Does the Copyright Act allow consumers to benefit from purchasing copyrighted works that are acquired abroad by third parties at a lower price and are then resold in the United States?
I am an LLM student from China, and when I firstly bought textbooks in the United States, I was shocked by the high price. I complained to my friend, a senior student, “Oh my God, it will cost nearly $200 for a used textbook!” He answered, “Well, you can buy an Indian version on abebooks.com. It would be much cheaper!”
Buying international versions of books is a method to save money. American publishers always establish market segmentation when selling copyrighted works around the world. In general, the version selling in developing countries are much cheaper than the one selling in developed countries, but the contents among the different versions are essentially equivalent. For instance, when you compare paperback editions of International Business Law by Richard Schaffer, Filiberto Agusti and Beverly Earle they are almost same, but the version from India is much cheaper than the American version.
With the development of international trade and transportation, copies selling in developing countries can be taken by individuals back to the developed countries and sold at a lower price; this is called international arbitrage. But can copyright owners successfully sue individuals who earn money by reselling their copyrighted works?
The answer is no. Section 109 of the U.S. Copyright Act, includes the “first-sale doctrine”, which establishes that “the owner of a particular copy or phonorecord lawfully made under this title…is entitled, without the authority of the copyright owner, to sell or otherwise dispose of the possession of that copy or phonorecord.” This means buyers of copyrighted works can freely dispose of such works since the exclusive distribution rights of copyright owners have been exhausted. But does the first sale doctrine protect copyrighted works that were initially manufactured abroad?
The answer is yes. In Kirtsaeng v. John Wiley & Sons, Inc, Kirtsaeng was a Thailand citizen who lived in the United States, and his friends and family members bought a lot of English textbooks published by John Wiley in Thailand and sent to him to the United States. Kirtsaeng got huge benefits from selling the Thailand version textbooks on eBay at a lower price than American version of these books.
The publisher John Wiley learned of this and filed a copyright infringement lawsuit against Kirtsaeng, John Wiley was initially supported by some lower federal court decisions. After Kirtsaeng lost in the lower courts, based in part on a split in Third and Ninth Circuit Appeals Court decisions on the issue, the U.S. Supreme Court ruled in 2013 that the first sale doctrine also applies to copyrighted works that are manufactured aboard. First, the Court held that the language and context of § 109 and common law history favor a non-geographical interpretation. Second, the first sale doctrine, as part of the a common law, emphasizes the importance of allowing buyers of goods to freely compete with each other when reselling or otherwise disposing of those goods rather than working “against trade and traffic, and bargaining and contracting.” Last but not least, the Court determined that the basic Constitutional copyright objective is “promoting the Progress of Science and useful Arts”, and the Copyright Act aims to ensure that publics have enough access to copyrighted works.
In conclusion, consumers—and booksellers — can rely on first sale doctrine to protect the benefits that flow from importing copyrighted goods into the United States without prior authorization. Copyright owners need to look for new alternatives for maintaining control of distribution of their published works.
by Hua Sun