Kirtsaeng v. John Wiley & Sons Inc.: Why Gamers Should Care

Why should gamers give a damn about the legality of an obscure grad student’s used-textbook business? Try this: imagine a consumer landscape in which the games you own are not, as such, games you actually own.

Yes, you’ve legally purchased your copy of Halo 4, your iPad, your Xbox 360. And yes, a century of American law and precedent says that once you buy something, you have full rights to do whatever you want with that particular something, up to and including the right to resell it to someone else. Despite this, let’s say you discover that because your game crossed a border before it crossed your threshold, you have absolutely no authority to make decisions of any kind about what to do with it while it’s in your possession. In fact, if you choose to give it away, trade it in for credit toward the purchase of a newer game, or sell the thing on eBay, you could face legal or financial penalties for having failed to secure the permission of the developer. We the people as renters of everything, owners of nothing more than the privilege of handing our money over, and there’s nothing you can do about it.

It sounds ridiculous and you’d be forgiven if you assume that this concept is too silly for even the most hackneyed fictional dystopia. But this ridiculous concept could become a ridiculous reality if the Supreme Court finds for the defendant in the case of Kirtsaeng v. John Wiley & Sons Inc..

The Case

At first glance, Kirtsaeng v. John Wiley & Sons Inc. seems to be about nothing more than a dispute between an eBay auctioneer and a book publisher. Thailand native Supap Kirtsaeng came to the United States as a grad student in 1997. Faced with onerously pricey textbook costs, Kirtsaeng realized that the international versions of those textbooks – the ones intended for students in poorer countries, printed on cheaper paper and lack some graphical content – were largely identical. He saved himself hundreds of dollars by having those versions shipped to him in the US, and began ordering them for fellow students as well. This worked so well that he later parlayed that service into an eBay cottage business reportedly worth more than a million dollars by 2003.

Kirtsaeng’s operation eventually caught the attention of John Wiley & Sons Inc, printers of most of the textbooks in question. They contend his business cut into their own illegally, so the publisher sued Kirtsaeng for copyright infringement; Kirtsaeng countered by citing the First Sale Doctrine, and the case has been winding through US courts ever since. On October 29, the Supreme Court of the United States began hearing arguments in the case.

First Sale What Now?

Photo source.

The First Sale Doctrine stems from a 1908 Supreme Court decision in the case of Bobbs-Merrill Co. v. Straus. Without getting too bogged down, Bobbs-Merrill Co. published a novel that came with a restriction forbidding retailers from selling the book for anything other than the publisher’s set price. The defendants ignored the warning, and the case went all the way to the Supreme Court, where things got weird. Unusual for an era in which the American legal system was dominated by reactionaries bent on crushing everything from labor rights to equal rights, SCOTUS held that while the original seller has the right to “multiply and sell” an item under their own restrictions, that right does not extend to subsequent resales. (For an example of how specific laws address this complexity, see here.)

This decision was influential enough that Congress eventually codified First Sale with the Copyright Act of 1976; it remains the standard by which consumer transactions are managed to this day. And with the case now before the Supreme Court, First Sale as we know it could become a thing of the past.

Lawful Importation?

Kirtsaeng’s defense would at least superficially appear to have been open and shut. He bought the books lawfully, and they were now his to do with as he wanted. To that, John Wiley & Sons. provided a novel counterargument: a separate section of the Copyright Act of 1976, which holds that “importation into the United States, without the authority of the owner of copyright… is an infringement,” actually means that First Sale doesn’t apply to anything sold outside the United States and brought into the country after.

That’s a very interesting interpretation.

The law in question was designed to ensure that imported copyrighted works weren’t pirated, but actually brought into the US legally. Think about it like this: You’re well within your rights to buy an Xbox 360 in another country at a lower price, bring it into the US and, if you choose, sell it to someone else. But you can’t build your own Xbox 360 from specs and sell it as though you designed it. However, the law also aimed to allow sellers to price their wares differently in different markets, something many businesses argue would be fatally undermined by such a scheme (indeed, this kind of argument is used by pharmaceutical companies who oppose the importation of cheaper drugs from Canada).

Unfortunately, much like how the second amendment to the US constitution is maddeningly ambiguous1, these two sections of the Copyright Act of 1976 seem to brazenly contradict one another. Clearly, some kind of reconciliation needs to occur for the law to make sense, but in August, 2011, a US Appellate Court ruled so broadly in favor of John Wiley & Sons that the basic underpinnings of the First Sale Doctrine might end up being negated entirely.

1) Seriously, ‘well regulated militia’ and also ‘shall not be infringed.’ Wouldn’t the ability of the government to ‘well’ regulate something constitute a type of infringement? Thanks a lot, founding fathers. No one is going to fight over that.

Join the Conversation   

* required field

By submitting a comment here you grant GameFront a perpetual license to reproduce your words and name/web site in attribution. Inappropriate or irrelevant comments will be removed at an admin's discretion.

10 Comments on Kirtsaeng v. John Wiley & Sons Inc.: Why Gamers Should Care

Axetwin

On November 6, 2012 at 12:03 am

Its one thing to sell something youre no longer using. Its something completely different to form a “business” around buying and selling someone elses work without giving them a cut. I know ALOT of people have this misguided idea that the simple act of “buy low sell high” is what Capitolism is all about. Well its not.

However, youre right Ross, this does affect us as gamers. However not in the way you think. This not comparable to gamer selling a game they no longer play. What this guy is doing is more relatable to a company based around Gold/Item Selling. So instead of hoping this guy wins, we should be hoping this guy loses. If he does, then that sets the precedent that ‘you cannot build a business around someone elses copyrighted work’.

Axetwin 2 (we're twins)

On November 6, 2012 at 3:18 am

Axetwin – believe me, media companies will not stop until ALL pre-owned sales are banned, even person-to-person sales. They’d criminalise eBay if they could. If they want to stop their profits from going down, they should lower the price to something gamers would want to buy brand new. It may sound counter-productive but it really isn’t, it’s the more pragmatic approach that guarantees more direct sales in the long run. £40 for a game brand new is too high, especially when you often have to make a bunch of microtransactions on top of that in order to get the full experience, AND the cost of developing games is quite a lot lower than it was even five years ago (adjusted for inflation). £60 to download it on PSN is an absolute joke, for this you have no consumer rights whatsoever because it’s digital – you can’t even share it among other users on your own damn console. And EA have flat-out said that they want all games to be distributed only via download, using FIFA (i.e. the annually-reskinned football game that’s rendered totally obsolete within 12-18 months) as their prime example. You can be sure Ubisoft and Activision want the same thing. But rather than leading to an increase in sales, this would do the exact opposite – it would simply alienate gamers and lead them to never look at the games in the first place. They’re not going to buy them at those prices just because there’s no alternative, aside from maybe the most hardcore fans or those for whom money is just no issue. The majority will either ignore them completely or wait until they’re reduced to a more realistic price. You can expect piracy to go up tenfold as well if this goes through.

So sorry Axetwin, I often agree with your comments but on this one you’re dead wrong. Wiley and Sons winning this case would be a slippery slope that would have widespread negative and destructive repercussions on every media industry in America, and indeed the world.

Ebalosus

On November 6, 2012 at 4:25 am

” There’s also the fact that Supreme Court decisions are final”

Not true, because according to the Constitution, juries are the ultimate arbiters of the law. How? Jury nullification.

If enough Juries nullify a law, the supreme court and/or the government can’t do sh*t about it, because (and I’m quoting directly here):

“In Suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved, and no fact tried by a jury, shall be otherwise re-examined in any Court of the United States, than according to the rules of the common law.” – VII Amendment to the US Constitution.

I.e. Since most copyright cases exceed $20, they’ll have to go to a jury trial…which then the jury can then nullify…which means that the law is unenforcable in practice.

(And yes, I recognise the irony of a New Zealander lecturing americans about the constitution and it’s application)

Roy Batty

On November 6, 2012 at 4:43 am

I had no idea Grizzly Adams was a gamer.

I have no problems paying $60 for a game as long as it has a great deal of replay value it is cheaper and more entertaining that a movie using an hourly cost formula.

I do have problems with being told what I can do with what I own. I also have problems with business using the courts for a business end (i.e. when companies use the Sherman Anti-trust act to sue Microsoft) claiming it is for the “consumer” (Bovine Scatology).

Perhaps John Wiley & Sons inc. should practice a little free market capitalism and offer the cheaper books here in the states. They could undercut Kirtsaeng’s prices on shipping costs alone which would run him out of the business. (or do what EA does…just buy the guy)

Ron Whitaker

On November 6, 2012 at 5:48 am

@Ebalosus: The irony is thick, yes. However, in practice, the Seventh Amendment isn’t quite so final. A judge may still set aside a jury’s ruling, although in the majority of cases, that means there will have to be a new jury trial. Surprisingly, Wikipedia actually explains it fairly well. http://en.wikipedia.org/wiki/Seventh_Amendment_to_the_United_States_Constitution

Ross Lincoln

On November 6, 2012 at 7:32 am

Ebalosus, with respect, while you’re correct, the section you’re referring to is also irrelevant, and you might be mistaken on what SCOTUS actually does.

A jury trial discusses guilt (or culpability) and innocence. SCOTUS determines constitutionality of the law. The issue here is the constitutionality of the lower court’s decision or whether that decision is in accordance with the law generally, in this case whether or not the law does in fact say that objects made outside the US aren’t covered by the first sale doctrine. The previous court’s ruling hinges on that question, so what they’re doing is determining whether or not that ruling had legal merit.

If I understand you, then what you’re saying is that after this case, we might conceivably see a bunch of jury trials rule against the court’s ruling. However, what’s at stake here is that fact that Kirtsaeng was prohibited from even mentioning the First Sale doctrine in the lower court; the second circuit panel’s ruling on that is what is being challenged here. If the court upholds that ruling, then similar cases would also be prohibited from bringing up that defense and juries would never even consider it.

David

On November 6, 2012 at 8:09 am

While I agree with most of the article, I would point out that SC decisions, while “final” in a juridical sense, are not actually “final” in a constitutional sense. Congress has often made laws that–in effect–overrule the SC: see, e.g., certain provisions of the so-called Civil Rights Act of 1991, or the Restoration of Religious Freedom Act. The authority to do this is implied by Article II, Section 2: feel free to look it up.

And–BTW–if you’re going to snark on the 2nd Amendment, you should try to show some awareness that the term “well-regulated” carried a different meaning to the Framers: it didn’t carry the modern meaning of “subject to rules”, but meant “orderly” or “squared away” or such similar sentiments. In other words, to the extent there is any connection between the militia part and the keeping arms part (and it isn’t clear that there is, see any number of other amendments where related but independent rights are discussed in a group, e.g. the five separate and distinct rights enumerated in the 1st Amendment), it is to say that to have a properly functioning militia, we need to guarantee that the citizenry has unfettered access to weaponry.

Ross Lincoln

On November 6, 2012 at 8:18 am

David, you’re right, and I did make that point in the end, though perhaps a bit too ambiguously. That’s part of ‘what to do next’. I regret that for length I cut a more lengthy elaboration of that point. You must concede that for all intents and purposes it is FINAL, meaning there is no appeal. (And kirtsaeng would lose no matter if the law were changed.)

As for your second point, history is not, in fact, unanimous on what the framers actually meant; centuries of precedent and the law, not to mention the arguments we’ve been having since like 1800, say otherwise. Here’s just one run down: http://www.law.cornell.edu/wex/second_amendment. Also, ‘well regulated’ meant the same thing in the 1700s that it means now, at least in the strict ‘meaning of words’ sense. They obviously intended to allow congress some leeway to pass laws related to guns.

BTW, I’m a gun owner. And I’ll still snark on the second amendment all I like. It’s horribly constructed and invites disagreement!

Ross Lincoln

On November 6, 2012 at 8:22 am

It’s also worth noting that there were some VERY strong disagreements between federalists and anti federalists about the nature of the law, the role of government, etc, and the language in the constitution is often open to interpretation specifically to satisfy everyone. They created a living document, not a bible. Let’s not forget also that it was crafted by people opposed to having a national army, most notably Thomas Jefferson.

Ebalosus

On November 7, 2012 at 3:05 am

Ron & Ross

I’ll…have to temporarily concede to your arguments, because i’ll have to ask the guy whom mentored me on the Constitution and how laws in your country operate about this case (which I’ve been meaning to do).