Jeremy J. Gustrowsky

Supreme Court Confirms that First Sale Doctrine Applies to Lawful Foreign Sales

March 21, 2013

Is a person who lawfully obtains a book from overseas allowed to redistribute the book in the United States without paying royalties to the original copyright owner?

That is the question the Supreme Court addressed in its ruling in Kirtsaeng v. John Wiley & Sons, Inc., which issued on March 19, 2013. The Supreme Court held that a purchaser is protected under the “first sale” doctrine of copyright law when reselling a copyrighted work in the United States provided it was lawfully manufactured and purchased abroad.

Kirtsaeng, a foreign student studying in the United States as a graduate student, had his friends and family in Thailand buy copies of English language textbooks produced for sale outside the United States from Thai book stores, where prices were low compared to U. S. book stores. He would then have the books mailed to him in the United States where he would resell them, reimburse his family and friends, and keep a profit.

John Wiley & Sons, publishers of some of the books Kirtsaeng resold, sued him for the unauthorized distribution of copyrighted works. Kirtsaeng argued Wiley’s distribution rights had been “exhausted” in the first sale which occurred overseas where the books were printed by one of Wiley’s subsidiaries. The “first sale” doctrine in U. S. copyright law provides that once a copyright holder sells a copyrighted work, subsequent owners may sell or otherwise transfer that copy of the work as they wish. The original distribution rights in that copy have been “exhausted.” Wiley countered that the first sale doctrine did not apply to copies of works made outside the United States.

Kirtsaeng lost in the lower courts, but in a 6-3 decision authored by Justice Breyer, the Supreme Court reversed stating that the “first sale” doctrine applies to copies of copyrighted works lawfully made abroad. In the Court’s view, the Copyright Act, “its context, and the common-law history of the “first sale” doctrine, taken together, favor a non-geographical interpretation” which meant a “first sale” abroad exhausted distribution rights in the work in the United States as well. The Court said reading a geographical restriction into the statute created “linguistic difficulties” creating more confusion than it solved. The court also stated it was doubtful “Congress would have intended to create the practical copyright-related harms with which a geographical interpretation would threaten ordinary scholarly, artistic, commercial, and consumer activities.” Among these harms, the Court examined a number of what it believed would be excessive restraints on free commerce likely to result from libraries, bookstores, tourists, and others having to obtain permission to later resell a book printed and obtained lawfully overseas.

If you have any questions regarding this case or any other copyright related matters, please contact us here at Woodard, Emhardt, Moriarty, McNett & Henry LLP.


Saving High-tech Innovators from Egregious Legal Disputes, or SHIELD Act

March 18, 2013

Representatives Peter DeFazio (D-Ore.) and Jason Chaffetz (R-Utah) recently reintroduced H.R. 845, the Saving High-tech Innovators from Egregious Legal Disputes, or SHIELD Act. The bill seeks to “protect American tech companies from frivolous patent lawsuits that cost jobs and resources” by implementing a “loser pays” system for patent infringement cases brought by some types of non-practicing entities (sometimes referred to as “patent trolls). The SHIELD Act would not apply to plaintiffs in lawsuits where the plaintiff invented the patent or produced evidence of having made a substantial investment in bringing the patent to market.

Both members of Congress first submitted the bill last August, but it failed to get enough support to pass. This time around, the co-sponsors believe its chances of passing are much better. It now covers all industries, not just the high tech industries covered in the previous bill. Support for the new bill has come from groups like the Consumer Electronics Association, the Electronic Frontier Foundation, Engine Advocacy, the National Retail Federation, the Coalition for Patent Fairness, and the Consumer and Communications Industry Association.

Also, President Obama has made recent statements suggesting he is in favor of making further changes to the patent system in this area as well. During a recent Google Hangout appearance online, President Obama specifically mentioned the problem patent trolls present to businesses, old and new. He stated that the America Invents Act passed last year and fully in effect this month “hasn’t captured all the problems.” He addressed the issue of non-practicing entities that “don’t actually produce anything themselves” but that are “just trying to essentially leverage and hijack somebody else’s idea” to “see if they can extort some money out of them.” President Obama mentioned that “our efforts at patent reform only went about halfway to where we need to go” and an additional consensus needed to be reached on “smarter patent laws.”

As H.R. 845 has resurfaced in a new form, new questions regarding its final wording, the scope of its coverage, and its effectiveness in dealing with patent trolls have reappeared as well. We will continue to provide you with updates regarding this important legislation as it proceeds through Congress.


Jeremy Gustrowsky Presents on Copyright Issues Related to Software and Websites

January 28, 2013

Jeremy Gustrowsky has prepared a presentation regarding copyright issues related to software and websites. The presentation includes a discussion on what is protectable and how protection is best attained. 

The presentation can be found here.


May 2012 Prosecution Group Luncheon

May 23, 2012

Topics discussed in this month’s prosecution group meeting include recent developments surrounding new top level domain name registrations, recent TTAB and Federal Circuit decisions, the Quick Path Information Disclosure Statement (QPIDS) pilot program, and a brief AIA update. To download a copy of this presentation click here.


Amazon.com Unable to Push Litigation Out of the Eastern District Of Texas

May 14, 2012

In a recent patent infringement case, Amazon.com asked to have the case transferred from the Eastern District to the Western District of Texas. That motion was denied by the Eastern District federal court judge. Amazon appealed to the Federal Circuit (because the case involved patents) effectively asking the Federal Circuit to force the district court judge to vacate the original order and transfer the case. However, the Federal Circuit denied Amazon’s request and upheld the Eastern District court’s refusal to transfer the case (In re Amazon.com., Misc. No. 115, nonprecedential).

 In denying Amazon’s motion to transfer, the Federal Circuit noted that Amazon.com was seeking “an extraordinary remedy, available to correct a clear abuse of discretion or usurpation of judicial power.” In short, the Federal Circuit found neither in this case. Amazon had argued that access to sources of proof favored transferring the case. However, the Federal Circuit found no clear abuse of discretion in the District Court’s finding that the relative ease of access to evidence in the case did not favor transfer. Even though the district court had relied on the fact that some of the defendants’ likely documentary evidence was outside, but closer to, the Eastern District of Texas, the Federal Circuit relied on the fact that no defendant was headquartered in the Western District of Texas, and that “transfer here would not result in trial of the case where the alleged infringing products were developed and where a significant amount of the defendants’ sources of proof are maintained.”

 Amazon also argued in favor of moving the case based on severance and judicial economy but both of these arguments were also unpersuasive. In conclusion, the Federal Circuit stated that Amazon failed to make “a compelling showing that the Western District is a clearly more convenient venue” and therefore the court could not say that “the District Court’s decision amounted to a clear abuse of discretion.”


Will the America Invents Act (AIA) Change Patent Litigation in the Eastern District of Texas?

December 15, 2011

Below is a presentation examining whether the AIA will change patent litigation in the Eastern District of Texas. The presentation explores aspects of the AIA, including changes to joinder, Post Grant Review and Inter Partes Review and how each of these changes in the law may impact patent litigation, particular with regard to the Eastern District of Texas. Click here to download a copy.


US Senate Passes the America Invents Act

September 9, 2011

On September 8, 2011, the Senate overwhelmingly passed S.23, more commonly known as the “America Invents Act”. It is the same bill passed by the House of Representatives in June which makes several significant changes to the U.S. patent system. Most notably, it changes the patent system from a “first to invent” system to a “first to file” system. The bill now goes to President Obama for his signature where it is expected he will sign it into law sometime in the next several weeks. We will continue to provide you with updates regarding this important patent legislation.

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