Protecting the First Sale Doctrine: PK Files Amicus Brief in Costco v. Omega

When we buy copyrighted items, like books or DVDs—or products that might have copyrighted logos attached to them, like watches or clothes--we take it for granted that we can dispose of them as we please.  We can sell them on Amazon or eBay. We can lend or give them to friends.  Or we can donate them libraries or charitable causes.  


But a recent decision from the Ninth Circuit Court of Appeals has thrown some doubt on whether all of these transactions are even legal. We at Public Knowledge think that’s a terrible idea. Since the case is on appeal to the Supreme Court, we filed an amicus brief with the Court today. The American Association of Law Libraries, the American Free Trade Association, the Electronic Frontier Foundation, the Medical Library Association and the Special Libraries Association joined us in our brief.

 

The Ninth Circuit’s Decision


Legally, we can sell or give away our books and DVDs because of something called the first sale doctrine, a centuries-old limitation on the right of authors to control their works’ distribution. The first sale doctrine is codified in §109 of the Copyright Act and says that a copyright owner gets to control the first transfer of a particular physical copy of the copyrighted work. After that first transfer, the recipient gets to control that physical copy. The copyright owner still owns the copyright, but the recipient owns the copy. We all use this concept in everyday life. The physical books on our shelves are ours, but the right to copy the expression inside the books belongs to the author or publisher.  


The Ninth Circuit’s decision says that the first sale doctrine doesn’t apply to copyrighted works made outside the United States—or to goods that aren’t copyrighted, but have copyrighted logos that were made and stuck on the goods outside the U.S. The plaintiff in this case was Omega, a manufacturer of Swiss watches. The watches weren’t copyrighted. But there was a small copyrighted logo, which you can see on Omega’s website, on the back of each watch. Because that copyrighted logo was inscribed abroad, the Ninth Circuit said Omega could control the product even after its first sale.

 

Why? The Ninth Circuit’s legal basis for its decision was a phrase within §109(a): “lawfully made under this title.” The court decided that “lawfully made under this title” only applied to copyrighted works made in the U.S.

 

The Ninth Circuit was trying to reconcile what it saw as a tension between §109 and §602 of the Copyright Act. Section 602 says that a copyright owner can control the importation of copyrighted works into the U.S. The court thought that, in order to give §602 teeth, §109 could only apply to works made in the U.S. But there is no textual support for this interpretation of “lawfully made under this title.” “Under this title” usually isn’t synonymous with “in this country.” The Ninth Circuit also worried that saying works made outside the U.S. were made “under this title” would be an extraterritorial application of U.S. law. But those worries don’t make much sense after considering how many U.S. laws take into account events that happen abroad, just like the Copyright Act does.

 

Why We Filed


The potential consequences of the Ninth Circuit’s decision are huge. Control over personal property is a basic freedom we all rely on, both personally and economically. It’s very invasive to be told that we can’t sell our books or DVDs without the publisher’s or manufacturer’s permission because they were printed or pressed abroad. The problem becomes even more obvious when you realize that a manufacturer can get this level of control simply by drawing a small logo on a non-copyrighted product, like a watch. The Ninth Circuit tried to mitigate this issue by saying that the first sale doctrine applies to a foreign-made item once the manufacturer authorizes a sale of the item in the U.S. That’s problematic in two ways: first, it gives the manufacturer perpetual control of the product under U.S. law so long as there is no sale within the U.S, no matter how many sales happen elsewhere. And second, there’s no language in the Copyright Act to support that reading of the first sale doctrine.

 

What happens to Netflix, Amazon and eBay if they have to find out where each item was made, whether it has a copyrighted logo made outside the U.S. (if the item itself isn’t a copyrighted work), and then buy licensing rights from the copyright owner if the item was made abroad? That’s an enormous economic burden to put on businesses who follow that model.

 

The Ninth Circuit’s decision, if upheld, would also hamper the work of non-profit organizations like charities and libraries. Although libraries have some special exceptions in the Copyright Act, these certainly wouldn’t apply to those who want to donate books to libraries, or to libraries that want to sell off books that aren’t useful anymore. And of course, a world without the first sale doctrine would be very restrictive to any private individual who wants to give or sell a copyrighted work or an item with a copyrighted work attached to it. All of this is why PK decided to file an amicus brief. Hopefully the Supreme Court will rule in favor of our right to do what we like with our own belongings, even if they have a copyrighted logo scribbled on them.

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