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Copyright Cases: US Supreme Court Hears Landmark Case On First Sale Doctrine

By Eric Misterovich

The US Supreme Court heard oral arguments on Monday in Kirtsaeng v. Wiley, a landmark copyright infringement case concerning the parallel importation of so-called grey-market goods. Grey-market goods are copyrighted goods purchased outside of the United States that are then imported back into the United States and sold a below-market prices. The case turns on the intersection of Section 602(a)(1) of the Copyright Act, which states that the importation of copies of a work that has been acquired outside of the United States is an “infringement of the exclusive right to distribute copies…,” and the first sale doctrine, which extinguishes a copyright owner’s rights upon the first sale of a work.

While at Cornell, Kirtsaeng, a Thai transplant, imported educational textbooks, lawfully purchased by individuals in Asia for a lower price, into the United States. Kirtsaeng then sold those textbooks, which are largely similar to their American counterparts, to US students at below-market prices. Claiming protection under the first sale doctrine, Kirtsaeng sold approximately $900,000 worth of textbooks before he was sued by John Wiley & Sons. The federal district court ruled in favor of Wiley’s interpretation of the statute, namely, that Section 602 trumps the first sale doctrine, and the Court of Appeals affirmed. At the Supreme Court, Kirtsaeng’s attorneys argued that the Court of Appeals’ reasoning, if upheld, would result in infringement lawsuits for used car sales provided the used cars were manufactured overseas.

In the Internet age, issues of parallel importation and grey-market goods are ever present, so it will be interesting to see how the Court handles the case. Revision Legal will keep you updated on the result.

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