Two recent decisions have helped clarify U.S. copyright law and provided some common sense guidance. In March the U.S. Supreme Court handed down its decision in Wiley v. Kirtsaeng applying the First Sale Doctrine to copyrighted works lawfully manufactured and sold abroad and later resold in the United States.
The case involved a foreign graduate student (Kirtsaeng) who realized that he could purchase nearly identical copies of the textbooks he used in his U.S. classes in his native Thailand for much less. Being entrepreneurial, he began having his family purchase numerous textbooks which he later resold for a profit. Before Wiley sued him he had allegedly made over one million dollars. Wiley sued Kirtsaeng for copyright infringement and both lower courts sided with the publisher. However, the Supreme Court realized that by definition the First Sale Doctrine has to apply to these facts. The doctrine, codified in 17 U.S.C.A. § 109(a) states "The owner of a particular copy or phonorecord lawfully made under this title or any person authorized by such owner is entitled without the authority of the copyright owner to dispose of the possession of that copy or phonorecord."
The court realized that despite the kneejerk fear that the publishers and perhaps all intellectual property owners would be damaged by its decision, to hold otherwise would lead to a fundamental restriction on people's rights to sell their own property (i.e. the backbone of many businesses large and small). It might seem like a controversial decision but it's the right one.
As if to underscore the rationality of the Supreme Court's decision the Second Circuit just issued its opinion in Capitol Records v. Redigi. In this case, Capitol sued a company whose stated purpose was to allow consumers to re‑sell lawfully purchased digital music files. On the surface such a sale would seem to be authorized by the Kirtsaeng's court's reliance on the First Sale Doctrine. However the subtle but important distinction here is that Redigi was infringing on the exclusive right of reproduction. One cannot distribute digital music files without reproducing them - it's not a physical object, like a textbook or a used record album. Their reliance on the First Sale Doctrine failed in this case. They also had a bizarre defesne based upon Fair Use but it’s not worth rehashing here. I don't know if Redigi will appeal the decision.
Both these cases illustrate how certain circumstances can inspire paranoia and fear of worse-case scenarios. They also illustrate how copyright law is flexible enough to handle the most complicated cases.
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