Publishers, Distributors Must Learn to Let Go

 img

It looks like we’ll soon know whether the Supreme Court will help referee an increasingly common fight between publishers (and other distributors and manufacturers) and consumers who sell or give away their used copies of books, music, games, and basically anything that contains a copyrighted work. Publishers and manufacturers want to be able to control—or stop—sales of used goods, while consumers want to be able to dispose of their own physical property however they see fit. What the Court chooses to do could have enormous ramifications for consumers and businesses across the country that sell or lend copies of copyrighted goods, from books to toys to automobiles.

The Supreme Court has announced that on April 13th the Justices will debate and decide whether to hear the parties’ full arguments and decide how copyright owners’ right to import goods interacts with the public’s right to resell or give away their own physical property. Public Knowledge, along with the Electronic Frontier Foundation and U.S. PIRG, filed a brief asking the Supreme Court to review the lower court decision in this case, Kirtsaeng v. John Wiley & Sons, which held a graduate student liable for buying copies of textbooks in Thailand and reselling them in the U.S.

At the heart of this case is a provision in copyright law called the first sale doctrine. The first sale doctrine allows the lawful owner of a particular copy of a copyrighted work to sell, give away, or lend that copy without getting permission from the copyright owner. This law is in part based on the fundamental concept that owning a copyright is distinct from owning the physical copies that contain a copyrighted work. When I buy a copy of a novel, I don’t get any ownership in the copyright to that novel, but I am the owner of that particular copy. Likewise, the copyright owner still owns the novel’s copyright, but no longer owns the copy that I’ve bought, and therefore can’t control how I dispose of that copy.

In Kirtsaeng’s case, the Second Circuit held that the first sale doctrine only applies to copies that are manufactured within the U.S., so copyright owners need only move their manufacturing abroad to get perpetual control over the redistribution of their works. Consumers who (legally) buy foreign-manufactured copies would therefore be prohibited from reselling or lending those copies to anyone else. This decision could hurt trade in secondary markets for any goods that contain a copy of a copyright-protected work.

It’s no secret that publishers and other distributors wish secondary markets didn’t exist. Just yesterday video game company Silicon Knights was waxing poetic about how used video game sales will lead to the end of the video game industry. If copyright owners and their distributors could find an end run around the first sale doctrine, many would certainly seize the opportunity to extract more money from consumers every time copies of (already paid-for) works change hands.

The Second Circuit’s reading encourages copyright owners to move their manufacturing jobs abroad to get indefinite control over all of the copies, and they can use this control to keep used copies from competing with new copies in the marketplace. This harms both consumers and retailers who participate in secondary markets: consumers will have to pay full retail price for a new copy or go without, and retailers will have to shut down operations that support secondary markets (like eBay’s auctions or Amazon.com’s marketplace for used goods).

The impact of this decision is many times worse when you consider just how many products contain copyrighted works in today’s world. Toys for Tots may be illegal because toys can have copyright-protected designs and are often manufactured abroad. Owners of foreign-made cars will be unable to resell them because cars often contain computers that run copies of copyright-protected programs. Libraries will only be able to stock U.S.-made books on their shelves. Even producers of non-copyrighted goods can seize control by simply putting their good in foreign-made packaging with a copyright-protected design on it. Of course, this decision also gives copyright owners a perverse incentive to move all of their manufacturing abroad to get perpetual distribution rights, so consumers may find it harder and harder to buy American-made goods anyway.

The Supreme Court could fix all this by deciding that copies “lawfully made under this title” include all copies made legally, according to federal copyright law, regardless of where the copies were manufactured. Since the importation right is defined as part of the distribution right, and the distribution right is limited by the first sale doctrine, it follows that the importation right must also be limited by the first sale doctrine. The Supreme Court should hear this case and confirm that a consumer’s right to control her own physical property does not depend on where the property was made.

Image by William Theaker.

The Latest