US Supreme Court debates copyright-grey market case | Bangkok Post: news

WASHINGTON : The US Supreme Court raised questions about the multibillion-dollar trade in goods outside authorised distribution channels, hearing arguments in the case of a Thai graduate student sued for selling foreign-edition textbooks in the US at discount prices.

The copyright dispute may restrict the so-called grey market, with ramifications for publishers, retailers, entertainment companies, manufacturers and consumers. Retailers that offer grey-market products, led by eBay Inc. and Costco Wholesale Corp., are seeking limits on copyrights. The motion picture, music, software and publishing industries say the grey market illegally undercuts their US sales.The high court case concerns Supap Kirtsaeng, who was ordered to pay John Wiley & Sons Inc $600,000 for importing the publisher's copyrighted textbooks from his native Thailand and selling them in the US for a profit.Allowing copyright holders to sue over such importations would give them "endless, eternal downstream control over sales and rentals" of their goods, Mr Supap's lawyer, E. Joshua Rosenkranz, told the court. That would give companies an incentive to send their manufacturing overseas, he said."Your reading is, essentially, once a copy is sold anywhere, the copyright owner loses control of distribution everywhere," Justice Ruth Bader Ginsburg told Rosenkranz.Justice Stephen Breyer asked Wiley & Sons's lawyer Theodore Olson whether a ruling for the publisher would mean that someone who bought a Toyota that included copyrighted sound and global-positioning systems couldn't sell the vehicle without getting permission from the copyright holders.Olson said that in some cases an implied licence, or "fair use" doctrine, would protect people.Grey-market products are genuine goods that retailers acquire through unauthorised channels to exploit the lower prices manufacturers sometimes charge overseas. Imports of those products to the US cost makers as much as $63 billion in sales a year, according to a 2009 Deloitte LLP analysis conducted for Bloomberg News.The case poses a question that deadlocked the Supreme Court 4-4 in a 2010 clash between Costco and Swatch Group AG's Omega unit over discounted watches.Justice Elena Kagan didn't take part in that case and now stands to cast the deciding vote.The dispute turns on a legal doctrine that says a copyright holder can profit only from the original sale of a product. In 1998, the Supreme Court unanimously ruled that the so-called first-sale doctrine applies to US-made products that are sold overseas. The ruling meant that purchasers could bring those goods back into the US to sell or distribute even if the copyright holder objected.The question now is whether that same reasoning applies when companies manufacture goods abroad. The New York-based 2nd US Circuit Court of Appeals ruled that it doesn't, siding with Wiley and upholding the jury award.The appeals court pointed to a provision in the 1976 Copyright Act that limits the first-sale doctrine to goods "lawfully made under this title." The panel said foreign-made goods don't fit that description.Kagan told Rosenkranz that a copyright isn't "one right that applies everywhere in the world." Instead, she said, "You have your US rights and you have your Chinese rights, and you have your rights under each jurisdiction's law.""Your position is essentially to say that, when I sell my Chinese rights to somebody, I'm also selling my US rights to that same person, because the person who has the Chinese rights can just turn around and...