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Supreme Court Ruling Threatens Resellers

If you're a small business owner handling re-sold goods, you may want to pay attention to what happens in the Supreme Court this week.
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The Supreme Court is today hearing a copyright infringement case between a Thai-born student entrepreneur and a leading book publisher that may have lasting implications for all retailers that sell used goods and the consumers that buy them.

Publisher John Wiley & Sons brought forth the lawsuit after Sudap Kirtsaeng made nearly $100,000 in profit from re-sold copyrighted textbooks bought abroad and sold on eBay.

But the larger issue in Kirtsaeng v. Wiley is the future of the “first sale” doctrine. The doctrine is a limitation that gives owners the ability to resell, lend or donate copyrighted goods without content creators provoking them. It was first mentioned in a 1908 Supreme Court case concerning copyright ownership and codified into law in 1976 as part of the Copyright Act of 1976.

Kirtsaeng’s supporters argue that if the doctrine is struck down, copyright owners will be able to tax or shut down any form of retail re-sales, according to Ars Technica. Chegg, eBay, Google, Goodwill and Redbox are among the supporters of Kirtsaeng’s cause.

"This case is an attempt by some brands and manufacturers to manipulate copyright law, to control the distribution and pricing of legitimate, authentic goods," eBay legislative counsel Hillary Brill told Ars Technica.

Kirtsaeng previously lost a trial in New York when a jury decided that he had sold copies of eight Wiley textbooks without the publisher’s permission. In 2010, the Supreme Court earlier ruled a split 4-4 decision in a copyright protection case between Costco and Swiss watch company Omega concerning imported watches sold in the discount wholesale retailer at a lower U.S. price than suggested.

But attorney John Mitchell, who has argued on behalf of a Texas medical student who also sold re-sold textbooks, said the Costco case shouldn't have a bearing on the Court's decision.

"Nobody has to buy a $2,000 watch, or a $1,300 watch, so it didn't affect people in general," Mitchell told Ars Technica.  "But anyone who wants a college degree is going to need to get their hands on textbooks."

The re-selling of goods that originates overseas, sometimes called the “gray market,” has an annual value “in the tens of billions of dollars,” according to The Associated Press.

IMAGE: Clarissa Peterson via Flickr
Last updated: Oct 29, 2012

MATTHEW WONG | Staff Writer

Matthew Wong is a digital journalist whose work has also appeared in Dow Jones VentureWire and The Wall Street Journal.




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