Supap Kirtsaeng v. John Wiley & Sons: A Balancing Act Between Competing Economic Interests Within the Constitutional Scheme

On March 19, 2013, the United States Supreme Court entered a decision on the matter of Supap Kirtsaeng v. John Wiley & Sons, Inc., finally settling a protracted debate in Copyright law. The specific question at issue was whether the unauthorized importation and resale of foreign-made textbooks infringed the manufacturer’s exclusive distribution rights. The controversy arose within a context involving price discrimination practices and the ensuing gray markets. Involved in the Kirtsaeng case are three provision of the U.S. Copyright Act. Section 106(3) grants the copyright owner an exclusive distribution right, as limited by Section 109(a)’s first sale doctrine. Section 602(a) makes the unauthorized importation of these protected copies an infringement of the same distribution right. Copyright advocates insist that Section 109(a)’s reach is geographically limited to the United States; thus, the first sale doctrine cannot insulate unauthorized importers of foreign-made copies from liability. In a 6-to-3 decision, the Supreme Court rejected this argument. Instead, the majority held that the manufacturer’s right to control distribution and importation exhausted upon the first sale, regardless of where the product was made and purchased. This article briefly reviews the background of the “first sale” doctrine in the United States and the doctrine’s growing significance in the evolution of parallel markets. The article also provides a summary of the conflicting schemes set forth by the Second, Third and Ninth Circuit Court of Appeals in their attempt to understand the relationship between Sections 109(a) and 602(a). The final section of this article analyzes the correctness of the Supreme Court’s holding as it shifted back to the constitutional purpose of U.S. copyright law: to maintain a balance between the copyright’s and public’s opposing interests, specially where the struggle is for right to compete for a share of multi-billion dollars in profits generated from manipulation of prices in different markets. This is possible because in applying the first sale doctrine to imported products regardless of their origin, the court has made it clear that copyright law does not guarantee the retention of maximum profits that can be generated throughout the life of the copies sold and placed in the stream of commerce.