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Upholding the first sale doctrine
At first blush, the case of Kirtsaeng v. John Wiley & Sons looks
like an obscure battle over the marketing of textbooks in the US with
little relevance to the free software community. But one need not look
deeply to realize that the US Supreme Court's recent ruling
[PDF] has some interesting implications. For years, it appeared that
there was no resistance to increased use of copyright law to protect
threatened business models. With the ruling in this case, the power of
copyright holders has been pushed back slightly, and an important right has
been reaffirmed.
The case in question starts with Supap Kirtsaeng, who figured out that he could buy textbooks in Thailand for resale in the US. Those books are sold much more cheaply in Thailand, offering a classic opportunity for arbitrage and a quick profit. The publisher of those books, John Wiley & Sons, sued, claiming that importing those books into the US was a violation of its copyright, despite the fact that the books had been legitimately published and sold in Thailand with Wiley's permission. Kirtsaeng responded that the books, like most copyrighted materials, were covered by the first sale doctrine; once Wiley had sold the books, it had exhausted its right to control their fate. Wiley's interesting claim in this case was that first sale does not apply to items that are manufactured outside of the US. Appeals courts in the US agreed with this position, but the Supreme Court did not. Its conclusion (by a 6-3 ruling) was that the place of manufacture and sale was not relevant to copyright law and that the import and resale of the books was a legal activity. So, for now, the first sale doctrine lives and cannot be eliminated simply by manufacturing an object abroad. This ruling matters for a couple of reasons. One is that software, too, is covered by copyright law, and it is often included in products manufactured all over the world. Copyright law is often used in an attempt to control what can be done with a larger product; the implications of eliminating first-sale rights on products with important copyrightable components could open the door to no end of possible horrors. Consider, for example, the following text from the decision:
Technology companies tell us that “automobiles, microwaves,
calculators, mobile phones, tablets, and personal computers”
contain copyrightable software programs or packaging. Many of
these items are made abroad with the American copyright holder’s
permission and then sold and imported (with that permission) to the
United States. 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. Yet
there is no reason to believe that foreign auto manufacturers
regularly obtain this kind of permission from their software
component suppliers, and Wiley did not indicate to the contrary
when asked. Without that permission a foreign car owner could not
sell his or her used car.
The logic that applies to a car also applies to just about any sort of electronic gadget that one can imagine — contemporary cars, after all, can be thought of as rather heavy electronic entertainment systems with self-propulsion capabilities and a problematic carbon footprint. It is a rare device indeed that doesn't contain copyrightable pieces imported from somewhere; the thought that all of those devices remain under the control of the copyright holder is discouraging at best. This ruling does not eliminate that threat (see below), but it mitigates it somewhat. Copyright law is often employed for the protection of business models. Over 100 years ago, music publishers claimed that player pianos were a threat to their existence and a violation of their copyrights; the attempts to use copyright to keep business models alive have continued ever since. So it is refreshing to see the Supreme Court state that there is no inherent right to protection for a specific business model:
Wiley and the dissent claim that a nongeographical interpretation
will make it difficult, perhaps impossible, for publishers (and
other copyright holders) to divide foreign and domestic markets. We
concede that is so. A publisher may find it more difficult to
charge different prices for the same book in different geographic
markets. But we do not see how these facts help Wiley, for we can
find no basic principle of copyright law that suggests that
publishers are especially entitled to such rights.
We still live in a world where publishers feel entitled to exactly such rights: the use of the CSS encryption scheme (and associated legal battles) to divide the DVD market is an obvious example. Perhaps it is optimistic to hope that a statement from the highest court in the US that such rights do not inherently adhere to a specific business model will improve the situation. But, then, your editor tends toward optimism. That said, there is plenty of space for pessimism as well; the upholding of first sale does not make our copyright-related problems magically vanish. Much of the industry appears to be headed in directions where first sale does not seem to apply — electronic books being an obvious example. The use of DRM schemes to restrict first-sale rights continues, and other aspects of copyright law (such as the DMCA in the US) support that use. The DMCA also remains useful for companies trying to restrict what the "owner" of a device can do with it; the debate over jailbreaking is one example. Online or "cloud-based" resources are subject to no end of restrictions of their own. And so on. But, then, nobody ever said that the fight for freedom would be easy. One Supreme Court victory is not going to change that situation. But it is an important affirmation that copyright is meant to be a limited right and not a means for absolute control by copyright holders. Those of us who are users of copyrighted materials (i.e. all of us) have some rights too. (Log in to post comments)
Upholding the first sale doctrine Posted Mar 21, 2013 8:14 UTC (Thu) by jezuch (subscriber, #52988) [Link]
This is a good decision, but I fear that as a result the publisher(s) will raise prices in Thailand instead of lowering prices in the US. I, being a resident of a certain Central European post-communist and not especially rich country, can see this happening with CD's. For years the high prices of music CD's has been a #1 complaint, by far, in one music magazine's annual "disappointment of the year" readers' poll. And for years these prices have been only going up. The excuse? If we had prices more appropriate for our standard of living, the Germans would come here in masses to buy cheap CD's. This is a principal reason I have absolutely no sympathy for media corporations whatsoever :)
Upholding the first sale doctrine Posted Mar 21, 2013 9:10 UTC (Thu) by bootc (subscriber, #87532) [Link]
Would this not affect Open Source licenses in a similar manner, though? All software licenses use copyright as a means to be effective, the GPL and its brethren included. How does the ruling affect the GPL's ability to enforce that the source code is available to all who obtain a device with GPL software onboard?
Upholding the first sale doctrine Posted Mar 21, 2013 9:49 UTC (Thu) by anselm (subscriber, #2796) [Link] If a device includes binary code derived from source code distributed under the GPL, that code (and by extension, the device containing it) can only be distributed if either (a) the source code is included with the binary, or (b) the vendor offers, in writing, to give the source code, under the GPL, to »any third party« (GPLv2) or »anyone possessing the object code« (GPLv3). In the first case, there is no problem because buyers of the device already have all they need. In the second case, there isn't a problem, either, since the offer also applies to second-hand buyers of the device. (The only problem with the second case is for second-hand buyers who buy the device after the time limit on having to offer the source code has expired.)
Upholding the first sale doctrine Posted Mar 21, 2013 9:58 UTC (Thu) by cladisch (✭ supporter ✭, #50193) [Link]
Applying the first-sale doctrine to software is somewhat difficult if there isn't a material object like a CD or a hard disk that is sold.
(see http://en.wikipedia.org/wiki/First-sale_doctrine#Applicat...)
I don't think that reselling makes is possible to lawfully remove the GPL source code requirements.
Reselling does not give the new owner more rights than the original owner had (for example, if an EULA forbids reselling, reverse engineering, benchmark publications, etc., then the first-sale doctrine makes the reselling restriction invalid, but after a sale, the new owner is still bound by any other lawful restrictions).
If somebody has a GPL binary, the source code or the source code offer is included. If he then resells this software, the *removal* of the source code (offer) would be a modification of the software which happens before the sale and which is forbidden by the GPL.
Also, making *copies* is a different right to which the first-sale doctrine does not apply.
Upholding the first sale doctrine Posted Mar 22, 2013 19:08 UTC (Fri) by giraffedata (subscriber, #1954) [Link] If somebody has a GPL binary, the source code or the source code offer is included. If he then resells this software, the *removal* of the source code (offer) would be a modification of the software which happens before the sale and which is forbidden by the GPL. I don't think that works. What you're distributing is the text of an offer - the words that memorialize an offer, not an offer per se. It isn't like a negotiable instrument (e.g. a bank check), where the writer of it is obligated to whomever ends up in possession. It does seem to me that first sale doctrine defeats the intent of the GPL, at least to the extent you can distribute physical copies. I don't need any permission from Harald Welte to give you my Red Hat CD. Ergo any conditions under which Harald offered me a license to give it to you are irrelevant. On the CD, you'll find evidence that someone once offered to give me source code, but I don't see how that entitles you to get source code from that person, and it definitely doesn't entitle you to get it from me. Likewise, EULAs don't propagate. An EULA is a contract in which I promise to do certain things in exchange for Microsoft giving me a copyright license. If I give my Windows CD to you, you're not obligated in any way under my contract with Microsoft. (It's true that I might have promised Microsoft not to give you my CD, or not to do so unless you made all the same promises, but the fact that I broke that promise doesn't affect your obligations).
Upholding the first sale doctrine Posted Mar 22, 2013 19:21 UTC (Fri) by mjg59 (subscriber, #23239) [Link]
"I don't see how that entitles you to get source code from that person"
GPL 3(b): "Accompany it with a written offer, valid for at least three years, to give any third party, for a charge no more than your cost of physically performing source distribution, a complete machine-readable copy of the corresponding source code"
The more interesting case is if the work was originally distributed under 3(a) and you received a binary CD and a separate source CD. Selling the binary CD on its own would cause the recipient to have problems.
Upholding the first sale doctrine Posted Mar 22, 2013 19:23 UTC (Fri) by dark (subscriber, #8483) [Link] The GPL foresaw this :) Version 2 says the offer should be to give the source to "any third party", and version 3 says "anyone who possesses the object code".Perhaps the third party won't be able to enforce this directly, but if the offer isn't honored then the copyright holder will have an issue to raise about the original distribution.
Upholding the first sale doctrine Posted Mar 23, 2013 3:09 UTC (Sat) by giraffedata (subscriber, #1954) [Link] The GPL foresaw this :) Version 2 says the offer should be to give the source to "any third party", and version 3 says "anyone who possesses the object code". That does seem to take care of it; thanks. But it also runs into another thing that has always made me uneasy about GPL: causality. The condition is that you make the offer, not that you honor it in the future. You meet the conditions of the license by including the offer with your copy, thus you're licensed to make that copy. You meant it at the time, but two years later, someone attempts to take you up on your offer and you say, "bite me." Does that mean your offer is retroactively not genuine and you retroactively didn't have permission to make the copy and we rewrite history?
Upholding the first sale doctrine Posted Mar 26, 2013 9:12 UTC (Tue) by ras (subscriber, #33059) [Link]
> Applying the first-sale doctrine to software is somewhat difficult if there isn't a material object like a CD or a hard disk that is sold.
I suspect we Australian citizens are going to put that to the test. We currently pay up to twice what you do in the US to download the same software from servers in the US. For more expensive products it is actually cheaper to fly to the US and buy it there. This includes gaming software from Valve.
Just so you know how bad it is, I'll quote from this URL http://au.news.yahoo.com/thewest/a/-/news/16114230/ :
> Australians pay on average 73 percent more on iTunes downloads than the United States, 69 percent more on computer products and a staggering 232 percent more on PC game downloads.
We are collectively so pissed off but this there was a Federal Government inquiry into it, where they summoned people from Microsoft, Adobe and so on for a "please explain". They were refreshingly honest. Except for Apple, their answer was "because we can". Apple was the one exception. As much as it pains me to say this, their hardware has a reasonable markup explained by taxes and Australia's enforced warranty provisions. iTunes was because pricing is determined by the Music industry, not Apple.
The end result of all this publicity? Have you every seen HOWTO's on proxies and laundering Australia Dollars do the look like US dollars in popular discussion forums? I hadn't, until now.
Upholding the first sale doctrine Posted Mar 21, 2013 19:21 UTC (Thu) by Aliasundercover (subscriber, #69009) [Link]
The GPL is not like a EULA as it does not attempt to take away any right you have as the owner of a copy. US copyright law makes a distinction between owning the object and owning the copyright. Owning the object entitles you to use it and sell it. Making new copies or doing public performances is reserved to the copyright owner. GPL does not have any bearing on using or selling but does offer privileges to make and distribute new copies if its terms are met. Without the GPL license only the copyright owner can make new copies.
I have read some arguments that strong first sale rights can be used to subvert the copyleft properties of the GPL. It goes something along the lines of obtaining a stream of physical copies of GPL works, then modifying each one and distributing it without the source code of the modification. I can't say I fully understand the argument but the people who put it forward claim first sale exposes the GPL to being bypassed. I don't credit it. Even if I did I think the issue is freedom and the freedoms we get from first sale are more important than defending against a hack on the GPL.
It is good to see the Supreme Court do something right. Only 3 votes for utter insanity is good for them lately.
Upholding the first sale doctrine Posted Mar 22, 2013 0:20 UTC (Fri) by giraffedata (subscriber, #1954) [Link] Only 3 votes for utter insanity ... Remember that the job of a Supreme Court Justice is not to decide what is sane (or what you really meant -- what is right). It's to decide what the law is. The fact that Wiley's lawyers, a district court, an appeals court, and 3 Supreme Court Justices thought First Sale doesn't apply to foreign-made copies tells me there is probably some clearly written statute or binding precedent somewhere that says that, the US Congress was happy with it, and 6 justices bent over backward to interpret it as not meaning what it seems to. I wouldn't necessarily cheer them on for that. I'm just saying a court's job is a lot harder than just deciding what the world should be like.
Upholding the first sale doctrine Posted Mar 22, 2013 1:56 UTC (Fri) by Aliasundercover (subscriber, #69009) [Link]
I believed that once upon a time, before I started reading court opinions.
Upholding the first sale doctrine Posted Mar 22, 2013 9:12 UTC (Fri) by dvdeug (subscriber, #10998) [Link]
The decision is linked at the top of the page; I don't see any twisting in its argument that the First Sale Doctrine is not geographically limited.
Upholding the first sale doctrine Posted Mar 22, 2013 15:40 UTC (Fri) by giraffedata (subscriber, #1954) [Link] I don't have time to read the decision (note that it took 33 pages for the court majority to explain why First Sale does apply to foreign-made copies; a concurring judge spent 4 more pages saying First Sale does apply, but for a different reason, and the minority took 33 pages to explain why First Sale doesn't apply. So it does not seem like a trivially obvious result that one of us could just criticize off-hand), but I read the first page and this is the argument that First Sale does not apply to foreign-made copies: Rights to prevent copying come from the US copyright statute. That statute says those rights don't cover simply transferring ownership of a copy made "lawfully under this title." (That is the First Sale doctrine). The US copyright statute has nothing to do with copies made in Thailand; it cannot be said that those copies were made "under this title," ergo the First Sale limitation to copyright does not apply. Obviously, the other way to look at it is that the copies made in Thailand did not violate the US copyright statute, so they were lawful under that statute. So it takes 33 pages to delve deeper into it, look at the rest of the title, previous decisions, history of the law, etc. to figure out which version Congress meant. Going only on the LWN article and the first page of the decision, I wouldn't even venture to guess.
Upholding the first sale doctrine Posted Mar 22, 2013 18:02 UTC (Fri) by Aliasundercover (subscriber, #69009) [Link]
So, numbers of pages should convince us these are hard questions of legal interpretation being handled by justices scrupulous in their duty to interpret Congressional intent without their own political bias?
Find the time to read the documents and risk raising your own cynicism. Or don't and preserve your bliss. Pages mean nothing.
Upholding the first sale doctrine Posted Mar 23, 2013 9:42 UTC (Sat) by dvdeug (subscriber, #10998) [Link]
I know that some Supreme Court decisions aren't based on good law. This one seems to be, and your arguments against that doesn't seem to be based on anything written in the documents.
Cynicism hides reality at least as badly as any other simplistic philosophy. If you're not interesting in taking reality as she is, at least don't harass those of us who are trying.
Upholding the first sale doctrine Posted Mar 24, 2013 11:52 UTC (Sun) by kleptog (subscriber, #1183) [Link]
The most interesting part I found was from I think the concurring judge which stated that market segmentation is not a right but neither is it explicitly forbidden, simply that neutering the first-sale doctrine was not the right way to do it.
He suggested that the supreme court had erred in a previous related case where if that had gone the other way market segmentation would have been possible without neutering the first-sale doctrine.
As usual, the ball is really with the legislature to fix the law so that it says what they intended, rather than having judges try to guess.
Upholding the first sale doctrine Posted Mar 26, 2013 0:31 UTC (Tue) by nix (subscriber, #2304) [Link] As usual, the ball is really with the legislature to fix the law so that it says what they intended, rather than having judges try to guess.But that requires legislators to read the laws before they pass them, rather than just taking whatever the lobbyists wrote and jamming it through on a $PARTY ticket. (This is not universal, but is depressingly common in both the US and EU.)
Upholding the first sale doctrine Posted Mar 28, 2013 16:46 UTC (Thu) by Wol (guest, #4433) [Link]
And which is why the UK government is intent on neutering the House of Lords.
Jealousy is a terrible reason for doing things, and one thing our unelected House did very well - precisely *because* they were unelected - was to go through legislation with a toothcomb and make sure that it was reasonable legislation.
Once we've lost it, I doubt we'll get it back ...
Cheers,
Upholding the first sale doctrine Posted Mar 28, 2013 17:04 UTC (Thu) by BlueLightning (subscriber, #38978) [Link]
Apart from those of the unelected who were offering legislation for a price, that is (and those were just the ones that got caught)...
Upholding the first sale doctrine Posted Mar 31, 2013 11:40 UTC (Sun) by wtanksleyjr (guest, #74601) [Link]
> a copy made "lawfully under this title."
As far as I can tell, that was the heart of the publisher's case. And it's enormously silly. Yes, that's the text -- but what did the text mean? That is, what exactly is being EXCLUDED? What isn't allowed to be resold without permission? The answer is simple -- it's _illegally produced_ copies.
Upholding the first sale doctrine Posted Apr 2, 2013 2:58 UTC (Tue) by giraffedata (subscriber, #1954) [Link] The answer is simple -- it's _illegally produced_ copies. And that was the heart of the importer's case. For the people who know a lot more about copyright than we do, the answer was not simple. Multiple learned judges came to the opposite answer, and were able to back it up with thousands of words of explanation. Other learned judges arrived at the same answer as you, but respected the alternative logic enough to take thousands of words to explain why their own logic beats it. Though I didn't read the arguments, it is not hard for me to believe that Congress might have meant to exclude some legally produced copies from that paragraph. If Congress really meant something that simple, why didn't Congress just say it? Why write about a copy made "lawfully under this title" instead of just "lawfully"? I haven't seen this particular phrasing before, but I have seen lots of statutes that talk about things done "under this section" that incontrovertibly refer to the things that are made legal by operation of that particular section, and not by anything else.
Upholding the first sale doctrine Posted Apr 2, 2013 11:44 UTC (Tue) by hummassa (subscriber, #307) [Link]
> Why write about a copy made "lawfully under this title" instead of just "lawfully"?
There is a principle in how to interpret the law that says (translated from my native Portuguese) "no comma is wasted in the law text". This principle, alone, is enough to justify interpreting "lawfully under this title" from "lawfully", where the latter should mean "under the effect of any law source" and the former, "under the effects described in this specific title only".
IANAL, TINLA, just a former paralegal.
Upholding the first sale doctrine Posted Apr 2, 2013 16:25 UTC (Tue) by giraffedata (subscriber, #1954) [Link] I don't know an aphorism for it in US law, but the same concept exists. All words must be given meaning. It produces some results that are maddening for a mathematician, like: a lease contract says all payments under the lease must be paid by the 5th of the month. In another section, it says utility payments must be made by the 15th of the month. To a mathematician, these two statements are consistent and mean that utility payments must be made by the 5th of the month. But a judge would read the utility payments to be an exception, because otherwise the words about the 15th would be superfluous.
Upholding the first sale doctrine Posted Mar 21, 2013 21:40 UTC (Thu) by lacos (subscriber, #70616) [Link]
Market segmentation is important when dealing with "inequalities over the world". (Please excuse the grandiosite words.) CD's are one example, but what about pharmaceutical drugs?
Suppose you're big pharma and research, develop, and sell meds. If you keep one price all over the world, you'll be billed a usurper of human suffering in poor countries. So you lower the prices there (practicing charity), while recovering your costs and making a profit in rich markets. Now suppose someone reimports the cheap drugs, basically punishing you for your charity and endangering your drug research. What's the answer if not market segmentation?
CD distributors just don't care, and rightfully so. Music (especially pop music) is not critical for your well-being; they're not morally obligated to help you in your desire for entertainment / culture.
Upholding the first sale doctrine Posted Mar 21, 2013 21:42 UTC (Thu) by lacos (subscriber, #70616) [Link]
"grandiosite words" --> botched attempt to turn "grandiosity" into "grandiose words". Sorry.
Upholding the first sale doctrine Posted Mar 21, 2013 21:58 UTC (Thu) by wahern (subscriber, #37304) [Link]
Market segmentation isn't charity, it's just maximizing profits. Every company attempts to segment their market six ways from Sunday, because it usually allows you generate more profits by arbitraging differences in price elasticity. Another term for market segmentation is price discrimination.
All these concepts are fundamentally neutral in terms of being harmful or beneficial. So don't pull on my heart strings in an attempt to feel bad when trade barriers are taken down.
If poor countries need help acquiring pharmaceuticals, they can come ask me or my political representatives directly. If somebody is on the cusp of curing cancer, but can't afford the trials because their Viagra slush fund was raided by stock holders, they can come ask me or my political representatives.
If you try to address these issues with round-about trade machinations, in all likelihood you'll dramatically reduce overall social wealth.
Upholding the first sale doctrine Posted Mar 21, 2013 22:15 UTC (Thu) by lacos (subscriber, #70616) [Link] If poor countries need help acquiring pharmaceuticals, they can come ask me or my political representatives directlyAssuming (from your comment) that free trade has been established and the producer has been forced to set a common (high) price overall, how would the above work in practice? Thanks.
Upholding the first sale doctrine Posted Mar 21, 2013 22:29 UTC (Thu) by dlang (✭ supporter ✭, #313) [Link]
you (or your political representatives) help the poor country pay the costs.
Upholding the first sale doctrine Posted Mar 22, 2013 8:48 UTC (Fri) by lacos (subscriber, #70616) [Link]
It wouldn't prevent them (or a 3rd party merchant) from reimporting and reselling more cheaply. Perhaps the subsidized pharmaceuticals should only be sold to patients ("end users") in the target country, but that's again a trade barrier, only not between countries.
Upholding the first sale doctrine Posted Mar 22, 2013 18:55 UTC (Fri) by nix (subscriber, #2304) [Link]
... or you decide to eat the loss because the alternative is the poor country compulsorily licensing your patent and farming it out to a much cheaper generic manufacturer. Of course, a lot of patent treaty sorts *hate* this, but it's still there, and India and others have used it. It's amazing how fast the licensing fees demanded dropped when they did so.
Upholding the first sale doctrine Posted Mar 22, 2013 19:32 UTC (Fri) by raven667 (subscriber, #5198) [Link]
> So you lower the prices there (practicing charity), while recovering your costs and making a profit in rich markets.
I don't believe that any industry operates by selling product at a loss in poor countries to only make a profit in rich countries, in the examples of pharma or music the product is still being sold at a profit in the poor countries, it is just sold at a much higher profit in the rich ones. The rich countries are not subsidizing the poor, profit is instead made from both, according to their ability to pay. If a customer dosen't have ability to pay, they just don't receive the product. In the pharma industry this can be rather cruel.
Upholding the first sale doctrine Posted Mar 24, 2013 19:08 UTC (Sun) by Jonno (subscriber, #49613) [Link]
> The rich countries are not subsidizing the poor, profit is instead made from both, according to their ability to pay.
While this is always true with regards to manufacturing cost (also known as the marginal cost, e.g. the cost of making one more item), if you include a proportional part of the development cost, the price of the product in poor countries might in fact be "below cost".
Thus, the company makes a larger profit by selling their product in poor countries at a lower prise, compared to not selling at all in those countries, but that don't mean they would make a profit if all their sales were at that price. This is what makes price discrimination (and it's enforcement) an ethically difficult issue...
Upholding the first sale doctrine Posted Mar 21, 2013 12:59 UTC (Thu) by neiljerram (subscriber, #12005) [Link]
"player pianos"?
Could someone expand on what that means? Or is it possibly a typo for "piano players"?
Thanks - Neil
Upholding the first sale doctrine Posted Mar 21, 2013 13:05 UTC (Thu) by neiljerram (subscriber, #12005) [Link]
Ah, OK, I've seen http://en.wikipedia.org/wiki/Player_piano now.
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