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Big Media Smackdown

by Paul Rapp on March 20, 2013

 

I’m happy to report that the U.S. Supreme Court got something right. Some months ago, we talked here about a case before the court involving a Thai student who bought inexpensive English textbooks in Thailand and sold them in the United States for sizable profits. The publisher of the textbooks, Wiley, sued, saying that this was somehow illegal. At the center of this is a fundamental principle of copyright law (and of personal property law in general) called the “first sale doctrine,” which stands for the rather unremarkable idea that once you buy something, it’s yours and you can do whatever you want with it, including giving or selling it to somebody else. Wiley claimed that this principle didn’t apply for some reason to copies of copyrighted products purchased outside of the United States.

Sound insane? Of course it does, but that didn’t stop a jury from finding the Thai student guilty of infringement and awarding Wiley damages of $75,000 for each title he brought into this country. And it didn’t stop the Second Circuit Court of Appeals, the most influential federal appeals court in the land, from upholding the verdict. And it didn’t stop the Ninth Circuit Court of Appeals, the second most influential appeals court in the land, from making a similar finding in a similar case.

And the Supreme Court restored some sanity this week, with a 6-3 vote reversing the lower courts and announcing that the first-sale doctrine applies to goods that are purchased outside of the country. Now, we’re all quite used to (and sick of) years of decisions by what appears to be a totally dysfunctional and partisan court, votes that are always split “along party lines,” right? Well, lookie. As I’ve often said, IP decisions never seem to go that way, and this case was no exception: Justice Brewer wrote the majority decision, joined by Alito, Kagan, Roberts, Sotomayor and Thomas; Justice Ginsberg wrote the dissent, joined by Kennedy and Scalia. WTF is right! One can only scratch one’s head.

The 72-page decision starts out with an exhaustive (and exhausting) but not terribly convincing statutory analysis and discussion of the legislative history supporting its decision. Then it starts flinging some basic and practical reality: Libraries are full of books printed elsewhere; most new books sold in the United States are printed offshore, and many books don’t even say where they’re printed; “automobiles, micro­ waves, calculators, mobile phones, tablets, and personal computers” contain copyrightable software programs or “packaging” that originate in foreign countries; retailers of all types import mountains of copyrightable stuff overseas that’s already been sold once; and how about museums wanting to display works created overseas that still have copyright protection?

All these things would present huge issues and uncertainties if the first-sale doctrine applied only to things purchased in the United States. The best that Wiley and the various amicus parties supporting it (including, shamefully, the Obama administration) could argue was that the law had never been applied that way, and that these were merely theoretical problems. You know, the old “trust us, we’d never ever do that” routine.

The majority, wonderfully, wasn’t buying this load of tripe, and wasn’t eager to open a Pandora’s box if it endorsed a copyright holder’s right to extraordinary control over copies of works manufactured and sold in foreign countries.

Finally, and significantly, the majority smacked down Wiley’s, Obama’s, and the dissenters’ sniveling argument that the ruling would disrupt publishers’ long-standing business model of dividing up foreign markets and charging different prices in different countries as a way to maximize profits. You know how we rant here from time to time that corporate America has hijacked copyright law? How, instead of promoting social good (as dictated in the Constitution), Big Media has mutated copyright law into a vehicle to prop up its outdated business models? Well here it is in a legal argument before the Supreme Court: Big Publishing wants copyright law to protect the way it’s always done business, because to change would hurt profits and shareholder value!

In a delightful passage that totally gooses us copyright geeks and portends more good things to come the Court ruled:

“Wiley and the dissent claim that [today’s ruling] will make it difficult, perhaps impossible, for publishers (and other copyright holders) to divide foreign and domestic markets. We concede that is so. A publisher may find it more difficult to charge different prices for the same book in different geographic markets. But we do not see how these facts help Wiley, for we can find no basic principle of copyright law that suggests that publishers are especially entitled to such rights. . . . the Constitution’s language nowhere suggests that [copyright’s] limited exclusive right should include a right to divide markets or a concomitant right to charge different purchasers different prices for the same book, say to increase or to maximize gain. Neither, to our knowledge, did any Founder make any such suggestion.”

Damn.

Expect a Big Media mad rush to Congress to “fix” this ruling. Here’s hoping the Obama administration has learned a lesson here and starts to watch out for us, not them, for a change.

Paul Rapp is an intellectual property attorney from the Berkshires who, unlike you, wouldn’t mind if winter lasted forever.