9 ms·

Supreme Court to hear arguments in case of student who resold books

98 points by pwg 14y ago

droithomme 14y ago
Whichever way they rule it is going to be interesting. If they bless the sales, it legitimizes what is already a very active global gray market. If they condemn the sales, they strike down the first sale doctrine and it is a massive blow to fundamental property rights. As commenters have already pointed out earlier this year regarding this case, since most electronic goods are made overseas, it would be officially illegal to resell them without permission. Criminalizing the resale of foreign made goods that contain an IP component. It would also provide a massive benefit to moving manufacturing of every kind overseas to obtain this special new protection.
- TillE 14y ago
  > electronic goods But this case is apparently about copyright, and hardware isn't usually subject to copyright. Though I suppose firmware, etc. might be. Of course, I think it's ludicrous that anyone could be guilty of a copyright violation without having, by any imaginable definition, made a copy of anything.
  - msbarnett 14y ago
    > But this case is apparently about copyright, and hardware isn't usually subject to copyright. Though I suppose firmware, etc. might be. There's no might, here. The firmware, OS, hell, even the branding text on a label is subject to copyright. See, for instance, the ruling in Omega v Costco, where a logo was enough to bring copyright infringement charges against Costco for importing foreign-market watches.
  - DanBC 14y ago
    Copyright is normally copy and other rights. Thus, for many years, "this edition not available in the United States" was printed in UK editions of many books. I think (but I'm not sure) that the UK makes a difference between personal sales of out-of-country goods (this is okay) and a business selling out-of-country goods (this is not fine). A notable case is Tesco vs Levi jeans. There have been some other cases involving DVD importing.
  - alexqgb 14y ago
    Copyright law governs both the creation of copies, and their distribution. This pairing is one of the law's longest-standing and must basic features. It's also the root of the conflict in this case.
    - decode 14y ago
      > Copyright law governs both the creation of copies, and their distribution. This is an interesting idea that I haven't heard before. In what ways has copyright law governed the distribution of objects when no copying is involved?
      - tedunangst 14y ago
        The distributed object is a copy. This court case does not apply to the sole copy of a manuscript.
      - alexqgb 14y ago
        "This DVD is licensed only for private, non-commercial use." That's backed up by copyright law. If you build a theater, charge people to enter, and program runs of classic movies, you will get sued for violating the commercial-distribution aspects of copyright law, even if you bought the DVD you were charging others to see.
        decode 14y ago
        "you will get sued for violating the commercial-distribution aspects of copyright law" I think that's incorrect. I think this would be infringement due to it being considered a public performance, not commercial distribution. As the copyright act says, "A public performance or display of a work does not of itself constitute publication." The MPAA also describes the situation as a public performance issue: http://www.mpaa.org/contentprotection/public-performance-law http://www.mpaa.org/contentprotection/public-performance-law Do you know of any cases where a public performance was prosecuted as a commercial distribution case?
        14y ago
- tzs 14y ago
  >If they condemn the sales, they strike down the first sale doctrine and it is a massive blow to fundamental property rights. As commenters have already pointed out earlier this year regarding this case, since most electronic goods are made overseas, it would be officially illegal to resell them without permission You've left out a possibility: they condemn the sale without striking down first sale. They can easily distinguish these book sales from other potential first sale situations because the former involve goods where the first sale occurs outside the US and the goods are then imported without permission of the copyright owner, whereas the later involve goods where the first sale occurs in the US and if the goods were imported before that sale it was by the copyright owner.
  - chris_wot 14y ago
    Actually, no. If they condemn the sales, then they have effectively restricted what you can and cannot do with overseas produced goods. Then everything gets sold from overseas to bypass first sale.
    - tedunangst 14y ago
      It doesn't matter where it's made. It's where it's authorized to be sold. The publisher will find it difficult to argue that the book they themselves imported was unauthorized.
    - tzs 14y ago
      No. They can condemn the sales by saying that 17 USC 602 controls in this situation, leaving first sale (17 USC 109) applicable to goods that have not been imported without authorization. Briefly, 17 USC 106 says that copyright owner has the exclusive right to distribute copies. 17 USC 109 (first sale) says that once a particular copy has been distributed under the authority of the copyright owner, it is no longer a violation of the distribution right for others to redistribute that copy. 17 USC 602 says that importing copyrights works into the US without permission of the copyright owner violates the distribution right.
- greatreorx 14y ago
  "If they condemn the sales, they strike down the first sale doctrine " ...only for goods manufactured outside the US and not authorized for import to the US by the manufacturer. Most electronic goods in the US that are made overseas are also authorized for US import. I bought my iPhone directly from Apple. Even if the Supreme Court rules against the sales in this case, I will be able to resell my iPhone because Apple authorized its import...they were the ones that imported it.
  - smsm42 14y ago
    Unless the phone was first bought overseas. This may have big implications for second-hand markets like ebay as you can not really be sure where a good sold on ebay was manufactured, which countries it was authorized to import and who has the authority to authorize that. In fact, with such decision, each foreign item becomes potentially a problem for the buyer unless he has a proven certificate from original manufacturer authorizing import into the country the buyer is resident in. This of course would be a huge boon for these manufacturers as they would be able to charge extra for such certificates and suppress secondary markets. But it would not be as good for the consumers.
greenyoda 14y ago
"Wiley, with the Justice Department in support, dismiss those scenarios, and say Congress would be in a position to ensure libraries in particular do not suffer from any high court ruling against them." It's strange that the Justice Department would have a reason to have an opinion in this court case at all. And why would our executive branch be siding with the publishing business and against the average citizen on this case?
- tzs 14y ago
  Why do you find it strange that the department in charge of enforcement of the laws of the United States would have an opinion on a case concerning the interpretation of one of those laws?
  - rhizome 14y ago
    Because interpretation is a matter for the judiciary particularly, and a matter of policy to the rest of the department.
    - tptacek 14y ago
      That's not always true. For instance, the US Code refers to the US Copyright Office for judgements about fair use.
  - greenyoda 14y ago
    Because this was a civil lawsuit (Wiley v. Kirtsaeng; a corporation suing an individual for damages), not a law enforcement issue.
- mtgx 14y ago
  Because Obama got convinced that he needs to be a lot "tougher" on copyright issues - meaning, of course, siding with the publishers, studios and labels.
  - rayiner 14y ago
    A little known fact is that the Justice Department is required to defend Congress's laws. Congress put the import restriction provisions into the law, and the Justice Department is required to argue in favor of them.
hermanhermitage 14y ago
Any idea why this is in USA courts? Surely the sale occurred in another country and the terms and condition of that sale are dictated in that country? The transfer of ownership happened in the original country. If that breached the law it happened in the other country. If Ownership of a book is a property that survives crossing international boundaries (that is it is not seized by the state) and ownership in that nation confers certain rights then so be it. Don't sell something if you still want to own it. Don't give something to someone if you still want to keep it.
- mikeryan 14y ago
  There's two sales which occur,the original purchase of the book which happens overseas, there's no dispute here. The book is then resold in the US from a "distributor" in the US to US customers, thats why this becomes a US issue. Its the secondary sale which is questionable.
  - hermanhermitage 14y ago
    Thanks for that - I think I kind of get it. And the second sale is questionable because of a limitation of the first sale?
    - greenyoda 14y ago
      The question is whether the first-sale doctrine (the right to freely re-sell things that you bought) applies to items originally sold outside the U.S.
    - GauntletWizard 14y ago
      There's a difference between personal first-sale and wholesale distribution. It sucks that information - There's no value in the paper, just the printing on it - can cost different amounts in different areas, but it's fairly easy to differentiate between "I bought 1-3 copies of this book in my home country, moved here, and brought them with me" and "I had my parents ship crates of books from my home country, which I resold at a profit". The gray area will remain "I personally bought something from foreign land, even though I do not reside there".
lambada 14y ago
One thing most people haven't picked up on is how the 'terms' of the first sale typically include that the textbook can't be imported into the US without prior consent. That could mean a way out without actually solving anything - ruling it an illegal importation or something similar. That would mean the problem would be when he imported the book, not when he resold it.
- csense 14y ago
  I believe that such sale conditions aren't binding in the US, except for software licenses. At the dawn of the recording era in the early 1900's, the music industry -- surprisingly similar to today -- tried printing on each record, "Not to be resold for less than five cents" or something similar. And this was struck down by the court system.
csense 14y ago
Economics 101: If your goods cost $C to produce, and person A will buy them for $C + $5, and person B will buy them for $C + $8, you will sell two copies at $C + $5 for a maximum profit of $10. (If you try raising your prices above this point, you'll make less because your sales volume will go down due to B leaving the market.) But if you can price-discriminate -- figure out how much each customer is willing (or able) to pay and charge exactly that much -- you can set A's price at $C + $8 and set B's price at $C + $5 and make $13 instead. The publisher's doing exactly this sort of price discrimination: American customers are much wealthier than Thai customers, and willing/able to pay more, so they charge more. The crucial point of this analysis, however, is that the seller is still able to make a profit at the lower price level; it's just a smaller profit. So a ruling against the publisher won't greatly harm them; they'll still be able to profitably sell their books. However, a ruling in favor of the publisher will make it much more complicated for people to determine the restrictions in effect on their property, make their books available to fewer people, and generally stifle economic activity.
- exit 14y ago
  at the end of your first paragraph, shouldn't you say 'person a' leaves the market, not b?
- vec 14y ago
  Books don't cost $C/book to produce, they additionally cost $X to research, write, market, etc. And $X is much much larger than $C. So to take your example, assuming X=12 and C=1, if I sell my books for $6 and $9, respectively, I make $1 profit, but if I'm forced to sell them both at $6 I lose $2. Price discrimination is often a Good Thing, on balance. The takeaway from allowing price discrimination isn't (mainly) that Americans get gouged, it's that Thai students get access to textbooks they wouldn't otherwise be able to afford.
  - Someone 14y ago
    There are two sides to it: the Thai student gets the book at a lower price, and the US student gets it at a higher price, and the two may not balance out. In your example, a publisher might sell 2M copies of that X=12M book, 1M for $6 each in Thailand and 1M in the US for $100 each, making a huge margin of (106-12)/12=785%. In a free market competition should decrease that margin. However, the markets for books isn't entirely a free one. For many books, competitors cannot make close enough clones to actually compete (Harry Potter and fifty shades of grey inspired 'clones' aren't really clones; a physics textbook may have the same content, but it cannot have the exact same presentation order, questions, etc) The publishers argue that will be offset by other books that also cost them X=12M of which they sell, say, 10K in Thailand for $6 and 10K in the US for $100 at a huge loss. There probably is truth in that, but should one try and enforce that through regulation? If so, how? Prescribe that publishers can make at most x% on every dollar they spend at a printer every year? That would likely make them find more expensive printers for their US wares.
pseingatl 14y ago
This case is about what happens in the analog world; the interesting thing will be what unintended consequences obtain for the digital world based on this decision. The "law" in this situation is far from clear, and what will happen is that because of the size of the U.S. market, the international consequences of this decision will be severe. It will be interesting to see if any other country files, or attempts to file, an amicus brief.
perlpimp 14y ago
Seems that corporations want to profit from globalization but they want to forbid private entities to do so. Kind of unfair, whatever the outcome of the court ruling will be. The only control they might have is to produce completely different texts for each country - but to profit on global scale this would be inefficient. So they resort to lawyers and tarnishing of their name.

98 points by pwg 14y ago

Whichever way they rule it is going to be interesting. If they bless the sales, it legitimizes what is already a very active global gray market. If they condemn the sales, they strike down the first sale doctrine and it is a massive blow to fundamental property rights. As commenters have already pointed out earlier this year regarding this case, since most electronic goods are made overseas, it would be officially illegal to resell them without permission. Criminalizing the resale of foreign made goods that contain an IP component. It would also provide a massive benefit to moving manufacturing of every kind overseas to obtain this special new protection.

TillE 14y ago
> electronic goods But this case is apparently about copyright, and hardware isn't usually subject to copyright. Though I suppose firmware, etc. might be. Of course, I think it's ludicrous that anyone could be guilty of a copyright violation without having, by any imaginable definition, made a copy of anything.
- msbarnett 14y ago
  > But this case is apparently about copyright, and hardware isn't usually subject to copyright. Though I suppose firmware, etc. might be. There's no might, here. The firmware, OS, hell, even the branding text on a label is subject to copyright. See, for instance, the ruling in Omega v Costco, where a logo was enough to bring copyright infringement charges against Costco for importing foreign-market watches.
- DanBC 14y ago
  Copyright is normally copy and other rights. Thus, for many years, "this edition not available in the United States" was printed in UK editions of many books. I think (but I'm not sure) that the UK makes a difference between personal sales of out-of-country goods (this is okay) and a business selling out-of-country goods (this is not fine). A notable case is Tesco vs Levi jeans. There have been some other cases involving DVD importing.
- alexqgb 14y ago
  Copyright law governs both the creation of copies, and their distribution. This pairing is one of the law's longest-standing and must basic features. It's also the root of the conflict in this case.
  - decode 14y ago
    > Copyright law governs both the creation of copies, and their distribution. This is an interesting idea that I haven't heard before. In what ways has copyright law governed the distribution of objects when no copying is involved?
    - tedunangst 14y ago
      The distributed object is a copy. This court case does not apply to the sole copy of a manuscript.
    - alexqgb 14y ago
      "This DVD is licensed only for private, non-commercial use." That's backed up by copyright law. If you build a theater, charge people to enter, and program runs of classic movies, you will get sued for violating the commercial-distribution aspects of copyright law, even if you bought the DVD you were charging others to see.
      - decode 14y ago
        "you will get sued for violating the commercial-distribution aspects of copyright law" I think that's incorrect. I think this would be infringement due to it being considered a public performance, not commercial distribution. As the copyright act says, "A public performance or display of a work does not of itself constitute publication." The MPAA also describes the situation as a public performance issue: http://www.mpaa.org/contentprotection/public-performance-law http://www.mpaa.org/contentprotection/public-performance-law Do you know of any cases where a public performance was prosecuted as a commercial distribution case?
        14y ago
tzs 14y ago
>If they condemn the sales, they strike down the first sale doctrine and it is a massive blow to fundamental property rights. As commenters have already pointed out earlier this year regarding this case, since most electronic goods are made overseas, it would be officially illegal to resell them without permission You've left out a possibility: they condemn the sale without striking down first sale. They can easily distinguish these book sales from other potential first sale situations because the former involve goods where the first sale occurs outside the US and the goods are then imported without permission of the copyright owner, whereas the later involve goods where the first sale occurs in the US and if the goods were imported before that sale it was by the copyright owner.
- chris_wot 14y ago
  Actually, no. If they condemn the sales, then they have effectively restricted what you can and cannot do with overseas produced goods. Then everything gets sold from overseas to bypass first sale.
  - tedunangst 14y ago
    It doesn't matter where it's made. It's where it's authorized to be sold. The publisher will find it difficult to argue that the book they themselves imported was unauthorized.
  - tzs 14y ago
    No. They can condemn the sales by saying that 17 USC 602 controls in this situation, leaving first sale (17 USC 109) applicable to goods that have not been imported without authorization. Briefly, 17 USC 106 says that copyright owner has the exclusive right to distribute copies. 17 USC 109 (first sale) says that once a particular copy has been distributed under the authority of the copyright owner, it is no longer a violation of the distribution right for others to redistribute that copy. 17 USC 602 says that importing copyrights works into the US without permission of the copyright owner violates the distribution right.
greatreorx 14y ago
"If they condemn the sales, they strike down the first sale doctrine " ...only for goods manufactured outside the US and not authorized for import to the US by the manufacturer. Most electronic goods in the US that are made overseas are also authorized for US import. I bought my iPhone directly from Apple. Even if the Supreme Court rules against the sales in this case, I will be able to resell my iPhone because Apple authorized its import...they were the ones that imported it.
- smsm42 14y ago
  Unless the phone was first bought overseas. This may have big implications for second-hand markets like ebay as you can not really be sure where a good sold on ebay was manufactured, which countries it was authorized to import and who has the authority to authorize that. In fact, with such decision, each foreign item becomes potentially a problem for the buyer unless he has a proven certificate from original manufacturer authorizing import into the country the buyer is resident in. This of course would be a huge boon for these manufacturers as they would be able to charge extra for such certificates and suppress secondary markets. But it would not be as good for the consumers.

greenyoda 14y ago

"Wiley, with the Justice Department in support, dismiss those scenarios, and say Congress would be in a position to ensure libraries in particular do not suffer from any high court ruling against them." It's strange that the Justice Department would have a reason to have an opinion in this court case at all. And why would our executive branch be siding with the publishing business and against the average citizen on this case?

tzs 14y ago
Why do you find it strange that the department in charge of enforcement of the laws of the United States would have an opinion on a case concerning the interpretation of one of those laws?
- rhizome 14y ago
  Because interpretation is a matter for the judiciary particularly, and a matter of policy to the rest of the department.
  - tptacek 14y ago
    That's not always true. For instance, the US Code refers to the US Copyright Office for judgements about fair use.
- greenyoda 14y ago
  Because this was a civil lawsuit (Wiley v. Kirtsaeng; a corporation suing an individual for damages), not a law enforcement issue.
mtgx 14y ago
Because Obama got convinced that he needs to be a lot "tougher" on copyright issues - meaning, of course, siding with the publishers, studios and labels.
- rayiner 14y ago
  A little known fact is that the Justice Department is required to defend Congress's laws. Congress put the import restriction provisions into the law, and the Justice Department is required to argue in favor of them.

hermanhermitage 14y ago

Any idea why this is in USA courts? Surely the sale occurred in another country and the terms and condition of that sale are dictated in that country? The transfer of ownership happened in the original country. If that breached the law it happened in the other country. If Ownership of a book is a property that survives crossing international boundaries (that is it is not seized by the state) and ownership in that nation confers certain rights then so be it. Don't sell something if you still want to own it. Don't give something to someone if you still want to keep it.

mikeryan 14y ago
There's two sales which occur,the original purchase of the book which happens overseas, there's no dispute here. The book is then resold in the US from a "distributor" in the US to US customers, thats why this becomes a US issue. Its the secondary sale which is questionable.
- hermanhermitage 14y ago
  Thanks for that - I think I kind of get it. And the second sale is questionable because of a limitation of the first sale?
  - greenyoda 14y ago
    The question is whether the first-sale doctrine (the right to freely re-sell things that you bought) applies to items originally sold outside the U.S.
  - GauntletWizard 14y ago
    There's a difference between personal first-sale and wholesale distribution. It sucks that information - There's no value in the paper, just the printing on it - can cost different amounts in different areas, but it's fairly easy to differentiate between "I bought 1-3 copies of this book in my home country, moved here, and brought them with me" and "I had my parents ship crates of books from my home country, which I resold at a profit". The gray area will remain "I personally bought something from foreign land, even though I do not reside there".

lambada 14y ago

One thing most people haven't picked up on is how the 'terms' of the first sale typically include that the textbook can't be imported into the US without prior consent. That could mean a way out without actually solving anything - ruling it an illegal importation or something similar. That would mean the problem would be when he imported the book, not when he resold it.

csense 14y ago
I believe that such sale conditions aren't binding in the US, except for software licenses. At the dawn of the recording era in the early 1900's, the music industry -- surprisingly similar to today -- tried printing on each record, "Not to be resold for less than five cents" or something similar. And this was struck down by the court system.

csense 14y ago

Economics 101: If your goods cost $C to produce, and person A will buy them for $C + $5, and person B will buy them for $C + $8, you will sell two copies at $C + $5 for a maximum profit of $10. (If you try raising your prices above this point, you'll make less because your sales volume will go down due to B leaving the market.) But if you can price-discriminate -- figure out how much each customer is willing (or able) to pay and charge exactly that much -- you can set A's price at $C + $8 and set B's price at $C + $5 and make $13 instead. The publisher's doing exactly this sort of price discrimination: American customers are much wealthier than Thai customers, and willing/able to pay more, so they charge more. The crucial point of this analysis, however, is that the seller is still able to make a profit at the lower price level; it's just a smaller profit. So a ruling against the publisher won't greatly harm them; they'll still be able to profitably sell their books. However, a ruling in favor of the publisher will make it much more complicated for people to determine the restrictions in effect on their property, make their books available to fewer people, and generally stifle economic activity.

exit 14y ago
at the end of your first paragraph, shouldn't you say 'person a' leaves the market, not b?
vec 14y ago
Books don't cost $C/book to produce, they additionally cost $X to research, write, market, etc. And $X is much much larger than $C. So to take your example, assuming X=12 and C=1, if I sell my books for $6 and $9, respectively, I make $1 profit, but if I'm forced to sell them both at $6 I lose $2. Price discrimination is often a Good Thing, on balance. The takeaway from allowing price discrimination isn't (mainly) that Americans get gouged, it's that Thai students get access to textbooks they wouldn't otherwise be able to afford.
- Someone 14y ago
  There are two sides to it: the Thai student gets the book at a lower price, and the US student gets it at a higher price, and the two may not balance out. In your example, a publisher might sell 2M copies of that X=12M book, 1M for $6 each in Thailand and 1M in the US for $100 each, making a huge margin of (106-12)/12=785%. In a free market competition should decrease that margin. However, the markets for books isn't entirely a free one. For many books, competitors cannot make close enough clones to actually compete (Harry Potter and fifty shades of grey inspired 'clones' aren't really clones; a physics textbook may have the same content, but it cannot have the exact same presentation order, questions, etc) The publishers argue that will be offset by other books that also cost them X=12M of which they sell, say, 10K in Thailand for $6 and 10K in the US for $100 at a huge loss. There probably is truth in that, but should one try and enforce that through regulation? If so, how? Prescribe that publishers can make at most x% on every dollar they spend at a printer every year? That would likely make them find more expensive printers for their US wares.

pseingatl 14y ago

This case is about what happens in the analog world; the interesting thing will be what unintended consequences obtain for the digital world based on this decision. The "law" in this situation is far from clear, and what will happen is that because of the size of the U.S. market, the international consequences of this decision will be severe. It will be interesting to see if any other country files, or attempts to file, an amicus brief.

perlpimp 14y ago

Seems that corporations want to profit from globalization but they want to forbid private entities to do so. Kind of unfair, whatever the outcome of the court ruling will be. The only control they might have is to produce completely different texts for each country - but to profit on global scale this would be inefficient. So they resort to lawyers and tarnishing of their name.