United States Supreme Court

(Photo credit: NCinDC)

The U.S. Supreme Court today settled a long-simmering debate over the Copyright Act by holding that publishers can't prevent the resale of books they produce overseas in U.S. markets.

The decision in Kirtsaeng v. John Wiley & Sons is a victory for Supap Kirtsaeng, a student who was fined $600,000 for importing Wiley textbooks from his native Thailand, where they were cheaper, and selling them in the U.S. It's also a victory for libraries and retailers like eBay, who argued the "first sale" doctrine -- giving owners of published books and recordings the right to sell them to whomever they want -- should apply to imported works as well as U.S. publications.

It's a blow to publishers like Wiley, who wanted to prevent cheaper foreign works from finding their way back into the U.S. market and undermining their pricing here. The U.S. government also tried, and failed, to convince the court to apply a narrower definition to the first-sale doctrine.

In a decision penned by Justice Stephen Breyer and joined by five other justices,  the court held that Congress overrode a section of the copyright laws giving publishers the right to prevent the importation of foreign works when it said the first-sale doctrine applies to all works "lawfully made under this title." That implies all works produced in compliance with copyright law, the court held, rejecting an interpretation by the Second Circuit Court of Appeals that it applied only to works produced under the U.S. copyright laws in America.

To give it that meaning, Breyer said, would lead to all sorts of odd conclusions. Publishers might have the right to import their own works, then prohibit the buyers of those works from selling them legally within the U.S., he said.

"Geographical interpretations create more linguistic problems than they resolve," he said.

The Owners Rights' Initiative, backed by retailers, the American Library Association and online merchants like Overstock.com, hailed the ruling as supporting the right of buyers to dispose of their property as they see fit. "This decision definitively affirms the first sale doctrine, cementing the right of consumers and organizations to sell, lend and give away goods that they bought and own, regardless of where those goods were made," the group said.

The Software & Information Industry Association wasn't so happy, saying the decision will undermine pricing strategies designed to make works affordable to students in poorer countries.

Publishers "will face direct harm, because our markets will be open to a flood of copyrighted material that was intended for purchase overseas," the group said. "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."

Neither was the Motion Picture Association of America, which argued in a brief supporting Wiley that a ruling against the publisher could undermine the film and recording industries.

"Studios’ ability to treat national markets separately for purposes of the timing, promotion, or content of theatrical and home video releases can be critical to a film’s commercial success," the MPAA said in its brief.

"If copyright owners want to gouge U.S. customers with higher prices, they will have to accept the reality that the marketplace will respond -- as it always does -- by buying the goods where they are cheaper and selling them where they are more expensive,” said Joshua Rosenkranz of Orrick, who represented Kirtsaeng.

Justice Ruth Bader Ginsberg dissented, along with Justices Anthony Kennedy and Antonin Scalia. She said it was the intention of Congress to provide copyright owners with a "potent remedy" against the unauthorized importation of their goods into the U.S.