Archive for March, 2013

Kirtsaeng v Wiley. SCOTUS (6-3) holds the “first sale” doctrine applies to copies of a copyrighted work lawfully made abroad.

22 Mar

In a major copyright decision, Wiley v Kirtsaeng, the Supreme Court has basically emasculated 17 USC 602 (a) which prohibits importation of foreign made copies of a work protected by US Copyright by holding tha the first sale doctrine of 17 USC 109(a)(3) applies and trumps 603(a) and reversing lower court decisions finding unauthorized parallel imports infringing.

When petitioner Kirtsaeng moved from Thailand to the United States to study mathematics, he asked friends and family to buy foreign edition English-language textbooks in Thai book shops, where they sold at low prices, and to mail them to him in the United States. He then sold the books, reimbursed his family and friends, and kept the profit. Wiley filed suit, claiming that Kirtsaeng’s unauthorized importation and resale of its books was an infringement of Wiley’s §106(3). Held (6-3) The “first sale” doctrine applies to copies of a copyrighted work lawfully made abroad, so Kirtsaeng did not infringe by buying Wiley textbooks at low prices in Thailand, importing them into the US, and then reselling them in the US at higher prices substantially  undercutting  the US prices of Wiley. Libraries and universities lobbied hard for this result to save cost on textbooks. The entertainment industry and US artists and entertainers will lose millions of dollars due to this decision and foreign buyers will lose millions due to inability of US copyright owners to discriminate geographically on price by charging less in poor countires. China will profit as this makes US copyrighted products less competitive to Chinese counterfeits and look-alikes.

The Court falsely claims 17 USC 602(a)(1) retains significance because unsold foreign made product, officially licensed for only foreign distribution,  would still infringe if shipped to the US. Of course even the most amateur foreign manufacturer will simply have the buyer take possession overseas so there is a sale prior to importing to the US.  So 603(a)(1) is effectively destroyed and rendered toothless and superfluous. The  result will be a double edged sword which hurts copyright owners but helps consumers, likely forcing US copyright owners to raise overseas prices (which raises foreign margins but makes US products less competitive) or lower US prices (to eliminate the incentive for such “parallel imports”). In fact, the majority concedes this:

“Wiley and the dissent claim that a nongeograph­ical interpretation will make it difficult, perhaps impos­sible, for publishers (and other copyright holders) to divide foreign and domestic markets. We concede that is so.”

The dissent, and the lower courts, seem to me to have the better of the argument both on legal and policy grounds.

Bruce Burdick, Managing Attorney

The Burdick Law Firm, Alton IL & St. Louis, MO


Patent Awards Reach Billion Dollar Mark

19 Mar

2012 saw 3 patent awards reach a new milestone, exceeding $1,000,000,000.

The largest award last year, for $1.17 billion, was made in December by a jury in Pittsburgh federal court to Carnegie Mellon University, which sued claiming Marvell Technology Group Ltd. (MRVL) infringed integrated-circuit patents. Marvell has denied infringing despite the award and says it will appeal. Will it escape this huge verdict? Will it stand as the biggest patent award ever? Or, will it be reduced.

In the second largest award, Apple won in August when a jury in US District Court in San Jose, California, awarded $1.05 billion for alleged infringement of smartphone technology design patents by Samsung Electronics Co. of South Korea. Samsung also denied infringement and said it would appeal.

And in the third largest award, Monsanto Co. (MON) won a $1 billion verdict in August from a jury in US District Court for the Eastern District of Missouri here in St. Louis in a suit against DuPont Co. (DD) over a patent for genetically modified soybeans. DuPont motions to set aside or reduce the verdict are pending.

So, unless all 3 Defendants prevail, 2013 may see the largest damages payments for patent infringement in US history.