You Don’t Own Your Books (This is Already Happening)
There’s a case before the Supreme Court right now that many in and around the publishing industry are watching (and I should have covered sooner). Some in the publishing industry are watching in the hopes that the USSC gives them what they have lusted after for decades, and a lot of us are watching out of fear that the wrong decision will cost us our right to resell the stuff we bought.
The case is Wiley v Kirtsaeng, and I am covering it today because some of the worst-case scenarios are already playing out. (More on this at the end of the post.)
Supap Kirtsaeng as a foreign exchange student in the US, and he had built a small business out of having his family and friend buy textbooks in his native Thailand. The textbooks were then shipped to Kirtsaeng and he sold them on Ebay.
Like many textbook publishers, Wiley sells the same textbook for less in poor countries like Thailand than in the US. That created an opportunity for an entrepreneurial individual to build a business based on the simple idea of buying in a market where the price is low and selling in a market where the price is high. (This is called arbitrage.)
Wiley naturally saw this in a less than favorable light and sued Kirtsaeng for copyright infringement in 2008. After a couple rounds of argument, ruling, and appeal, this case ended up in the US Court of Appeals for the Second Circuit where a 3 judge panel decided that Kirtsaeng did not have any right to sell the textbooks (ruling).
As the judges saw it the first sale doctrine (the legal principle which allows you to resell physical content you have legally bought) did not apply to the textbooks from Thailand. Their interpretation was that this doctrine only applied to items manufactured in the US.
This interpretation is not entirely out of the question; there’s actually a legal basis for it. But when you consider the broad-ranging effect of the Second Court ruling, that’s when things get crazy.
It’s not just that you cannot sell your (made in China) DVDs, or the fact that you cannot sell anything that came with a user manual and was made in another country. No, it’s when you realize that this decision includes software that understand realize just how insane it is. Software is copyrighted, so if the device it is running on was made outside the US you cannot sell it.
That means you cannot sell you mp3 player. You cannot sell your Kindle. You cannot sell your computer. You can’t even sell a car, not unless you want to first get permission of the manufacturer.
But wait – there’s more. Thanks to this decision it is now illegal to sell most homes.
I’m Not Kidding.
I just walked through my mother’s house, and she cannot sell it without first getting permission from Honeywell (digital thermostat), Whirlpool (dishwasher, washing machine), Trane (furnace), GE (microwave, dryer), or Maytag (stove).
That, folks, is the situation which the USSC is considering at the moment. If they uphold Wiley v Kirtsaeng then things will get very strange in the used stuff market. But that’s not why I am posting today.
There are many people (ranging from consumer advocates to basically anyone who can count above 10 without taking their shoes off) who believe that some publishers will immediately turn this decision to their advantage. They will use it to kill of the used book market and to
extort extract more money from libraries. The more nefarious ones will contract out their printing operations to offshore presses. The publishers will then import the books secure in the knowledge that the books cannot be resold or lent without the permission of the publisher.
Textbook publishers hate the used textbook market and there are publishers of all stripes that don’t like libraries and the way they enable multiple serial users (checking content out to many patrons, one at a time). This ruling can and will be used to harm both students who depend on the used textbook market and library patrons.
And guess what? We are already seeing the kind of crap that publishers will pull if they can get away with it.
I was reading the Scholarly Communications @ Duke blog this morning. It’s a copyright law blog, and today’s post related to two examples of publishers trying to control what libraries do with legally acquired content (in this case, a DVD and a textbook).
These 2 publishers clearly want to control what happens to the material they sell after it is sold. They have few legal ways to do that now, but if Wiley v Kirtsaeng is upheld that will change.
These 2 publishers stand as examples of how this ruling can be used to harm me, you, and pretty much everyone except pirates. Anyone who says that this won’t happen is either a fool or a liar.
I do not make the claim that all publishers will pull some kind of dirty trick, but I can predict with absolute certainty that some will. And when you add that prediction to the many problems this ruling will cause for virtually everything sold in the US, it becomes clear that the case needs to be decided in favor of common sense.
As it stands, Kirtsaeng v Wiley fails to take into account the reality of the world we live in. Far too much of what is sold in the US is not made in the US. It makes little sense to exclude all this material from a core legal concept like the first sale doctrine.
image by dbking
Richard Adin January 26, 2013 um 6:38 am
Nate, I think you are misinterpreting the decision. If your computer was manufactured in China but legally imported into the U.S. by Best Buy and sold to you by Best Buy, then the first sale doctrine applies and you can sell the item. If, however, you bought the computer from a retailer in China while visiting China, you would not be able to resell under the first sale doctrine because you did not legally import the computer for resale. As the court’s decision noted:
"The Supreme Court recently seemed poised to transform this dicta into holding when it granted a writ of certiorari to review the Ninth Circuit’s decision in Omega S.A. v. Costco Wholesale Corp.23 That case involved the importation into the United States of Omega-brand watches by unidentified third parties without the permission of Omega; the watches were ultimately purchased and resold by Costco Wholesale Corporation. The Ninth Circuit maintained its well-settled position that § 109(a) does not apply to items manufactured outside of the United States unless they were previously imported and sold in the United States with the copyright holder’s permission. After hearing oral argument, an equally divided Supreme Court (with Justice Kagan recused) was obliged to affirm the judgment rendered by the Ninth Circuit."
In the case at hand, Kirtsaeng had no authority to import the textbooks from Thailand and resell them. That is the crux of the matter. I fully expect the Supreme Court to reaffirm the position of the 9th Circuit. As was noted in oral argument of the case, should the Court take the more expansive view that you think is imminent, we would not be able to trade-in older models of cars for newer models. As bad as this Supreme Court is, it is not likely to wholly disrupt the economic marketplace with a broad ruling.
fjtorres January 26, 2013 um 7:22 am
So, in the limited view; "First sale" doctine becomes "First in-country sale" doctrine.
Still impacts a lot of specialty product importers like DYNAMISM.
A loss either way.
Nate Hoffelder January 26, 2013 um 7:46 am
I’m going to go by what the legal experts say:
You know and I know that some publishers want the Second Circuit interpretation to become law. But even if the 9th Circuit ruling is chosen, we’re still in an awkward position of having to confirm that a given item was legitimately imported. I’m not sure how that is all that much better.
Doug January 28, 2013 um 3:36 pm
Right. The 9th Circuit said that if originally legally sold in the US, foreign-made products were subject to the First Sale doctrine. The 2nd Circuit, in Kirtsaeng, said that they couldn’t find any statutory basis for the 9th Circuit’s decisions, and that the law said that foreign-made products weren’t subject to the First sale doctrine, period.
The "split in the circuits" is probably the reason that the Supreme Court chose to take up this case.
Lynne Connolly January 26, 2013 um 8:50 am
So there are going to be a lot of florists very happy?
"Buy a rose, get a free washing machine."
Dan Meadows January 28, 2013 um 11:05 am
I agree with you that this will get very ugly if the 2nd Court’s blanket ruling that first sale doesn’t apply to foreign-made goods is allowed to stand. I’m not even as optimistic as you are that businesses won’t, en mass, jump on this for full advantage. I believe far, far more will than won’t. I also have a suspicion that the "legislative fix" we’ll end up with is more likely to be gutting first sale for U.S. made goods so we can "stay competitive in a global economy."
There’s one other concern I have as well that I haven’t really seen mentioned anywhere. I’m not a lawyer by any means, but if the first sale portion of U.S. copyright law doesn’t apply to foreign goods, then why would any other part of it apply either? I’m thinking principally of fair use, which is what many of the supporters of Wiley site when dismissing concerns like you and I seem to have. "People will still have fair use defenses," they say, but fair use specifically sites commercial use as a standard for whether its even applicable in many cases, which does nothing to defend resale rights. And, logically, it makes no sense that portions of the law would apply but others not. I’d guess there are some media entities who’s first order of business if the 2nd Court is upheld, will be to use that as precedent to attack fair use for those same goods.
This decision scares the hell out of me because there’s a very real potential that the concept of ownership humans have lived under forever is very seriously at risk. And all to defend a publisher using an outdated and technologically unworkable practice like territoriality! No, copyright isn’t broken at all.
DocC January 30, 2013 um 4:02 pm
I don’t know why we should feel optimistic about what publishers will do in the future if they have already locked up the e-book market to the disadvantage of public libraries.
Friday Reads: “Luddite Love” by Claire L. Evans and “On Digital Dualism” by Erin Stark | Critical Margins February 1, 2013 um 7:00 am
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