• Companies Selling Copyrighted Works in Foreign Countries Beware
  • April 5, 2013
  • Law Firm: McDonald Hopkins LLC - Cleveland Office
  • Foreign purchasers of those works can lawfully import them back to the U.S.

    In a significant decision that will affect how companies do business abroad, the United States Supreme Court ruled that when a party sells a product protected under U.S. copyright in a foreign jurisdiction, the purchaser of that work may then import and sell it back into the United States under the “First Sale Doctrine.” Kirtsaeng v. John Wiley & Sons.

    In the case, Wiley published textbooks for sale in the United States and authorized a foreign affiliate to publish the same textbook at considerably lower prices than the U.S. editions in foreign markets. Wiley’s affiliate also included a statement in those books that they were only to be sold in that specific country.

    Kirtsaeng, who came to the United States from Thailand, asked friends and family in Thailand to purchase the lower-priced foreign editions of the English-language textbooks and mail them to him in the United States. He then sold the books at a reduced cost from the U.S. edition of the textbook, making a profit for himself.

    Wiley sued Kirtsaeng for copyright infringement because his actions violated Wiley’s exclusive “importation right” under the Copyright Act. A jury found Kirtsaeng liable for willful infringement and awarded statutory damages to Wiley. On appeal, the United States Court of Appeals for the Second Circuit affirmed.

    The United States Supreme Court reversed in a six-to-three decision. The Court adopted a non-geographical interpretation of the Copyright Act— if a copyright owner authorizes a work to be made and sold in a foreign country, any such copies of that work are deemed to be “lawfully made.” Therefore, the Court determined, the First Sale Doctrine applies to such copies, and the copyright owner cannot control the distribution of such copies beyond when the first sale was made in the foreign country, regardless of the “importation right.”

    Companies making or selling works in foreign territories will have to revisit their legal and business options to prevent the unauthorized importation and distribution of their goods and products into the United States. Our Intellectual Property group is available to discuss this case, its impact on your business, and your legal and business options to prevent such unauthorized practices by third parties.