Kirtsaeng v. John Wiley & Sons Inc.: Why Gamers Should Care
How First Sale Is Threatened
Is this the future face of organized crime?
As the case reached appellate courts, Kirtsaeng was prohibited from using First Sale in his defense, and was ordered to pay hundreds of thousands in damages to John Wiley & Sons. A Second Circuit panel considering this outcome and the prohibition against using First Sale as a defense ruled, in essence, that the First Sale doctrine only applies to objects actually manufactured in the United States. Objects manufactured elsewhere – even those manufactured on behalf of US-based companies – are not subject to the law. This is the question the Supreme Court is now considering.
What’s the big deal? It’s just about controlling resales of books, right? The big deal is that the First Sale doctrine is the legal basis on which entire retail industries rest. You can rent video games on Game Fly, buy used games at your local shop and sell your games on eBay because of it. But it isn’t just money that’s at stake. Public libraries depend on First Sale too; without it, they would have no legal standing to lend books for free. And yes, that means you, too, rely on First Sale to be able to lend your books to friends and family without fear of legal reprisal.
The problem is that in the modern globalized economy, there is very little sold in the US that isn’t manufactured outside of it, regardless of the company selling it. The shoes you’re wearing were almost certainly made overseas. So too the majority of Blu-ray discs on your movie shelf. The television you watch those blu-rays on was definitely made abroad. Not to mention your iPod, the printer connected to your computer, the coffee machine that fueled your ability to be angry on the Internet, and possibly even the glasses on your face. Even every single smartphone you’ve ever used was made overseas. This overly broad interpretation of the law would effectively nullify First Sale, even if it were upheld on strictly-domestic grounds.
This is doubly troublesome if you’re a gamer. Sony’s Playstation 3 console is manufactured in China. Xbox 360s are made in Brazil. Lest we forget, Microsoft and Sony are both very, very keen to severely restrict what the consumer may do with the equipment after purchase. Microsoft famously engaged in very serious judicial shenanigans back in 2010, in an attempt to ruin the life of one Matthew Crippen for his Xbox 360 console modding business. That case was thrown out, and no verdict was issued, meaning that the legality of the practice is still very much in doubt. With a ruling in favor of John Wiley & Sons, it would no longer be necessary to first establish whether or not modders are allowed to mod a console; instead, console developers would be able to litigate them into an early grave by simple assertion of foreign manufacture. It’s authority as vast and nebulous as that enjoyed by the recording industry in its quest to stamp down mp3 sharers without.
And just in case PC gamers start feeling smug, your Intel chip might have been fabricated in the United States, but remember the hard drive shortage earlier this year? That was caused by flooding in Thailand, where most hard drives are made. How would such a ruling affect your ability to gift or sell an older PC? Would certain (extremely pricey) components need to be removed or deactivated before sale? If SCOTUS rules for John Wiley & Sons, then yes, if the manufacturer demands it.
So What Next?
The court will likely rule in one of three ways. It’s possible they’ll find for the plaintiff after all; should this happen, we must expect a dramatic increase in business lobbying to bring about a change to the law, SOPA style, which would curtail First Sale. The court could also rule narrowly, maintaining the right of retailers to set regional prices but otherwise upholding the broad principle of First Sale. This would in essence kill cottage businesses, but wouldn’t necessarily kill, say, GameStop. The worst case scenario is that the Court will uphold the lower court’s decision in full, a decision that would forever upend the way Americans interact with sellers. (It would also become a self-reinforcing justification for further removal of production and manufacturing from American soil. Just in case you weren’t worried enough.)
The Court’s recent record on matters affecting consumers is spotty at best (for a perfect example of the problem, see Kelo v. New London‘s absurd redefining of Eminent Domain.) Their worst decisions haven’t fallen upon straight party lines, so it’s not entirely possible to predict how this court will rule. There’s also the fact that Supreme Court decisions are final. Unlike the very successful fight to derail SOPA, there’s not much that can be done by average citizens, save preparing for the aftermath of SCOTUS deliberations.
Even so, it’s important to keep a close eye on this. Whatever the outcome, gamers interested in the protection of consumer rights need to be ready to act quickly. Game Front will be following the case, and when a decision is issued – expected in June, 2013, so have fun! – we will revisit this topic with an eye on what to do next. In the meantime, for more information, see this extremely helpful article published by University of Minnesota.
NOTE: Edited for clarity; content was not otherwise altered.
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