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Old 10-08-2012, 02:29 PM   #34
Andrew H.
Grand Master of Flowers
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1. This case doesn't have anything to do with juries. While the first trial was a jury trial, jury didn't make this ruling, it was made by the trial court and then affirmed by the appellate court. Essentially, the trial court didn't allow the jury to decide whether the "first sale" doctrine should apply; it's this ruling that the appellate court upheld. The petitioners want a new trial.

2. This ruling doesn't apply to all manufactured goods; it only applies to copyrighted items. (However, many manufactured goods may also have a copyright attached to them in some manner.)

3. This ruling doesn't apply to consumers; it applies only to distributors. (The defendant in the original case had around $1 million in revenue over a couple of years).

4. The backdrop of the case is this: the defendant came from Thailand to study in the US. While here, he discovered that textbooks were much cheaper in Thailand, so he organized his relatives and friends there to buy up the books and ship them to him; he sold them on ebay and the like, and had revenue of around $1 million. I'm not sure what his profit was.

5. The case is really about two statutory provisions in the copyright act. 17 USC sec. 601(a)(1) says this:
Quote:
(a) Infringing Importation or Exportation.—
(1) Importation.— Importation into the United States, without the authority of the owner of copyright under this title, of copies or phonorecords of a work that have been acquired outside the United States is an infringement of the exclusive right to distribute copies or phonorecords under section 106, actionable under section 501.
This is the "geographical restrictions" clause. IOW, if a copyright holder has given one party the right to distribute copyrighted goods in another country, but not in the US, it is copyright infringement for the distributor to sell the goods in the US...because he only has the right to sell the goods in the foreign region.

The "first sale" clause (17 USC sec. 109) says this (I've omitted some irrelevant parts dealing with restored copyright:

Quote:
(a) Notwithstanding the provisions of section 106 (3), the owner of a particular copy or phonorecord lawfully made under this title, or any person authorized by such owner, is entitled, without the authority of the copyright owner, to sell or otherwise dispose of the possession of that copy or phonorecord.
6. So the reasoning of the appellate court is as follows: (1) the first sale doctrine only applies to "lawfully made" copies (sec. 109); (2) a copy imported into the US by a distributor without the rights to distribute the books in the US is infringing, so the copy is not "lawfully made" (sec. 602); and (3) therefore, the first sale doctrine does not apply to these items.

While this seems pretty straightforward, the issue is actually a little more complicated (which is probably why the supreme court is taking the case). In 1998, they decided Quality King Distributors v. L'Anza. This case involved a manufacturer who sold copyrighted items made in the US to a distributor with distribution rights in the UK. The distributor sold the goods to a distributor in Malta, and the goods made their way to a distributor in the US, who sold them in California.

In this case, the court decided that the first sale doctrine *did* apply. It noted, though, that this case was about an item manufactured in the US, exported to the UK, and then eventually reimported. It stated that it didn't necessarily apply to a copyrighted item manufactured in a foreign country and reimported. It also included this comment, as dicta:

Quote:
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,[20] 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) (or, for that matter, to an action under § 106(3), if there was a distribution of the copies).
Here is a link to the court of appeals opinion in the current case: http://scholar.google.com/scholar_case?case=2678020953327425749&hl=en&as_sdt =2&as_vis=1&oi=scholarr#[5]

Here is a link to the Quality King case: http://scholar.google.com/scholar_ca...=2,15&as_vis=1

(Note that Quality King discusses the interplay of a lot of other copyright provisions; my version above is somewhat simplified.)
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