EFF is leaving very important details out about at least Kirtsaeng. What's happening in that case is not simply that publishers are trying to claw back rights from US consumers. Supap Kirtsaeng took advantage of discounted pricing that Wiley offered students in poorer countries to arbitrage prices. This trick is called "parallel importation" (or "grey market importation") and it's a legal grey area, especially where copyright is concerned, turning on whether owners exhaust the right to import on first sale.
In short, the defendant in Kirtsaeng is taking advantage of a discount program Wiley never intended to offer that defendant in the first place in order to subvert Wiley's whole pricing scheme. Whether Wiley can use a legal argument about first sale to stop this or not, it seems apparent that Wiley will one way or another prevent that from happening.
Knowing HN, these details probably don't do much to change your view of the case. But you should still want to know them! This is something the EFF used to be good at, but now is quite bad at, and despite the fact that EFF mostly supports causes I agree with, I urge you to direct your donations to ACLU or other civil liberties charities instead.
This article is a quick end-of-year summary of two issues that have been active during the year. The description of what Kirtsaeng was doing was likely omitted for brevity, not as a cover-up. (The person who asked my coworkers to write these end-of-year posts specifically asked for short, broad summaries instead of detailed analysis.)
"Wiley claims that this doctrine only applies to goods that are manufactured in the U.S., and that the defendant, Supap Kirtsaeng, was infringing its copyright by purchasing books at a reduced rate in his native Thailand and selling them below list price in the States."
This description appeared on the same EFF blog (Deeplinks) where the item that you're concerned about did.
One of the most important aspects of the Kirtsaeng case that we've tried to get the Supreme Court to appreciate is that the plaintiff's theory would limit first sale in a wide range of situations. (One example is artworks, like paintings or manuscripts, that were produced outside of the U.S. and that were brought to the United States by their legitimate owners, who are not the copyright holders. As discussed elsewhere in this thread, there is also a question of whether publishers intending to sell works in the United States can choose the location of their manufacturing operations to make first sale a dead letter.) So even people who think that parallel importation as practiced by Supap Kirtsaeng is bad or should be restricted by law may have cause to be concerned about the Kirtsaeng case. Those consequences and concerns are the focus of this summary post.
The majority of Wiley's revenue comes from western markets where their products sell at "full price". How would Wiley be able to offshore their publishing to exploit a ruling that first sale doesn't exist control over import? Most of their titles would already have been "imported"; Wiley couldn't prevent their resale within the US.
"Unlike the Ninth Circuit’s interpretation, however, the Second Circuit’s reading of Sections 109 and 602 permits no exception for foreign-manufactured goods that are sold within the United States with the permission of the copy-
right holder. As a result, absent the permission of
the copyright holder, any distribution of any foreign-manufactured copy could infringe copyright."
This seems to be a reference to the distinction drawn by the Second Circuit at p. 16 of its opinion:
"While the Ninth Circuit in Omega held that §109(a) also applies to foreign-produced works sold in the United States with the permission of the copyright holder, that holding relied on Ninth Circuit precedents not adopted by other courts of appeals. Accordingly, while perhaps a close call, we think that, in light of its necessary interplay with § 602(a)(1), § 109(a) is best interpreted as applying only to works manufactured domestically."
And on p. 17:
"In sum, we hold that the phrase “lawfully made under this Title” in § 109(a) refers specifically and exclusively to works that are made in territories in which the Copyright Act is law, and not to foreign-manufactured works."
In a footnote, the Second Circuit seems to acknowledge that this leads to the exact concern that we raised:
"Phrased differently, it is argued that [this] decision may allow a copyright holder to completely control the resale of its product in the United States by producing its goods abroad and then immediately importing them for initial distribution. In this sense, the copyright holder would arguably enjoy the proverbial “best of both worlds” because, in theory, the consumer could not rely on the first sale doctrine to re-sell the imported work. In other words, the copyright holder would have an incentive to “outsource” publication to foreign locations to circumvent the availability of the first sale doctrine as a defense for consumers wishing to re-sell their works in the domestic market. [...] We acknowledge the force of this concern, but it does not affect or alter our interpretation of the Copyright Act."
Hence, the Second Circuit suggests that Wiley could control the resale of foreign-manufactured books in the U.S., even if Wiley itself imported and sold them.
In a global economy, restrictions on parallel importation are destructive and backward.
What happened to "free trade"? I see no difference between buying something in country A and selling it in country B and buying and selling within the borders of country A.
As borders continue to fade away, restrictions on importation will become restrictions on first sale rights. So I really draw no distinction, personally.
Recognize that your position may have the following implication: if the producer cannot segment prices regionally, they may choose to charge the US price globally - in this case they lose the marginal sales in poorer countries, and customers in poorer countries lose access to the product. No one wins in this scenario.
I read a hypothesis that airlines would be unsustainable without price discrimination. That is: if tickets were uniformly priced, there is no price at which ticket sales (demand) would exceed fixed costs. Without gouging business travelers, there wouldn't be enough revenue to subsidize the
pleasure travelers, who would stop flying because they couldn't afford unsubsidized fares. And the industry would fail.
This hypothesis is an extreme case, but it shows a mechanism how price discrimination can be welfare-increasing. That there can be tradeoffs between first-sale freedoms and societal wealth. (Because first-sale restrictions -- tying tickets to names, like a contract -- is what keeps secondary markets from equalizing airline fares).
They may. Or they could drop the prices just enough that importing charges would make up the difference. It's just rules of the game. If they change, adapt your business model or go bust.
But I'm not objective. For me segmenting (like DVD zones) always looked like and artificial way to milk more cash out of people.
No, local competitors win out over multinationals. This is better in my opinion. Human capital and knowledge are more mobile than ever, and should be even more mobile (why can we import goods freely but importation of labor is tightly restricted?).
This means that local companies in small and developing countries have enormous opportunities they did not have in the past. But multinationals that dump goods into these markets in the hope of securing market share for the future (when the markets actually become profitable for them) are a huge hurdle.
I see no problem with the scenario you described outside of a few select industries. For example, pharma is problematic, but that market is so screwed up it is hardly worth talking about (publicly funded research being turned into private profits, etc.).
Personally, I would rather see IP exceptions built into treaties. For example, if you refuse to sell product A in country B, then other companies can ignore your patents as long as they only sell in country B, etc.
"Free trade", despite the dishonest propaganda, has always been about freedom for companies, not consumers or workers. When was the last time you heard a free trade proponent advocate for unrestricted freedom of movement for workers across borders, similar to that of capital?
The difference between that and this lawsuit is that if I order an Oreilly book from the Phillipines via Amazon or something such to have it delivered to me in the USA for X price, it is legal because Amazon has been granted permission from Oreilly to be a distributor of their media overseas. In this lawsuit this is not the case.
I call bullshit on this. You can order a book from any store in the world, they should deliver it to you if economically viable, and then you can resell it if no longer need for the price you and your buyer consider fair.
And you don't have to ask the publisher. After all, if you buy socks or a piece of rubber you don't ask the manufacturer if you want it to pass some borders, do you?
That's how real world goods work. And book is a real world thing.
Agreed. First thing I thought of: Isn't this how places like half priced books and the paperback exchange work? I'm pretty sure neither is paying publisher rights to resell the books people bring in.
Half Price Books is a used bookseller. The difference between a used book seller and a parallel importation scheme is that the used book seller doesn't attempt to subvert the publisher's overseas price breaks to stock their warehouse.
Under the theory in these suits, wouldn't Half-Priced Books have to actually vet their inventory to ensure they only sell books that have undergone a proper domestic first sale authorized by the publisher? It doesn't seem to be enough that Half-Priced Books themselves refrains from engaging in a parallel-import scheme. The strong version of the argument, at least, seems to be arguing that the first-sale doctrine doesn't apply at all to books that were imported without the publisher's consent. So not only would parallel importation violate a copyright holder's rights, but so would subsequent domestic resale of any such book. So e.g., if I sold Half-Priced Books a book I bought in Europe (which I've done), and they resold it, both those sales would be illicit, absent publisher consent.
Obviously the real target of the publishers' suits is cheaper versions of books (mainly textbooks). But I don't see how the arguments they're making can be limited to that case, and wouldn't also sweep up a whole bunch of other reasonably common cases where people sell books in one country that they bought in another country. Some examples: estate sales of people who grew up in one country and died in another one; resale of books bought on trips; small-scale independent importation and sale of books that were never published in the U.S. (e.g. novels in the original French/German/etc.). Heck, as an American expat in Denmark, I fairly routinely sell U.S.-bought books in Denmark or vice versa, depending on where they happen to be at a given time and how full my suitcase is.
The more suspicious part of me suspects that, while parallel importation of cheap textbooks is their main target, they wouldn't really mind an outcome that banned those other resales, either, and looked more like a region-coding system. For example, one easy-ish thing Half-Priced Books could do to keep safe would be to filter by ISBN, only stocking books with ISBNs indicating US publication. That'd have some false positives (some foreign-published books are imported with the publisher's blessing), but it'd be more feasible than attempting to determine on a case-by-case basis whether a particular book had undergone an authorized domestic first sale.
An alternate statutory fix that targets only the narrower case could be to legislate: 1) resale of any lawfully owned book in the U.S. is legal, regardless of where it was first sold; but 2) large-scale [for suitable definition] parallel importation with commercial intent is separately prohibited.
HPB buys books from the first-sellers, so someone pays the appropriate price on the books. HPB doesn't care who. They key distinction is that their business isn't structured around circumventing treaty-supported geography-based pricing on physical products.
Some of their inventory might not have had anyone paying the appropriate price, though. If I buy a book in France (or the Philippines), and resell it to a Half-Priced Books in Texas, under the theory in these suits (as I read it) HPB would be violating the copyright-holder's rights if they resold it, because that book never had a proper first sale in the US, and was not imported with authorization of the publisher.
My point is that their legal arguments in this case aren't limited to bulk importation, but are arguing that there exists no first-sale right at all for books that didn't undergo that initial authorized domestic "first sale", regardless of why, e.g. whether it was one book imported by a tourist who bought it in France.
If their arguments applied solely to bulk parallel importation, that would be another matter. That's the "narrower" legislative fix that I proposed above: to ban the act of bulk commercial importation itself, rather than doing it in a roundabout way via resale restrictions.
The article doesn't really comment on the merits of the case for Kirtsaeng. The EFF isn't trying to convince people to support any position in that case, nor should they, I agree with you that it is definitely a legal grey area.
What the EFF is taking issue with in that case is the potential precedent that could be set depending how the case turns out that could undermine first sale. The only reason EFF is interested in the case is because the legal arguments being used could impact first sale.
What's happening in that case is not simply that publishers are trying to claw back rights from US consumers
True... but that's the part of the case that the EFF is concerned about.
In contrast, in the Capitol case the article very clearly takes a position, and while I'm not familiar with that case I give the EFF the benefit of the doubt and assume they're being truthful.
(The "urging" there is a link to EFF's amicus brief in the Supreme Court -- https://www.eff.org/sites/default/files/PKEFFCertAmicus_firs... if you'd like to read the brief, which was filed together with Public Knowledge and US PIRG, back in January of this year.)
Although I mentioned that there are reasons that people who oppose parallel importation or aren't sure if they support it should be concerned about the respondent's (Wiley's) view of the first sale doctrine, EFF's brief explicitly supports parallel importation (see section II(C) of the brief). Reasons to care even if you don't care about protecting parallel importation are found in sections II(A) and II(B).
I took the time to read your cite, and I can't see how the EFF's argument in favor of parallel importation isn't a public policy no-op. EFF argues that by restricting parallel import, US customers are forced to pay more than overseas customers. You don't say? Offering price breaks to students in Thailand who can't possibly afford to pay what US customers routinely pay for books means US people pay more than Thai people for books?
I too wish that the EFF would be a bit more honest when it comes to such issues. I'm very much against anything that divides up globalization and adds region locks.
"Import rights" are a relic of old company structures. You see them in things like Nikon equipment going for much more money in the US, where Nikon USA is a separate company pretty much out of touch with Nikon Japan. But Nikon deals with it by only allowing servicing in country of purchase: hey, their right to lower customer service if they want. A more nefarious issue is e.g. Microsoft in other countries trying shakedown approaches, saying you licenses bought in one country are not legal in other countries.
But when the details emerge, the EFF looks bad and hurts everyone on their side by misrepresenting.
As I mentioned in a reply above, an earlier EFF blog post (https://www.eff.org/deeplinks/2012/10/parade-horribles-supre...) on the Kirtsaeng case did describe what Supap Kirtsaeng was doing ("purchasing books at a reduced rate in his native Thailand and selling them below list price in the States").
Be careful donating to the ACLU. I love them to death but I keep getting calls on my house phone (not the one I signed up with, mind you) at 8pm asking to donate.
> This is something the EFF used to be good at, but now is quite bad at, and despite the fact that EFF mostly supports causes I agree with, I urge you to direct your donations to ACLU or other civil liberties charities instead.
I'm not sure if that line of logic actually follows, but a rather important distinction is that many causes the EFF supports (that are publicized) have an impact globally, while the ACLU, well the 'A' in the name already says it, no?
Now I still prefer to support my own local digital civil liberties groups (such as Bits of Freedom, that do great work on explaining tough computer/security/privacy subject to ancient politicians), but if we're going to be urging people to support this and not that, better give to the EFF because what they do is actually useful for more people.
I'm fine with first sale not applying to digital goods, but then you cannot call it buying but must call it renting instead. But of course, if amazon was honest and replaced the 'buy' button on a kindle book with a 'rent' button, people would be outraged at the price.
If i cannot leave something to my son in my will, it was never mine to begin with. You can't inherit kindle books, so it's obvious that you don't buy them either. There's no such thing as "buying a license", legally speaking that's called "renting".
I hope the publishers realize that they must tread lightly here. Even by the ridiculously low standards of music and movies, books are reaaally easy to pirate. The DRM is a joke and most of them comprise fewer bytes than a moderately complex webpage.
If we learned one thing from the music industry over the last 15 years, it's that the internet gives your customers the power to destroy you if you treat them with contempt for long enough.
I love to read and I happily buy many Kindle books at $9.99+ a pop on Amazon. I want to live in a world where authors can make a living by writing. But bogus restrictions on book sharing, complete lack of a resale market, etc. are already starting to rub me the wrong way. At some point, if pushed too far, I'm not going to feel much remorse about flouting the system.
>If we learned one thing from the music industry over the last 15 years, it's that the internet gives your customers the power to destroy you if you treat them with contempt for long enough.
Well, i'm a lawyer, and his position is at least defensible.
After all, the difference between leasing and buying is exactly right to use vs ownership.
Leasing/licensing have retention of ownership in the provider, buying does not.
Without having thought about it for more than 5 minutes, I can't think of any legal difference other than terminology.
Note that there is a difference in real property: Licensing is about giving someone the right to do something that would otherwise be unlawful, whereas leasing is generally about right to possess.
However, this is not the distinction software "licenses" are making.
I'm a lawyer in common sense. "Buying a license" is what penn & teller call BS. There's a common sense understanding of what buying is, and kindle books don't fall into that category.
I will admit that "legally speaking" was perhaps not accurate. But is it really?
The Kirtsaeng case is quite important because, if lost, it would create a loophole to destroy "first sale" in the U.S. entirely. Just cease manufacturing any sort of copyright material in the U.S.; move ALL production to Mexico or China. If the Kirtsaeng case is lost, reselling any of those works would become illegal, eliminating used book stores and similar enterprises entirely. And indeed, this could apply to any product with writing on it or code in it - massive incentives to move all production of such things out of the U.S., since then you would be able to prevent ANY secondary sales of your product.
VERY important case, with massive implications for the future structure of U.S. society and the economy.
Wrong. If it's sold in the US, first sale applies. That's why it's called the 'first sale' doctrine, not the 'first manufacture' doctrine. I already have books that were printed in Mexico and China, and you probably do too.
I apologize for not responding in more detail, but it's late. I would be glad to continue this conversation, though. In brief, I'd argue that in its opinion (on page 16 at 12-14), the 2nd circuit is treating 'lawfully made' as encompassing not merely the manufacture, the but the publication and offering for sale to the public (as mentioned at the bottom of page 13).
The idea that this would eviscerate the first sale doctrine makes no sense, since publishers who aimed to circumvent it would have to publish their work elsewhere, import it for sale into the US, and then deny that the work had been published in the US (and abandon the protection of US copyright law in the process). The law does not compel absurd results, and I don't see courts buying into the idea that American Book Co. promotes and offers a book for sale in the US with US pricing, LoC catalog data and all the rest, while simultaneously denying that it had published the book in the US. This would be cutting off one's nose to spite one's face; as the court observes in footnote 40, Kirtsaeng's reading would require copyright holders to either keep the material off the market altogether or to sell it only in places that are not signatories to Berne.
I haven't sat down and read your brief yet, and probably won't get around to it until next week; the last time I took a look at these issues was 6 months ago, so I apologize for this highly abbreviated argument. In a nutshell, though, the idea that first sale should apply to all works published outside of and imported into the US requires courts to accept the view that American law travels wherever Americans and American commercial relations go, such that if an American desires to buy something American law is unilaterally imposed on a foreign seller. That would be derogation by the back door, as it were.
PS, in response to the plaint that a win for Wiley would make the resale of artworks, storage in libraries, and so on impractical for any and all works of foreign origin, I would refer you to the reciprocal arrangements summarized in http://www.copyright.gov/circs/circ38a.pdf and point out that the text of the copyright act already explicitly provides for such situations, something which is usually waved aside in the parades of horribles.
The american law wouldn't be imposed on the seller. They'd merely have to accept the limitations of their county's law on the buyer, with regard to their inability to prevent resale.
Which isn't as much forcing our law on them as not letting them force theirs on us by attaching it to a sale.
Anyways, the entire issue is a red herring created by fraudsters. There are already the concepts of renting or licensing which are limited. Sale is unlimited. Anything else is false advertising.
To retain resale rights simply don't sell something. If that isn't enough for you (in the generic) you're a criminal.
Given the practice of tax dodging, how many items are really sold in the US by US webstores? Are you sure that all those amazon books are sold "in the US" and not from Ireland or some small island somewhere?
If the transaction is initiated by a US consumer inside the US, it's considered to be a US sale. If you dig into the case law on this, you'll find that the concept of first sale doctrine is perfectly well understood by the legal establishment and is not about to shrivel up and blow away.
There's an excellent (albeit technical) introduction to these issues in the 9th circuit's ruling on Omega S.A. v. Costco Wholesale Corp.. Read up also on some of the journal articles from the Wiki page: http://en.wikipedia.org/wiki/Omega_S.A._v._Costco_Wholesale_.... and if you're really itnerested, dig into the amicus briefs.
As someone from Ireland, I'll tell you amazon, despite having s large EU office here and their AWS European region here, do not actually sell much here. There is no amazon.ie, you must buy from the UK amazon.co.uk or the US amazon.com. If you have a kindle, you must use the US amazon.com kindle store. If you have a customer service complaint about your kindle you have to eventually find a US customer service number.
Are you sure about that? I understood it to be ruling that disallows you from buying abroad and importing. So if they moved production to Mexico, but then they imported and sold it to you, it would not matter - you'd still have first sale. What you couldn't do is buy it in Mexico and bring it in yourself and sell it.
I'm against any erosion of first sale and believe all "grey market" stuff should be legal. Companies should find other ways to differentiate products rather than the meatspace equivalent of "region locks".
But let's be honest: this case isn't suddenly going to destroy first sale _within the US_.
You should have a look at the gap between the Ninth Circuit's holding in Omega v. CostCo and the Second Circuit's holding here. :-)
In footnote 44, the Second Circuit agrees that its own "decision may allow a copyright holder to completely control the resale of its product in the United States by producing its goods abroad and then immediately importing them for initial distribution" but says that this "does not affect or alter our interpretation of the Copyright Act".
Region locks are not desired by copyright holders, but by the distributors in those regions who want exclusivity within their retail territory. Suppose you make a product and discover that someone in, say, Indonesia is faking and selling a counterfeit version. Are you equipped to sue them? Probably not unless you're a large global firm, so it makes more sense for you to sell your product through a distributor in that territory. Likewise, pricing is different because incomes and economies are different. You charge the price the market will bear in each territory.
None of this prevents individuals from buying something for themselves overseas and taking it home to use. But it does prevent bulk importation, which parties to a distribution agreement are contractually required to combat.
Well yes, that's why you enter into a distribution agreement with a wholesaler in that market if you can rather than sitting back and letting your stuff be republished for nothing.
>I understood it to be ruling that disallows you from buying abroad and importing. So if they moved production to Mexico, but then they imported and sold it to you, it would not matter - you'd still have first sale.
The key word in that sentence is "they" -- who is "they"?
Here's the problem: The copyright holder manufactures the product abroad and sells it abroad to a nominally unaffiliated distributor who then imports it into the United States. In theory the distributor is doing what would not be allowed -- importing the foreign product without a license -- but the copyright holder gets to decide whether or not to sue them. And they don't sue them, this one unofficial distributor with whom they have an unspoken agreement. They only sue you when you go to resell the used product, claiming it was never sold by the copyright holder in the United States.
Maybe you could make some claim that the distributor had a de facto license based on the fact that the copyright holder implicitly allowed the importing to continue, but good luck proving it when they claim it was unsanctioned (and meanwhile they have a token official U.S. reseller with near-zero sales volume who sells at 5X the price, and a list of other unsanctioned importers who they've sued to shut down).
The argument is actually about what you own. Is it the media or a license for one person to play it?
Most people I know are fed up with such word games and just plain old steal the bits and bytes (well duplicate them - whether or not that is stealing is another question). The media industries are just hanging themselves even more by the day. I don't see any tears being shed.
Exactly the same way as other media. In fact sometimes worse.
I have tried to sell a few bits of software via eBay (used windows XP pro retail box) which have been uninstalled or replaced with partner action pack licenses. After a day or so, I get an email from eBay saying that the item has been withdrawn due to a complaint from the manufacturer.
This is what they want.
I'm in the UK btw and am concerned this may become an international issue.
That's ebay's choice, but they're certainly not obliged to do that by copyright -- in the EU, at least. First Sale has been upheld (in the context of software) by the ECJ pretty recently (even for software you've downloaded rather than bought in retail), in the UsedSoft case -- http://www.linklaters.com/Publications/Publication1403Newsle...
Choice quote:
"This broad interpretation of Article 4(2) is necessary as otherwise the effectiveness of the rule of exhaustion would be undermined since suppliers would merely have to call the contract a “licence” rather than a “sale” in order to circumvent it."
At what point do we realize that these people are simply trying to extract rent from our electronic communications, and we should circumvent them at any opportunity, and punish the politicians who are bought off to give them power?
The copyright owners have a bigger problem than what they may consider unauthorized copying. Drawing attention to compositions in sound and vision has become so much more difficult because it has become so much easier to distribute them. The scarcity has gone and so has the price. Quite a bit of the value has now decisively shifted to compositions in touch, smell, and taste, which cannot be distributed digitally.
In short, the defendant in Kirtsaeng is taking advantage of a discount program Wiley never intended to offer that defendant in the first place in order to subvert Wiley's whole pricing scheme. Whether Wiley can use a legal argument about first sale to stop this or not, it seems apparent that Wiley will one way or another prevent that from happening.
Knowing HN, these details probably don't do much to change your view of the case. But you should still want to know them! This is something the EFF used to be good at, but now is quite bad at, and despite the fact that EFF mostly supports causes I agree with, I urge you to direct your donations to ACLU or other civil liberties charities instead.