Thursday, March 21, 2013

Grey Markets No Longer A Grey Area

In a remarkable decision on March 19, 2013, the United States Supreme Court held that the first sale doctrine applies sales both inside and outside the United States.  The Court decided that the first sale doctrine provision of the Copyright Act (17 U.S.C. 109(a)) supersedes a second, import-control, provision of the Copyright Act (17 U.S.C. 602(a)(1)).  The case, Kirtsaeng v. John Wiley & Sons, arose when Supap Kirtsaeng, a Thai mathematics student at Cornell University, asked friends and family to send him versions of textbooks lawfully marketed in Thailand, and then sold these textbooks in the United States at a profit.  Publisher, John Wiley & Sons, sued Kirtsaeng, alleging that the first sale of these textbooks had occurred within the United States, constituting copyright infringement.  Kirtsaeng countered by arguing that the first sale of these textbooks had occurred in Thailand, and the publisher's copyrights had thus been exhausted prior to the sales subsequently made by Kirtsaeng.  The Supremes agreed, holding that
The "first sale" doctrine applies to copies of a copyrighted work lawfully made abroad.
Absent action by Congress to eliminate grey market imports, this decision will severely hamper current practices of price discrimination between different countries for copyrightable goods.  This 6-3 decision augurs well for farmer, Vernon Hugh Bowman, a 75-year old Indiana soybean farmer currently defending his farming practices against Monsanto Corporation in the Supreme Court on grounds of patent exhaustion, a doctrine related to copyright first sale doctrine.  Supap Kirtsaeng may now have sowed the seeds of victory for Vernon Hugh Bowman.