By Gary Shapiro, President and CEO of the Consumer Electronics Association Contributed to Forbes
In a 6-to-3 decision in Kirtsaeng v. John Wiley & Sons yesterday, the U.S. Supreme Court said U.S. copyright owners may not stop imports and re-selling of copyrighted content lawfully sold abroad. The decision is a major victory for American consumers because it allows them to shop worldwide for their copyrighted content. More, it could have far-reaching implications in other industries including health care.
The first-sale doctrine, which the Court upheld in its decision, is a principle that the legal purchaser of a copyright-protected item may dispose of that property anyway he or she sees fit. The court ruled in favor of an immigrant scientist from Thailand, Supap Kirtsaeng, who imported textbooks lawfully printed overseas by a U.S. publisher and sold them on eBay.
While the court’s decision relied heavily on the statutory language governing the first-sale doctrine, the court also explained why the doctrine makes sense in today’s interconnected world where we easily buy and sell products across borders. The court correctly noted that consumers benefit from greater choice and lower prices when technology companies, libraries, used bookstores and retailers can import and sell products without having to ascertain that the U.S. copyright owner approves of each further sale. The court declared that “a geographical interpretation would subject many, if not all, of them to the disruptive impact of the threat of infringement suits.”
If the lower-court opinion in Kirtsaeng v. John Wiley & Sons had been allowed to stand, content providers could have skirted our copyright laws and reasserted control over the use of sold products simply by moving their manufacturing overseas. The court’s opinion, which reflects the advocacy of the tech and retail communities in support of Kirtsaeng, preserves the rights that the first-sale doctrine guarantees to manufacturers, retailers, libraries, consumers, and the public at large.
Almost 30 years ago, the Consumer Electronics Association fought and won a similar battle to preserve the first-sale doctrine from legislation that would have choked off the market for movie rental and would have impeded the development of innovative devices. As a newly minted lawyer representing VCR makers in the early 1980s, I stumbled upon the first-sale doctrine in a proposed bill in Congress legalizing the VCR (which had been found illegal by a federal court of appeals). But buried at the end was a provision which would have changed the first-sale doctrine so Americans would not be permitted to rent movies from video stores like Blockbuster without the permission of movie studios, who said they would grant such permission only at greatly inflated prices.
We took on Hollywood, and we won. The Supreme Court in 1984 reversed the federal court decision finding that the VCR was an illegal product. The first-sale amendment died in Congress in 1985, pleasing millions of consumers who enjoyed renting movies and setting the stage for aggressive innovation in the home video sector. Still, I have spent a good portion of the subsequent 28 years fending off efforts by Hollywood and the music industry to restrict, tax or ban perfectly safe and useful technology.
Just as the survival of the first-sale doctrine in 1985 allowed the home video market to thrive, the Supreme Court’s decision Tuesday could have potentially significant applications beyond just textbooks or, more broadly, digital content. If the reasoning is extended to pharmaceuticals, for example, Americans would no longer be the chumps who pay the highest prices in the world simply because they’re not allowed to shop overseas where prices are lower. Buying the same drugs cheaper overseas could dramatically reduce our burdensome health care costs.
The Kirtsaeng case serves as an important reminder that the copyright monopoly must be limited to its constitutional purpose: “promot[ing] the Progress of Science and useful Arts.” As the Court stated: “American law … has generally thought that competition, including freedom to resell, can work to the advantage of the consumer.” The exemptions and defenses provided by our copyright laws are just as essential as the rights to exclude for which they provide. Laws should not be created to protect monopolies and raise costs, whether they are for books or for prescription drugs.