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Supreme Court sides with book reseller in copyright ruling

The Supreme Court's ruling on copyrighted works bought abroad and resold in the U.S. gives discount retailers a victory and the entertainment industry a setback.

March 19, 2013|By David G. Savage and Dawn Chmielewski, Los Angeles Times
  • In a copyright case, the Supreme Court ruled 6-3 on Tuesday in favor of a USC graduate student from Thailand who had bought low-cost textbooks in his native country and resold them in the United States.
In a copyright case, the Supreme Court ruled 6-3 on Tuesday in favor of a USC… (J. Scott Applewhite / Associated…)

WASHINGTON — The Supreme Court gave foreign buyers of books, video discs and other copyrighted works a right to resell them in the U.S. without permission of the copyright owner, giving discount retailers a victory and the entertainment industry a setback.

The 6-3 decision Tuesday came in the case of Supap Kirtsaeng, a USC graduate student from Thailand who figured he could earn money for his education by buying low-cost textbooks in his native country and reselling them in the United States.

John Wiley & Sons, a textbook publisher, sued him over copyright infringement and won $600,000 in damages from a New York jury. Kirtsaeng was ordered to turn over his golf clubs, computer and printer as partial payment.

But in Tuesday's decision, the Supreme Court found the Thai student's view of U.S. copyright law "more persuasive" than the publishing industry's, and it threw out the verdict against him.

In doing so, the justices adopted a version of EBay's motto: "If you bought it, you own it, and you have a right to sell it."

Judges had been divided over whether copyright protection extended to works that were lawfully made and sold abroad, but were imported for resale in the United States. One part of the law says the U.S. copyright holder has an "exclusive right to distribute copies" in the United States.

A second part of the law says the rights of the copyright holder are protected only for the "first sale" of a work. For example, a book publisher profits from the first sale of a novel, but the buyer is then free to sell it as a used book.

In Kirtsaeng vs. John Wiley, the high court decided the copyright holders get only the protection for a first sale and not a protection against copies being imported into the U.S. for resale.

"This decision is a landmark win for consumers, small businesses, online marketplaces, retailers and libraries," said a coalition called the Owners' Rights Initiative. Its members include EBay and Overstock.com as well as libraries, used-book stores and discount retailers.

But U.S. companies that sell books and software around the world said they were disappointed by the ruling.

"The truth is, the ruling for Kirtsaeng will send a tremor through the publishing industries, harming both U.S. publishers and students around the world," said Keith Kupferschmid, counsel for the Software & Information Industry Assn.

Indeed, the ruling has ramifications that extend beyond books to all types of copyrighted works — including music and movies — sold around the world, said Tom Allen, chief executive of the Assn. of American Publishers.

The motion picture and recording industries had told the court their international marketing strategy would be upset if they could not prevent unauthorized sales of video discs or CDs in the United States. They said filmmakers often introduce films at different times in other parts of the globe.

"Under Kirtsaeng's view, a studio could not release a movie on home video disc in one market while the movie was still in theaters in the United States … without incurring risk that unauthorized importation of those discs could detract from the success of the U.S. theatrical release," the Motion Picture Assn. of America argued in its friend-of-the court brief.

In response to the ruling, the MPAA said the decision "will hinder American business' ability to compete overseas to the detriment of the long-term economic interests of the United States, and particularly its creative industries."

Howard Gantman, its spokesman, stressed the ruling dealt only with resale of products made abroad, such as DVDs, not with theatrical releases or online distribution of movies.

Kirtsaeng, who returned to Thailand to teach after earning a doctorate in math, was unavailable to comment on the ruling. His New York attorney, Sam P. Israel, said he had not yet spoken with his client.

"I'm delighted the Supreme Court has found the logic in the statute that has eluded many others," he said. "There is nothing inherent in the copyright law that makes subsequent sales after a first sale illegal."

The case had been closely watched in the retail industry because many products, such as watches, have copyrighted logos or labels that could have prevented their resale in the United States without permission of the copyright holder.

Justice Stephen G. Breyer, speaking for the majority, said the justices were wary of extending copyright protection to all manner of products, including books and artworks, that were lawfully made and sold abroad.

In dissent, Justice Ruth Bader Ginsburg called the ruling a "bold departure" from "Congress' aim to protect copyright owners against the unauthorized importation of low-priced, foreign-made copies of their copyrighted works." Justices Antonin Scalia and Anthony M. Kennedy agreed with her.

Allen, head of the publishers group, said the Supreme Court's ruling would harm the ability of American publishers to compete in global markets.

"That ruling creates a disincentive for American educational publishers to continue to produce Asian editions or editions for foreign markets," Allen said. "If that disincentive takes hold, there'll be fewer American educational materials, which are the gold standard, available for students and educators around the world."

The entertainment industry has long relied on the more restrictive reading of the copyright law to prevent the sale of movies licensed for sale abroad from being purchased and imported to the U.S. for resale.

"Now those types of movies cannot be stopped," said Jonathan Kirsch, a publishing and intellectual property lawyer in Los Angeles.

It is unclear how the movie, music or video game industries will be affected by the high court's decision, as more entertainment content is sold digitally.

david.savage@latimes.com

dawn.chmielewski@latimes.com

Times staff writer Adolfo Flores in Los Angeles contributed to this report.

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