons Inc. v. Kirtsaeng, 654 F.3d 210 (2nd Cir. 2011) and the possibility that the Supreme Court grant certiorari and finally settle the parallel imports controversy, here is an article originally publised in the Southwestern Journal of International Law, Vol. XV, No. 2 2009, which analyzes the application of the first sale doctrine to imported goods legally manufactured abroad but imported into the U.S. without the consent of the copyright owner in the United States, particularly as it applies to the rapidly growing volume of cross-border Internet commerce transactions.

Without prejudice to the protection of intellectual property rights, the article argues that the first-sale exception to the right of distribution should apply equally to all copyrighted goods that are sold in the U.S., regardless of where they were manufactured, or that at least an exception should be in place for purchases by end users or final consumers. In fact, the application of the current exhaustion scheme potentially places thousands of consumers, and those who facilitate the transactions-i.e. e-commerce portals, ISPs, financial institutiions- at risk of liability for direct or contributory copyright infringement. More than an unintended consequence of the current state of the law, this is actually an example of its anachronistic nature, and of the usual inability of copyright law to keep up with technological advancements. The proposed extension of the first-sale doctrine to include "gray market" imports would place the reality of worldwide Internet commerce within the law.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Vartan Saravia | Attorney Advertising

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