Copyright QuestionOne of the exclusive rights in copyright granted to the creator of a work is the right to distribute it.  For instance, if you self-publish a book — a popular activity these days — you also have the exclusive right to make copies and distribute them to whomever you want.  The distribution right, however, is not unlimited.  If I were to purchase one of your self-published books, the law permits me to resell it to whomever I want without violating your exclusive right of distribution.  This is known as the “First Sale” doctrine — codified in Section 109 (a) of the Copyright Act.  The First Sale doctrine is important because it legitimizes the sales activities of used book stores, art galleries, and other establishments, which resell copyrighted works.  But what are the limits of the First Sale doctrine?  That was the question raised by a recent case before the U.S. Court of Appeals for the Second Circuit in John Wiley & Sons, Inc. v. Supap Kirtsaeng, No. 09-4896-cv (August 15, 2011, 2nd Cir).  It may have far-reaching implications.

In 2009, Supap Kirtsaeng, a Thai national, opened a used textbook business to support his educational studies in the United States. The business model was simple.  He enlisted his friends and family in Asia to buy textbooks and ship them to him in the United States for resale on e-Bay. To ensure that he was acting legally, Kirtsaeng asked the opinion of his friends in Thailand and consulted “Google Answers” (now defunct). Apparently, these sources gave him the green light because his textbook selling activities continued and prospered.  Kirtsaeng was so successful that he caught the eye of John Wiley & Sons, Inc. (“Wiley”) — the copyright owner — who sued him in federal court for copyright infringement.  Wiley based its lawsuit on Section 609(a) of the Copyright Act, which prohibits the importation of copyrighted works manufactured outside of the United States without the authorization of the copyright holder.  At trial, the federal district court prohibited Kirtsaeng from raising the first sale doctrine as a defense to copyright infringement and as a result, the jury found in favor of Wiley and awarded it damages for intentional copyright infringement.

On appeal, the United States Circuit Court of Appeals for the Second Circuit affirmed the decision of the lower court. The court of appeals acknowledged that there was a tension between the First Sale doctrine, which gives rights to owners of copyrighted works and Section 609(a) of the Act, which takes them away if the works were manufactured outside of the United States.  Nevertheless, it was persuaded by a recent decision of the United States Supreme Court in Quality King Distributors, v. L’anza Research International, Inc., which suggested that Section 609(a) was meant to give control to copyright owners over imported goods, which, by definition, are not “lawfully made” under the U.S. Copyright Act.  Under the First Sale doctrine, the law requires that the goods be “lawfully made” under the Act.

Although a decision by the U.S. Circuit Court of Appeals for the Second Circuit is not the law of the land, only decisions of the U.S. Supreme Court wear that title, it could potentially persuade other courts to decide cases in the same direction.  The end result may have important implications for used book sellers, art galleries, libraries and any other establishment that may resell copyrighted works manufactured abroad.    Of course the Kirtsaeng case also suggests that you shouldn’t make important business decisions based on advise from non-experts even if they bear the “Google” name.

— Adam G. Garson, Esq.