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Kirtsaeng v. John Wiley & Sons could harm or stop the practice of importing.

Submitted by kmeisthax on Tue, 06/26/2012 - 01:00 in News

Grey-market importation is a very important right of consumers which allows them to purchase and view works not available in their own territory without the permission of the copyright owner. This is a good thing, especially when there's no real reason for a delay between countries. Many times regions get delayed or inferior releases of content simply because of arbitrary reasons put in place by the owner. This is most a concern in countries like Australia, which are treated like the rest of Asia despite not having any language issues which would preclude a more prompt release.

At issue today is a Supreme Court case, Kirtsaeng v. John Wiley & Sons, Inc., which would change the legal basis by which reimportation of goods can occur. The case is between a clever student and a textbook company. The clever student decided to purchase cheaper international editions and sell them to the US market on eBay. This, obviously, cuts into the textbook company's already massive profit margins, so they decided to sue.

Previously, importation has been considered to be legal under an American legal provision called the First Sale doctrine. It was first upheld as a right by the Supreme Court in 1908 under Bobbs-Merill Co. v. Straus and later made an explicit provision of copyright law, codified as 17 USC 109. The First Sale doctrine is important because it is the only legal provision which protects the resale right of consumers; without it, physical property would be nontransferrable and you really wouldn't own anything, and it would pose significant challenges to historical archival of still-copyrighted works.

Indeed, this provision of copyright law is why Kirtsaeng and many other importers are allowed to operate. However, there is another provision of copyright law which controls importation, 17 USC 602. 602(a) seems to be targeted directly at grey-market importation, as it specifically exempts unauthorized importation by individuals for private, educational, or other non-commercial purposes. The Supreme Court ruled in Quality King v. L'anza that the copyright holder cannot prevent re-importation of authorized materials, i.e. that First Sale trumps 602.

That would be the end of it if it wasn't for another case decided by the Ninth Circuit in 2008, Omega S.A. v. Costco Wholesale Corp. Here, the Ninth interpreted that First Sale was only applicable in the US, but 602 applied to worldwide importation, and thus importation of goods made outside the US. Therefore, Costco could not import watches made overseas into the US without the copyright holder's permission. The Supreme Court heard the case and split 4-4, which meant that the Ninth's decision was upheld.

Today, we have Kirtsaeng v. John Wiley & Sons, which is a similar case of importing non-US made materials. In fact, I can't find any significant difference between Kirtsaeng and Omega. The key here is that Kirtsaeng is getting another Supreme Court hearing. Recall that the last one was a tie ruling as Justice Elena Kagan was absent from the case - Ninth's opinion was reaffirmed, but it doesn't apply in other circuit courts or the Supreme Court. This new case will create lasting precedent.

Fundamentally, the rights of distributors in a particular country should not differ based on where the goods come from. More importantly, distributors should be free to sell worldwide absent contractual obligations. Without this right, the only way one can legally import works from other countries would requires one to fly to the other country, purchase it, and fly back. This is prohibitively expensive. Even then, it's not entirely guaranteed that said works will pass through customs if rightsholders decide to crack down on importation. One could see fans importing works this way being harassed at customs for being suspected resellers.

What can happen is a matter of what the Supreme Court decides. If the Supreme Court affirms the lower court decision, it will cement Omega and ban most importation. Fans will be unable to purchase goods not cleared for their particular country, and consumers will see longer release delays and higher prices as a result. The Supreme Court must not uphold the silly notion that one's rights under copyright law change based on the origin of a work. It does not make sense to apply one part of US copyright law (importation restrictions) and not another (first sale).

There is not much people can do to take action. If the Supreme Court upholds the lower court ruling, then we must lobby Congress (no matter how difficult that sounds) to pass new law which upholds first sale in all territories.

copyright law
region locking
supreme court

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