Your garage sale could be at risk

By Kimberly Atkins Dolan Media Newswires BOSTON, MA--In spite of the hurricane barreling towards the nation's Mid-Atlantic region on Monday, the U.S. Supreme Court was open in Washington as the justices considered a copyright case that could have thunderous repercussions. At issue in Kirtsaeng v. John Wiley & Sons Inc. is whether purchasers of foreign-made copies of books, CDs, electronic programs or other copyrighted works can be held liable for copyright infringement for selling those copies. (See "Decision could impact consumers' ability to sell their own stuff.") The case involves Supap Kirtsaeng, a student from Thailand who came to the United States to attend college and graduate school. To help pay for school, Kirtsaeng asked friends and family members to ship him textbooks from Thailand so he could sell them for a profit on eBay. Some of those textbooks were printed in Asia by John Wiley and Sons. The company sued Kirtsaeng in federal court, arguing that the sale of the textbooks without its permission constituted copyright infringement under §602(a)(1) of the Copyright Act. Kirtsaeng defended the suit by arguing that §109(a) of the Act--also known as the "first sale doctrine"--gives purchasers of copies of works "lawfully made under this title" the right to sell, display or otherwise dispose of those copies without the copyright owner's permission. A district court rejected Kirtsaeng's claim, arguing that foreign-manufactured products do not fall within federal copyright law. A divided 2nd Circuit affirmed, holding that the first-sale doctrine applied only to works manufactured in the United States. After Kirtsaeng unsuccessfully petitioned for en banc rehearing, the Supreme Court granted his petition for certiorari. Counterfeit goods excluded? Although Hurricane Sandy was approaching Washington and the city was under a federal state of emergency in preparation, Chief Justice John G. Roberts Jr. decided to have oral arguments in the case go on as scheduled. According to the Court's transcript, E. Joshua Rosenkranz, head of the Supreme Court and Appellate Litigation practice in Orrick, Herrington & Sutcliffe's New York office, argued on Kirtsaeng's behalf that his client's interpretation of the law was consistent with the text and purpose of the statute. On the other hand, the publisher's reading of the statute in a way that avoids the first-sale doctrine "grants them rights far beyond anything that anyone could have imagined," Rosenkranz said. But Justice Ruth Bader Ginsburg wondered if Kirtsaeng's interpretation went too far. "Your reading is essentially, once a copy is sold anywhere, the copyright owner loses control of distribution everywhere," Ginsburg said. "That is correct, Your Honor," Rosenkranz said, asserting that all works "'lawfully made under this title' means [works] made wherever, in a way that satisfies U.S. copyright standards." Rosenkranz argued that by using the phrase "lawfully made under this title," the statute was intended to exclude counterfeit goods. He said the law was meant to guard against such things as improper use by distributors and "bailees ... stealing things from the manufacturers' loading docks or from shippers." Justice Stephen G. Breyer reacted skeptically. "I could not find a word of that in the legislative history," Breyer said, noting that copyright holders could have contractual claims against bailees or distributors. Stopping 'an international gray market' Theodore B. Olson, who co-chairs the Appellate and Constitutional Law Group in Gibson, Dunn & Crutcher's Washington office, argued on the publisher's behalf that the statute was intended precisely to address situations like the one in this case. "Petitioner's commercial enterprise is precisely what [the law] was enacted to address, an international gray market in copyrighted works," Olson said. Breyer wondered about the impact of that interpretation as well. "Imagine Toyota, all right?" Breyer began. "Millions sold in the United States. They have copyrighted sound systems. They have copyrighted GPS systems. When people buy them in America, they think they're going to be able to resell them." "When we talk about all the horribles that might apply in cases other than this - museums, used Toyotas, books and luggage, and that sort of thing - we're not talking about this case," Olson said. Breyer, Justice Sonia M. Sotomayor and Justice Anthony M. Kennedy tried to respond at the same time. Kennedy won. "You have to look at those hypotheticals in order to decide this case," Kennedy asserted. "These parade[s] of horrible[s], people have been arguing about these for years," Olson said. "For 30 years, the statute has been interpreted the way that we are suggesting." A decision from the Court is expected later this term. Entire contents copyrighted © 2012 by The Dolan Company. All rights reserved. Reproduction in whole or in part without written permission is expressly forbidden. Published: Mon, Nov 5, 2012

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