Supreme Court Upholds First Sale Rule: Librarians Thrilled, Publishers Unhappy

Posted on March 20, 2013

Librarians and consumers are the big winners after the U.S. Supreme Court's ruling in the closely watched case of Kirtsaeng v. Wiley. In a 6-3 decision, the court upheld the first sale rule which says that once you've bought a copyrighted work, you own it. You can sell it, give it away or destroy it without the copyright holder's permission. Libraries depend on the first sale rule to be able to lend books and de-acquisition books.

Supap Kirtsaeng is a Thai scientist who was going to college in the U.S. To supplement his income he had friends legally purchase textbooks published by John Wiley & Sons in Thailand. Wiley charges more to U.S. customers for the same textbooks. Kirtsaeng sold the textbooks to students on Ebay and was able to make a profit, while giving the students cheaper books. It's important to note that this case involved legally purchased books, not pirated books which is an entirely different scenario.

Wiley argues that Kirtsaeng was illegally importing copyrighted works without its permission. Kirtsaeng argued that the importation of the cheaper textbooks was protected under the first sale rule and the fact they were purchased abroad is irrelevant. The court sided with Kirtsaeng. The American Library Association filed an amicus curiae brief supporting Kirtsaeng. Its arguments that overturning the first sale rule would destroy libraries was persuasive to the court which rules that the fact that the textbooks were manufactured outside the U.S. was irrelevant.

In a statement the ALA said, "The 6-3 opinion is a total victory for libraries and our users. It vindicates the foundational principle of the first sale doctrine-if you bought it, you own it. All who believe in that principle, and the certainty it provides to libraries and many other parts of our culture and economy, should join us in applauding the court for correcting the legal ambiguity that led to this case in the first place. It is especially gratifying that Justice Breyer's majority opinion focused on the considerable harm that the Second Circuit's opinion would have caused libraries."

Book publishers are extremely unhappy with the decision. The Association of American Publishers said in a statement, "We are disappointed that today's copyright decision by the US Supreme Court ignores broader issues critical to America's ability to compete in the global marketplace. To quote Justice Ginsburg's dissenting opinion, the divided ruling is a 'bold departure' from Congress' intention 'to protect copyright owners against the unauthorized importation of low-priced, foreign made copies of their copyrighted works' that is made 'more stunning' by its conflict with current US trade policy."

The ALA asserted that the decision "will have significant ramifications for Americans who produce the books, music, movies and other content consumed avidly around the world. The Court's interpretation of the 'first sale' provision of US copyright law will discourage the active export of US copyrighted works."

It remains to be seen how the ruling will work as a practical matter for digital works. The reselling and lending of digital books is already a hot issue for copyright holders and publishers alike.