51 thoughts on “Colbert on the First Sale Doctrine

  1. Alun–

    I was responding to the opinion expressed by Ned in his comment on Nov 28 at 4:35 pm.

    The essential issue in this case was under what circumstances 109 forecloses application of 602. Since the court decided that 109 does not apply in the case of foreign-manufactured copies, the foreign transfer agreement seems to have absolutely no relevance to this case, as you suggest.

    The inclusion by the court, early in the opinion, of Wiley’s printed geographic restrictions, is therefore confusing. IMHO their mention in the opinion is entirely superfluous–were it otherwise, the absence of any such restrictions could be construed as a contracting-away-by-implication by Wiley of its 602 rights. I think the court’s inclusion of the printed geographic restrictions should be ignored.

  2. …and it was absolutely delightful when he appeared before Congress this year and did not deviate from his schtick – zero deference given to the lawmakers.

  3. Although only the US has an anti-circumvention law (the DMCA) and nowhere else is likely to enact one anytime soon.

    Is that right? What about the EU Copyright Directive and the EU Enforcement Directive? Haven’t those been implemented in EU states?

  4. Although only the US has an anti-circumvention law (the DMCA) and nowhere else is likely to enact one anytime soon. So the smart move is to move digital recordings from the US to Europe, even though the price differential is smaller.

  5. Ned–

    The intended purpose of the initial sale is irrelevant here, as it was in Bobbs.

    Bobbs was actually a contract issue. The court found that there was no express provision in the contract for controlling downstream sales. The court then considered whether there were any such provisions implied in the contract from the coypright statute, which they also decided in the negative:

    “The precise question, therefore, in this case is, does the sole right to vend (named in ยง 4952) secure to the owner of the copyright the right, after a sale of the book to a purchaser, to restrict future sales of the book at retail, to the right to sell it at a certain price per copy, because of a notice in the book that a sale at a different price will be treated as an infringement, which notice has been brought home to one undertaking to sell for less than the named sum? We do not think the statute can be given such a construction, and it is to be remembered that this is purely a question of statutory construction. There is no claim in this case of contract limitation, nor license agreement controlling the subsequent sales of the book.

    In our view the copyright statutes, while protecting the owner of the copyright in his right to multiply and sell his production, do not create the right to impose, by notice, such as is disclosed in this case, a limitation at which the book shall be sold at retail by future purchasers, with whom there is no privity of contract.”

    In Bobbs, the intent of the contracting parties at the time of execution of the contract, with respect to the future disposition of the books, did not imply any contractual provision regarding downstream sales–thus, the nature of the contracting parties as regards future disposition of the books (e.g. a “distributor” whose ordinary business it is to re-sell the books) was not relevant to the agreement between the parties.

    I can see no reason why it would be considered relevant to construction of the purchase/sale agreement in this case.

  6. He did the best with what he had to work with. That’s why he was so destroyed. The questions put to him that he could not answer have not been answered in any decent fashion by any commentator anywhere.

    Also, listen again at how the governments rep was guided to a fundamental question, and with his admission supporting the opposing side was curtly dismissed.

  7. Ned, have you listened to the oral arguments at the SC yet?

    The position you are putting forth was absolutely destroyed there.

  8. Leo, I agree.  I brought the issue up because I think the SC might have to distinguish BM.  BM involved a sale to a wholesaler.  The books here were sold to an end user.

    Thus if the sale was for private use, mass purchases for commercial resale should not excused by the exhaustion doctrine.

    However, if the sale is to a distributor without restriction where an item might be resold, there is exhaustion.

    There is a lot in BM about implied licenses and scope of rights granted by implication.  I think this is the key.

  9. If the sale abroad is clearly for private use, the subsequent non commercial resale may be beyond the scope of exhaustion.

    How do you get this from Bobbs-Merrill? Doesn’t it say something much closer to the opposite, i.e., that the original seller can’t hold back exclusive “commercial” vending rights?

  10. Yeah, he was smuggling:

    “To help subsidize the cost of his education, Kirtsaeng allegedly participated in the following scheme: Between 2007 and September 8, 2008, Kirtsaeng’s friends and family shipped him foreign edition textbooks printed abroad by Wiley Asia. In turn, Kirtsaeng sold these textbooks on commercial websites such as eBay.com. Using the revenues generated from the sales, Kirtsaeng would reimburse his family and friends for the costs that they incurred during the process of acquiring and shipping the books and then keep any remaining profits for himself. Kirtsaeng claims that, before selling the textbooks, he sought advice from friends in Thailand and consulted “Google Answers,” a website which allows web users to seek research help from other web users, to ensure that he could legally resell the foreign editions in the United States.” link to scholar.google.com

  11. The only problem with this is that the SC may have to distinguish, in some fashion, Bobbs-Merrill.

    link to scholar.google.com

    If the sale abroad is clearly for private use, the subsequent non commercial resale may be beyond the scope of exhaustion.

    The common law, the source of the exhaustion doctrine, was a personal right of the owner. This right should be limited, in my view, to its purpose so that buying and reselling for commercial purposes is not covered if the original sale was only for private use.

  12. Lets explain this so even the Scarecrow will understand it.
    If a book is copyrighted and you buy that book. You can not copy it. But you own the book and you can sell it because you own it.
    If you record something at the Copyright Office, the trick word is RECORDED. So if you get a record of what you want out of the Copyright Office you can NOT make a copy of it. You could sell that one Copy just like you could sell a book. I think what the Copyright Office needs to do is put that on the recording you get from them just like you see in front of the DVD’s and VHS’s you buy for all you dummies that Colbert is speaking to. He is making fun of the Case. what a waste of the USSC’s time.

  13. How does a third party buy prescription drugs “en masse” outside the medical service-presecription supply chain without some other kind of medical fraud/illegality/breach of contract?

  14. In the UK it is not an infringment of copyright to import in to the UK copies of a book bought abroad and put into circulation with the consent of the copyright holder.

  15. Scotus often likes to find international rules to impose on us. So, Max, what are the rules in UK/Europe? If the publisher were English and the books brought to Cambridge from Thailand, would they infringe the English copyright?

  16. The importation itself is an act of infringement, is it not? And some people out there still want automatic injunctions.

    You haven’t even bothered becoming familiar with this case have you? If you had, you would not have made your post (unless of course you are merely throwing around non-sequiturs) – this case has ZERO do to with automatic injunctions, and absolutely NO ONE has made an argument even remotely linked to that topic).

  17. It’s my understanding that the copyright law is in place to prevent copying, not to prevent resale of a copyrighted work. There’s the distinction between e-books and printed materials. This guy didn’t copy the textbooks, he bought them and resold them.

    Mickey Mouse has acted to pervert the copyright law in this country, and paid a lot to do it. Herein the result.

  18. I think the ultimate answer has to with “personal use.” If the buyer uses the goods personally, and moves them around from jurisdiction to jurisdiction, there is no problem when he ultimately sells them.

    The importation itself is an act of infringement, is it not? And some people out there still want automatic injunctions.

  19. A person with no sense of irony explaining the concept of satire to a man with no sense of humor. Now that is comedy.

  20. If territoriality is to be so strictly construed, would Wiley be happy if their Thai copyright didn’t automatically flow from their U.S. copyright? For example, if they had to explicitly apply for copyright registration before publication in every country, from Albania to Zimbabwe, before they had any rights there? We (the U.S. and other countries) clearly accept a fairly global treatment of rights under copyright law. It’s territorial in name only.

    Whatever statutory construction says otherwise is blind to the real-life consequences of the decision. Which is exactly Colbert’s point.

  21. When Colbert “agrees” with a point (here with Wiley), he is actually making fun of that point.

    It’s his style of humor.

  22. If prescription drugs could be (re)imported into the USA en masse, how would that affect R&D for new drugs? Did PhRMA weigh in with an amicus brief on the possible effects of this decision on the pharmaceutical industry, should SCOTUS effectively overrule Jazz so that patent exhaustion also applies to overseas sales? (Note that there’s an easy distinction to be made here: Wiley chose to sell at a lower price in the far east than in the USA; Pfizer is forced to sell at a lower price in the EU and Canada.)

  23. “Colbert is once again on the mark.”

    Not quite so simple given the provisions set forth in 17 USC 109 (First Sale Exception to 17 USC 106) and 17 USC 602 (Importation).

    Colbert is parroting the list of “horribles” asserted by those who disagree with the decision by the 2nd Circuit, virtually all of which “horribles” are plainly silly. It is understandable why the opposite argument is not mentioned. After all, it does not admit to a comedy routine.

  24. If you have a point, make it.

    Far as I can tell from Colbert, what they sold for simply has no point. The fact that they were sold (and thus bough) fully legally, now, that, has a point.

  25. “But there is a difference when he buys them specifically for resale.”

    Indeed, he just created at least one american job. But you lawltards just can’t stand that.

  26. But there is a difference when he buys them specifically for resale.

    Relisten to the oral arguments at the SC. No legal basis for this position was given to the Court.

    Sale is sale. Downstream market is downstream market.

    I get that you want post sale control. Do you get that this flies in the face of the exhaustion doctrine?

    It’s kind of the whole point here.

  27. I think the individual was buying for both personal use and for making a buck on resale.

    $1.2 million profit from textbooks? Probably not all for personal use (Colbert’s awesome snark re textbook prices notwithstanding).

  28. IANAE, I think the ultimate answer has to with “personal use.” If the buyer uses the goods personally, and moves them around from jurisdiction to jurisdiction, there is no problem when he ultimately sells them.

    But there is a difference when he buys them specifically for resale.

    I am not sure of the facts in this case, but I think the individual was buying for both personal use and for making a buck on resale.

  29. the marginal cost for selling a copy of a copyrighted work is close to zero, depending on media (in fact, the marginal cost of selling it is probably higher than the marginal cost of giving it away, for digital downloads).

    Very astute observation. And now we* can easily understand the escalating desire to obtain patents that effectively cover the information itself and how (= to whom, by whom and when) that information is distributed.

    *those with minds willing to understand

  30. The artificial arbitrage created by copyright regulation may benefit the publisher, but losing out on the arbitrage is not necessarily harmful to them,

    It’s a question of whether we see the price differential between markets as an entitlement based on copyright in the higher-priced market (i.e., they should be able to charge whatever the local market would bear), or whether we see it as a fleeting market inefficiency that is only profitable until someone arbs it out of existence.

    I can’t help thinking that IP rights don’t guarantee a particular price point or gross margin. You can enforce your IP locally, but it’s still up to the market to set your price. If you’re competing with yourself right across the border, and as a result your selling price is lower, why does society owe you a remedy?

  31. In theory: yes.

    That’s the approach used to avoid first sale doctrine issues with “e-books” and other digital media. Generally you can (legally) resell your DVD, CD, video game, and book in tangible form but once it’s digital the licensing scheme is used to prevent resale or transfer.

    However the issue of tangibility is a fiction. The real reason that the licensing scheme is used for the intangibles rests in the protection afforded by anti-circumvention laws which effectively turn a contract issue into a criminal issue.

    If you were to create a tangible book (or just about anything else) that provided a technical means of restricting the transfer of that item then you would: (1) likely be able to call that sale a “license” and (2) rely on the state to prosecute those who resold that item (assuming a violation of anti-circumvention).

    It’s only a matter of time before this discrepancy is reconciled (hopefully in favor of the consumer).

  32. The issue of harmfulness is still arguable. The publisher has decided that the lower price in a less affluent market is a fair price for their product, but they create arbitrage by charging more for the same product in more affluent markets. The artificial arbitrage created by copyright regulation may benefit the publisher, but losing out on the arbitrage is not necessarily harmful to them, since they already showed that they’re willing to accept the lower price for the same good.

    In today’s technological world, the marginal cost for selling a copy of a copyrighted work is close to zero, depending on media (in fact, the marginal cost of selling it is probably higher than the marginal cost of giving it away, for digital downloads). Every single sale, regardless of the price, is of benefit to the publisher – even though it might not be of as much benefit to the publisher had the original sale taken place in the US rather than a less affluent market.

  33. Simply the fact that people would like to have these IP rights does not make them exist

    But all the patent t–b-ggers are wearing ruby slippers.

    And Kappos gave a speech!!!!!

  34. You buy a gas in a state with no sale tax and drive to a state that has a sales tax.

    Is that smuggling?

    What if you did this as a business, buying in one state and selling in the other?

  35. Your hypotheticals are somewhat lacking, in that they are all explicitly illegal because they either (1) avoid taxes or (2) import things that are illegal to possess in the US.

    It is not clear that import books is also illegal. In the US we also have used bookstores, which publishers would love to make illegal as the infringe the right to be the only seller of a piece of IP, but are unquestionably protect under modern Supreme Court precedent. Simply the fact that people would like to have these IP rights does not make them exist, and that is true in this case as well. The Supreme Court may decide either way, but I do not think the issue is as simple and oneside as you would like to make it seem.

  36. That would be no, otherwise used book stores could not exist. First Sale Doctrine means that the owner of the IP gets paid for the original sale, but can not stop that buyer from reselling it in the future. This has become somewhat fuzzy for digital goods, but it still the law of the land with respect to physical products.

  37. Can a book could be licensed like a patent? Non-transferable, non-sublicensable, etc. If so, problem solved.

  38. I hope that the SCOTUS sees this for as simple an issue as this is: an authorized sale to a purchaser.

  39. When I was a kid, I saw a movie about cigarette smuggling in the Mediterranean. I really did not understand why anyone would smuggle cigarettes. Then I found out about taxes.

    In the US we have moonshiners. Why?

    We have drug smuggling of all sorts. Why?

    With the Internet, can we really keep drug prices high in the US in the face of foreign sales at much cheaper prices?

    We need to think this through carefully. Artificial price differences cannot be maintained for long. Can the US long maintain any IP rights if we simply abandon the fight? Smuggling will occur, true. But why should we simply surrender?

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