The Second Circuit Court of Appeals has rejected the first sale doctrine as a defense to the importation of genuine copyrighted goods purchased overseas and affirmed a willful copying award against a graduate student who sold textbooks on the web.
The decision in John Wiley & Sons, Inc. v. Kirtsaeng, et al., Docket No. 09-4896-cv (2d Cir. Aug. 15, 2011) is significant not just for affirming a statutory award of $75,000 per foreign printed textbook that was imported, but also because the Second Circuit has now joined the Ninth Circuit and other district courts around the country in finding that the first sale doctrine 17 U.S.C. 109(a) does not shield purchasers of foreign manufactured goods subject to a U.S. copyright.
The defendant in the case was a graduate student who had family and friends purchase textbooks overseas that were resold in the United States on such sites as eBay. The publisher brought suit, alleging that their copyrights had been infringed by the importation without authorization in violation of 17 U.S.C. 602(a)(1).
Kirstaeng argued that the trial court had committed reversible error by allowing testimony concerning the gross revenues Kirstaeng earned in his business, even through only a portion of those revenues were generated by titles from the John Wiley catalog. The Second Circuit held that any error made by the trial court was not prejudicial because there was sufficient evidence in the record to support a finding of willful infringement and the jury had discretion to award up to $150,000.
The Court noted that each of the books had contained an express warning that its sale was only authorized in a foreign region and that exportation or importation of the book to another region was "illegal." The court makes no mention of any evidence submitted on the issue of actual damages.
The defendant also unsuccessfully sought a jury instruction that the applicability of the first sale doctrine, which permits the resale of previously purchased copyrighted works without infringement, was an unsettled area of the law. Kirstaeng argued that the jury might have inferred from the unsettled nature of the law that he had not willfully infringed the plaintiff's copyrights.
In rejecting the first sale doctrine as a defense to the importation of goods purchased overseas, the Second Circuit relied heavily on dicta from the U.S. Supreme Court decision in Quality King Distributors v. L'ana Research International, Inc., 523 U.S. 135 (1998) and the language of 17 U.S.C. 602(a)(1), which prohibits importation of copyrighted works into the United States without authorization of the copyright owner.
The first sale doctrine as a defense to copyright infringement in the context of imported goods is discussed in more detail on our blog, The IP Trader, in a post here. Other posts on this topic include coverage here of the Supreme Court's decision in Costco Wholesale Corp. v. Omega, S.A., in which a split court affirmed a similar ruling of the Ninth Circuit Court of Appeals, but did not create any precedential effect, and our expanded coverage of the John Wiley case here.
