This is the reposting of a comment first published on the IPilogue blog of the Osgoode Law School at this url
The American Bar Association (ABA) recently urged the Supreme Court of the United States to affirm the decision of the Court of Appeal, 2nd Circuit, in John Wiley & Sons, Inc. v. Kirtsaeng.
The defendant, Kirtsaeng, was having friends buy foreign editions of textbooks (produced in Thailand), and having them shipped the textbooks to America where they were resold by Kirtsaeng for a profit. The plaintiff publishing corporation John Wiley & Sons Inc. argued that Kirtsaeng was in violation of section 602(a)(1) of theUS Copyright Act; which deals with the importation of copies into the US without copyright owner approval. Kirtsaeng’s defence was section 109(a) which permits persons who buy copies of a works to resell them without any permission from the copyright holder. There appeared to be a conflict between those two sections. The Court of Appeal found that Kirtsaeng had violated section 602(a)(1) and could not rely on section 109(a), in order to keep both sections active. The ABA endorsed that line of reasoning.
US copyright law section 602(a)(1) states that “Importation into the United States, without the authority of the owner of copyright under this title, of copies or phonorecords of a work that have been acquired outside the United States is an infringement of the exclusive right to distribute copies or phonorecords under section 106, actionable under section 501”. Section 109(a) states that “notwithstanding the provisions of section 106(3), the owner of a particular copy or phonorecord lawfully made under this title, or any person authorized by such owner, is entitled, without the authority of the copyright owner, to sell or otherwise dispose of the possession of that copy or phonorecord”. The Court of Appeal identifies section 109(a) as simply a “codification of a long-standing ‘first sale doctrine’”. In other words, the right to sell copies in section 106(3) of the US Copyright act is limited to the right to sell the copy of a work first.
The Court of Appeal, when reconciling these sections, was bound by the previous Supreme Court decision ofQuality King Distributors, Inc. v. L’anza Research International, Inc., (hereafter “Quality King”). In that decision, the court held that copies made in the US, sold abroad and then resold again in the US did not contravene section 602(a)(1) because of section 109(a). The Court of Appeal had to explain why this case was different, and the effect of section 109(a). The court focused on the words “made under this title” in section 109(a) and concluded that those words must be interpreted to mean “made in the United States” despite the finding that “the relevant text is simply unclear”. That would distinguish this case from the Quality King decision because, in this case, the copies of textbooks were produced in a foreign nation. While the court admittedly struggled with that interpretation, they claimed that they were bound to it, in order to give section 602(a)(1) any force and effect. The court, as well as the ABA, also relied on dictum in the Quality King decision which suggested that people reselling copies could not rely on section 109(a) if the copies were not made in the US.
In coming to their decision the court’s stated goal was “to adopt an interpretation of § 109(a) that best comports with both § 602(a)(1) and the Supreme Court’s opinion in Quality King”. Is interpreting the words “made under this act” in section 109(a) as “made in the USA” the best interpretation to comport with both section 602(a)(1) and Quality King? The court addressed the interpretation to “made under this act” which would include copies manufactured in foreign nations but it was not adopted.
If we were to adopt an interpretation of “made under this act” that included copies manufactured in foreign nations, Section 602(a)(1) would still have limited effect. Consider a scenario where we have an “importation into the United States”, without the permission of the “owner of copyright”, of copies “acquired outside the United States” however, no sale has taken place prior to the sales in the US. This might occur when a foreign distributor tries to sell directly into the American market. The foreign distributor cannot rely on section 109(a) because these copies have not been sold to them, they were produced by them. In other words, “made under this title” can be interpreted to apply to copies manufactured in foreign nations without rendering section 602(a)(1) inoperative.
That interpretation allows section 602(a)(1) to have force without the need for a limited interpretation of the words “made under this title” in section 109(a). The Court of Appeal, acknowledged that “’lawfully made under this title’ appears in other provisions of Title 17 where it is at least arguable that Congress intended this language to apply to copies of works manufactured outside of the United States”. The court was reluctant to apply this interpretation because section 602(a)(1) “would have no force in the vast majority of cases if the first sale doctrine was interpreted to apply to every copy manufactured abroad that was either made ‘subject to protection under Title 17,’ or ‘consistent with the requirements of Title 17 had Title 17 been applicable’”.
The court didn’t want to apply the section because it would limit the application of section 602(a)(1). However, since the Court in Quality King was willing to restrict the application of section 602(a)(1), why should this court be reluctant to here? At least the broad interpretation allows the law to be interpreted consistently, a goal stated by both the U.S. Court of Appeal and the ABA, without the need for any problematic interpretation of the words “made under this title”.