‘You can’t resell that’ — A guide to today’s Supreme Court copyright case

Is this the end of the yard sales? News media are making a fuss about a court decision that lets publishers use copyright to prevent consumers from reselling imported goods.

Today, the Supreme Court will take a closer at this “grey marketing” issue — and decide how to balance consumers’ right to use their property against owners’ rights to set prices.

The outcome will affect your right to buy and sell books, music and more. Here’s a plain-English guide to what the case is about and what it means for you:

What do you mean I can’t resell this book? I bought it fair and square

In the past, a publisher’s right to control distribution ended after they sold a book — copyright’s “first sale” rule. But last year, an appeals court said this rule only applied if the book (or other item) was made in the US . This means that if you resell a book or a toy made in China or the UK, you’re infringing copyright.

What led to the ruling?

A Thai-born man studying at a US school realized he could buy his textbooks much cheaper in his home country. He began importing large quantities of books and reselling them on eBay. Other people began doing the same, leading publisher John Wiley to bring a copyright suit to stop this. Last year, an appeals court sided with John Wiley.

Does this apply to just books or to any imports?

It can apply to anything protected by copyright. The case is so important because manufacturers are relying on the rule, too — by putting artistic designs on their products so they qualify for copyright protection. That’s what watch maker Omega did a few years ago; Omega put a tiny picture on its watches  and then sued the retailer Costco for copyright infringement (Omega was upset that Costco was buying the watches overseas and then selling below the suggested price in the US).

Here’s a look at the tiny design that Omega used to make its watches eligible for copyright protection (other companies will likely try the same trick) :

In the bigger picture, the textbook and Omega watch cases show how real time information makes it easier for sellers to engage in arbitrage — buying goods in other markets to resell back here. Publishers and manufacturers believe the resellers are engaged in an unfair business practice and are using copyright to stop this.

But what if I have a yard sale or sell my stuff on Craigslist?

That’s the problem. In the John Wiley textbook case, the appeals court didn’t set out any limits to the “no resale” rule. This means, in theory, that anyone who resells an overseas good could be violating copyright.

In reality, it’s a pretty safe bet that publishers and manufacturers are not going to run around shutting down garage sales. But the ruling could spell trouble for used book stores, consignment stores or other merchants who sell used goods.

If you’re into the legal nitty-gritty, the Copyright Act has two sections that seem to contradict one another: One section says unauthorized imports violate a copyright owner’s exclusive right to distribution (which favors the publisher). The other section limits the rights of the copyright owner by saying the owner of a copy “lawfully made under this title” can sell it (which favors the consumer).

What’s the Supreme Court going to do?

The court can overturn the appeals court case, leaving us to carry on as before. If it decides to uphold the ruling, the vourt may try to limit its effect, perhaps by declaring the rule only applies in special cases. Or it may simply uphold the case and leave it to Congress to clean up the ensuing resale mess.


How does the case affect digital book or music sales?

It won’t have a big affect because, for better or worse, we don’t really own our digital books and music — we license them from Apple or Amazon. The Supreme Court case — which turns on physical objects we do own — is about non-digital property.

Any predictions on the outcome?

The Supreme Court heard the same issue in 2010 when Omega and Costco argued about the watches. That case resulted in a 4-4 tie which means the lower court ruling against Costco (and consumers) was upheld. The tie came because Justice Elena Kagan recused herself. She will cast a vote this time — likely the deciding one. It’s hard to predict which side she will take.

I can’t get enough of this first sale copyright stuff. Where can I learn more?

Legal reporter Joe Mullin of Ars Technica has a great profile of the facts and legal background: How a Supreme Court ruling may stop you from selling just about anything. And SCOTUSblog has the filings and more for Kirtsaeng v. John Wiley & Sons.

(Image by Monkey Business Images via Shutterstock)