In a decision published last week, Kirtsaeng v. John Wiley & Sons Inc., the United States Supreme Court held that the "first sale" doctrine under the United States Copyright Act applies to copies of a copyrighted work lawfully made abroad. The decision is the culmination of a legal battle fought by John Wiley & Sons, Inc. ("Wiley"), a publisher of academic text books, against former student Supap Kirtsaeng ("Kirtsaeng") since 2008.
Kirtsaeng, a citizen of Thailand, moved to the United States in 1997 to study mathematics at Cornell University. While he was studying in the United States, Kirtsaeng asked his friends and family in Thailand to buy copies of foreign edition English-language textbooks at Thai book shops, where they sold at low prices, and mail them to him in the United States. Kirtsaeng would then sell them, reimburse his family and friends, and keep the profit. In 2008 Wiley filed a lawsuit against Kirtsaeng for copyright infringement, alleging that Kirtsaeng's unauthorized importation of its books and his later resale of those books amounted to an infringement of Wiley's Copyright Act § 106(3) exclusive right to distribute, as well as the Copyright Act's related import prohibition. Kirtsaeng replied that the books he had acquired were "lawfully made" and that he had acquired them legitimately. Thus, in Kirtsaeng's view, the Copyright Act's "first sale" doctrine (§ 109(a)) permitted him to resell or otherwise dispose of the books without Wiley's further permission.
The District Court held that Kirtsaeng could not assert the "first sale" doctrine defense because, in its view, the doctrine does not apply to "foreign-manufactured goods" (even if made abroad with the copyright owner's permission). The jury then found that Kirtsaeng had willfully infringed Wiley's American copyrights by importing and selling, without authorization, copies of eight of Wiley's copyrighted titles. The jury assessed statutory damages of $600,000 ($75,000 per work). On appeal, a split panel of the Second Circuit agreed with the District Court. It pointed out that the "first sale" doctrine applies only to "the owner of a particular copy ... lawfully made under this title." (Emphasis added.) In the majority's view, this language means that the "first sale" doctrine does not apply to copies of American copyrighted works made abroad. The Supreme Court granted Kirtsaeng's petition for certiorari in order to resolve a split among the circuit courts of appeal as to whether the "first sale" doctrine applies to copies of works made outside the United States or only to those made within the United States.
In an opinion authored by Justice Breyer, the Court sided with Kirtsaeng that the "first sale" of the Wiley books, which were lawfully printed and sold abroad under a contract with Wiley, exhausted Wiley's exclusive distribution right. According to the majority, the "first sale" doctrine makes no geographical distinctions. The Court found that (i) the language of the Copyright Act's "first sale" doctrine read literally favors Kirtsaeng's non-geographical interpretation, namely, that "lawfully made under this title" means made "in accordance with" or "in compliance with" the Copyright Act; (ii) historical and contemporary statutory context indicate that Congress, when writing the present version of the Copyright Act's "first sale" doctrine, did not have geography in mind; (iii) a relevant canon of statutory interpretation favors a non-geographical reading of the Copyright Act's "first sale" doctrine; and (iv) the concerns of technology companies, consumer-goods retailers, booksellers, libraries, and museums, whose practices have long relied on a non-geographical interpretation of the "first sale" doctrine, were too important too ignore.
*Mr. MacDonald was formerly a lawyer with Olshan's IP Department.