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Supreme Court Rules Against Publisher In Textbook Copyright Case

On Tuesday, the Supreme Court reversed lower court decisions and found that, under the first sale doctrine, textbooks and other goods made and sold internationally may be imported and re-sold in the United States without violating U.S. copyright laws. The first sale doctrine provides that an "owner of a particular copy . . . Lawfully made under this title . . . Is entitled, without the authority of the copyright owner, to sell or otherwise dispose of the possession of that copy . . . ." 17 U.S.C. § 109(a).

The case involved Supap Kirtsaeng, a graduate student from Thailand living and attending school in the United States, and book publisher John Wiley & Sons. As a student, Kirtsaeng developed a side business of importing english language international versions of Wiley's books, which are made and sold internationally at reduced prices, into the United States and then reselling those same books for a substantial profit. Wiley sued Kirtsaeng for copyright infringement and a jury awarded Wiley $600,000 in damages. That verdict was upheld on appeal to the Second Circuit Court of Appeals.

On appeal to the Supreme Court, Kirtsaeng argued that the copies were "lawfully made" and had been obtained legitimately in Thailand. As such, the "first sale" or "exhaustion" doctrine applied and Wiley's rights in the books were exhausted. On the other hand, Wiley argued that the the phrase "lawfully made under this title" is a geographical restriction to the scope of the doctrine's applicability. As such, only a sale within the United States could exhaust its rights.

The question before the Supreme Court was whether the words "lawfully made under this title" restrict the scope of §109's "first sale" doctrine geographically. In a 6-3 decision, the Court found that there was no such restriction to the first sale doctrine.

One major contributing factor in the Court's decision was the adverse impact that a geographical restriction would have on libraries, used books dealers, tech companies, retail stores, museums, etch., who often rely on the protection of the first sale doctrine in carrying out their respective businesses. For example, under Wiley's interpretation, libraries and used books dealers would likely need to obtain permission before importing a foreign book. Similarly, tech companies often import components that include copyrightable software programs and/or packaging. "A geographical interpretation would prevent the resale of, say, a car, without the permission of the holder of each copyright on each piece of copyrighted automobile software."

Wiley also argued that a non geographical interpretation would make it difficult for publishers (and other copyright holders) to divide foreign and domestic markets. This process is called market segmentation and it allows a broad market into subsets of consumers that have a common interest or need. One benefit of market segmentation to businesses is that the same goods may be sold at higher prices in certain markets.

The Court acknowledged that a nongeographical reading would indeed mark it difficult to segment the market. However, the Court stated "we can find no basic principle of copyright law that suggests that publishers are especially entitled to such rights."

If you have questions about this ruling or copyright law in general, please contact us.

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