Kirtsaenge v. John Wiley & Sons Inc. - Implications for Copyright Infringement Law

Late last month, the U.S. Supreme Court heard arguments from litigants in the case of Kirtsaenge v. John Wiley & Sons Inc., and the outcome could have potentially widespread implications with regard to future copyright infringement cases.

While our Chicago business attorneys know that the product in question is actually textbooks, it could mean that private individuals could be pursued for copyright infringement for failing to discard their newspaper after entering customs upon returning from international travel.

It sounds crazy, but that could ultimately be the interpretation if the court justices rule in favor of John Wiley & Sons, a textbook manufacturer.

Kirtsaeng is a Thailand native who traveled to the U.S. on a student visa in the late 1990s. He, like many university students, soon discovered the sky-high prices of textbooks. And also, like many other foreign students who came to the U.S. to get an education, realized he could obtain those same textbooks back home for prices that were far lower.

So rather than pay full price for the books in the U.S., he would have family members in Thailand legally purchase the materials. He would then have his family ship those textbooks to the U.S. If it was solely for his own purposes, this may not have garnered much attention.

However, Kirtsaeng saw a business opportunity, and in turn, began selling those under-priced textbooks on online forums.

The book company filed a lawsuit against him in 2008. A district court jury ruled in favor of Wiley, and awarded the company $75,000 worth of damages per work that had been infringed upon. So in other words, for every title that he resold, he would pay that much. That decision was appealed to the 2nd Circuit Court of Appeals, where a panel of justices confirmed the district court's decision. Since then, Kirtsaeng has appealed to the U.S. Supreme Court, which heard arguments on the case on Oct. 29. A decision can be expected within a few months.

Essentially, there are two competing legal copyright infringement issues here upon which the high court will likely base its decision.

The first of those is called the first sale doctrine. Under this interpretation, if someone legally purchases a copyrighted work, he or she has the right to sell it or otherwise dispose of it without obtaining prior permission from the copyright owner. So let's say you buy a Tom Petty CD in the U.S. You can lend that to your roommate or your brother or a person you meet in a bar - no problem. And if two years later you want to sell it in a garage sale, that's also no problem. According to a Supreme Court ruling made in 1998, the first sale doctrine poses that once a copyright owner places the copyrighted item in the stream of commerce by selling it, he or she has exhausted his or her exclusive statutory rights to control its further distribution.

But here's where it gets tricky: international commerce. There is another section of U.S. copyright law that forbids importing copyrighted material into the U.S. without the authority of the owner if the works were acquired outside of the U.S.

Which one will prevail?

Well, the 2nd Circuit Court of Appeals ruled that the first sale doctrine wasn't applicable to copies made outside the U.S.

But this poses all kinds of problems. For one, how do you know where a material was manufactured? Tom Petty is an American artist and his record label is American, but what if his CDs are actually manufactured in China? Would you then not be able to lend that CD?

Or what if we donate a computer we know was made in Thailand to a school?

The issue before the Supreme Court is an important one, and one that our Chicago business lawyers will be watching closely.

Jeremy A. Gibson & Associates is a law firm dedicated to business litigation in Chicago and elsewhere in Illinois. Call 877-452-4529 for a free consultation.

Additional Resources:
Kirtsaeng v. John Wiley & Sons, Inc., Argued Oct. 29, U.S. Supreme Court of the United States