Bring Us Your Tired, Your Poor, Your Textbooks?: First Sale Goes Global

“If you really like it you can have the rights,
It could make a million for you overnight.”  Paperback Writer, Lennon and McCartney

So you’ve come to the U.S. from Thailand to pursue a degree at an elite American college.  Things are looking up, until you’re hit with that first tuition bill and the accompanying rapid onset of sticker shock.  Financial aid and student loans are options, but you’re not enthralled by the prospect of leaving school a quarter million dollars in debt.  So what do you do?  If you’re Supap Kirtsaeng, a math student at Cornell and a Thai national, you think fast and do some simple arithmetic.  The textbooks for courses at Cornell and other schools can be bought for a fraction of the cost back home.  And the cost of shipping them to the United States barely eats into the prospective profits.   So, as Mr. Kirtsaeng did, it becomes a simple exercise to have relatives back home buy up textbooks for resale here. Kirstaeng reportedly netted over $100,000 through this international used-book program–enough to pay for two Ivy League semesters.

While Mr. Kirtsaeng was sailing through school, a major U.S. book publisher was stewing–and suing. John Wiley & Sons charged Kirtsaeng with infringing its copyrights. Wiley claimed that the law allowed it to “divide and conquer” the world markets, setting different prices for different markets–with the U.S. editions commanding this highest price tags. Wiley recognized that a provision of Copyright law called “the first sale doctrine” allows anyone who buys a copyrighted work, such as a book or cd, to resell it without permission from the copyright owner. But according to Wiley, the protections of the first sale doctrine ended at the U.S border.

The trial court and appeals court agreed with Wiley. Undeterred and showing the pluck that led him to conceive his bookselling strategy, Kirstaeng appealed to the Supreme Court, urging the nine justices to conclude that the law means what it says–that the first sale of a copy lawfully made under the U.S. Copyright law exhausts the copyright, regardless of where that sale takes place.

In a 6-3 ruling, the High Court sided with Kirstaeng, holding that because the books were Real McCoys “lawfully made” by the copyright owner, they were subject to the first sale doctrine.

Reaction to the Court’s ruling divided along predictable lines. Consumer groups praised it as ushering in new freedom for American consumers to shop worldwide for copyrighted materials. As one spokesperson told the New York Times “Americans [will] no longer be the chumps who pay the highest prices in the world . . .”

Others were chagrined, predicting drastic changes in the way content, such as books and software, will be distributed. As the Business Software Alliance wrote in its brief “Software authors will have little incentive to price their programs for foreign markets if they can simply be resold in the United States and thereby undercut the price of the domestic version.”

The Times even pondered whether “the decision might even hasten the near-demise of print–spurring publishers into a digital works where they can license their books rather than sell them . . .”

Two years ago, the Supreme Court could not decide whether the first sale doctrine allowed the importaion for resale of copyright-protected watches intended for foreign markets. Now, with its decision in the Kirstaeng case, the scope and international reach of the first sale doctrine no longer is in doubt. Proving once again that even with global forces aligned against you, sometimes all it takes is the old college try.

QUOTE OF THE DAY: “The love of one’s country is a splendid thing. But why should love stop at the border?” –Pablo Casals