WASHINGTON, D.C.—Oral arguments were heard today by the justices of the United States Supreme Court in a case that could have far-reaching consequences for e-commerce law and a thriving international "gray market" in which copyrighted works are made or produced overseas and then resold in the United States. Many industries, including ones involved with adult entertainment, could be impacted by the Court's ruling. The SCOTUS blog—yes, there is such a thing, and a valuable resource it is—puts the importance of the case into perspective:
"The Court’s November calendar features probably the most important copyright case since its 2003 decision in Eldred v. Ashcroft," writes contributor Ronald Mann in his argument preview. "Kirtsaeng v. John Wiley & Sons, Inc. presents one of the fundamental questions for the globalized media world: whether a U.S. copyright holder can prevent the importation of 'gray-market' products manufactured for overseas markets."
The specific issues before the Court are described thusly on the SCOTUS site: "How do Section 602(a)(1) of the Copyright Act, which prohibits the importation of a work without the authority of the copyright’s owner, and Section 109(a) of the Copyright Act, which allows the owner of a copy 'lawfully made under this title' to sell or otherwise dispose of the copy without the copyright owner’s permission, apply to a copy that was made and legally acquired abroad and then imported into the United States?"
According to Mann, "The dispute turns almost entirely on a close reading of those provisions" and one other one, Section 106(a)(3), which "grants copyright holders the exclusive right to 'distribute copies . . . of [any] copyrighted work to the public by sale."
The actual case under review involves a Thai national named Kirtsaeng, who, Mann writes, "came to this country to study at Cornell and U.S.C. To subsidize his educational expenses, he resold textbooks purchased by his family at bookstores in Thailand. Although the parties have understandably different views about how to describe his operations, it is plain that he sold several hundred thousand dollars of textbooks imported in this way; because the price at which the books were purchased in Thailand was markedly lower than the price at which similar versions of the books were sold in the United States, his profits from the sales were in the range of $100,000. When his activities came to the attention of Wiley (a major American textbook publisher), a suit for copyright infringement predictably ensued. The district court found for Wiley and imposed statutory damages of $600,000. The Second Circuit affirmed."
As Mann explains, "the economic significance of the question [before the Court] is profound: the ability of copyright holders to discriminate on the basis of price—selling books, movies, music, and other copyrighted works more cheaply in foreign countries and at higher prices in the United States—is central to the profitable exploitation of copyrighted works in a globalized economy. A decision explicitly authorizing the importation into this country of low-cost foreign versions of copyrighted works would directly undermine the ability of content providers to maintain high prices for domestic versions of the works."
The case has also attracted the attention of "a rich set of briefs in which the two sides join issues on a large number of disparate facets of the problem." Mann's article deftly summarizes the arguments made in the briefs, and is well worth the few minutes it takes to read it, especially if your business is even partly dependent upon copyright law.
