
How a Supreme Court ruling may stop you from reselling just about anything - jseliger
http://arstechnica.com/tech-policy/2012/10/a-supreme-court-clash-could-change-what-ownership-means/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+arstechnica%2Findex+%28Ars+Technica+-+All+content%29
======
slapshot
Good discussion of the same case here:
<http://news.ycombinator.com/item?id=4706572>

There's a lot of FUD ("they might" "a ruling could") in this article. The
short version is that this case deals with the fact that the Copyright Act
prohibits unlicensed copying _and_ importing of copyrighted goods.[1] It comes
up because (just like in the textbook case), it behooves a lot of
manufacturers to charge a high price in the US and Western Europe and a lower
price in the rest of the world. The price difference goes to cover things like
research, writing, and other fixed costs that exist no matter how many
marginal copies are sold.

The case deals only with the "gray market" importation question --- not what
you do with your iPad that you bought in the US from Apple. There's no
question (before or after this case) that if you buy an iPad in the US, the
"first sale doctrine" still applies. Any copyright interest that Apple had in
the device were terminated by their licensed sale to you in the US (even if
the device was made in China, shipped directly from China, whatever). Nothing
about this ruling would change that. Same for your DVD collection you bought
from Amazon. Or any other product you bought in the US.

The only question raised by this case is if you wanted to fly to Manila, buy
1,000 textbooks at the Philippines price and then sell them in the US at the
US price, could the textbook manufacturer claim that you imported unlicensed
goods into the US?

There's a good economic analysis from the old thread: if the Court rules that
publishers cannot prevent gray-market imports of textbooks that sell for $100
in the US but $20 in the Philippines, publishers aren't going to set the price
to $20 in the US. They're just going to raise the price in the Philippines to
$100 minus whatever it costs to ship from Manila to the US. Students in poor
countries just get further screwed.

[1] <http://www.copyright.gov/title17/92chap6.html>

~~~
debacle
> The price difference goes to cover things like research, writing, and other
> fixed costs that exist no matter how many marginal copies are sold.

The price difference is market arbitrage designed to suck the largest profit
out of a market. Pointing out research, or writing, or anything else, ignores
the reality that if the production cost warrants a sale price of $x, charging
$x * 5 or in some cases $x * 100 and using legal protections to do so is
inherently greedy and immoral.

> Students in poor countries just get further screwed.

That's fine, as long as there's a more level playing field.

~~~
aviraldg
That's fine? $200 (a figure I saw quoted somewhere for a single college
coursebook) is more than the annual fees for some government-run colleges here
(in India.)

~~~
debacle
If the market is fair but the price is wrong, the price will change.

Creating fair markets should be the #1 goal of capitalism.

~~~
gabemart
>If the market is fair but the price is wrong, the price will change.

You're assuming that a price that no-one in a developing country can afford is
the same as a price that is "wrong". It's perfectly possible that a price that
no-one in a developing country can afford is "right" from an economic
perspective in that it's profit maximizing for the producer.

~~~
talmand
If you have to sell your product at the "right" price, meaning profit, in a
market that can't afford that price then the problem isn't the price; you are
selling the "wrong" product.

------
Nursie
This whole area of law annoys me.

Globalisation has meant that some companies can shop around the entire globe
for raw materials and manpower, looking for the best price for both. They then
throw up every barrier they can to stop individuals doing the same, region
locking and other DRM, bought laws to prevent workarounds etc.

They also try to prevent other businesses taking advantage of market
disparities to undercut 'official' prices. The _same_ market disparities that
allow them to get their labour and materials for next to nothing. The whole
thing stinks.

~~~
tomp
What kind of solution do you propose?

~~~
belorn
For areas like DRM and region locking, the answer is quite simple. Actually
enforce ownership and property law for consumers.

If I buy a car, I should be able to decide what I want to do with it. Where I
want to drive. Who I allow in it. Where I want to buy gas. Where I want to
repair it. Where I want to buy parts. If I want to sell it. and so on and so
on.

Once sold, the new owner should have complete control, and all _rights_ should
belong to him. If an actor (in this case, the manufacture) can exercise
control over the product after its been sold, then the manufacture has
illegally taken possession of the product.

In this view, disabling "other os" in playstation was an act of sabotage.
Deleting books from the kindle was stealing. It really become simple if one
would just accept that the owner is the one that should be in full control of
his own property.

~~~
TheAmazingIdiot
I very much agree with this sentiment.

The whole PS3 removal of otherOS is a plain "computer crimes" law. Charge Sony
with 1 count per device. Nice criminal case there.

Next we have Monsanto, who runs around finding seeds contaminated with roundup
resistance. If you, a farmer, try to save seed, you will get bit by this.
Since Monsanto argues it's their patent and their seed, I say we agree with
them. And when their property is elsewhere, that sounds like
trespassing...for.every.seed.

~~~
AutoCorrect
or even criminal negligence, since their seed contaminated your crop, then the
contamination was used in a shakedown.

~~~
TheAmazingIdiot
I'm more akin going for cumulative fines and/or jailtime for the executive
board.

Trespassing in Indiana can be fined up to $1000 and 6 month jail sentence.
Each of these seeds are "their" property. Lets say that a contaminated field
is 500,000 seeds. $1000 per seed is $500 Million.

Of course, if Monsanto abandons their "property", or lays no claim to it,
there wouldn't be a judgement on trespassing.

------
mseebach
Correct me if I'm wrong, but isn't there a " ... purchased outside the US"
missing from the title of the piece?

The article says: "... seeking to knock out the "first sale" doctrine on goods
_made_ abroad" (emphasis mine) - surely a product made abroad, but sold in the
US by an authorized importer/reseller will still be subject to first sale? And
it would still be legal for students to buy books for themselves abroad? Even
the example mentioned where US students buy books directly on Amazon UK
doesn't seem to be affected - just their right to resell that book in the US?

It's still a big deal, but it seems that Ars is making it quite a bit bigger
than it is.

~~~
ubernostrum
You're quite right.

I've been far from happy with the way this case has been covered in the tech
press; the sky is not falling, you can still resell your iPod when you're done
with it. What you can't do is start a side business where you become a
company's competitor by finding another country where prices are low enough
that you can buy bulk and import into the US for less than the US price.

Which should surprise practically nobody, so I guess that's why everybody is
rushing to sensationalize the hell out of this.

(and the fact that a sensationalized version of this appears and gets highly
upvoted on HN about once a week is a depressing indicator of not just the
press, but the state of the community they're feeding)

~~~
danparsonson
> What you can't do is start a side business where you become a company's
> competitor by finding another country where prices are low enough that you
> can buy bulk and import into the US for less than the US price

Why not? That's the free market economy at work isn't it? How is this
different to off-shoring production and supply sourcing to save money?

~~~
mseebach
Because the law says so. I'm all for changing the law, but that's just not
what this case is about.

~~~
hn_is_vile
You will need to cite which law says so. If a business decides to import books
published in Thailand by Thai publishers into the US, does the law prevent
them from doing so? And if it does, could not the importer take the US to the
WTO for a ruling that this was a trade barrier?

What if an American living in Thailand purchased books in the US, imported
them into Thailand and sold them at a profit? Would that also be illegal under
this law?

------
anigbrowl
Oh dear, how much linkbait are we going to have to go through with this case?
Look, your first sale rights within the US are perfectly safe. This case only
affects people who do bulk buys in an overseas market and then try to resell
within the US. Claims that it will be impossible to sell anything without an
exhaustive audit trail are absurdly overblown. The legal issue here is whether
a company has the right to exert control over the distribution of its product.

The USSC will probably find for the publisher on public policy grounds (IMHO),
since it would be difficult for publishers/manufacturers to execute agreements
with distributors if it were not also prepared to go bat against unauthorized
distributors. Not the most consumer-friendly situation since it allows
producers to engage in market partition, but on the other hand exclusive
distribution agreements are often the key to establishing a market presence in
the first place. The arguments in Omega v. Costco
([http://en.wikipedia.org/wiki/Omega_S.A._v._Costco_Wholesale_...](http://en.wikipedia.org/wiki/Omega_S.A._v._Costco_Wholesale_Corp.))
are particularly instructive in this regard; _amicus_ briefs in support of
Costco offered long parades of horribles, but were built on absurd premises,
such as speculation that courts would suddenly start interpreting statutory
protections for libraries in direct contradiction of their plain meaning.

------
ck2
Cannot root, cannot resell - it's America just consume more and more and more
!?

Make a pile of old tablets in your life that you cannot legally do anything
with.

When are we going to revolt and insist we own what we buy without being
criminals?

------
belorn
Is it just me, or is it a bit odd that copyright is used for market control in
regards to importation and exportation? I thought most countries used tariffs
to produce this effect.

If you want to stop people from buying TV's cheap from somewhere, the state
add a tax to encourage local production. Is this somehow not enough to stop
people from buying books cheap and sell them expensively in the US? Isn't the
solution then to just increase the tax? Are there a reason why copyright can
do a better job at this, and are there a substantial difference between
copyright regulation and tariffs?

~~~
cardine
The US government doesn't want textbooks to be more expensive in the US so a
tariff makes no sense. This is corporations wanting their goods to be more
expensive where people have more money, which they can legally do. Tariffs are
unrelated.

~~~
belorn
Tariffs purpose is to allow corporations to have higher prices locally. Both
tariffs and copyright regulations are laws created by the government, and both
increase how expensive a item is in the country. How are they unrelated?

~~~
eigenvector
No, the purpose of tariffs is to make domestically-produced goods cheaper than
imported goods, not to raise the price for the consumer.

~~~
belorn
How exactly do you make local prices decrease by making imported goods more
expensive? It does not make any sense. If the global market price of a product
get artificial higher, one do not lower the local prices. The local prices get
increased to match what ever the effective global market price (price +
tariff) is.

Of course. The purpose of tariffs is neither to increase nor lower the prices
of goods. The purpose of tariffs from the government point of view is to
increase self-production, value generating, and self-sustainability. But the
practical effect of an tariff is a higher priced product for the consumer. In
the word of wikipedia: _Typical analyses find that tariffs tend to benefit
domestic producers and government at the expense of consumers._

------
helmut_hed
_Those companies argue differential pricing schemes are vital to their
success, and should be enforced by US courts_

I find this sort of reasoning very frustrating. It's not the job of the courts
to ensure that anyone's business model can continue to be followed profitably.
There may be sound legal reasons to overturn precedent in this case, but
"companies are losing money" is not one.

~~~
bsenftner
This sure sounds like Corporate Welfare to me. Those damn Socialist
Capitalists are pretty good at calling the kettle black.

------
pngai
Please read this for a more through discussion of the issue and applicable
laws.

<http://us.practicallaw.com/9-519-7148>

------
Jd
tl;dr:

Student resells textbooks produced in Thailand making $1.2 million. Publishers
sue him. They win first two rounds because "first sale" law does not apply
overseas. Ebay and a hodgepodge of other groups support student. Case about to
start in Supreme Court.

------
jivatmanx
I'm surprised nobody has mentioned that selling something at below cost (when
R&D is factored) is clearly dumping and prevents the emergence of local
publishers.

------
jsnk
Whenever someone tells me that certain ruling only applies to X, and people
worrying about Y are misguided, I almost always side with people who are
worried about Y.

Court cases set a precedence, and there are unintended consequences for it.
Given that a court cases are not 100% exploit-proof, you can bet your bottom
dollar that eventually there will be some lawyer referring to previous rulings
to justify some other rulings.

------
camus
Arent Big Corporations importing cheap goods and reselling them in USA for a
huge profit ? so why an individual could not be able to do the same, even if
that good has been produced in US at first place ? why should i pay 150$ for a
book produced here while people on the other side of the world get the same
book for 40$ ? Because it is not like i can choose the book i need for my
studies.

~~~
DanBC
Levis has jeans made abroad. They send these jeans to various regions for sale
through a distribution network. Levis claims to be able to control where shops
can wholesale buy jeans from.

There's a UK case about Tesco and Levi jeans.

(<http://en.wikipedia.org/wiki/Grey_market>)

> _Manufacturers or their licensees often seek to enforce trademark or other
> intellectual-property rights against the grey market. Such rights may be
> exercised against the import, sale and/or advertisement of grey imports. In
> 2002, Levi Strauss, after a 4-year legal fight, prevented UK supermarket
> Tesco from selling grey market jeans. However, such rights can be limited.
> Examples of such limitations include the first-sale doctrine in the United
> States [...]_

That's sort of what's happening here - a publisher is using some form of
rights protection law to prevent someone importing many copies of a product
from one region and selling them in another region.

That feels to me anti-competitive, but it's pretty well established that
region-locking is acceptable.

In the UK you'd be able to buy a textbook from overseas for your own personal
use. The problem is that it's hard for someone else to set up a business to do
the importing.

