On March 19, 2013, the Supreme Court issued the much-anticipated decision in Kirtsaeng v. John Wiley & Sons, Inc., holding 6 to 3 that Copyright First Sale Doctrine applies to “foreign-made works, and that the authorized manufacture and sale of a copyrighted work abroad exhausts the copyright owner’s rights to control the distribution of the work in the United States.”
The Copyright First Sale Doctrine is an exception to the rights granted under the U.S. Copyright Laws (see 17 U.S.C. § 106). The Copyright Laws grants the copyright owner certain exclusive rights, including the right “to distribute copies . . . of the copyrighted work to the public by sale or other transfer of ownership.” 17 U.S.C. § 106(3)). However, the Copyright Laws also impose certain exceptions including the first sale doctrine, which states that the copyright owner can not prohibit the resale of a produce which was lawfully purchased. See § 109(a).
An exception to the first sale exhaustion doctrine has been related to the importation of foreign products. In the case before the Court, it was related to textbooks which were lawfully made and purchased overseas. The international textbooks were purchased overseas at a cheap discount and imported back into the U.S. for sale to students. The publisher was opposed to the importation claiming it was in violation of the copyright owner’s distribution rights under the Copyright Laws. 17 U.S.C. § 602(a) governs importation of a copyrighted work into the United States. The publisher argued that the importation prohibition states that whoever imports into the United States, without the copyright owner’s authority, “violates the owner’s exclusive distribution right” under § 602(a)(1) of the Copyright Act.
Relying on its decision in Quality King, the Court held that the first sale doctrine applies to foreign-made works, and that the authorized manufacture and sale of a copyrighted work abroad exhausts the copyright owner’s rights to control the distribution of the work in the United States.
While the impact of the Court’s ruling is still being evaluated, domestic copyright holders who do business solely in the U.S. should not be impacted. In addition, if a business is doing substantial production, sales or manufacture of copyrighted goods overseas, then it may be worthwhile to investigate whether a license would be applicable. Based on the Court’s ruling, even though the Copyright Laws may allow for the unlimited importation of internationally produced or sold copyrighted materials a valid license maybe utilized to prohibit the same. If you are interested in understanding the impact of the Courts ruling and your rights, you should schedule a meeting with one of our attorney’s to discuss this case and your rights.