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(I work for EFF.)

This article is a quick end-of-year summary of two issues that have been active during the year. The description of what Kirtsaeng was doing was likely omitted for brevity, not as a cover-up. (The person who asked my coworkers to write these end-of-year posts specifically asked for short, broad summaries instead of detailed analysis.)

If you follow the link given in the article (https://www.eff.org/deeplinks/2012/10/parade-horribles-supre...), you'll see another article from October by my colleague Parker, where he writes:

"Wiley claims that this doctrine only applies to goods that are manufactured in the U.S., and that the defendant, Supap Kirtsaeng, was infringing its copyright by purchasing books at a reduced rate in his native Thailand and selling them below list price in the States."

This description appeared on the same EFF blog (Deeplinks) where the item that you're concerned about did.

One of the most important aspects of the Kirtsaeng case that we've tried to get the Supreme Court to appreciate is that the plaintiff's theory would limit first sale in a wide range of situations. (One example is artworks, like paintings or manuscripts, that were produced outside of the U.S. and that were brought to the United States by their legitimate owners, who are not the copyright holders. As discussed elsewhere in this thread, there is also a question of whether publishers intending to sell works in the United States can choose the location of their manufacturing operations to make first sale a dead letter.) So even people who think that parallel importation as practiced by Supap Kirtsaeng is bad or should be restricted by law may have cause to be concerned about the Kirtsaeng case. Those consequences and concerns are the focus of this summary post.

The majority of Wiley's revenue comes from western markets where their products sell at "full price". How would Wiley be able to offshore their publishing to exploit a ruling that first sale doesn't exist control over import? Most of their titles would already have been "imported"; Wiley couldn't prevent their resale within the US.

Our brief says:

"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.

In a global economy, restrictions on parallel importation are destructive and backward.

What happened to "free trade"? I see no difference between buying something in country A and selling it in country B and buying and selling within the borders of country A.

As borders continue to fade away, restrictions on importation will become restrictions on first sale rights. So I really draw no distinction, personally.

Recognize that your position may have the following implication: if the producer cannot segment prices regionally, they may choose to charge the US price globally - in this case they lose the marginal sales in poorer countries, and customers in poorer countries lose access to the product. No one wins in this scenario.

I read a hypothesis that airlines would be unsustainable without price discrimination. That is: if tickets were uniformly priced, there is no price at which ticket sales (demand) would exceed fixed costs. Without gouging business travelers, there wouldn't be enough revenue to subsidize the pleasure travelers, who would stop flying because they couldn't afford unsubsidized fares. And the industry would fail.

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).

If you have a link to this, I would love to read it. It makes a lot of sense, and I'd be interested to read it in more detail

This is probably unsatisfying, but it's where I read about it:

http://www.demarcken.org/carl/papers/ITA-software-travel-com...

ToC: http://www.demarcken.org/carl/papers/ITA-software-travel-com...

You could email the author and ask him, he seems to know.

Thank you!

They may. Or they could drop the prices just enough that importing charges would make up the difference. It's just rules of the game. If they change, adapt your business model or go bust.

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

No, local competitors win out over multinationals. This is better in my opinion. Human capital and knowledge are more mobile than ever, and should be even more mobile (why can we import goods freely but importation of labor is tightly restricted?).

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.

You know who wins? The competitor who sees a market opportunity and their customers.

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

I'd be curious to hear your thoughts on this concept as it pertains to essential medicines.

I admit it's a complicated issue. See my response above... http://news.ycombinator.com/item?id=4965196

"Free trade", despite the dishonest propaganda, has always been about freedom for companies, not consumers or workers. When was the last time you heard a free trade proponent advocate for unrestricted freedom of movement for workers across borders, similar to that of capital?

How have borders continued to fade away when it comes to selling physical books in different parts of the world at different prices?

Nowdays you can order a book from any place in the world and have it delivered to you via mail.

The difference between that and this lawsuit is that if I order an Oreilly book from the Phillipines via Amazon or something such to have it delivered to me in the USA for X price, it is legal because Amazon has been granted permission from Oreilly to be a distributor of their media overseas. In this lawsuit this is not the case.

I call bullshit on this. You can order a book from any store in the world, they should deliver it to you if economically viable, and then you can resell it if no longer need for the price you and your buyer consider fair.

And you don't have to ask the publisher. After all, if you buy socks or a piece of rubber you don't ask the manufacturer if you want it to pass some borders, do you?

That's how real world goods work. And book is a real world thing.

Agreed. First thing I thought of: Isn't this how places like half priced books and the paperback exchange work? I'm pretty sure neither is paying publisher rights to resell the books people bring in.

Half Price Books is a used bookseller. The difference between a used book seller and a parallel importation scheme is that the used book seller doesn't attempt to subvert the publisher's overseas price breaks to stock their warehouse.

Under the theory in these suits, wouldn't Half-Priced Books have to actually vet their inventory to ensure they only sell books that have undergone a proper domestic first sale authorized by the publisher? It doesn't seem to be enough that Half-Priced Books themselves refrains from engaging in a parallel-import scheme. The strong version of the argument, at least, seems to be arguing that the first-sale doctrine doesn't apply at all to books that were imported without the publisher's consent. So not only would parallel importation violate a copyright holder's rights, but so would subsequent domestic resale of any such book. So e.g., if I sold Half-Priced Books a book I bought in Europe (which I've done), and they resold it, both those sales would be illicit, absent publisher consent.

Obviously the real target of the publishers' suits is cheaper versions of books (mainly textbooks). But I don't see how the arguments they're making can be limited to that case, and wouldn't also sweep up a whole bunch of other reasonably common cases where people sell books in one country that they bought in another country. Some examples: estate sales of people who grew up in one country and died in another one; resale of books bought on trips; small-scale independent importation and sale of books that were never published in the U.S. (e.g. novels in the original French/German/etc.). Heck, as an American expat in Denmark, I fairly routinely sell U.S.-bought books in Denmark or vice versa, depending on where they happen to be at a given time and how full my suitcase is.

The more suspicious part of me suspects that, while parallel importation of cheap textbooks is their main target, they wouldn't really mind an outcome that banned those other resales, either, and looked more like a region-coding system. For example, one easy-ish thing Half-Priced Books could do to keep safe would be to filter by ISBN, only stocking books with ISBNs indicating US publication. That'd have some false positives (some foreign-published books are imported with the publisher's blessing), but it'd be more feasible than attempting to determine on a case-by-case basis whether a particular book had undergone an authorized domestic first sale.

An alternate statutory fix that targets only the narrower case could be to legislate: 1) resale of any lawfully owned book in the U.S. is legal, regardless of where it was first sold; but 2) large-scale [for suitable definition] parallel importation with commercial intent is separately prohibited.

HPB buys books from the first-sellers, so someone pays the appropriate price on the books. HPB doesn't care who. They key distinction is that their business isn't structured around circumventing treaty-supported geography-based pricing on physical products.

Some of their inventory might not have had anyone paying the appropriate price, though. If I buy a book in France (or the Philippines), and resell it to a Half-Priced Books in Texas, under the theory in these suits (as I read it) HPB would be violating the copyright-holder's rights if they resold it, because that book never had a proper first sale in the US, and was not imported with authorization of the publisher.

Single unit sales are not at issue here, it is bulk importation that is directly aimed at circumventing pricing that is.

My point is that their legal arguments in this case aren't limited to bulk importation, but are arguing that there exists no first-sale right at all for books that didn't undergo that initial authorized domestic "first sale", regardless of why, e.g. whether it was one book imported by a tourist who bought it in France.

If their arguments applied solely to bulk parallel importation, that would be another matter. That's the "narrower" legislative fix that I proposed above: to ban the act of bulk commercial importation itself, rather than doing it in a roundabout way via resale restrictions.

Do we have guarantees that single unit sales will not become an issue? Because laws can be passed without acknowledging this and then we are screwed.

The article doesn't really comment on the merits of the case for Kirtsaeng. The EFF isn't trying to convince people to support any position in that case, nor should they, I agree with you that it is definitely a legal grey area.

What the EFF is taking issue with in that case is the potential precedent that could be set depending how the case turns out that could undermine first sale. The only reason EFF is interested in the case is because the legal arguments being used could impact first sale.

What's happening in that case is not simply that publishers are trying to claw back rights from US consumers

True... but that's the part of the case that the EFF is concerned about.

In contrast, in the Capitol case the article very clearly takes a position, and while I'm not familiar with that case I give the EFF the benefit of the doubt and assume they're being truthful.

EFF did take a position in the Kirtsaeng case, in support of the petitioner (Kirtsaeng): https://www.eff.org/deeplinks/2012/01/eff-asks-supreme-court...

(The "urging" there is a link to EFF's amicus brief in the Supreme Court -- https://www.eff.org/sites/default/files/PKEFFCertAmicus_firs... if you'd like to read the brief, which was filed together with Public Knowledge and US PIRG, back in January of this year.)

Although I mentioned that there are reasons that people who oppose parallel importation or aren't sure if they support it should be concerned about the respondent's (Wiley's) view of the first sale doctrine, EFF's brief explicitly supports parallel importation (see section II(C) of the brief). Reasons to care even if you don't care about protecting parallel importation are found in sections II(A) and II(B).

I took the time to read your cite, and I can't see how the EFF's argument in favor of parallel importation isn't a public policy no-op. EFF argues that by restricting parallel import, US customers are forced to pay more than overseas customers. You don't say? Offering price breaks to students in Thailand who can't possibly afford to pay what US customers routinely pay for books means US people pay more than Thai people for books?

I too wish that the EFF would be a bit more honest when it comes to such issues. I'm very much against anything that divides up globalization and adds region locks.

"Import rights" are a relic of old company structures. You see them in things like Nikon equipment going for much more money in the US, where Nikon USA is a separate company pretty much out of touch with Nikon Japan. But Nikon deals with it by only allowing servicing in country of purchase: hey, their right to lower customer service if they want. A more nefarious issue is e.g. Microsoft in other countries trying shakedown approaches, saying you licenses bought in one country are not legal in other countries.

But when the details emerge, the EFF looks bad and hurts everyone on their side by misrepresenting.

Hi,

As I mentioned in a reply above, an earlier EFF blog post (https://www.eff.org/deeplinks/2012/10/parade-horribles-supre...) on the Kirtsaeng case did describe what Supap Kirtsaeng was doing ("purchasing books at a reduced rate in his native Thailand and selling them below list price in the States").

Be careful donating to the ACLU. I love them to death but I keep getting calls on my house phone (not the one I signed up with, mind you) at 8pm asking to donate.

This is true of a lot of good charities. I assume it's because it works, and just deal with it.

> This is something the EFF used to be good at, but now is quite bad at, and despite the fact that EFF mostly supports causes I agree with, I urge you to direct your donations to ACLU or other civil liberties charities instead.

I'm not sure if that line of logic actually follows, but a rather important distinction is that many causes the EFF supports (that are publicized) have an impact globally, while the ACLU, well the 'A' in the name already says it, no?

Now I still prefer to support my own local digital civil liberties groups (such as Bits of Freedom, that do great work on explaining tough computer/security/privacy subject to ancient politicians), but if we're going to be urging people to support this and not that, better give to the EFF because what they do is actually useful for more people.