The U.S. Court of Appeals for the Second Circuit held that copyrighted goods made abroad and imported into the U.S. without the permission of the copyright owner are not subject to the “first sale” doctrine. John Wiley & Sons, Inc. v. Kirtsaeng, No. 09-4896 (2d Cir. Aug. 15, 2011).
The U.S. Copyright Act grants copyright owners several exclusive rights, including the right to prevent others from importing copies of the copyrighted work into U.S. territory. 17 U.S.C. § 602. Subject to several exceptions, Section 109 of the Act also provides that “the owner of a particular copy … lawfully made under this title, or any person authorized by such owner, is entitled, without the authority of the copyright owner, to sell or otherwise dispose of the possession of that copy….” 17 U.S.C. § 109. Section 109 is a codification of the common law “first sale” doctrine, which generally allows a person who buys a legally produced copyrighted work to sell or otherwise dispose of the work as he sees fit.
In the case before the Second Circuit, the plaintiff textbook publisher, John Wiley & Sons, alleged that defendant Surap Kirtsaeng and his associates purchased abroad foreign editions of Wiley textbooks and imported and resold them in the U.S without Wiley’s authorization. Wiley claimed that Kirtsaeng’s unauthorized importation and resale of the textbooks infringed Wiley’s copyrights in the textbooks. Kirtsaeng argued that he was protected from infringement liability by the first sale doctrine. The U.S. District Court for the Southern District of New York rejected the applicability of the first sale doctrine to foreign editions of textbook and prohibited Kirtsaeng from raising the defense. The case proceeded to trial, where a jury held Kirtsaeng liable for eight acts of infringement and assessed statutory damages of US$75,000 per infringement. Kirtsaeng appealed to the Second Circuit.
In a 2-1 decision, a majority of the three-judge panel of Second Circuit judges affirmed the district court. The court acknowledged the existence of tension between “§ 602(a)(1), which seemingly seeks to give copyright holders broad control over the circumstances in which their copyrighted material may be imported (directly or indirectly) into the United States, and § 109(a), which limits the extent to which the copyright holder may limit distribution following an initial sale.” In fact, in Quality King Distributors, Inc. v. L’anza Research International, Inc., 523 U.S. 135 (1998), the U.S. Supreme Court held that the first sale doctrine allows one who purchases abroad copyrighted items that were manufactured in the United States to re-import those items to the United States without the copyright owner’s authorization. However, in Quality King, the copyrighted items in question had all been manufactured in the United States. Moreover, in a dictum, the Supreme Court in Quality King suggested that “copies that are lawfully made under the law of another country” are “not subject to the first sale doctrine.”
Reviewing the text of Copyright Act Section 109 in the context of Section 602(a) and in light of the dictum in Quality King, the Second Circuit ultimately concluded that the “phrase ‘lawfully made under this Title’ in § 109(a) refers specifically and exclusively to works that are made in territories in which the Copyright Act is law, and not to foreign-manufactured works.”
