Ariel Lavinbuk, May 28, 2013
In Kirtsaeng v. John Wiley & Sons Inc., the Supreme Court held that the Copyright Act’s first-sale doctrine applies to all copies of a copyrighted work made by or with the authorization of the U.S. copyright owner, regardless of where those copies were made. That means that genuine copies made and sold abroad by a U.S. copyright owner can now be imported into the United States, where they can be resold or otherwise transferred freely-whether the copyright owner authorizes such activity or not. The decision would seem to end copyright owners’ ability to use copyright law to enforce market segmentation and its attendant price discrimination.
As it turns out, however, that is not the case-or, at least, not entirely the case. Although the Court’s opinion in Kirtsaeng severely restricts copyright owners’ ability to use the Copyright Act to enforce market segmentation, it does not foreclose it. Indeed, under one condition, the decision actually reaffirms copyright owners’ ability to exert control over goods already brought to market. That condition? That copyright owners merely license, as oppose to sell, their works. Licensees, Kirtsaeng makes clear, cannot avail themselves of the first-sale doctrine and licensors can, therefore, continue to use the Copyright Act to control the disposition of their works, even as against downstream parties with whom they are not in privity of contract.
This anomaly is not simply a function of the Court’s decision. It is there in the plain text of the Copyright Act and may well reflect a compromise that Congress struck among competing interest groups in the years before the Act was amended. Does it matter? Certainly not for many types of goods. No one will ever license shampoo. But the distinction will likely prove significant with respect to others, such as the textbooks at issue in Kirtsaeng. The Court’s decision, for example, may well speed the seemingly inexorable replacement of physical books (which are typically sold) with electronic ones (which are typically licensed). It is hard to believe Congress intended the Copyright Act to hasten such change, let alone that the Act’s importation provisions should turn so meaningfully on them. But, absent legislative change, that is the landscape afterKirtsaeng.
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