U.S. Supreme Court Applies "First Sale" Copyright Doctrine To Allow Import And Sale Of Gray Goods

On March 19, the United States Supreme Court in Kirtsaeng v. John Wiley & Sons, Inc., 2013 WL 1104736, held that the "first sale" doctrine, as codified in the Copyright Act, applies to copyrighted works lawfully manufactured abroad.

This ruling is a setback for U.S. copyright holders whose works are manufactured and purchased abroad and are brought into the United States for resale. This decision eliminates a legal argument used to block the sale of foreign manufactured goods in the United States. The decision arose from a case involving a Thai student attending college in the United States who had relatives purchase lower-priced editions of books manufactured overseas and ship them to him for resale in the United States.

The decision is the latest in a series of legal challenges interpreting the ability of intellectual property owners to prevent the importation and sale of "gray market" or "parallel import" goods into the United States that were manufactured and intended for sale outside the United States.

The decision does not directly affect the opportunities of trademark owners to control the quality of goods bearing their marks. Trademark law preserves an owner’s rights to block importation and sale of materially different products in the U.S. intended for sale in markets outside the United States.