Some Analysis on the First Sale Doctrine Case Headed to the Supreme Court

Last week we presented the news that a "First Sale Doctrine" case (Kirtsaeng v. John Wiley & Sons) was headed to the Supreme Court. Some journalists were sounding alarm bells that an outcome in favor of the publisher in the case could have a serious impact on how people sell used products such as books, DVD's and even video games. Alarmists went so far as to say that it would make it so that consumers would have to get permission from rights holders prior to selling their used goods. We thought this sounded a bit far-fetched…

We do not pretend to know the intricacies of the First Sale Doctrine and how a ruling against the defendant in the case would impact consumers, so we asked the Entertainment Consumer Association’s (ECA) Policy Coordinator Patrick Hightower for some expert analysis on the case. Basically Patrick says that the overall impact on used games will be little to none should the court rule in favor of the publisher, though he does think it could hurt the sale of imported games from regions such as Japan. From Patrick:

While the conclusion of the 2nd Circuit states that “the first sale doctrine does not apply to copies manufactured outside of the United States”, this language is actually not the full decision in this case. What the court actually rules is that the first sale doctrine does not apply to goods manufactured outside of the United States which are imported without the rights-holder’s permission.

In the Kirtsaeng case, the products in question were marked with notices limiting where the books in question could be sold. Further, textbook manufacturers often do make material changes in the products themselves; most often in the materials used in manufacturing. The 2nd Circuit Court of Appeals ruling, which has been appealed to the United States Supreme Court, states that the private importation of these foreign manufactured goods are not covered by the first sale doctrine.

The video game industry is different, and there is a critical distinction to be noted when it comes to used sales. Even if video games are manufactured overseas, most are imported into the country under authority of the rights-holder. This step, despite the 2nd Circuit’s decision, should protect the used games market in America from the problems in this case. This means that once you purchase a game from GameStop, Wal-Mart, or any other major retailer, the first sale doctrine would still apply. One could argue that the 2nd Circuit’s decision makes this point unclear, but any other reading would strike all meaning from the statutory language. The Supreme Court is likely to clarify this point regardless of anything else its decision may contain.

This does not mean the video game industry will be completely immune from this decision. Even with this more limited reading of the lower court’s decision, private game imports could be a violation. If you are a gamer that buys import games from Japan, that practice could be threatened. However, that practice has already been greatly curtailed by region locking hardware.

Full disclosure: GamePolitics is an ECA publication.

Supreme Court building in Washington image © 2012 Millerium Arkay, via Shutterstock.

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