U.S. Supreme Court may revoke the right to resell

[Daithi]

I remember something similar happening in the drug industry. The drug manufacturers were selling drugs in Canada for far less than they sold the exact same drugs in the U.S. People were going across the border (or ordering across the Internet) drugs in Canada to get them cheaper. I remember there was a big stink about the practice but I don't remember how it was resolved. Maybe that was one of the reasons for the Medicare expansion providing prescription drugs occurred.

[teh603]

Originally Posted by Daithi

I remember something similar happening in the drug industry. The drug manufacturers were selling drugs in Canada for far less than they sold the exact same drugs in the U.S. People were going across the border (or ordering across the Internet) drugs in Canada to get them cheaper. I remember there was a big stink about the practice but I don't remember how it was resolved. Maybe that was one of the reasons for the Medicare expansion providing prescription drugs occurred.

Partially. Some of the stink was also because IIRC the drug companies were claiming that the "high" cost of FDA drug testing was being passed on to consumers, and the fact that people could cross the border and get the same drugs cheaper proved they were lying. Business doesn't like being proven a liar when it tries to strongarm the government.

[Quexos]

True, the evil ones that govern Americans are fundamentally not so different from the evil ones governing us. The greed for power is the same and corporations know it.

Originally Posted by Hellmark

But how often is it "Monkey See, Monkey Do" in regards to international commercial law and politics. Both US and EU tend to do things that the corporations want, and not what anyone else wants.

[Andrew H.]

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:

(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:

(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:

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.)

[teh603]

Originally Posted by Andrew H.

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).

1. If you can have copyrighted punctuation marks, you can easily attach copyrighted material to an otherwise non-copyrighted object using the washing instructions and size tag.

2. A consumer buys and uses, then resells. How does the consumer keep from becoming a distributor under those terms?

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.

I guess that part makes sense to lawyers, because the idea of ex post facto revocation of an object's being legally made is downright bizarre. "Yes, you made it legally, but because someone did XYZ with it, your right to make that object is no longer valid, for that specific object."

[JoeD]

Originally Posted by murraypaul

I can't see why this would be legal.
In case case someone has bought something from outside the EU, and then sold it within, and has made money from it. Why should they be treated differently?

There was a case where a buyer was importing playstation 3's from abroad and reselling them in the UK. I'm reasonably sure it was shutdown as a grey market import.

However, there's nothing wrong/illegal* with importing for your own use and I would imagine if you later sell it on there is nothing wrong either. What would be an issue is if you sell it on, buy another, sell it on, buy another. Then you're not doing it for personal usage, you're doing it for making money.

It's the same with how people selling their used goods on ebay don't have to declare it as an income for tax purposes. However, there's a point where selling items on ebay becomes classed as a business venture and then you're going to be in trouble if you don't start declaring your income.

in my not so legal opinion, that point is likely where selling a used PS3 that you imported on ebay is fine, selling more than one could be a grey area, selling multiple/unused/imported playstations, watch out There may or may not be a earning threshold too, I don't sell on ebay so have never looked into it.

* imho, but then I'm not a lawyer so don't do as I say

[GreenMonkey]

Originally Posted by Andrew H.

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.)

Sony has already asserted that folks modifying their PS3 software are breaking the Computer Fraud and Abuse Act by hacking into Sony's PS3 software. Because the software on the PS3 is Sony's.

https://www.eff.org/deeplinks/2011/0...gerous-message

Originally Posted by EFF.org

Not content with the DMCA hammer, Sony is also bringing a slew of outrageous Computer Fraud and Abuse Act claims. The basic gist of Sony's argument is that the researchers accessed their own PlayStation 3 consoles in a way that violated the agreement that Sony imposes on users of its network (and supposedly enabled others to do the same). But the researchers don't seem to have used Sony's network in their research — they just used the consoles they bought with their own money. Simply put, Sony claims that it's illegal for users to access their own computers in a way that Sony doesn't like. Moreover, because the CFAA has criminal as well as civil penalties, Sony is actually saying that it's a crime for users to access their own computers in a way that Sony doesn't like.

That means Sony is sending another dangerous message: that it has rights in the computer it sells you even after you buy it, and therefore can decide whether your tinkering with that computer is legal or not. We disagree. Once you buy a computer, it's yours. It shouldn't be a crime for you to access your own computer, regardless of whether Sony or any other company likes what you're doing.

...

Sony's core arguments — that it can silence speech that reveals security flaws using the DMCA and that the mere fact of a terms of use somewhere gives a company permanent and total control over what you do with a device under pain of criminal punishment — are both sweeping and frightening, and not just for gamers and computer researchers. Frankly, it's not what we expect from any company that cares about its customers, and we bet it's not what those customers expect, either.

It's a fuzzy line these days. Copyright & DMCA restrictions seems to be trumping everything lately in the courts - right to resell, Fair Use, reverse engineering.

[speakingtohe]

Originally Posted by Daithi

I remember something similar happening in the drug industry. The drug manufacturers were selling drugs in Canada for far less than they sold the exact same drugs in the U.S. People were going across the border (or ordering across the Internet) drugs in Canada to get them cheaper. I remember there was a big stink about the practice but I don't remember how it was resolved. Maybe that was one of the reasons for the Medicare expansion providing prescription drugs occurred.

From memory only, the reason drugs are/were sold cheaper to Canadian companies is that the Canadian Government regulates the markup allowed on prescription drugs.

Manufacturerers do not have to sell drugs to Canadian Pharmacies, but obviously they have reasons for doing so. Reasonable profit being better than no profit at all perhaps.

Helen

[Dulin's Books]

Originally Posted by teh603

2. A consumer buys and uses, then resells. How does the consumer keep from becoming a distributor under those terms?

the consumer buys it for their own use and then sells it when they are done with it. this person was not doing that. he was running a business importing books and retailing them.

another example of this difference. i moderate a car club forum. on the forum if you are modding your car and have some parts you don't need you can sell those parts from your car. or if you wreck your car and want to "part it out" thats allowed to. for free you can post it up and sell the bits.

however if you are a salvage/junk yard sort of operation and you buy up a bunch of wrecks and sell parts as part of that business you may not post them for sale for free. you must pay a fee to support the site.

one is an individual consumer, the other is a business.

[SteveEisenberg]

Originally Posted by Daithi

I remember there was a big stink about the practice but I don't remember how it was resolved.

The quick answer is: it wasn't. Some Americans are still getting Canadian pharmacies to honor their prescriptions, and in doing so may be showing disrespect to US law.

[JDK1962]

This is known in finance as arbitrage. Traders routinely exploit the fact that a good sold on one exchange might be priced differently on another, and they take advantage of that fact to (hopefully) score a profit. I added the "hopeful" bit, since you have to be fast enough to capitalize on the imbalance.

I would be curious, being of a fairly logical mindset, to know what the difference is. The publishers are setting up a system vulnerable to arbitrage, and expecting laws to protect them from the downside. How does that square with a free market economy, and how does protecting publishers promote any sort of public good?

[Apache]

Even some of the "Big Corporate Jewelry Stores" have sold gray market name brand watches. I know of a few who sold Seiko's manufactured for sale in The Middle East and Asia. They did not tell their customers and instead of a three year warranty they were stuck with one year. Seiko gives a 3 year warranty. Read it. It states that you get the first year world wide. The remaining two years are only good in the country the watch was manufactured for.
Apache

[whitearrow]

Originally Posted by Daithi

However, I don't know if this would really apply to all goods, or just copyrighted goods.

The first sale doctrine is a copyright doctrine. Cars aren't subject to copyright because they aren't works of authorship.

[Daithi]

Originally Posted by whitearrow

The first sale doctrine is a copyright doctrine. Cars aren't subject to copyright because they aren't works of authorship.

That makes sense, but what about trademarks? From the articles it sounds like this applies to trademarks as well, so cars, iPhones, and pretty much all goods with a trademark would be affected. For example, Harry mentioned that there are already limits on athletic shoes in the U.K.

As I'm rereading the articles, it sounds to me that if I buy a product overseas then First Sell doctrine doesn't apply to me. If I buy the product in the U.S. then I do maintain the rights of First Sell. However, this leads to gray areas such as, do I have the right of First Sell if I buy something in the U.S. but unknown to me the person I bought it from imported it and didn't have the right of First Sell.

More importantly, why should it matter? If I buy something, it is mine. It shouldn't matter if I bought it in Thailand or Texas. Unless I was required to sign some agreement that I wouldn't resell the item I bought then it should be mine to do with as I please. Of course, in the case of books, I own a copy of that book and not the right to the text and thoughts, so I can't make copies of it and sell it, but reselling the copy (the actual book) that I bought should be my right. Otherwise, I don't really own the item that I bought.

[SleepyBob]

What's the EEA?