Supreme Court Poised To Rule On Important First Sale Case

The First Sale Doctrine has been an important part of copyright law for well over a hundred years now and an important part of the gaming culture for the last 30 years or so. Unfortunately, these last few decades have also seen a lot of effort to erode what protections consumers have to resale their property without the permission of the copyright owner. Once again, the Supreme court is poised to rule on how far the protections the First Sale Doctrine go when it comes to copyright.

In recent history, we had the Autodesk vs Vernor case that clarified that if software is sold as a license, it cannot be resold if the license forbids it, but also helped clarify that when something is clearly a sale it is still protected by the First Sale Doctrine. We also had a strange case in which watch maker Omega sued to stop Costco from importing cheaper Omega watches and selling them in the US and won. In that case, Omega convinced the District Court that because it had a logo on the watch that was covered by copyright and the watches were manufactured and sold outside the US, they were not protected by US First Sale. Unfortunately, the Supreme court hit a stalemate and the lower court ruling stands.

Now we have a similar case involving the sale of imported text books. GameTrailers (thanks for all who brought it up) takes a look at this case and concludes that if the Supreme Court lets the ruling stand, it could negatively effect and potentially block the sale of used games. Sadly, if the Supreme Court upholds the lower court's ruling without clarification, that could be the outcome.

In this case, a college student, by the name of Supap Kirtsaeng, decided to make some extra money by having his family in Asia buy copies of text books sold there and ship them to him. Then he would resell those imported copies for a profit, but for less than those books are sold in the US. The publisher of those text books, John Wiley & Sons, was not going to stand for it and sued Supap for copyright infringement. Supap tried to claim a First Sale defense but John Wiley was able to convince the court that the language of the First Sale Doctrine is worded in such a way that it only applied to copyrighted works manufactured in the US. Thus books, games and other copyrighted works manufactured outside the US were not protected by First Sale and thus could only be resold if authorized by the copyright holder.

What is really frightful about this ruling is that it is very broad in nature. It doesn't just cover works manufactured and sold outside the US, it also covers works manufactured outside the US and sold in the US. Basically, if this ruling stands, even if you bought a game at Walmart or Gamestop in one of the 50 states, if that disk and case were manufactured in China or anywhere else in the world, you could not resell it without the permission of all copyright holders.

Now, there is some hope here. The Supreme Court has just accepted the case at this point and has not yet reviewed or ruled on it. So there are several outcomes to this case, some good and some bad. For instance:

  • The Supreme Court could uphold the lower court ruling thus removing First Sale protection for all works manufactured outside the US. This is obviously the worst possible outcome as it would have the potential to block all secondhand sales of copyrighted works.
  • The Supreme Court could overturn the lower court and rule in the opposite. Meaning, that all products sold in the US, whether second or first hand, are protected by First Sale. This means that even if you bought it outside the US, you could still resell it in the US regardless of where it was manufactured. The best possible outcome.
  • The Supreme Court could rule in a more narrow way in which only goods authorized for sale in the US could be resold in the US. This one would still prevent the type of reselling that Supap was doing, but would protect games and other works bought in the US. However, this would mean that if you import a game into the US, such as games promoted by Operation Rainfall, you would not be able to resell those imports later. While not the worst outcome, it could still limit First Sale.
  • Finally, the Supreme Court could stalemate once again and leave the waters as murky as they currently stand.

Regardless of how the Supreme Court rules, Congress could still pass a bill with language clarifying what is protected by First Sale. As the law stands, it is ambiguous on what is actually meant by products made "under this" law. 

This is definitely a case worth watching.

Original source – The Atlantic

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