The Supreme Court Issues A Decision In Kirtsaeng v. John Wiley & Sons Inc,

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Following up on our previous blog post addressing Kirtsaeng v. John Wiley & Sons Inc., the Supreme Court recently held, in a 6-3 decision, that the “first sale” doctrine applies to works produced and sold overseas. The decision, reversing the Second Circuit, came much to the chagrin of American publishers. The Court’s ruling essentially holds that U.S. copyright laws are not violated when textbooks and other products made and sold abroad are re-sold in the U.S. at a discounted price.

Respondent, John Wiley & Sons, Inc., (“Wiley”) a textbook publisher, assigns its publication and print rights to its wholly owned foreign subsidiary in order to sell foreign editions of their textbooks abroad. Petitioner, Kirtsaeng, asked friends and family in Thailand to purchase and ship the foreign editions to him, in the U.S., where he proceeded to sell them at significantly discounted prices, in comparison to same textbooks sold in the U.S. After learning of this, Wiley filed suit alleging violations of §106(3) and §602 of the Copyright Act. Kirtsaeng responded by asserting that because the books were legitimately acquired and lawfully made, the “first sale” doctrine permits their subsequent resale pursuant to §109(a).

The Supreme Court was confronted with determining the extent to which a copyright holder is protected when products that are made and purchased outside the U.S. are resold within the U.S. absent the manufacturer’s permission. In making its determination the Court examined what the language of §109(a) requires when it states “lawfully made under this title.” Wiley asserted that language of §109(a) permits a geographical interpretation, limiting the application of the “first sale” doctrine to copies made in territories subject to the Copyright Act. The Court ultimately held that “lawfully made under this title” simply means “in accordance with” or “in compliance with” the Copyright Act. In particular, the court noted that a geographical interpretation of the language would impose greater linguistic hurdles and in the interest of “simplicity and coherence” a nongeographical reading would be applied.

Construing the language in this manner offers greater advantages to consumers who now benefit from reduced prices and greater options in making purchases. However, the Court’s ruling has received some sharp criticism by those arguing that the decision will invariably harm businesses and consumers globally as there will now be a disincentive for U.S. publishers to manufacture foreign editions of various publications.  Justice Breyer authored the majority opinion, while Justice Ginsburg, Justice Kagan, and Justice Alito dissented.

If your institution has questions or concerns about this topic and you would like further information, please email Cynthia Augello at caugello@cullenanddykman.com or call her at 516-357-3753.

A special thanks to Cynthia Thomas a law clerk at Cullen and Dykman LLP, for help with this post.

 

Topics:  Copyright, Exports, First Sale Doctrine, Grey Market, Imports, Kirtsaeng v. John Wiley & Sons, SCOTUS

Published In: General Business Updates, Intellectual Property Updates, International Trade Updates

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.

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