Tuesday, March 19, 2013

Kirtsaeng beats Wiley: the “first sale” doctrine applies to copies of a copyrighted work lawfully made abroad

The Supreme Court decision begins:

Section 106 of the Copyright Act grants “the owner ofcopyright under this title” certain “exclusive rights,”including the right “to distribute copies . . . of the copyrighted work to the public by sale or other transfer of ownership.” 17 U. S. C. §106(3). These rights are qualified, however, by the application of various limitations setforth in the next several sections of the Act, §§107 through
122. Those sections, typically entitled “Limitations onexclusive rights,” include, for example, the principle of “fair use” (§107), permission for limited library archivalreproduction, (§108), and the doctrine at issue here, the “first sale” doctrine (§109).

Section 109(a) sets forth the “first sale” doctrine asfollows:
“Notwithstanding the provisions of section 106(3) [the section that grants the owner exclusive distributionrights], the owner of a particular copy or phonorecord lawfully made under this title . . . is entitled, without the authority of the copyright owner, to sell or otherwise dispose of the possession of that copy or phonorecord.”

Thus, even though §106(3) forbids distribution of a copy of, say, the copyrighted novel Herzog without the copyright owner’s permission, §109(a) adds that, once a copy of Herzog has been lawfully sold (or its ownership otherwise lawfully transferred), the buyer of that copy and subsequent owners are free to dispose of it as they wish. In copyright jargon, the “first sale” has “exhausted” the copyright owner’s §106(3) exclusive distribution right.

A key point in the case was that the copies at issue were legally made abroad:

The copies at issue here were manufactured abroad.That fact is important because §109(a) says that the “first sale” doctrine applies to “a particular copy or phonorecord lawfully made under this title.” And we must decide here whether the five words, “lawfully made under this title,”make a critical legal difference.

Also within the decision

Associations of libraries, used-book dealers, technology companies, consumer-goods retailers, and museums point to various ways in which a geographical interpretation would fail to further basic constitutional copyright objectives, in particular “promot[ing] the Progress of Science and useful Arts.” U. S. Const., Art. I, §8, cl. 8.The American Library Association tells us that library collections contain at least 200 million books published abroad (presumably, many were first published in one of the nearly 180 copyright-treaty nations and enjoy American copyright protection under 17 U. S. C. §104, see supra, at 10); that many others were first published in the UnitedStates but printed abroad because of lower costs; and that a geographical interpretation will likely require the li- braries to obtain permission (or at least create significantuncertainty) before circulating or otherwise distributingthese books. Brief for American Library Association et al. as Amici Curiae 4, 15–20. Cf. id., at 16–20, 28 (discussinglimitations of potential defenses, including the fair use and archival exceptions, §§107–108). See also Library andBook Trade Almanac 511 (D. Bogart ed., 55th ed. 2010) (during 2000–2009 “a significant amount of book printing moved to foreign nations”).

How, the American Library Association asks, are the libraries to obtain permission to distribute these millions of books? How can they find, say, the copyright owner of a foreign book, perhaps written decades ago?

The concept of "dictum" arises:

We cannot, however, give the Quality King statement the legal weight for which Wiley argues. The language“lawfully made under this title” was not at issue in Quality King; the point before us now was not then fully argued; we did not canvas the considerations we have here set forth; we there said nothing to suggest that the example assumes a “first sale”; and we there hedged our state- ment with the word “presumably.” Most importantly, the statement is pure dictum. It is dictum contained in a rebuttal to a counterargument. And it is unnecessary dictum even in that respect. Is the Court having once written dicta calling a tomato a vegetable bound to deny that it is a fruit forever after?

To the contrary, we have written that we are not necessarily bound by dicta should more complete argument demonstrate that the dicta is not correct. Central Va. Community College v. Katz, 546 U. S. 356, 363 (2006) (“[W]e are not bound to follow our dicta in a prior case in which the point now at issue was not fully debated”); Humphrey’s Executor v. United States, 295 U. S. 602, 627–628 (1935) (rejecting, under stare decisis, dicta, “which may be followed if sufficiently persuasive but which are not controlling”). And, given the bit part that our Quality King statement played in our Quality King decision, we believe the view of stare decisis set forth in these opinionsapplies to the matter now before us.

And the result

For these reasons we conclude that the considerations supporting Kirtsaeng’s nongeographical interpretation ofthe words “lawfully made under this title” are the morepersuasive. The judgment of the Court of Appeals isreversed, and the case is remanded for further proceedings consistent with this opinion.

Justice Thomas and Justice Scalia were on opposite sides of the vote.


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