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Supreme Court Will Review First Sale Defense for Foreign-Made Goods

 

4/17/2012

The Supreme Court will review a Second Circuit decision that the first sale defense at 17 U.S.C. 109(a) does not apply to copyrighted works manufactured abroad. Kirtsaeng v. John Wiley & Sons, U.S. No. 11-697, cert. granted 4/16/12.

The Second Circuit held that this result is required by the statement in the statute that it applies to copies “lawfully made under this title.” 654 F. 3d 210 (2d Cir. 2011).  Since Title 17 only applies in the United States, according to the appellate court, copyrighted items can only be “made” under that title if they were physically made in this country.

The decision rejected interpretations of the phrase "lawfully made under this title" as meaning any work "subject to the protection of Title 17," or "consistent with the requirements of Title 17 if that title were applicable to works made abroad." If that were the correct interpretation, it would undermine the copyright owner's protection against infringing imports under 17 U.S.C. 602(a). That provision states that "[i]mportation into the United States, without the authority of the owner of copyright under this title, of copies or phonorecords of a work that have been acquired outside the United States is an infringement of the exclusive right to distribute copies or phonorecords under section 106, actionable under section 501." According to the Second Circuit, this statute would have no force in the vast majority of cases if the first sale doctrine were interpreted to apply to every work manufactured abroad.

Kirtsaeng deals with the online resale of foreign copies of textbooks in the U.S. In 2010, the Court was presented with this issue in Costco Wholesale Corp. v. Omega, S.A., 130 S. Ct. 2089 (2010), which involved the importation of Swiss watches bearing a small copyrighted logo on the back of the watch. The Court did not decide the case after a 4-4 vote. Before Costco, the Court was presented with a similar issue in Quality King Distributors Inc. v. L'anza Research International Inc., 523 U.S. 135 (1998), which involved the importation of hair care products bearing copyrighted labels. Quality King applied the first sale defense to U.S. goods exported and then imported back into the United States.

The Ninth Circuit applies the fair use defense after an authorized U.S. sale of the foreign-made work, and the Third Circuit applies it to any foreign-made work.

To read the Second Circuit opinion in this case, click here.