Copyright law's first sale doctrine

In early 2013, the United States Supreme Court decided a case involving a longstanding principle known as the first sale doctrine, which allows the owner of a lawfully made copy of a copyrighted work to sell or otherwise dispose of the possession of that particular copy, without the authority of the copyright owner. The doctrine is codified in §109 of the Copyright Act of 1976.

In Kirtsaeng v. John Wiley & Sons, Inc., the Supreme Court addressed how the first sale doctrine is to be applied to copyrighted works produced outside of the United States. In a 6-3 decision, the Court ruled that physical books produced and purchased abroad could be imported into the United States for resale without violating the copyright owner's distribution rights under copyright law.

So what is all the fuss about the so-called first sale doctrine, and why should we care?

First sale doctrine basics

United States copyright law gives copyright owners a number of exclusive rights, including the right to distribute copies of their work.  But under the first sale doctrine, when a copyright owner has sold a lawfully made copy of his or her work, the purchaser can transfer that copy to another person. Accordingly, the first sale doctrine gives those who have purchased a lawfully made copy of copyrighted material the ability to dispose of the particular copy, including the option to sell that copy.

The Kirtsaeng Decision

In Kirtsaeng, Supap Kirtsaeng, a student living in the United States had relatives in Thailand purchase and ship to him about 600 English-language textbooks published by John Wiley & Sons' wholly owned foreign subsidiary, Wiley Asia. The textbooks had been labeled for exclusive distribution in Europe, Asia, Africa, and the Middle East. Kirtsaeng resold the books in the United States at a higher price, primarily on eBay. Attorneys for Wiley & Sons estimated Kirtsaeng's total sales to be about $1.2 million.

In 2008, Wiley & Sons sued Kirtsaeng for copyright infringement, alleging that the company had never given permission for the importation of the books to the United States, something that was explicitly forbidden via a notice included in each book. Kirtsaeng cited the first sale doctrine in defense of his actions, asserting that he didn't need Wiley & Sons' permission to resell the books in the United States.

The federal district court agreed with Wiley & Sons that the first sale doctrine did not apply to works produced abroad and awarded Wiley & Sons $600,000 in damages. The U.S. Court of Appeals for the Second Circuit affirmed that decision.

Kirtsaeng appealed to the U.S. Supreme Court, which reversed the decision issued by the Court of Appeals. The Supreme Court's decision effectively lifted geographical limits on the application of the first sale doctrine and further clarified what the U.S. Copyright Act's “lawfully made” language means (i.e., that it includes works created abroad).

The future of the first sale doctrine

While some have hailed the Kirtsaeng decision as a victory for consumers' rights, others have criticized the Court's ruling. The Software and Information Industry Association, for example, believes that “publishers' ability to do business abroad” will be threatened through “exploiting pricing models that are meant for students in underdeveloped nations.”

Whether publishers and other copyright owners adopt new strategies to counter any potential profit loss through the reselling of copyrighted works produced abroad remains to be seen, but the decision could have far-reaching effects into many other industries.