Supreme Court Docket Report - April 16, 2012

Originally published April 16, 2012

Keywords: Copyright Act, first sale doctrine, application, goods, copyright owner

Today the Supreme Court granted certiorari in one case of interest to the business community:

Copyright Act—First Sale Doctrine's Application to Goods Produced Abroad

Under the Copyright Act's first sale doctrine, codified at 17 U.S.C. § 109(a), "the owner of a particular copy . . . lawfully made under this title" may sell or otherwise transfer ownership of that copy without the authorization of the copyright owner. In Quality King Distributors, Inc. v. L'anza Research International, Inc., 523 U.S. 135 (1998), the Supreme Court held that the first sale doctrine is applicable to imported copies. In Costco Wholesale Corp. v. Omega, S.A., 131 S. Ct. 565 (2010), the Court granted certiorari to decide whether the first sale doctrine applies to imported goods that are manufactured abroad, but the lower court's decision in that case was affirmed in a one-line order by an equally divided Court (with Justice Kagan recused). Today, the Supreme Court granted certiorari in Kirtsaeng v. Wiley & Sons, Inc., No. 11-697, to decide the same question on which it was equally divided in Costco: whether the first sale doctrine applies to goods produced abroad and then imported into the United States.

Petitioner Supap Kirtsaeng arranged for family and friends in Thailand to purchase and send him foreign edition textbooks originally printed by the Asian subsidiary of respondent Wiley & Sons, Inc. to resell in the United States. Upon learning that the petitioner had resold these textbooks on commercial websites like eBay.com, respondent sued petitioner for copyright infringement in the Southern District of New York. Before trial, the district court rejected petitioner's first sale defense as a matter of law. The jury ultimately returned a verdict for respondent.

A divided panel of the Second Circuit affirmed, holding that "the phrase 'lawfully made under this title' in § 109(a) refers specifically and exclusively to copies that are made in territories in which the Copyright Act is law, and not to foreign-manufactured works." 654 F.3d 210, 222. Finding the statutory text "utterly ambiguous," the Second Circuit adopted an interpretation of § 109(a) that it believed "best comports with both § 602(a)(1) [of the Copyright Act]"—which prohibits importing copyrighted works acquired abroad without the authorization of the copyright holder—"and the Supreme...