First Sale Under Siege: If You Bought It, You Should Own It

"Unlike the Ninth Circuit’s interpretation, however, the Second Circuit’s reading of Sections 109 and 602 permits no exception for foreign-manufactured goods that are sold within the United States with the permission of the copy- right holder. As a result, absent the permission of the copyright holder, any distribution of any foreign-manufactured copy could infringe copyright."

This seems to be a reference to the distinction drawn by the Second Circuit at p. 16 of its opinion:

"While the Ninth Circuit in Omega held that §109(a) also applies to foreign-produced works sold in the United States with the permission of the copyright holder, that holding relied on Ninth Circuit precedents not adopted by other courts of appeals. Accordingly, while perhaps a close call, we think that, in light of its necessary interplay with § 602(a)(1), § 109(a) is best interpreted as applying only to works manufactured domestically."

And on p. 17:

"In sum, we hold 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."

In a footnote, the Second Circuit seems to acknowledge that this leads to the exact concern that we raised:

"Phrased differently, it is argued that [this] decision may allow a copyright holder to completely control the resale of its product in the United States by producing its goods abroad and then immediately importing them for initial distribution. In this sense, the copyright holder would arguably enjoy the proverbial “best of both worlds” because, in theory, the consumer could not rely on the first sale doctrine to re-sell the imported work. In other words, the copyright holder would have an incentive to “outsource” publication to foreign locations to circumvent the availability of the first sale doctrine as a defense for consumers wishing to re-sell their works in the domestic market. [...] We acknowledge the force of this concern, but it does not affect or alter our interpretation of the Copyright Act."

Hence, the Second Circuit suggests that Wiley could control the resale of foreign-manufactured books in the U.S., even if Wiley itself imported and sold them.

This hypothesis is an extreme case, but it shows a mechanism how price discrimination can be welfare-increasing. That there can be tradeoffs between first-sale freedoms and societal wealth. (Because first-sale restrictions -- tying tickets to names, like a contract -- is what keeps secondary markets from equalizing airline fares).

But I'm not objective. For me segmenting (like DVD zones) always looked like and artificial way to milk more cash out of people.

This means that local companies in small and developing countries have enormous opportunities they did not have in the past. But multinationals that dump goods into these markets in the hope of securing market share for the future (when the markets actually become profitable for them) are a huge hurdle.

I see no problem with the scenario you described outside of a few select industries. For example, pharma is problematic, but that market is so screwed up it is hardly worth talking about (publicly funded research being turned into private profits, etc.).

Personally, I would rather see IP exceptions built into treaties. For example, if you refuse to sell product A in country B, then other companies can ignore your patents as long as they only sell in country B, etc.

I don't see any good reason for limiting secondary sales that doesn't reek of protectionism.

The idea that this would eviscerate the first sale doctrine makes no sense, since publishers who aimed to circumvent it would have to publish their work elsewhere, import it for sale into the US, and then deny that the work had been published in the US (and abandon the protection of US copyright law in the process). The law does not compel absurd results, and I don't see courts buying into the idea that American Book Co. promotes and offers a book for sale in the US with US pricing, LoC catalog data and all the rest, while simultaneously denying that it had published the book in the US. This would be cutting off one's nose to spite one's face; as the court observes in footnote 40, Kirtsaeng's reading would require copyright holders to either keep the material off the market altogether or to sell it only in places that are not signatories to Berne.

I haven't sat down and read your brief yet, and probably won't get around to it until next week; the last time I took a look at these issues was 6 months ago, so I apologize for this highly abbreviated argument. In a nutshell, though, the idea that first sale should apply to all works published outside of and imported into the US requires courts to accept the view that American law travels wherever Americans and American commercial relations go, such that if an American desires to buy something American law is unilaterally imposed on a foreign seller. That would be derogation by the back door, as it were.

PS, in response to the plaint that a win for Wiley would make the resale of artworks, storage in libraries, and so on impractical for any and all works of foreign origin, I would refer you to the reciprocal arrangements summarized in http://www.copyright.gov/circs/circ38a.pdf and point out that the text of the copyright act already explicitly provides for such situations, something which is usually waved aside in the parades of horribles.

There's an excellent (albeit technical) introduction to these issues in the 9th circuit's ruling on Omega S.A. v. Costco Wholesale Corp.. Read up also on some of the journal articles from the Wiki page: http://en.wikipedia.org/wiki/Omega_S.A._v._Costco_Wholesale_.... and if you're really itnerested, dig into the amicus briefs.

Not to negate your general point though.