On March 30, 2013, the U.S. District Court for the Southern District of New York decided that ReDigi, Inc. was guilty of copyright infringement because it facilitated sales of music lawfully purchased from iTunes (Capitol Records LLC v. ReDigi Inc, U.S. District Court, Southern District of New York, No. 12-00095).  10 days earlier, on March 19, 2013, the U.S. Supreme Court decided that Supap Kirtsaeng was not guilty of copyright infringement when he resold lawfully purchased textbooks on eBay (Kirtsaeng v. Wiley568 U. S. ____ (2013)).

In ReDigi, the Court held the first sale doctrine was inapplicable; in Kirtsaeng, the Court said it was.  Is it perhaps time, after over 30 years, for Congress to completely re-examine and update U.S. Copyright laws to more directly address emerging technologies and issues related specifically to digital transfers of property? Take a look at the following sentences included within Judge Sullivan’s written opinion in Redigi and let us know what you think:

  • The novel question presented in this action is whether a digital music file, lawfully made  and purchased, may be resold by its owner through ReDigi under the first sale doctrine. The Court determines that it cannot.
  • ReDigi asserts that its service, which involves the resale of digital music files lawfully purchased on iTunes, is protected by the first sale defense.The Court disagrees
  • In addition, the first sale doctrine does not protect ReDigi’s distribution of Capitol’s copyrighted works. This is because, as an unlawful reproduction, a digital music file sold on ReDigi is not “lawfully made under this title.”
  • Put another way, the first sale defense is limited to material items, like records, that the copyright owner put into the stream of commerce.
  • Second, amendment of the Copyright Act in line with ReDigi’s proposal is a legislative prerogative that courts are unauthorized and ill suited to attempt.
  • Section 109(a) still protects a lawful owner’s sale of her “particular” phonorecord, be it a computer hard disk, iPod, or other memory device onto which the file was originally downloaded
  • the first sale doctrine was enacted in a world where the ease and speed of data transfer could not have been imagined. There are many reasons, some discussed herein, for why such physical limitations may be desirable. It is left to Congress, and not this Court, to deem them outmoded.
  • At base, ReDigi seeks judicial amendment of the Copyright Act to reach its desired policy outcome. However, “[s]ound policy, as well as history, supports [the Court’s] consistent deference to Congress when major technological innovations alter the market for copyrighted materials.  Congress has the constitutional authority and the institutional ability to accommodate fully the varied permutations of competing interests that are inevitably implicated by such new technology.”
  • However, here, the Court cannot of its own accord condone the wholesale application of the first sale defense to the digital sphere, particularly when Congress itself has declined to take that step.

As these types of digital transactions become more and more a part of our economy, it may be time for Congress to take another look at and update U.S. Copyright law.    AFTA wants to learn what you think…..

American Consumers Win Big  with Supreme Court’s Decision  in  Kirtsaeng v. Wiley

On March 19, 2013, the Supreme Court issued its long-awaited decision in Kirtsaeng v. Wiley, confirming that owners of lawfully-made, copyrighted goods are able to sell, resell, import, distribute, lend or otherwise freely dispose of those products at their discretion, no matter where they were first produced.   Here is a copy of the opinion: supreme court opinion in kirtsaeng v wiley

In this particular case, the U.S. publisher, John Wiley & Sons, had sued Supak Kirtsaeng, an ebay reseller of used college textbooks manufactured overseas, alleging copyright infringement.  The First Sale Doctrine, Section 109(a) of the U.S. Copyright Act, provides owners of lawfully made copyrighted products the right to resell or otherwise do whatever it is they want to do with that product after purchase.  Wiley had tried to argue that this “first sale” protection only applies to owners of copyrighted goods originally manufactured in the United States.  The Court disagreed.

Quality King Distributors had won an earlier first sale decision before the Supreme Court in 1998 (Quality King v. L’Anza Research) in which the Court had determined that the First Sale Doctrine permitted re-importation of U.S. made goods.  Alfred Paliani, General Counsel of Quality King Distributors and President of the American Free Trade Association (“AFTA”) issued this statement immediately after publication of the Court’s decision:   “It has been a long fight for all of us at Quality King.  The first sale doctrine is the lifeblood of our business and industry.  For the past 100 years, it has been what enables wholesalers and retailers to bring genuine, brand-name goods to the American consumer at competitive prices.  We fought for its survival throughout the 1990’s and prevailed, culminating in the Supreme Court’s Quality King v. L’Anza decision.  Today, in Kirtsaeng, the Supreme Court has put the icing on the cake, confirming finally that once a copyrighted article is sold — no matter where it was manufactured– it belongs to its buyer who is free to re-sell it, lend it or even give it away without any interference from the copyright holder.”

And, Gilbert Lee Sandler, Esq., AFTA’s General Counsel offered the following commentary on the Supreme Court pronouncement:   “This is a great decision for the US economy and its consumers, students and readers.  The books in this case — and the watches and shampoos in earlier cases — are now freed from the high prices and restrictive distribution that would have been imposed on the US marketplace had the Court exempted foreign-made goods from the “first sale doctrine.” Now it is clear that goods made abroad and bearing a copyright can continue to be freely sold and imported into the US after their first, authorized sale.  Any other decision would have been shocking to our common sense.  US law should promote production in the US, not production abroad. Two years ago the Court could not decide whether the same rules should apply to goods made in the US and abroad, setting the stage for favoring goods made off shore as held by some lower courts..  That threat from the courts is now over.”

For more information about the case, the opinion or the American Free Trade Association, please visit www.aftaus.com or send an email directly to afta@aftaus.com