First Sale Doctrine being called into Question

You buy a book, finish it, sell it second hand via Amazon marketplace- for many this approach to buying goods has become fairly common practice. Especially with sites such as Ebay, Preloved and Gumtree, it has become easier and more frequently practiced for people to re-sell their old goods. After-all once you have bought something its yours to do with what you like, right? Well, it might not be any more…Currently in the U.S. this style of ownership is being put into jeopardy due to a number of court cases that have called into question people’s rights to re-sell their goods.

First Sale Rights

The first sale doctrine, allows the purchaser of a copyrighted work to re-sell it, lend it, rent it, or destroy it, without having to seek explicit copyright permission. This law means that copyright only applies to a product being sold for the first time. Without it free-markets allowing for the distribution of CDs, DVDs, used phones etc. would be deemed illegal, as would rental places such as Blockbuster, Love-film or Libraries unless they had specific authorization from the copyright holders. Fundamentally, the law allows people to do with their goods, pretty much everything we are accustomed to do, even down to lending a CD to a friend.

So what is the problem?

The first sale doctrine applies to any copyrighted good ‘lawfully made under the [Copyright Act]’. However, what has currently become the subject for debate is what exactly constitutes a product made lawfully under the Copyright Act?  Although it has been established that this covers any product manufactured in the U.S. what is now being questioned is whether it applies to those goods manufactured outside the U.S as well?

Omega vs. Costco

The issue was first raised in 2010, in a case involving Omega and Costco. Omega was selling watches only for distribution in South America, yet Costco was managing to sell Omega’s watches in the United States for a cheaper price than the suggested re-sale price there. Costco defended its distribution right using the first sale doctrine. The federal district court ruled in Costco’s favour, but the Ninth Circuit Court ruled in Omega’s favour declaring that the Doctrine did not apply to goods manufactured outside the U.S. The case was then moved to the Supreme Court, which remained in a 4-4 deadlock and the issue was never fully resolved and therefore can provide no precedent.

John Wiley & Sons, Inc. v. Kirtsaeng

The case that currently is being addressed by the Supreme Court involves an international student from Thailand reselling textbooks that were manufactured in both the United States and Thailand. Textbooks were also sold in both places; however the ones being sold in Thailand were made in lower quality materials, and therefore were cheaper than their American equivalents. In order to finance his way through University, the student, Supap Kirtsaeng, decided to buy these cheaper textbooks in Thailand and then sell them to his fellow students at a cheaper price than they would otherwise have had to pay when buying the more expensive American editions. On learning about this, the publisher Wiley, sued for copyright infringement. The trial court ruled in favour of the publisher, awarding them $600,000 in damages, with the Second Circuit Appeal court upholding the ruling, declaring Copyrighted works manufactured abroad were not works lawfully made under’ Copyright Act… and thus are not subject to  first sale doctrine’

So what now?

The case is now being moved to the hands of the U.S. Supreme who will be charged with the ultimate decision. If they do rule in favour of the Second Circuit, then it looks like the flexibility of distributing products will be severely altered.  This means that any products manufactured abroad, even if they might have been designed in the U.S, will no longer be able to be re-sold freely without fear of infringing copyright. This very concept would mean that people would no longer truly own what they buy, where products are leased rather than sold to you, which as Techdirt points out, would be a ‘massive encroachment on individual’s property rights’

On top of this, some fear that this will encourage companies to manufacture their goods abroad in order for them to have greater control over the distribution of their products, and have sustained copyright over the products. With many companies, such as Apple, already manufacturing their products abroad in places like China, what will this mean for people who, say, want to resell their old iPhone?

Feeling the Pressure?

Ebay is clearly feeling the threat that this impending case poses, and has given its support for the Citizens for Ownership Rights to help collect signatures for a petition urging the Obama administration to support ‘the rights of Americans to purchase legitimate goods, resell these goods, give them away, or use them in any legal manner as they see fit’

Library Associations have also stepped in to defend their rights to lend books printed abroad, feeling that they do not have the legal budgets to risk continuing lending in case they were sued, nor have the time or money to track down all individual rights holders. They claim that U.S libraries have over 200 million books with foreign publishers; not counting those printed abroad, meaning that the implications for libraries would be massive. Therefore, the LCA (Library Copyright Alliance) have asked the court to alter the Second Circuit’s definition as ‘lawfully made under this title’ meaning made ‘in the United States’, to ‘copies manufactured with the lawful authorization of the holder of a work’s U.S reproduction and distribution rights’

A Step Backwards

In the Internet age, at a time when it seems likely that we might soon even be able to resell digital music, a decision ruling against first sale doctrine being applied to goods manufactured abroad, seems like a major step backwards.  With the whole definition of first sale doctrine being placed under scrutiny in this case, there seems to be a lot more riding on the Supreme Court’s decision than purely the redistribution of textbooks.