Kirtsaeng v. John Wiley & Sons, Docket No. 11-697 (Supreme Court 2012)
MR. ROSENKRANZ: (on behalf of accused infringer Kirtsaeng): What [copyright holders] got [with the passage of Section 602] was a much more powerful weapon than a contract. [A] copyright weapon gives you injunctive relief, gives you multiples of damages which you don’t get out of a contract remedy.
MR. ROSENKRANZ: The moment that a manufacturer learns that this Court says you get what we’ve called the Holy Grail of manufacturing, endless eternal downstream control over sales and rentals, you can ruin secondary markets that are competing with you, the moment that happens, that will be yet another reason for manufacturers silently to decide that they’re headed — that they’re sending their manufacturing overseas.
JUSTICE KAGAN: Mr. Rosenkranz, can I take you back to Justice Ginsburg’s opening question? Just as a matter of copyright theory, I had always understood [that] a copyright holder has a kind of a bundle of rights. It’s not one right that applies everywhere in the world. It’s you have your U.S. rights and you have your Chinese rights, you have your rights under each jurisdiction’s law. And your position is essentially to say that when I sell my Chinese rights to somebody, I’m also selling my U.S. rights to that same person, because the person who has the Chinese rights can just turn around and import the goods. I mean, that’s the nature of your position, isn’t it, that your U.S. rights are always attached when you sell more — your rights under the jurisdiction of another country?
MR. ROSENKRANZ: Well — so first, Your Honor, back in 1976, this notion of geographic division was very, very new, so it’s not at all clear what Congress was thinking with that — with respect to that. But secondly, no, we’re not — we’re not saying that when the owner sells his Chinese — its Chinese rights to the Chinese company, it is selling all rights. Certainly, the Chinese company cannot sell everywhere, but after that first sale, all of the manufacturer’s rights are cut off.
JUSTICE BREYER: I mean, an American copyright holder licenses a British company to publish the work under British copyright law. 602(a) says he can’t import the books into the United States, period…. The question is what happens when he sells it to his bookstore and you or I go in and buy it and we want to give a copy to our wife when we get back to the United States. The question is, … is that unlawful? … [What if] I bring back five copies and I give one to my son?
MR. OLSON (arguing on behalf of the copyright holder John Wiley): Well, there are fair use exceptions …
JUSTICE BREYER: [I]magine Toyota, all right? Millions sold in the United States. They have copyrighted sound systems. They have copyrighted GPS systems. When people buy them in America, they think they’re going to be able to resell them…. Under their reading, the millions of Americans who buy Toyotas could not resell them without getting the permission of the copyright holder of every item in that car which is copyrighted?
MR. OLSON: … that is not this case….
JUSTICE KENNEDY: You’re aware of the fact that if we write an opinion with the — with the rule that you propose, that we should, as a matter of common sense, ask about the consequences of that rule. And that’s what we are asking….
JUSTICE BREYER: I would like to know, if you were the lawyer for the Toyota distributor, and if you were the lawyer for the Metropolitan Museum of Art, or you are the lawyer for a university library, and your client comes to you and says, my God, I just read the Supreme Court opinion. It says that we can’t start selling these old books or — or lending them or putting them in our word processor or reselling the Toyota without the — without looking — displaying the Picasso without the permission of the copyright holder, who may or may not be Toyota itself. What, as their lawyer, do you tell them? Do you tell them, hey, no problem; or, do you tell them, you might become a law violator; or, do you tell them, I better litigate this? What do you tell them?
MR. OLSON: Well, each one of those situations that you posit, Justice Breyer, has a whole panoply of set of facts. With respect to the museums, with respect to the person bringing books into the United States, there are other defenses, including fair use. There are other defenses under the copyright law. But — and one of the things is that, to a certain extent, if you’re going to use the product created by someone else in a way that’s contemplated by the copyright laws, maybe it’s required that you actually comply with the copyright laws by going to the owner of the copyright and saying, look, here’s what I propose to do, can I have a license to do this?
JUSTICE GINSBURG: Mr. Olson, do you have an answer to the outsourcing problem and the charges that if you read the statute as you are urging, then you are inviting the outsourcing of manufacturing jobs?
MR. OLSON: There are several answers to that. One, that’s Congress’s concern. And — and there is no evidence that that would really actually happen. And Congress was concerned with creating a segmentation of the market. But it’s entirely speculative as to whether or not people are going to start manufacturing books or other items outside the United States. Congress can address that if that should become a problem, but it’s not something that was suggested as a part of what was taking place at that time.
JUSTICE BREYER: Well, the word has grounding. [What about the ancient principle found in] Coke on Littleton, 1628, where it says that “if a man be possessed of a chattel and give or sell his whole interest upon a condition, that condition is no good.” And Coke says, and that’s how it should be. And now that’s picked up in Bobbs-Merrill; it’s picked up in Dr. Miles. It’s been the law. Now if, in fact, there are two ways of interpreting the statute, and one is consistent with that basic principle of commercial law, and the other produces some of the complexities that you have just mentioned, isn’t it better to go with the common law and simply reaffirm a principle that’s been in the commercial law almost forever?
MR. STEWART (arguing as amicus on behalf of the US Government): I give two answers for that. And the first is that Coke was saying that, in most circumstances at least, a sale is sufficient in order to divest the owner of his prior right to control distribution, but it doesn’t say that a sale is necessary. And my point is that when Mr. Rosenkranz says the hypothetical foreign publisher who makes copies with authorization but ships … them into the United States without [authorization] could be held liable for infringement, there is nothing in section 109(a) that would allow a court to draw that distinction; that is, although 109(a) is sometimes referred to as a codification of the First Sale Doctrine, it doesn’t require an antecedent first sale. So as long as the foreign publisher was the owner of the books at the type — time they were manufactured, if those books were lawfully made under this title, under Petitioner’s reading they could be imported and distributed. We know also that this was not an oversight, that Congress didn’t intend the provision to be subject to a sort of implicit first authorized sale requirement, because the language was intended to cover copies that were made pursuant to a compulsory license.
No direct mention of patent law in the oral arguments.