Can You Sell That Here?

When you buy something – a book or a washing machine – do you own it? Can you use it as much as you like? Can you resell it as you please?

For most of the 20th Century, after the initial sale, the seller was happy enough to take the money and didn’t care what you did with the merchandise. Due to retail markup, wear-and-tear and depreciation, it just didn’t pay to try and resell stuff you bought at a store. One exception was items that became collectable, like stamps, coins, comic books and baseball cards. But if I bought a comic book, it would be years before it might accrue in value. And it might not.

In the 1990s, I purchased software for my employer – or thought I did. We used SCO Xenix, and later SCO Unix, on dozens of workstations. It turned out we didn’t actually own the software, we were just licensed to use it. We could sell the PCs, but not the operating systems or even the CAD software. That made some sense because it would be awfully easy to undercut SCO by copying and reselling their materials. But still my firm thought they had paid money for a product.

As a young architect, the offices in which I worked often owned volumes of Means Building Construction Cost Data, Means Residential Cost Data, or Means Square Foot Costs. We looked up the values that seemed appropriate, entered them in small calculators and wrote the results on paper. In 2003, when I was doing my own estimating I bought Means cost estimating software on a CD, which had a built-in spreadsheet-style calculator that accessed Means database of labor and material costs. It was far more powerful than I needed for small renovations, but I liked not having to transcribe the values from the book. The surprise was that the software stopped working after a year. Means expected me to keep buying the same software every year, which might have made sense if I had been running a busy firm. I frankly wished I had gotten the old-fashioned book.

My wife and I frequent thrift stores and used book stores, where people resell all sorts of things for pennies on the dollar. But what if you could find a way to buy and resell new merchandise and make a tidy profit? With eBay, and similar sites, advertising and delivery have become relatively affordable. A fellow from Thailand attending college in the US noticed that he could buy textbooks in Asia a lot cheaper. Had he simply bought them for himself, no one would have cared, but Supap Kirtsaeng made over a million dollars reselling Asian versions of textbooks on eBay to American students. One of the publishers, John Wiley and Sons took exception and claimed that their copyrights made such sales illegal.

The Supreme Court will soon be considering whether the First Sale Doctrine allows foreign-sourced, gray market sort of reselling, or whether assignation of copyrights supersede the doctrine. If SCOTUS rules in favor of copyrights, is that a precedent for an erosion of individual rights, or just a technicality that won’t affect all of our yard sales?

JOHN WILEY SONS INC v. KIRTSAENG

The “first sale doctrine” in copyright law permits the owner of a lawfully purchased copyrighted work to resell it without limitations imposed by the copyright holder.1 The existence of the doctrine dates to 1908, when the Supreme Court held that the owner of a copyright could not impose price controls on sales of a copyrighted work beyond the initial sale.2 Congress codified the doctrine in successive Copyright Acts, beginning with the Copyright Act of 1909.3

The principal question presented in this appeal is whether the first sale doctrine, 17 U.S.C. § 109(a), applies to copyrighted works produced outside of the United States but imported and resold in the United States. Under another basic copyright statute, it is ordinarily the case that “[i]mportation into the United States, without the authority of the owner of copyright under [the Copyright Act], of copies ․ of a work that have been acquired outside the United States is an infringement of the [owner’s] exclusive right to distribute copies․”4

Defendant contends, however, that individuals may import and resell books manufactured abroad pursuant to 17 U.S.C. § 109(a), which provides that “the owner of a particular copy ․ lawfully made under [the Copyright Act], or any person authorized by such owner, is entitled, without the authority of the copyright owner, to sell or otherwise dispose of the possession of that copy.”

Supreme Court to Hear ‘Gray Market’ Reseller Case

In announcing that it would hear the case, the Supreme Court acknowledged that it will seek to reconcile the friction between one portion of the Copyright Act that rights-protected works cannot be imported “without the authority of the owner” of the copyright, and the first-sale doctrine that provides for resale of lawfully obtained works without the copyright owner’s permission. In so doing, the court figures to sort out three conflicting precedents established in various circuit courts.

“The question presented is how these provisions apply to a copy that was made and legally acquired abroad and then imported into the United States,” the court said in a statement of the issues at stake.

“Can such a foreign-made product never be resold within the United States without the copyright owner’s permission, as the Second Circuit held in this case? Can such a foreign-made product sometimes be resold within the United States without permission, but only after the owner approves an earlier sale in this country, as the Ninth Circuit held in Costco? Or can such a product always be resold without permission within the United States, so long as the copyright owner authorized the first sale abroad, as the Third Circuit has indicated?”

eBay Lobbying Arm Seeks Support from Users in SCOTUS Case

eBay spokesperson Johnna Hoff told EcommerceBytes in April, “In reviewing the case of Wiley v. Kirtsaeng, the Supreme Court now has an opportunity to protect the right of small businesses and individuals to sell legitimate goods across borders, which will benefit consumers, businesses and the overall Internet-enabled economy.”

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9 responses to “Can You Sell That Here?”

  1. cmaukonen says :

    Grey Market sales is a big problem for retailers here. In electronics and photography and probably other areas as wee. For instance:

    Ham radio transmitters and transceivers have to be type accepted by the FCC before they can be legally sold in retail stores here or from retail stores over seas. But a private part can sell to hams over here legally and quite often do.
    The manufactures do not like it but it is done.

    Audio electronics are a big grey market item too since most can be converted to any line voltage. TVs used to be for a particular area since the analog formats were different. NTSC vs PAL vs SECAM etc. But digital is pretty much universal now.

    And grey market photography equipment has been a big item for a long time. No warranties but the savings can be substantial on a 2000 dollar lens.

    And then there is also grey market DVDs which are supposed to be coded for different areas but software to play them on you PC is easy to get and most computers can be attached to large monitors.

    Glad I’m not in the retail market.

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    • Donal says :

      I think brick-and-mortar retail is under threat from internet sales in general, but when the government imposes austerity from above, more people will turn to gray and black markets below.

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      • trkingmomoe says :

        You are right it is the austerity being forced on laborers. We watch movies that have been pirated off the internet. They get passed around the neighbors along with movies that are bought. College is so expensive, so of coarse they are looking for ways to save money. The grey and black markets are only going to grow.

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  2. remoat says :

    In regards to drawing software, you not only not own what you happen to be using, you will not be able to use “outdated” versions for “enterprise” purposes unless your company invests in a separate system that does not depend on the liability of not keeping current. And whatever that system involves also demands that everything must be kept current or one is not ready to do business with you. On many levels, it is a supply driven market.

    That is why Adobe Acrobat has been so successful. If you keep current with them, you can get away with being years out of date with other software. For instance, I draw with Vectorworks 2009. The software is barely supported any longer but it does all I will ever need. When I print out the result to a PDF, no one need know that am an old man turning the knobs of an etch-a-sketch.

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    • Donal says :

      We now have a utility, TrueView, that converts drawing files to any version of Autocad that you need. So many consultants use newer or older versions of Acad that it is essential.

      The other advantage of Acrobat is that the person receiving the files can’t accidentally turn off a key layer.

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      • remoat says :

        The difference between a utility like TrueView and Acrobat points out how difficult it is to use BMI in a collaborative fashion between different outfits.

        For instance, if all the contractors our company dealt with used Revit, that would streamline all kinds of information sharing. The idea is exciting; a 3D model of the job where all the changes are immediately conveyed to everybody who cares in real time.
        Large companies can orchestrate that sort of thing (at least in theory).:
        Small ones make a lot of phone calls and send emails with PDF attachments.

        Your point about layers is something that happens within our company. If you are not facile with a certain software, you won’t notice that you have completely ignored information in the file. Printing leaves less to chance.

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        • cmaukonen says :

          The music industry does not put up with that. At least not the recording end. All editing/composing software supports WAY and MIDI files and has fore years.

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        • Donal says :

          We use Revit on some projects, but it seems to require a lot of front-end setup to populate all the families.

          A problem that I have noticed is that cad drafters now expect the software to take care of coordination, so some real boners slip through to 90% drawings.

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