Transfer Pricing Associates

First Sale Doctrine Now Applies Worldwide

post Friday March 22, 2013

copyright india


The US Supreme Court ruled in Kirtsaeng v John Wiley & Sons a huge setback for copyright owners. The decision inhibits copyright owner’s ability to manage copies of their works and creates a huge strategy issue for the global marketing of entertainment media.

Courts have long recognized that copyright owners’ rights are limited by the established first sale doctrine (Section 109 of the Copyright Act): “the owner of a particular copy [of a work] … lawfully made under this title . . . is entitled, without the authority of the copyright owner, to sell or otherwise dispose of … that copy.” Companies have long expected that the rules of the doctrine apply only to items sold in the US - not any item globally - and this has become a quintessential aspect of the marketing strategies for US movie, TV, book and software companies. The current version of copyright law was used to geographically segment markets - copies sold in the US were priced significantly higher than in placed like India and China. Previously, if there was an attempted sale of a low-priced foreign-made copy in the US, the copyright owner could sue for copyright infringement but the defendant had no claim of first sale doctrine as the copy was “made” outside the US.

In this case, John Wiley published English language textbooks in Thailand and Supap Kirtsaeng acquired these books and sold them at a profit to help fund his US university education. Wiley sued Kirtsaeng for copyright infringement but the courts ruled that the first sale doctrine is not limited by geography. As Justice Stephen Breyer stated, Section 109’s first sale doctrine was not specifically limited by geography. As long as the version was made with full consent of the US copyright owner, the first sale doctrine applies.

While this is a blow to US media companies, it is a victory for resellers and consumers. Had the verdict gone the other direction, companies could leverage the “made elsewhere” policy and wipe out the market for used books, music, electronics and cars.

“The Kirtsaeng ruling is at odds with the position taken by the US government in the negotiations for the Trans-Pacific Partnership Agreement (TPP). A leaked text indicates that the US wants the TPP to grant copyright owners the ability to stop imports of works made outside the country.” Now that the Supreme Court has decided Kirtsaeng, “the question remains of whether the [US] will continue to push for provisions that are contrary to current U.S. law,” Krista Cox, staff attorney at Knowledge Ecology International, has noted in ablog post.

Discussion: Will this affect your company’s strategic sales? How will this change the consumer pricing model in the US and globally? Will this change the sales strategy for soft media to prevent resellers taking advantage of low prices internationally?

Source: Intellectual Property Watch

Image source: Free Digital Photos

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