Books and other goods manufactured overseas can be imported and sold in the United States without the permission of the copyright holders, the Supreme Court ruled Tuesday in a case important to eBay and the country’s big discount stores.
The court ruled 6 to 3 that the same rules that apply to goods made and purchased in the United States govern those made overseas. Once the products have been legally purchased, the new owners are free to sell or lend them as they see fit, the court said.
The decision was applauded by retailers, libraries and others who said a ruling the other way would have caused chaos in their operations. Justice Stephen G. Breyer, who wrote the court’s opinion, said retailers imported more than $2.3 trillion worth of goods in 2011, and many were purchased abroad for resale here.
But the Software & Information Industry Association warned that the ruling would send a “tremor through the publishing industries” and would harm U.S. businesses and consumers around the world.
“The practical result may very well be that consumers and students abroad will see dramatic price increases or entirely lose their access to valuable U.S. resources created specifically for them,” the association’s general counsel, Keith Kupferschmid, said in a statement.
Textbook publishers had told the court that some versions of books were priced more cheaply overseas because they would simply be too expensive in other economies.
The case before the court involved Supap Kirtsaeng, a Thai student who took advantage of those different pricing schemes when he came to the United States for college.
To partly finance his studies at Cornell University and the University of Southern California, Kirtsaeng recruited friends and family members to buy the cheaper textbooks in Thailand and ship them to the United States, where he sold them on eBay and elsewhere.
Textbook publisher John Wiley & Sons said Kirtsaeng’s unauthorized importation and sale of its books amounted to copyright infringement. It said the normal “first sale” rules — under which people who buy something may resell or otherwise dispose of it as they wish — do not apply to goods produced overseas specifically for sale there.
The U.S. Court of Appeals for the 2nd Circuit in New York agreed and upheld a $600,000 judgment against Kirtsaeng.
The Supreme Court’s decision Tuesday reversed that. “Reliance upon the ‘first sale’ doctrine is deeply embedded in the practices of those, such as book sellers, libraries, museums, and retailers, who have long relied upon its protection,” Breyer wrote.
The court was essentially reviewing five words in the federal Copyright Act: “lawfully made under this title.” Some lower courts and the Obama administration said that did not cover goods made abroad.
But Breyer said a careful reading of the law did not show that geography mattered. He was joined by Chief Justice John G. Roberts Jr. and Justices Clarence Thomas, Samuel A. Alito Jr., Sonia Sotomayor and Elena Kagan.
Breyer noted a number of concerns that had been lodged with the court. Many library books are printed overseas, he said, and a “geographical interpretation” could have created significant uncertainty about lending them without permission.
Retailers and used-book sellers were also concerned, he said, and software contained in automobiles, microwaves, mobile phones and computers is often produced overseas.
“A geographical interpretation would prevent the resale of, say, a car, without the permission of the holder of each copyright on each piece of copyrighted automobile software,” Breyer wrote.
Justices Ruth Bader Ginsburg, Antonin Scalia and Anthony M. Kennedy dissented.
Ginsburg said the majority’s “stunning” interpretation of the Copyright Act is “at odds with Congress’ aim to protect copyright owners against the unauthorized importation of low-priced, foreign made copies of their copyrighted works.”
The court considered a similar case about two years ago. But Kagan was recused because of her work as President Obama’s solicitor general, and the court deadlocked 4 to 4. The court did not disclose how individual justices voted in that case. Tuesday’s 6 to 3 vote indicates that at least one justice changed his or her vote to join the majority.
The case is Kirtsaeng v. John Wiley & Sons .
In a second business case decided Tuesday, the court was unanimous. It said a plaintiff could not direct a class-action suit from federal court to a more friendly state court by stipulating that damages would be less than $5 million.
That is the threshold set by the Class Action Fairness Act that gives federal courts jurisdiction over class actions. Many plaintiffs would rather have their cases heard in more generous state courts, and one strategy used by trial lawyers is to stipulate that they will not seek more than $5 million.
But Breyer, again writing for the court, said that “a plaintiff who files a proposed class action cannot legally bind members of the proposed class before the class is certified.”
The proposed class action was brought by Arkansan Greg Knowles against Standard Fire Insurance Company. Knowles’s home was damaged by a hailstorm, and he alleged that the company did not fully reimburse him and others for losses.
The case is Standard Fire Insurance Co. v. Knowles.
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