Gamers Rejoice: SCOTUS Upholds First Sale Doctrine

At last, some rare good news in the copyright law landscape. After months of deliberations, the Supreme Court of the United States issued a decision yesterday in the case of Kirtsaeng v. John Wiley & Sons Inc., ruling in favor of Supap Kirtsaeng and in the process, saving American consumers – for the time being – from an almost feudal commercial environment.

The case – which we went into at length last fall – concerned Kirtsaeng’s textbook cottage business. A cash-strapped graduate student during the late 1990s, he found cheaper versions of the same textbooks in his native Thailand, which he had his relatives buy for him to save costs stateside. He began to acquire such textbooks for fellow students and by 2003 had built himself an eBay business selling foreign editions of U.S. textbooks that was worth more than a million dollars.

Textbook publisher John Wiley & Sons Inc. sued Kirtsaeng on the grounds that his business undermined its copyrights. Kirtsaeng argued that he was within his rights under the first sale doctrine, which allows purchasers to resell items purchased legally without compensating the original copyright holder. The doctrine has been accepted law since 1908, but an appellate court sided with John Wiley & Sons, even going as far as ruling that the first sale doctrine only covered items actually produced in the United States. That ruling, if upheld by the Supreme Court, would have essentially gutted American consumer rights, preventing the resale of anything not actually made in the USA. Imagine being sued for copyright infringement for selling used games, used CDs, or even trying to trade foreign editions of books with your friends. Such was the danger inherent in that interpretation of the law.

Fortunately, the Supreme Court disagreed with the lower court’s rather loose interpretation of precedent and the law. In a 6-3 ruling, the court found for Mr. Kirtsaeng, with Justice Breyer writing in the majority opinion that “Reliance upon the ‘first sale’ doctrine is deeply embedded in the practices of those, such as book sellers, libraries, museums, and retailers, who have long relied upon its protection.”

Breyer cited concerns that even libraries would be affected by a ruling that reduced first sale doctrine protections, as well as the legal nightmare it might create for what are now routine transactions. “A geographical interpretation would prevent the resale of, say, a car,” Breyer said, “without the permission of the holder of each copyright on each piece of copyrighted automobile software.” Chief Justice John G. Roberts Jr. and Justices Clarence Thomas, Samuel A. Alito Jr., Sonia Sotomayor and Elena Kagan agreed with him.

As the Washington Post notes, a similar case from 2011 was deadlocked 4-4 after Justice Kagan recused herself, demonstrating that one justice changed their opinion in the years since. While that in and of itself is trivial, the ruling, and evidence of changing opinions on the court, could provide a glimmer of hope to gamers concerned about console manufacturers asserting ownership rights over devices after they’ve been lawfully sold.

The infamously botched Matthew Crippen case comes immediately to mind. Crippen was slapped with serious federal charges and faced up to 10 years in prison after he was accused by Microsoft of willfully enabling piracy via his Xbox 360 console modding business. After it came out during trial that evidence directly refuting Microsoft’s accusation had been suppressed and that government witnesses committed numerous violations of the law, the case was dropped without a ruling. As a result, the legal status of console modding operations has not been settled.

A victory for John Wiley & Sons Inc. would have provided tremendous cover to companies like Sony and Microsoft who seek to severely restrict how consumers use their devices post-purchase. Naturally, the inconsistency of the modern Supreme Court cannot be overstated, but with the first sale doctrine now firmly upheld as the law of the land, arguments against the right of consumers to modify their devices are undermined, and as a bonus, the way that the DMCA and the US Copyright Act are in many ways incompatible is starkly highlighted.

The powerful cartel of copyright owners in the United States and abroad are reeling, with claims that the ruling in Kirtsaeng will adversely affect consumers; during the trial, textbook publishers even told the court in veiled terms that they would price-gouge the third world as a result. One might be tempted to assume that such claims are bullshit; pricing one’s wares beyond the ability of local customers to pay is a foolish business move. That said, the music industry’s clumsy attempts to resist the MP3 format, and the strange myriad rules governing global distribution of television and film releases that allows online pirates to beat studios to the punch in many regions, suggests that not all business decisions are entirely rational.

Even if we don’t see a sudden rise in costs for consumers in the developing world, we are about to enter a very interesting period as copyright holders seek to get around this ruling. On the bright side, at least they’ll be doing so in a legal landscape in which first sale doctrine is protected and consumers are not mere renters of the things they purchase.

Well, the things not made by major video game publishers, in any case.

Read more Ross Lincoln’s work here, and follow Ross and Game Front on Twitter: @rossalincoln and @gamefrontcom.

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3 Comments on Gamers Rejoice: SCOTUS Upholds First Sale Doctrine

R.J.

On March 20, 2013 at 5:16 pm

Glad to hear this. I’m taking a copyrights class as part of my law degree, and we’ve been keeping an eye out for this case. As was noted, upholding the ruling of the lower court would have essentially killed first sale since so many things are produced outside of America. Removing the ability to resell via a store or person-to-person simply because a company outsourced production would have been devastating.Just using text books as an example, the companies would most likely increase the already exorbitant prices because they would no longer have to worry about used sales. Given that they already charged far more than necessary to turn a profit and issue new editions constantly that are only minimally updated, I can’t say I feel to bad knowing that used sales can continue.

James Blonde

On March 21, 2013 at 10:48 am

Good. A Western government that stands up against corporate thuggery and intimidation to do what’s right for the residents of that country. A rare occasion indeed. We need more of those in the UK to sort out our corrupt banking and media sectors.

Kevin

On March 21, 2013 at 8:24 pm

Copyright reform needs to be tackled eventually. I don’t know if it is the “next big thing”, but it has to get done. Thankfully, this is something that the bases of both parties are moving closer and closer to. (look at tech savvy rising GOP stars like Derek Khana who basically waged a one man crusade defending cell phone unlocking and detonated a bomb within the party establishment with his paper on copyright reform)

Within 10 years I think we will have serious copyright reform.