First Sale Doctrine Now Applies to World-Wide Sales!

October 22, 2013

Few issues have created greater confusion in copyright law than the "first sale doctrine." The doctrine is one of the specific statutory restrictions which Congress has placed on the exclusive rights of copyright owners.  The first sale doctrine, codified at 17 U.S.C. § 109, provides that an individual who knowingly purchases a copy of a copyrighted work from the copyright holder receives the right to sell, display or otherwise dispose of that particular copy, notwithstanding the interests of the copyright owner.  Thus, the copyright holder’s exclusive right to distribute ends once the owner has sold that particular copy. See 17 U.S.C. § 109(a) & (c).

The case of Kirtsaeng v. John Wiley & Sons, Inc., 133 S. Ct. 1351, 1358 (2013) specifically deals with the issue of whether the First Sale Doctrine applies to copies of copyrighted goods lawfully made abroad.  John Wiley & Sons, Inc. is a publisher of academic textbooks who assigned to its wholly-owned foreign subsidiary the rights to print and publish foreign editions of the very same textbooks it sold in the United States.  Kirtsaeng, a student who moved to the United States from Thailand to study mathematics, discovered that the foreign-made versions of most textbooks distributed in Asia sold for a fraction of their domestic version.  He hashed an enterprising plan wherein he asked his friends and family to buy and ship to him the foreign versions of various textbooks, which he then resold for a hefty profit.  Wiley sued Kirtsaeng claiming that Kirtsaeng’s unauthorized importation and resale of its books was an infringement of its exclusive right to distribute.

In holding that the First Sale Doctrine does apply to copyrighted goods lawfully made abroad, the Supreme Court analyzed the meaning of the statutory language “lawfully made under this title,” which the Court analyzed in two parts.   First, that “under” means “in accordance with” and not literally within the United States.  And secondly, that “lawfully made” meant that the copyrighted item was originally manufactured with the permission of the copyright holder, regardless of geographic location.  Additionally, the Supreme Court argued that the Copyright Act (“Act”) itself supported a nongeographical limitation since the Act does apply to works made abroad in various respects, (e.g., § 602(a) foreign printed pirated copies subject to the Act).

This case is a significant win for the sellers of gray-market goods.  However, it is by no means dispositive; owners of goods originally meant to be distributed and sold abroad but imported without their authorization may still avail themselves to the protection available to them under the Lanham Act.  If you have any questions regarding the First Sale Doctrine, or the importation and sale of gray market goods, please feel free to contact our office at 305.921.9326 to setup a consultation.

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