October 26, 2012

What You Need to Know About Kirtsaeng v. Wiley

Many college students resell their textbooks online. But Supap Kirtsaeng turned textbooks into a profit machine, and his homegrown business is now at the center of a lawsuit that some observers call the most important copyright case in nearly a decade. The U.S. Supreme Court heard arguments in the case on Monday. Here's a guide to what the case means, and how it could send ripples far beyond college campuses.

How did Mr. Kirtsaeng sell the books?

The Thai national and former Cornell University student took textbooks that had been printed and legally purchased overseas and sold them for a profit on eBay. Evidence presented at trial suggested that he made roughly $1-million in the process, though others have estimated that his profits were much lower.

Why is John Wiley & Sons suing him?

The publisher accused Mr. Kirtsaeng in 2008 of infringing on its copyrights. Mr. Kirtsaeng defended himself by invoking the first-sale doctrine, a long-held principle of U.S. copyright law that gives the purchaser of a particular copy of a copyrighted work the legal right to resell that copy.

So what's the central question here?

The justices will consider whether U.S. copyright holders can prevent so-called gray-market goods—in this case, legally produced textbooks made for foreign markets and sold overseas—from being imported and resold in the United States. Put another way, does the first-sale doctrine apply to gray-market goods?

Are there any precedents?

Not exactly. The last time the court ruled on this question, in the 2010 decision Costco v. Omega (No. 08-1423), the justices split in a 4-to-4 tie. Justice Elena Kagan recused herself from that decision, which left in place an appellate court's ruling that allowed rights holders to stop gray-market goods from being imported and resold. But with the split, the decision didn't set a nationwide precedent.

How have other courts ruled on this case?

The U.S. District Court for the Southern District of New York found Mr. Kirtsaeng guilty of copyright infringement and awarded Wiley & Sons  $600,000 in statutory damages. The U.S. Court of Appeals for the Second Circuit upheld that decision. Mr. Kirtsaeng appealed to the Supreme Court, which in April agreed to hear the case.

Who's Watching the Case and Why They're Interested

These are some of the groups that have tried to sway the justices in friend-of-the-court briefs.

Supporting Supap Kirtsaeng

Consumers will suffer if the justices leave the Second Circuit's ruling in place, argued a group of bookstores and library associations. A coalition of Internet companies including eBay, Google, and Yahoo argued that once a copyright owner sells his property, he has "exhausted his exclusive statutory right to control its distribution."

Supporting John Wiley & Sons

Several industry groups argued on the publisher's behalf, including the Motion Picture Association of America, the Text and Academic Authors Association, and the Association of American Publishers. The government argued that Mr. Kirtsaeng cannot claim first-sale protection under the Copyright Act since the provision does not apply to foreign-made goods.