Supreme Court Rules in Favor of Student Seller, Against Textbook Publishers

In a decision of great consequence to our industry (as well as to all things copyright), the U.S. Supreme Court yesterday ruled 6-3 in favor of allowing resellers who buy copyrighted products abroad to resell them in domestically without permission from copyright owners.

The Guru has been following this case since the start (International Textbook Editions: It’s all legal until it isn’t). Nearly a year ago, I brought you the story of Supap Kirtsaeng, a Californian whose family in Thailand sent him textbooks to resell, which he reportedly did on eBay in earnings of $37,000, and the publisher’s reaction (John Wiley & Sons sued Kirtsaeng for copyright infringement and won to the tune of $75,000 in damages for each book), and how Kirtsaeng then appealed arguing that he is protected by the first-sale doctrine.

Never has there been any doubt in my mind that this case would be a game changer, regardless of how it was decided, and honestly, given the Court’s current makeup of Justices from business backgrounds who strongly favor free enterprise, I’m not surprised by the way it shook down. But it’s interesting and complicated and the repercussions will be massive.

First, a bit about the ruling:

  • The majority opinion (written by Justice Breyer on behalf of himself, Justices Alito, Kagan, Sotomayor, Thomas, and Chief Justice Roberts) took the stance that once goods are sold lawfully (domestically or abroad), publishers and manufacturers lose the protection of U.S. copyright law and that “reliance upon the ‘first sale’ doctrine is deeply embedded in the practices of those, such as booksellers, libraries, museums, and retailers, who have long relied upon its protection.” Breyer stated that a ruling otherwise “would prevent the resale of, say, a car, without the permission of the holder of each piece of copyrighted automobile software.”
  • In a separate opinion, Justice Kagan (joined by Justice Alito), wrote that Congress is free to change the law if it thinks holders of copyrights need more protection.
  • In dissent, Justice Ginsburg (on behalf of herself and Justices Kennedy and Scalia) said the court was ignoring Congress’s aim of protecting “copyright owners against the unauthorized importation of low-priced, foreign-made copies of their copyrighted works.”

A bit about the reaction:

  • In favor (interestingly this includes support by both for-profit companies and non-profit organizations):
  • eBay warned that a ruling in favor of the publisher would have been a blow to “trade, consumers, secondary markets, e-commerce, small businesses and jobs.”
  • Goodwill Industries said such an outcome would have had “a catastrophic effect on the viability of the secondary market and, consequently, on Goodwill’s ability to provide needed community-based services.”

Against:

  • The Software & Information Industry Association claims that as a result of the ruling, “American publishers will face direct harm, because our markets will be open to a flood of copyrighted material that was intended for purchase overseas. By exploiting pricing models that are meant for students in undeveloped nations, importers both deny those students a full education, and threaten American publishers’ ability to do business abroad.”
  • Keith Kupferschmid, general counsel for the Software & Information Industry Association said, “The ruling for Kirtsaeng will send a tremor through the publishing industries, harming both U.S. businesses and consumers around the world. Today’s decision will create a strong disincentive for publishers to market different versions and sell copies at different prices in different regions. The practical result may very well be that consumers and students abroad will see dramatic price increases or entirely lose their access to valuable U.S. resources created specifically for them.”

The Guru Weighs In
My guess is that this morning saw publishers anxiously getting into boardrooms to discuss how this ruling may result in a flood of foreign-printed-and-supplied cheap textbooks (technically new but marketed as used) could enter the market and thus undercut the price of new books. In the past, the only books one could purchase overseas were international editions, which were not for resale in the United States; now, many are publishing the U.S. edition overseas and importing it. Sellers that can get their hands on these foreign-made U.S. editions are bringing them back to the U.S. and selling them as used books. This practice is sure to grow with the ruling.

Here are a few of the stories on this ruling.
http://www.npr.org/blogs/thetwo-way/2013/03/19/174757355/supreme-court-oks-discounted-resale-of-gray-market-goods
http://www.latimes.com/news/nation/nationnow/la-na-nn-supreme-court-copyright-law-20130319,0,5654337.story
http://www.nbcnews.com/business/supreme-court-backs-student-dispute-over-used-textbook-sales-1C8932489
http://www.washingtonpost.com/politics/courts_law/supreme-court-says-copyright-law-does-not-protect-publishers-in-discount-re-sales/2013/03/19/68b8afd4-909f-11e2-9173-7f87cda73b49_story.html

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