This case involved the publisher Bobbs-Merrill Company, which sold a copyrighted novel with a notice stating that anyone who sold the book at cost lower than its retail price would be subject to copyright infringement. The owners of Macy’s department store, the defendants in this case, resold the book at a lower price without the publisher’s consent.
The Court ruled in favor of the owners of Macy’s.
The Court’s ruling established what came to be known as the ‘first-sale doctrine’.
The ‘first sale doctrine’ established that once a copyrighted work is lawfully sold or otherwise willingly placed into the stream of commerce, the copyright owner exhausts its control of the distribution of the work and the owner of the copy can then sell or dispose of it as he or she sees fit.
1998: Quality King v. L’anza
This case involved the hair care company L’anza, which sold shampoo in bottles that featured a copyrighted design on the label. It made its labels and shampoo in the United States, but it exported some products for sale internationally. Quality King acquired some of L’anza’s products from a distributor abroad and shipped them back into the United States for resale. L’anza asserted that it had the right to prevent Quality King, from re-importing its products for resale.
The Court ruled that the first sale doctrine limited L’anza’s right to prevent the re-importation of its products because the products were manufactured in the United States.
Notably, the Supreme Court did not decide the issue in a case where products are initially manufactured abroad and then imported into the United States.
2009: Costco v. Omega
In this case, Costco purchased Omega watches overseas and imported them to the United States for resale in Costco stores. Omega asserted that this was copyright infringement because it did not authorize Costco to import the watches.
The 9th Circuit ruled in favor of Omega, determining that the first sale doctrine did not apply to goods manufactured abroad.
The Supreme Court was equally divided, which meant that the 9th Circuit’s ruling was upheld. Given the split, the Court’s order established no precedent.
2012: Kirtsaeng v. John Wiley & Sons
This case centered on a graduate student, Supap Kirtsaeng, who lawfully bought textbooks through friends and family in Thailand and sold them online in the United States. Kirtsaeng was sued by the book publisher, who claimed that the first sale doctrine did not apply because the books were manufactured abroad.
The 2nd Circuit Court ruled against Kirtsaeng, holding that because the books were manufactured abroad, he was in violation of U.S. copyright law for being an unauthorized seller.
The Supreme Court, in a 6-3 decision, clearly affirmed that the Copyright Act was not intended, and cannot be misconstrued, to limit the distribution of authentic.
This decision is a landmark win for consumers, small businesses, online marketplaces, retailers and libraries nationwide and an affirmation of the ORI motto, ‘you bought it, you own it, and you can resell it.’ This decision definitively affirms the first sale doctrine, cementing the right of consumers and organizations to sell, lend and give away any physical goods such as books, DVD’s, clothing and IT equipment to name just a few items that they bought and own, regardless of where those goods were made.