Supreme Court Expands First Sale Doctrine

In a case that has implications for multinational product suppliers, the Superme Court upheld the first sale doctrine on products imported by the purchaser.  In Kirtsaeng v. John Wiley & Sons, 133 S.Ct. 1351 (2013), Kirtsaeng was a student who had family living in Thailand.  He had his family buy textbooks in Thailand where the books were much less expensive than in the U.S.  Then his family shipped the books to him and he sold them to students in the U.S. for a substantial markup, but still at cheaper prices than at what the books were offered for sale in the U.S.  The publisher sued Kirsaeng claiming that he was infringing on the publisher’s importation right.  Kirtsaeng’s defense was that his actions were allowed under the first sale doctrine of U.S. law, which states that once a publisher sells a book, it loses its rights to control what the purchaser of the book does with it.  The question before the Supreme Court was whether the first sale doctrine trumped the right of importation.

Lower courts had held that the first sale doctrine applied only to books manufactured in the U.S.  However, the language in the statute (17 U.S.C. Section 109) is ambiguous.  The Supreme Court ruled 6-3 that the first sale doctrine applies to all works regardless of the country of origin.  The majority of the court reasoned that this will result in an avoidance of problems, such as the inability to import a car with embedded computer software without getting permission from the software’s copyright holder.

This ruling has severe consequences for publishers who attempt to sell CDs, DVDs, and software in other countries for less than what they are sold for in the U.S.  Only time will tell the ramifications of this decision and whether Congress will step in to amend Section 109.

If you have questions about this opinion or about its impact on you or your business, please contact Jason E. Voyles.