The US Supreme Court has ruled that the copyright first sale doctrine not only applies to goods lawfully purchased within the United States, but also to goods lawfully purchased in foreign countries. The copyright first sale doctrine states that the rights of the copyright holder are cut off upon the first lawful sale of a product. In the case of Kirtsaeng v. John Wiley and Sons, however, the US Supreme Court was asked whether the first sale doctrine applies where an individual first lawfully purchased the product in question in a foreign market. And, in response, the Supreme Court answered, “Yes.”
Many Internet businesses purchase their products in overseas market, where companies often sell those products for cheaper prices, and then resell those products at a lower cost in the US market. This idea, called parallel importation, allows retailers to purchase products at cheaper prices in the international markets. Prior to this ruling, the manufacturers of the products, who are the copyright owners of the creative works embodied in the products, have pursued parallel importers for copyright infringement. In the case in question, Kirtsaeng was charged with importing copyrighted textbooks that were lawfully purchased in a foreign market.
What does this mean for you? This decision legalizes the business models of many Internet retailers, who have secretly imported legitimate products from overseas markets. This also likely means that copyright owners will need to rethink their pricing strategies in foreign and domestic markets. As always, if you intend to participate in parallel importation or believe that you fall under the first sale doctrine, contact an attorney for an analysis of your business model to ensure that you are not subjecting yourself to unnecessary risk.
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