Today, the U.S. Supreme Court issued its decision in Kirtsaeng v. John Wiley.  The case involves the legality of purchasing copyrighted works that are made and sold overseas with the authority of the publisher and then resold into the United States without the publisher’s authority.  At issue in the case was whether the first sale doctrine — a legal principle that allows a person who buys (rather than licenses) a copy of a copyrighted work to resell or distribute the copy without the publisher’s permission — applies to copyrighted products that were made abroad.  In a 6-3 decision, the Court overturned the Second Circuit decision and held that the first sale doctrine applies to copies of copyrighted works that are legally manufactured abroad.

Justice Breyer wrote the majority opinion for the Court, joined by the Chief Justice and Justices Thomas, Alito, Sotomayor, and Kagan.  The majority opinion focused on “whether the words ‘lawfully made under this title’ restrict the scope of … the ‘first sale doctrine’ geographically.”  The Court found that the statutory “language, its context, and the common-law history of the ‘first sale’ doctrine, taken together favored a non-geographical interpretation.”  The Court agreed with Kirtsaeng’s interpretation of this five-word phrase, saying that it meant nothing more than “in compliance with” or “in accordance with” and “says  nothing about geography.”

The Court was sympathetic to the parade of horribles complained of by “libraries, book sellers, technology companies, consumer-goods retailers and museums.”  The fact that the complaints of these groups is largely theoretical had no bearing on the ultimate decision.

The Court “concedes” that its decision will “make it difficult, perhaps impossible, for publishers (and other copyright holders) to divide foreign and domestic markets.”  The court went on to say that a “publisher may find it more difficult to charge different prices for the same book in different geographic markets.  But we do not see how these facts help Wiley, for we can find no basic principle of copyright law that suggests that publishers are especially entitled to such rights.”

A concurring opinion was written by Justice Kagan and joined by Justice Alito.  The concurring opinion points out that the combination of the Kirtsaeng decision and the Court’s 1998 decision in Quality King v. L’anza destroys the copyright owner’s ability to engage in market segmentation and price differentiation.  Justice Kagan points out that that result is due to an incorrect decision in L’Anza, not the decision in Kirtsaeng.  She then calls on Congress to fix the problem if it deems appropriate.

The dissenting opinion was written by Justice Ginsburg and joined by Justices Kennedy and Scalia.  Justice Ginsburg called the Court’s decision “absurd” and its interpretation of the phrase “lawfully made under this title” an “unnatural construction.”  As to the parade of horribles, Justice Ginsburg said:

[I]f, as the Court suggests, there are a multitude of copyright owners champing at the bit to bring lawsuits against libraries, art museums, and consumers in an effort to exercise perpetual control over the downstream distribution and public display of foreign-made copies, might one not expect that at least a handful of such lawsuits would have been filed over the past 30 years?  The absence of such suits indicates that the “practical problems” hypothesized by the Court are greatly exaggerated.

Justice Ginsburg also reiterated an argument found in SIIA’s amicus brief – that “principles of fair use and implied license (to the extent that express licenses do not exist) would likely” apply to many of the “horribles” to prevent the user from incurring liability under the copyright law .

A full analysis of the case can be found here.

Keith Kupferschmid is General Counsel and SVP, Intellectual Property Policy & Enforcement at SIIA.