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?
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.”
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 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.”