|EcommerceBytes-NewsFlash, Number 2985 - January 23, 2013 - ISSN 1539-5065 2 of 6|
WASHINGTON - A top lawyer for eBay warned on Tuesday that if the U.S. Supreme Court rules against an online seller in what could be a landmark intellectual property case, the ecommerce giant will take its case to Capitol Hill and ask members of Congress for legislation that would authorize the resale of copyright-protected works that were legally purchased overseas.
At issue in Kirtsaeng v. John Wiley & Sons is the so-called first sale doctrine, a longstanding provision of copyright law that limits the rights of copyright and trademark owners following the lawful sale of a protected work.
The case involves Thailand-born Supap Kirtsaeng, a doctoral student at USC who in an effort to help pay for his education costs imported discounted versions of textbooks from his native country into the United States, where he resold them on eBay and other platforms for a healthy profit.
Wiley, the publisher of the textbooks, sued, arguing that the first sale doctrine does not apply to works purchased overseas and then imported and resold in the United States. Wiley won in two lower courts, and the two sides presented oral arguments before the Supreme Court in October.
Defenders of Kirtsaeng, including eBay, which has filed a brief arguing on his behalf with the high court, warn that a strict and narrow interpretation that limits the first sale doctrine to goods purchased - and potentially manufactured - inside U.S. borders would amount to drastic new restrictions on ownership rights and sharply limit the activities of online sellers.
"We think it's a pretty fundamental principle that Congress would have never intended that copyrighted goods manufactured outside the United States would receive more protection and have no first sale doctrine than copyrighted goods manufactured inside the United States," Tod Cohen, eBay's deputy general counsel, said during a panel discussion here at the annual State of the Net conference hosted by the Advisory Committee to the Congressional Internet Caucus.
"So we're fairly clear and would advocate pretty strongly that, if the Supreme Court rules in either of the two negative scenarios - in our view - that manufacturing should not matter as to where ... for copyright purposes the first sale doctrine should apply."
"Once you've sold something, your rights are exhausted, no matter where it is manufactured in the world," Cohen added.
Wiley and its supporters in the Kirtsaeng case counter that the blanket application of the first sale doctrine to works purchased overseas ignores important distinctions in the business and pricing models copyright owners employ in foreign markets. The textbooks that Kirtsaeng imported from Thailand, with the aid of friends and family members, were priced at a steep discount compared to the American versions, for instance. Without the assurance that those books would stay in the Thai marketplace, a publisher like Wiley - or any other copyright holder - would phase out discount pricing structures tailored for specific overseas markets, argued Keith Kupferschmid, general counsel at the Software and Information Industry Association, a trade group that represents software makers and devotes much of its resources to combating the trafficking of counterfeit merchandise, including litigation against eBay sellers.
"It's about market segmentation. It's about the ability to treat different markets differently. It's about software companies and content companies and other copyright owners - and frankly even beyond copyright owners - to be able to create different products for different geographical areas so they can make their works more widely available to different markets. They can make their products more affordable to markets that maybe otherwise can't afford them. They can make them more accessible to take into account for cultural differences," Kupferschmid said.
"It also allows frankly many, many benefits to consumers. This isn't just about giving publishers rights and abilities," he added, offering as an example a publisher of educational software that provides teachers and students with discounted pricing. "If this case were to go down, were it to come out the wrong way, then frankly those different models would likely disappear."
The Supreme Court is expected to rule in the Kirtsaeng case in the next six weeks, and the panelists outlined three potential scenarios. A ruling fully in favor of Wiley could pin first sale rights to U.S. borders, setting the precedent that copyright-protected goods manufactured or purchased overseas are not eligible for resale in the United States without the permission of the rights holder. On the other hand, if the high court vindicated Kirtsaeng it would enshrine a more expansive interpretation of the first sale doctrine.
A third option could see the court rule against Kirtsaeng, but only on the basis of his import operation. That could leave the door open to the domestic resale of goods that were manufactured overseas but brought into the United States by the rights owner. Such an outcome would still be unsatisfactory to eBay, and send the company's lobbyists to Capitol Hill seeking legislation establishing a cross-border view of the first sale doctrine, but it would avoid the messy scenario where any trademarked or copyright-protected good with a component manufactured overseas could potentially be barred from resale without the permission of the rights owner.
About the author:
Kenneth Corbin is a freelance writer based in Washington, D.C. He has written on politics, technology and other subjects for more than four years, most recently as the Washington correspondent for InternetNews.com, covering Congress, the White House, the FCC and other regulatory affairs. He can be found on LinkedIn here.
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Federal Court Strikes Down Resale Rights for Digital Goods - April 03, 2013
Supreme Court Rules for eBay Seller in First Sale Case - March 20, 2013
Warner Bros Brings Fresh Assault on Amazon Sellers - February 25, 2013