Wiley

There is an interesting copyright case making its way through the U.S. federal courts. John Wiley and Sons is suing Supap Kirtsaeng, a Thai doctoral student who was importing foreign edition textbooks and selling them on eBay between 2007 and 2008. Wiley sued Kirtsaeng alleging copyright infringement under 17 U.S.C. § 501, trademark infringement under 15 U.S.C. § 1114(a), and unfair competition under New York state law. Wiley also sought a preliminary and permanent injunction under 17 U.S.C. § 502(a) and statutory damages under 17 U.S.C. § 504(c). Kirtsaeng argued that the first-sale doctrine – a copyright provision that allows the purchaser to transfer (i.e., sell, lend or give away) a particular lawfully made copy of the copyrighted work without permission – was a defense to copyright infringement.

The case went to trial and a jury found Kirtsaeng guilty of willful copyright infringement. The docket has a good explanation of how the jury deliberated:

At the end of the trial, the District Court charged the jury to determine whether Kirtsaeng had infringed the copyrights of each of eight works and whether any such infringements had been willful. The District Court explained that, under the statutory damages scheme found at 17 U.S.C. § 504(c), see note 10, ante, if the jury found that Kirtsaeng had infringed Wiley’s copyright, it could award no less than $750 and no more than $30,000 in damages for each infringed work.

The District Court identified two exceptions to this rule. First, the District Court instructed the jury that, if it found that Wiley had proved by a preponderance of the evidence that the infringement was willful, under the statutory scheme the jury had the option of awarding up to $150,000 in damages per infringed work. Second, if the jury found that Kirtsaeng had proved by a preponderance of the evidence “that he was not aware and had no reason to believe that his acts constituted an infringement of copyright,” the jury could choose to impose an award of statutory damages as low as $200 per infringed work. The jury ultimately found Kirtsaeng liable for willful copyright infringement of all eight works and imposed damages of $75,000 for each of the eight works.

Yikes. $600,000 in damages. Damages that were just affirmed by the Court of Appeals, 2nd Circuit. The ruling means that the first-sale doctrine only applies to works manufactured in the United States. Judge J. Garvan Murtha dissented, arguing that the ruling could allow companies to exert complete control over the resale of its products:

Even in the absence of a market allocation agreement between, for example, a publisher of the United States edition and a publisher of the British edition of the same work, each such publisher could make lawful copies. If the author of the work gave the exclusive United States distribution rights—enforceable under the Act—to the publisher of the United States edition and the exclusive British distribution rights to the publisher of the British edition, however, presumably only those made by the publisher of the United States edition would be ‘lawfully made under this title’ within the meaning of § 109(a). The first sale doctrine would not provide the publisher of the British edition who decided to sell in the American market with a defense to an action under § 602(a).

The first-sale doctrine has been part of U.S copyright law since the early 1900s so it is unfortunate to see it limited in such a drastic manner. And by the looks of the docket, Wiley’s counsel used some pretty dubious methods to get Kirtsaeng’s complete PayPal records – which included income from the sale of books by many other publishers – admitted as evidence. The Court had to remind the counsel that it “must be careful not to refer to these [unrelated] sales in any way as infringing sales, because that would be entirely improper.” Even so, it’s not hard to imagine a jury becoming comfortable leveraging $600,000 in damages for 8 books after it hears about 1.2 million in revenue for an unspecified number of books.

More:
Kenyon and Kenyon LLP – Does the Copyright Act’s First Sale Doctrine Permit Infringement Claims for Importing Genuine Works Made Outside the United States?

Library Journal – Court Rules First Sale Doctrine Only Applies to Works Manufactured in U.S.

Thomson Reuters News and Insight – Copyright Owners Win Broader Rights for Works Made Abroad