VICTORY: You Can Sell Your Stuff!

Category: Reference

The little guy won big in a U. S. Supreme Court decision this week, which affirmed the right to resell a legally purchased item. That's right... you almost lost the right to sell (or give away) a used item at your own yard sale. Read on to learn the incredible story behind this ruling, and why you still need to be vigilant...

Supreme Court Expands First Sale Doctrine

On March 19th, the U. S. Supreme Court ruled in a 6-3 decision http://www.supremecourt.gov/opinions/12pdf/11-697_d1o2.pdf that the “first sale” doctrine, which permits legitimate buyers of copyrighted works to resell or give away their copies, does apply to works manufactured and purchased overseas. Publishers of everything from books to games, software, music, movies, and more are very upset by the decision, which threatens so-called “regional pricing” schemes.

But it's a pretty big deal for consumers. Last fall, a U.S. appellate court ruling effectively abolished the 1908 "First Sale Doctrine" which had allowed people to resell goods they had legally purchased. Happily, the Supreme Court just overruled that bizarre decision of the lower courts. But if the high court had ruled the other way, you would have needed "permission" to resell any foreign-made product.

First Sale Doctrine - Supreme Court

To be clear, it would have been illegal to resell certain books, music, software, video games, antiques, or electronic gadgets at a flea market, garage sale, or online auction. The onus would have been on the consumer to determine if the item (or part of it) was manufactured overseas, and then to beg the copyright holder for permission to resell it. And that "permission" probably would have involved taking a cut of the proceeds. Can you imagine what a nightmare that would have been?

The decisive case involved a small-time Thai entrepreneur and textbook publishing giant John Wiley & Sons. Wiley manufactures and sells textbooks in Thailand, forbidding importation of such copies to the U. S. Nonetheless, the entrepreneur bought textbooks at the Thai prices and resold them via eBay in the U.S. at higher prices that still undercut Wiley’s U. S. prices for the same works. Wiley sued, claiming infringement of its copyright restrictions.

At trial, the District Court found in Wiley’s favor and the jury awarded damages to the company. The Second Circuit Court of Appeals affirmed the verdict, finding that the first-sale doctrine did not apply to American copyrighted works manufactured abroad. The Supreme Court overturned the lower courts and a similar decision in the Ninth Circuit, finding that the relevant section of American copyright law “says nothing about geography.” Copies of works made and acquired in accordance with American copyright law are subject to the first-sale doctrine no matter where they are made or acquired.

What Could Have Been (Or Might Be...)

If the Court had upheld Wiley’s position, the result could have been dramatic. Rights owners would have every incentive to move manufacturing out of the U.S., an outcome that Congress surely did not intend. Libraries would have to get permission to circulate foreign-made books. Used book stores would be severely impacted, and even garage sales of foreign-made paperbacks and old video games could be barred.

The first-sale doctrine applies not only to books, but to everything protected by copyright. That includes software, music, video, art, and all other creative works. It’s a critical consumer protection that was threatened by globalization. This ruling protects it, for now.

The Court acknowledged that Congress may well have intended to give rights owners geographic control over their works and pricing; that intention simply didn’t find expression in the law. Copyright law can be rewritten to overcome the Court’s ruling. The extremely powerful industries that have an interest in extinguishing the first-sale doctrine will surely lobby Congress to do so. And when that happens, you'll need to do the same. Or you'll lose a fundamental right to buy and sell as you please.

Some suggest that publishers will move their operations overseas entirely to escape this ruling. That would eliminate U. S. jobs for authors, editors, programmers, and many other occupations. It’s much more likely that publishers will attempt to change the law so they can have their cakes and eat them.

But for now, at least, anyone can do what the Thai eBay seller did: play the international arbitrage game and win. And more importantly, you can sell your stuff without worrying that you're breaking the law. Consumers also benefit from this price competition.

Now, if only a similar legal opinion applied to pharmaceuticals, Americans could buy prescription drugs made overseas at a fraction of the prices charged in the USA. We can dream, right?

Your thoughts on this topic are welcome. Post your comment or question below...

 
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Most recent comments on "VICTORY: You Can Sell Your Stuff!"

Posted by:

snert
21 Mar 2013

I'm commenting on the next to the last paragraph.
Who would make sure the pharmaceuticals we purchase are what we pay for? Caveat Emptor! There's too many way to get screwed if you don't know who or what you're dealing with. By the time you find out, the damage may be done.


Posted by:

Lee McIntyre
21 Mar 2013

My gosh! An unfavorable ruling could put Goodwill Industries and the Salvation Army thrift stores out of business.

And I'd no longer be able to buy used books at Amazon for a penny (plus $3.99 shipping)!

Gadzooks! Thanks for the heads up, Bob. I wonder why this story didn't show up in my local newspaper?


Posted by:

vbyler
21 Mar 2013

Hooray for us consumers! It serves to gives us hope that not all is lost just yet. My main comment is to the pharmaceuticals along with the previous poster, snert.

A less than new condition of a book, antique, or what ever is not going to affect our well being, that is, our health. On the other hand, less than quality pharmaceuticals can kill us right there. We should never promote buying second hand drugs of any kind. I can look at an apple at a farmers market and have an idea whether it is healthy to eat it. But I cannot look at a pill and know what is in it, thus how it will affect my health. So we need to know who to hold accountable for our consumption of drugs. Let's keep drug resale off of the table.


Posted by:

bob price
21 Mar 2013

Can we assume this does not apply to MS operating systems? MS says we don't actually own them, but pay a "user fee".


Posted by:

Jon
21 Mar 2013

Perhaps with drugs the USA should take a look at our system in Wales. Medicines prescribed by doctors are FREE. So are doctor appointments, surgery, both emergency and some elective..... etc. etc. A poor country which is part of the UK (population 3 Million) with severe economic problems caused by the financial disaster. BUT we value our people and take health seriously. The secret is that a government has a 'little' more clout when negotiating prices than individual patients.

EDITOR'S NOTE: The secret isn't quite that simple. In the UK, incomes above £35,000 (about US52,000) are taxed at 40 percent! Incomes above £150,000 pay 50 percent. That's how the "free" health services are paid for.


Posted by:

David
21 Mar 2013

Wow, a Supreme court ruling I agree with! Very important to many of us that resell stuff for additional income or profit. Does this apply to digital works also and how would you resell a digital work?

Many of our pharmeceuticals are allready made overseas and tested there too. Much of it in third world countries. This does not give us a break in prices, it gives the drug companies greater profits.


Posted by:

David
21 Mar 2013

Regarding pharmaceuticals: I've purchased all my meds from an online vendor for over ten years, averaging 4-5 orders per year. It's based in the UK but shipments come from the South Pacific, arriving in 8-9 days like clockwork. All have been exactly the same as Walgreen's goods, just 70% cheaper. That's "regional pricing" at its most odious! Only once has Customs intercepted a package, and it was cheerfully replaced free of charge. Like any other vendor selection, you just have to ask around and choose cautiously. A store's name is not a guarantee of reliability.

It's commonplace for brand name stores to substitute slightly different generics for proprietary formulations without consulting doctors or patients; the difference can be meaningful for some patients. Very seldom do you hear of an online pharmacy delivering bogus goods.


Posted by:

GM
21 Mar 2013

Well, you didn't really tell Wiley's side of the case: They claimed they sold books in other countries at low prices/low profit to enable poor people in less affluent countries to be able to afford higher education. With this ruling they say they will be forced to price textbooks highter in 3rd world countries to avoid this type of arbitrage and that will price some of the poor out of being able to afford higher education.

While I don't totally buy this argument, it is something to consider. I would hope they could continue to support students in 3rd world countries by selling at full price, but maybe offering rebates or some other discount to in-country students.

EDITOR'S NOTE: Wiley doesn't sell at low prices to help poor people afford higher education. They charge what the market will bear in a given sector. It's a global economy, they'll have to deal with that in a way that makes business sense to them.


Posted by:

Linda Maloney
21 Mar 2013

As someone who has made a (very) modest living for years as an editor with a small, nonprofit publisher, I have mixed feelings about this. I recall when I was getting my Masters of International Business some years ago that the student contingent from Taiwan got their textbooks dirt cheap from home. Whether they were copyrighted or pirated, I know not. But books cost a lot to produce, and the profits are poor for books that don't hit the mass market.
A lot of American publishers, big and small, go to the annual Frankfurt Book Fair to sell publishing rights to their books to houses in other countries. You don't sell rights to a publisher in India, say, for sales into the US, which would undercut your own market. You sell rights to publish within a certain country or region if you know that the markets there won't sustain the prices you have to charge in the US to break even.
So it's one thing for an individual to sell books at a yard sale or on eBay; it would be quite another for a used bookstore, say, or Amazon to deliberately import copies for sale in the US. It's forbidden to the publisher to sell back into the US unless they hold world English rights, and there should be a gross limit on the number of copies not licensed for first sale in the US that can be imported -- unless you want to see publication of everything but mass market paperbacks collapse in the US. I can assure you that in Taiwan and India etc. they're not printing on acid-free paper, so those books will not last on library shelves or wherever. And as for editorial quality -- well, you can probably imagine that for yourself.


Posted by:

Gordon Lee
21 Mar 2013

Bob,
Your remarks on pharmaceuticals applies here in Australia. An example: An item costing $AUD95 here was purchased in UK for GBP20, about $AUD30.
Gordon Lee,


Posted by:

obliviious
22 Mar 2013

Thanks for posting this article , Bob. I've more articles to sell. Imported or not.


Posted by:

actionjksn
23 Mar 2013

I agree with everything you said Bob. I'm sick of these copyright trolls trying to rip people off too. If there is a copyright law that has me getting screwed then I will just violate it. It's my stuff after I buy it, end of story.


Posted by:

Bob
24 Mar 2013

Good article, Bob. Would you consider giving permission to reproduce it, with proper credit of course? Bob S.


Posted by:

Brummagem Flash
25 Mar 2013

Interesting article, Bob.
I believe reselling anything legitimately acquired is permissible here in UK also; and rightly so.
I think we should all be more concerned about fake items: especially pharmaceuticals!
I heard recently that UK authorities estimate some 10% of medicines may be counterfeit: including those acquired from a few high street chemists*. (*=drug-stores)
I expect those counterfeiters manage to con sales from a similar proportion of US citizens and businesses. A few of these faked medicaments have already been shown to have contributed to early deaths.
So, let's not promote buying and selling outwith any form of official monitoring and control.


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