Supreme Court allows sale of gray market goods over publishers' objections

In Kirtsaeng v. John Wiley & Sons, the high court held that the first-sale doctrine applies to overseas versions of copyrighted works

It’s true. Businesses routinely discriminate against U.S. consumers. Companies sell their products at higher prices in the U.S. than in overseas markets.

This geographical segmentation hurts U.S. consumers, but it helps companies’ bottom lines. This business strategy has one inherent danger, however. Low-priced goods sold overseas may be imported to the U.S., and these so-called “gray market goods” could undercut more profitable domestic sales.

Dicta in Quality King declared that the first-sale doctrine did not apply to copies made outside the U.S. When such foreign-made copies were sold overseas, the U.S. copyright holder didn’t lose its right to control further distribution of those copies in the U.S. Importing such copies without the copyright holder’s authorization would constitute infringement, the court wrote.

However, the Supreme Court changed its mind when it handed down its 6-3 decision in Kirtsaeng, which explicitly rejects Quality King’s dicta and holds that the first-sale doctrine applies to all copies created with the copyright owner’s permission. The doctrine even covers copies created and sold outside the U.S., so subsequently importing these copies into the U.S. is not infringing.


Steven Seidenberg

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