Supreme Court Deals Blow to U.S. Copyright Holders on Works Published Outside U.S.

On Tuesday, March 19, 2013, the U.S. Supreme Court in Kirtsaeng v. John Wiley & Sons Inc., U.S. Supreme Court, No. 11-697, overturned a 2nd U.S. Circuit Court of Appeals decision in New York in holding that the first sale doctrine applies to copies of copyrighted works lawfully made outside of the United States. The 6-3 decision dramatically hinders the ability of U.S. copyright owners to control copies of their works that are lawfully made abroad and then resold in the U.S.

In the case, Thai national Supap Kirtsaeng funded his American university education in part by reselling copies of English-language textbooks published in Thailand on eBay. The copies published in Thailand were significantly cheaper than ones sold in the U.S., and Kirtsaeng reaped a net profit of approximately $100,000. Eight of the textbooks Kirtsaeng sold were published by John Wiley & Sons Inc. (Wiley). Wiley sued Kirtsaeng for copyright infringement and won a $600,000 damages award, which was upheld by the 2nd U.S. Circuit Court of Appeals in New York. The 2nd Circuit ruled that foreign copies can never be resold in the U.S. without permission of copyright owners.

Kirtsaeng argued that he was protected by the first sale doctrine, written into Section 109 of the Copyright Act, which states that owners of particular lawfully made copies of copyrighted work can resell them without the copyright owners’ permission. Historically, there had been confusion as to whether or not the first sale doctrine applied only to lawful copies made in the U.S. The Supreme Court in Quality King Distributors, Inc. v. L’anza Resarch Int’l, Inc. suggested that the doctrine presumably is limited to goods manufactured in the U.S. The Court found the statement in Quality King to be non-binding dictum, however, as it was unnecessary to the decision in that case, and held that the doctrine is not limited by geography and applies to all lawfully made copies, even if made overseas. Here, John Wiley & Sons Inc. had authorized the making of the copies published in Thailand, and thus, Kirtsaeng’s activities fell under the scope of the first sale doctrine.

The Court’s decision has great implications for both U.S. copyright owners and consumers. U.S. copyright owners will have a much more difficult time preventing lawfully made copies produced abroad from being resold in the U.S., affecting domestic sales. Consumers, however, are now free to resell lawfully made copies without permission from the copyright owner, even if the copy was made overseas.