First sale freedom

Brands can’t use copyright to stop resales, court confirms

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In 2013, the fate of everything from used bookstores to neighborhood garage sales hung in the balance as the Supreme Court decided whether it was legal for people to sell secondhand goods without the permission of the original owner. Fortunately for resellers, the court said it was and, this week, a new court ruling cleared up the issue once and for all — for physical goods that is. Digital possessions are still a different story.

If you’re unfamiliar, the Supreme Court case was about imported textbooks, but the reason the issue had become a national fuss in the first place was thanks to watch maker Omega, which made a devious decision to stop the retailer Costco from importing its watches.

Omega did this by putting a small picture on the watch, and then pointing to an ambiguous part of the Copyright Act (“lawfully made under this title”) to say that a right to resell works under copyright only applied if the goods were made in the U.S.

Even if Costco had bought the watches fair and square overseas, Omega argued, the small picture meant that the watches were covered by copyright law, and that Costco could not around and sell them in its U.S. stores. To the surprise of many, an appeals court in California bought this argument and, all of a sudden, anyone selling used goods not made in the U.S.A. faced the nasty possibility of having to seek permission from the overseas owner.

The ensuing legal squabble between Costco and Omega actually reached the Supreme Court in 2010, but resulted in a rare 4-4 tie, leaving the situation in further limbo. It wasn’t until the textbook case in 2013, known as Kirtsaeng, that the court finally cleared up the matter, ruling 6-3 that the so-called “first sale” doctrine — which ends the control of copyright owner to limit sales — applied to goods bought anywhere.

And now, in a bit of mop-up work, the California appeals court this week returned to the original Costco-Omega fight, but this time sided resoundingly with Costco.

Project Disco has a good write-up of the decision but, in short, the upshot is that a three-judge panel applied the Supreme Court textbook case to put a stop to Omega’s campaign. And in an interesting twist, one of the judges wanted to go further and uphold a lower court finding that Omega had committed “copyright misuse.”

While the whole affair might seem to be no more than a question of common sense, the issue of “first sale” could become a hot issue in the future as a result of many of our possessions becoming digital. Unlike a book or record on our shelf, we don’t actually own our iTunes songs or Kindle copies — we simply license them at the whim of Apple and Amazon. This situation has led some to argue before Congress, which is currently reviewing the state of copyright law, that there should also be a digital right of resale.

5 Responses to “Brands can’t use copyright to stop resales, court confirms”

  1. Kallen Williams

    There is really no difference between a digital item and, say, a book aside from the belief they are somehow different. In an age where information wants to be free, we have the greedy corporate shareholders demanding the right to extort for their own gain, regardless of the damage it does to peoples lives by depriving us of art and culture. Sure, people should be able to survive making art, but the reason they cannot is due to those who work to enslave them and their creative spirit in a system that funnels the rewards to them, the parasites, not those who create/express as part of their life journey. The container is little more than shackles on culture, and when we can put culture into our own buckets, it confounds those who wish to feed off others for a living.

    • Will Buckley

      Information is not art. When I refer to the music industry, I refer to the individual creators, who like any worker deserve to be able to monetize their work.

      Not the record labels, not interactive music streaming’s and least of which pirate websites, who profit from the work of creators without compensation..

      Free is not a sustainable business model for any individual who wants to commit their lives to creating for the benefit of others.

  2. Will Buckley

    Can you imagine the Pandora’s box that the resale of digital content would rain upon an already ravaged music industry? While it is easy to establish the rightful ownership of a physical product, although even there you already have a problem with counterfitting, the resale of digital content would create a flood of pirated content being sold.

    I completely oppose the resale of digital content and the impossible situation it would create in verifying legitimate ownership. As the free file sharing proponents aggressively claim it is only a “copy”.

    Can’ miss the author’s innuendo “at the whim of Apple and Amazon.”