Kirtsaeng v. John Wiley & Sons - USSC Holds First Sale Doctrine Applies To Foreign-Made Works, Limits Import-Control Provision - Boon To Gray Marketers

Resolving the long legal struggle over the scope of the Copyright Act's provision governing the right of copyright owners to control imports, the Supreme Court held on Tuesday that the first sale doctrine embodied in 17 U.S.C. § 109(a) trumps the import-control provision of § 602(a)(1). Kirtsaeng v. John Wiley & Sons, 2013 U.S. Lexis 2371 (Mar. 19, 2013).

Once a copy of a work of authorship has been lawfully obtained, the High Court held, purchasers have the right to re-sell and distribute that copy without the consent of the copyright holder, and unauthorized parties may import such copies into the United States, all regardless of whether the copy was manufactured here or abroad. The Court's broad interpretation of § 109(a) sharply limits the scope of § 602(a)(1), in substance eliminating copyright law as a significant obstacle to gray market importing. The industries impacted by such imports will likely ask Congress to overturn the decision.

In light of the oft-noted constitutional cousinhood between patent and copyright law, Kirtsaeng may have implications for the territorial limitations on the corresponding doctrine of patent exhaustion, which, the Federal Circuit affirmed last year, does not apply to foreign-made works not first sold in the United States. Ninestar Technology Co., Ltd. v. Intern'l Trade Comm'n, 667 F.3d 1373(Fed. Cir., 2012). On the other hand, the decision in Kirtsaeng rests heavily on statutory wording and legislative history that have no parallel in or direct bearing on the judge-created patent doctrine.

The 6-3 opinion of the Court, written by Justice Breyer, (1) reversed the Second Circuit's decision holding that the first sale doctrine did not apply to foreign-made goods; (2) resolved the question left open in Quality King Distributors, Inc. v. L'anza Research International, Inc., 523 U.S. 135 (1998), essentially disavowing dicta that leaned the other way; and (3) disapproved the Ninth Circuit's effort, in Parfums Givenchy, Inc. v. Drug Emporium, Inc., 38 F.3d 477, 482 n.8 (9th Cir. 1994), and Omega S.A. v. Costco Wholesale Corp., 541 F.3d 982 (9th Cir. 2008), to harmonize the two provisions by holding that first sale does apply to works made abroad if they have been imported by or with the authority of the copyright holder.

The Dispute and Legal Backdrop

Like other manufacturers who price differentially in different markets, publisher John Wiley & Sons designated certain editions of its texts for sale only...