Author Topic: Wiley v. Kirtsaeng & First Sale Doctrine  (Read 3287 times)

Daley

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Wiley v. Kirtsaeng & First Sale Doctrine
« on: October 29, 2012, 02:22:36 PM »
I figured I should bring the subject up as today is the first day the SCOTUS is hearing arguments on the Wiley v. Kirtsaeng appeal and I haven't seen anyone else mention it here.

http://arstechnica.com/tech-policy/2012/10/a-supreme-court-clash-could-change-what-ownership-means/
http://www.cnn.com/2012/10/26/justice/court-student-copyright/index.html
http://www.marketwatch.com/story/your-right-to-resell-your-own-stuff-is-in-peril-2012-10-04

For those of you who've missed out on this news... in a nutshell, the outcome of this case could dramatically change the definition of ownership in this country and destroy the used goods market, making it illegal to resell many imported goods no matter the origin of purchase without the manufacturer's permission and basically doing away with First Sale Doctrine. Much of the very habits we use and rely on as mustachians to save money is at risk if the decision is upheld. I've a few thoughts on the subject myself, but doesn't contribute much to what's already being said. However, I figured you fine folks should at least be made aware of it.

There's not much we can really do outside of sit and wait for a verdict, but there is a consumer rights advocacy group trying to gain traction in response to this: http://ownersrightsinitiative.org/

Any of you lawyers floating around care to take a stab at a better analysis and discussion?

gooki

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Re: Wiley v. Kirtsaeng & First Sale Doctrine
« Reply #1 on: October 29, 2012, 07:33:31 PM »
Makes me glad to be in a country where parallel importation of goods is legal.

MooreBonds

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Re: Wiley v. Kirtsaeng & First Sale Doctrine
« Reply #2 on: October 29, 2012, 09:25:22 PM »
I have no background in law.

When I first saw links referencing this court case a month or so ago, I hadn't ever clicked on them....but I was shocked at the headline and what it implied. But then I read one of your links, and I have to say that I would tend to side with the publishers. For those who are claiming that libraries won't be able to lend out books anymore...I think it's safe to argue that publishers would have gone after libraries 100 years ago when they opened their doors. They haven't gone after them then, and I really don't see them going after them now.

To start with, IMO, it's not truly a case of 'I don't own something that I buy' - you and I can buy a can of Coke, drink the contents, and then post a 'for sale' post on Craigslist to sell the empty can bearing the Coke logo if we want. This case is also a bit of the issue of importation duties/tariffs and the like....Also, from what I can gather (without having read the legal briefs/opinions) is that the heart of the matter is not the physical good (paper), but rather the information and ideas disseminated in those pages. Might not seem much different than an Armani suite tailored in Vietnam and shipped over to the US, but at least the Armani suite has some value in and of itself, even without the label and colors/style. A book of blank paper - essentially worthless, compared to the content.

How about this example: you buy 10,000 ebook copies of "50 Shades of Gray". You pay a printer in China to print up 10,000 hardback copies of the book, and then delete the 10,000 ebook copies, and then import the hardback copies into the US for sale. You still 'own' the 10,000 copy licenses, don't you, since you deleted the ebook? Or are ebooks different than printing them up? If you say that the eBook doesn't give you rights to print up and resell the hard copy, then you are arguing for some extent of control of the material, despite 'owning' it. If you do argue that a license for an eBook gives you the ability to print it up in a foreign country, import it back here, and sell it for less than the publisher....well, I guess we should expect less original content in the future due to the erosion of intellectual rights.

The defendant is not someone who is buying a textbook for personal use, and he isn't someone buying truckloads of truly used books from students to resell to other students....but rather, someone who is exploiting the price difference created by foreign laws and importation tariffs (or lack thereof), precisely to exploit the societal cost of producing a good in this country. If you wish, it's an act of "commerce" (muscle spasm jolting me awake, as I have flashbacks to the previous thread on taxation of dividends and the use of the word "commerce" :) ). Two individuals transacting one textbook is one thing - a person engaging in commercial activity and making a business out of it is entirely another matter (hence, the 'interstate commerce clause' is one reason why it's making it all the way to the Supreme Court, in addition to the copyright infringement, etc.)

It's not a 100% precedent-setting case, but a previous case has some similar undertones in how interstate commerce can be controlled by Congressional law: look at http://en.wikipedia.org/wiki/Wickard_v._Filburn, about a farmer in the Great Depression, who the SCOTUS ruled could not grow 'excess' wheat on his own farm to feed his own chickens (because that resulted in the farmer buying less wheat on the open market, which impacts interstate commerce). The main difference is that Congress (AFAIK) hasn't passed a law or duty tax on importing textbooks, as they passed a law limiting the amount of grain a farmer could plant (in order to try to stabilize the global price of wheat).

Daley

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Re: Wiley v. Kirtsaeng & First Sale Doctrine
« Reply #3 on: October 29, 2012, 11:47:50 PM »
There's far deeper issues at play here than your approach to the subject, Moore. This rubs right up against the fundamentals of First Sale Doctrine with imported goods and creates a slippery slope situation. If the ruling is upheld as it stands, then technically all imported foreign copyrighted materials are now subject to licensing restrictions. It doesn't matter that the major publishers or the MPAA or RIAA cross their hearts and hope to die promising to never enforce it... it's the fact that it's enforceable at all, and would have to stand as the gold standard across all markets where copyright is used and could be pressed in.

Something that makes this decision potentially dangerous is the case Costco v. Omega, which has effectively stood unchallenged due to a 4-4 split decision with Justice Kagan unable to split the decision due to direct prior involvement in the proceedings. The problem is, Omega officially got away with abusing and subverting copyright law as grounds for halting the sale of their gray market watches at Costco that were being offered below their regional asking value. They effectively abused copyright law with a physical good, used international copyright law to halt the resale of their own physical merchandise, and the SCOTUS failed to strike it down. Effectively, this stands as grounds to be able to copyright any physical good being imported into the country.

Justice Breyer gets it:
Quote
"Imagine Toyota, right?" said Breyer. "Millions sold in the United States. They have copyrighted sound systems. They have copyrighted GPS systems. Under [Wiley's] reading, the millions of Americans who buy Toyotas could not resell them without getting the permission of the copyright holder of every item in that car which is copyrighted? Am I right or am I wrong? "

"There are other defenses, but that is not this case," said Wiley's lawyer, famed Supreme Court advocate Ted Olson. "This case is not--"

Breyer interrupted him: "Well, how do you distinguish? How do you distinguish?"

The problem is far reaching, and much of the dangers extends into the technology sector and the situation that intellectual property theft and copyright violations are no longer a civil matter but a federal one in this country. Even ignoring dangerously misapplied copyright law to physical goods and the fact that this only applies to imported goods... we're a nation of importers, and this is a trial directly impacting First Sale Doctrine on imported, copyrighted goods.

Just for starters, programming code is subject to copyright, and complex programmable electronics are in everything these days. Just look at how complex so many of the goods we're importing have become... if it stands, it sets a precedent of requiring a license and explicit permission to resell any copyrighted good from the rights holder. You give some companies an inch legally, they'll go a mile. All it takes is one bad apple to enforce it once and be successful, and once the initial villain is out of the way, everyone else will jump on board because a) it's legal to do so, and b) it'll make them even more money to take that opportunity. Imagine if Apple were allowed to tell you that you couldn't resell your iPad or iPhone. Imagine if Microsoft decided to refuse transfer of ownership on their Windows Embedded system in several vehicle models on the road today. You know all those petty trivial patent laws trying to eliminate the competition in the cell phone market? Imagine that extended into the copyright sphere where say Broadcom decides not to give resale license on devices that use their chipsets and drivers. They're the copyright holder, they do global business, their devices are imported... it's now their right to deny resale of their copyrighted work and they decided to exercise that right. Congratulations, you're now breaking federal law and stealing Broadcom's intellectual property trying to sell your used laptop.

Kirtsaeng's hardly a saint, and honestly I think him and Wiley deserve each other. If a global media company is going to do business globally with products that are sold the world around without so much as a regional distinction beyond the front cover and publication page, they need to set a fair price globally to prevent this sort of thing from happening, instead of price gouging customers in first world countries using asinine copyright laws to defend the practice just because they can get away with it. At best, this should be a civil license usage matter with the government getting no more involved with this case beyond import tariffs and income tax off the profits... but it isn't. Wiley argued that it was copyright violations, and he was found guilty of doing just that in front of a panel of twelve jurors. This argument, decision and subsequent upholding and appeal has very deep and broad consequences if it goes unchallenged and unmodified. Modern copyright law is insidious and everywhere, and allowing this to stand basically allows foreign copyright holders a permanent dictatorial monopoly on the sale and resale of any and all goods that can successfully have copyright claims shoehorned into them in this country. If you don't think corporations and industries won't trip over each other to exploit that newfound power to its fullest, you're fooling yourself.

As for this...
When I first saw links referencing this court case a month or so ago, I hadn't ever clicked on them....but I was shocked at the headline and what it implied. But then I read one of your links, and I have to say that I would tend to side with the publishers. For those who are claiming that libraries won't be able to lend out books anymore...I think it's safe to argue that publishers would have gone after libraries 100 years ago when they opened their doors. They haven't gone after them then, and I really don't see them going after them now.

You apparently have no idea the turf wars libraries, publishers, and big media have fought the past few years over fair use, copyright law and digital media. Have a small sample.

Intellectual property rights do not drive innovation, competition and limited exclusivity does. Copyright was intended for creative works, not goods and services, and it was designed to protect those rights initially long enough for the creator to make a modest living off it, and then release it to the public domain after a reasonable time for the common betterment of society if its relevance survived long enough to do so. I don't see much of that application here. I see an 800lb gorilla who wants their pound of flesh, the privilege to make criminals out of people exploiting their exploitation of regional pricing practices, and damn the consequences for getting that.

I'm not saying that it could turn out as a "parade of horribles" or not, and I'm doing my best to try and ignore the mounting legal history of the erosion of property rights through copyright abuse in this country and shoot my dang optimism gun all over the place in hopes that the SCOTUS makes the right call... but the decision is going to be important to most American mustachians no matter what the outcome.

Daley

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Re: Wiley v. Kirtsaeng & First Sale Doctrine
« Reply #4 on: October 31, 2012, 11:46:03 AM »
Finally dug through the Supreme Court's website. Have a couple PDFs:

Specific Question presented:
http://www.supremecourt.gov/qp/11-00697qp.pdf

Argument Transcripts from 29 October:
http://www.supremecourt.gov/oral_arguments/argument_transcripts/11-697.pdf

The transcript is an interesting read if you've got the time.