July 19, 2011 Articles

First-Sale Doctrine Only Applies to Goods Made in America

By Andrew Berger

The Supreme Court's split 4–4 in Costco v. Omega, 131 S. Ct. 565 (2010) created a cloud of uncertainty over goods made by copyright holders abroad and then imported into this country without permission—so-called gray-market goods. The Second Circuit Court of Appeals, in a 2–1 decision in John Wiley & Sons, Inc. v. Kirtsaeng, 2011 WL 3560003 (2d Cir. Aug. 15, 2011), did little to clear this cloud of uncertainty.

Kirtsaeng held that section 602 (a)(1) of the Copyright Act trumps the first-sale doctrine in section 109(a) of that act with respect to goods made abroad and then imported into this country. But the tension between section 602 (a)(1) and section 109(a) is far from over. Kirtsaeng admitted the case raised "a particularly difficult question of statutory construction" and the result was therefore a "close call." Id. at 16. And Judge Murtha's well-reasoned dissent in Kirtsaengadds to the uncertainty.

Sections 109 and 602 are in tension because they lead to opposing results. Section 109, the first-sale doctrine, provides that a copyright holder loses control over the distribution of goods once the holder has made a first sale. But section 602(a)(1) provides that a copyright holder may retain control over the distribution of copyrighted goods made abroad if they were then imported into the United States without the permission of the copyright holder. Control is maintained because section 602(a)(1) states that the unauthorized importation of goods into the United States infringes copyright holder's "exclusive right to distribute . . . under section 106."

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