CHICAGO (MarketWatch) — Tucked into the U.S. Supreme Court’s agenda this
fall is a little-known case that could upend your ability to resell
everything from your grandmother’s antique furniture to your iPhone 4.
At issue in Kirtsaeng v. John Wiley & Sons is the first-sale
doctrine in copyright law, which allows you to buy and then sell things
like electronics, books, artwork and furniture, as well as CDs and DVDs,
without getting permission from the copyright holder of those products.
Under the doctrine, which the Supreme Court has recognized since 1908,
you can resell your stuff without worry because the copyright holder
only had control over the first sale.
Put simply, though Apple Inc. has the copyright on the iPhone and Mark Owen has it on the book “No
Easy Day,” you can still sell your copies to whomever you please
whenever you want without retribution.
That’s being challenged now for products that are made abroad, and if
the Supreme Court upholds an appellate court ruling, it would mean that
the copyright holders of anything you own that has been made in China,
Japan or Europe, for example, would have to give you permission to sell
it.
“It means that it’s harder for consumers to buy used products and harder
for them to sell them,” said Jonathan Band, an adjunct professor at
Georgetown University Law Center, who filed a friend-of-the-court brief
on behalf of the American Library Association, the Association of
College and Research Libraries and the Association for Research
Libraries. “This has huge consumer impact on all consumer groups.”
Another likely result is that it would hit you financially because the copyright holder would now want a piece of that sale.
It could be your personal electronic devices or the family jewels that
have been passed down from your great-grandparents who immigrated from
Spain. It could be a book that was written by an American writer but
printed and bound overseas, or an Italian painter’s artwork.
There are implications for a variety of wide-ranging U.S. entities,
including libraries, musicians, museums and even resale juggernauts eBay
Inc.
and Craigslist. U.S. libraries, for example, carry some 200 million books from foreign publishers.
“It would be absurd to say anything manufactured abroad can’t be bought
or sold here,” said Marvin Ammori, a First Amendment lawyer and Schwartz
Fellow at the New American Foundation who specializes in technology
issues.
The case stems from Supap Kirtsaeng’s college experience. A native of
Thailand, Kirtsaeng came to America in 1997 to study at Cornell
University. When he discovered that his textbooks, produced by Wiley,
were substantially cheaper to buy in Thailand than they were in Ithaca,
N.Y., he rallied his Thai relatives to buy the books and ship them to
him in the United States.
He then sold them on eBay, making upward of $1.2 million, according to court documents.
Wiley, which admitted that it charged less for books sold abroad than it
did in the United States, sued him for copyright infringement.
Kirtsaeng countered with the first-sale doctrine.
In August 2011, the U.S. Court of Appeals for the Second Circuit upheld a
lower court’s ruling that anything that was manufactured overseas is
not subject to the first-sale principle. Only American-made products or
“copies manufactured domestically” were.
“That’s a non-free-market capitalistic idea for something that’s pretty fundamental to our modern economy,” Ammori commented.
The Supreme Court is scheduled to hear oral arguments on the case on Oct. 29.
Both Ammori and Band worry that a decision in favor of the lower court
would lead to some strange, even absurd consequences. For example, it
could become an incentive for manufacturers to have everything produced
overseas because they would be able to control every resale.
It could also become a weighty issue for auto trade-ins and resales,
considering about 40% of most U.S.-made cars carry technology and parts
that were made overseas.
This is a particularly important decision for the likes of eBay and
Craigslist, whose very business platform relies on the secondary
marketplace. If sellers had to get permission to peddle their wares on
the sites, they likely wouldn’t do it.
Moreover, a major manufacturer would likely go to eBay to get it to pull
a for-sale item off the site than to the individual seller, Ammori
added.
In its friend-of-the-court brief, eBay noted that the Second Circuit’s
rule “affords copyright owners the ability to control the downstream
sales of goods for which they have already been paid.” What’s more, it
“allows for significant adverse consequences for trade, e-commerce,
secondary markets, small businesses, consumers and jobs in the United
States.”
Ammori, for one, wonders what the impact would be to individual Supreme
Court justices who may buy and sell things of their own. He himself once
bought an antique desk from a Supreme Court justice. “Sometimes it’s
impossible to tell where things have been manufactured,” he said. “Who
doesn’t buy and sell things? Millions of Americans would be affected by
this.”
If the Supreme Court does rule with the appellate court, it’s likely
that the matter would be brought to Congress to force a change in law.
Until then, however, consumers would be stuck between a rock and a hard
place when trying to resell their stuff.
