Tag Archives: Kirtsaeng

Greg Cram of The New York Public Library Represents Library Perspective on the First Sale Doctrine at House Judiciary Subcommittee Hearing

On Monday, June 2, 2014, the U.S. House Committee on the Judiciary, Subcommittee on Courts, Intellectual Property and the Internet continued with its copyright review with a [field hearing held in New York, NY](Greg Cram of The New York Public Library to Represent Library Perspective on the First Sale Doctrine at House Judiciary Subcommittee Hearing). This hearing focused on the first sale doctrine, a principle that provides that after the first sale of a lawfully made copy of a copyrighted work, the copyright holder’s distribution rights in that particular copy terminate.

The panel included nine witnesses: Stephen M. Smith, President and CEO of John Wiley & Sons, Inc.; John Ossenmacher, CEO of ReDigi; Ed Shems of edfredned illustration & graphic design; Jonathan Band representing the Owner’s Rights Initiative, Matthew B. Glotzer, Greg Cram, Associate Director of Copyright and Information Policy at The New York Public Library; Sherwin Siy, Vice President of Legal Affairs at Public Knowledge; John Villasenor, Professor of Electrical Engineering and Public Policy at UCLA Luskin School of Public Affairs; and Emery Smith, Counselor for BSA – The Software Alliance.

The Library Copyright Alliance endorsed Cram’s statement, which highlights the importance of the first sale doctrine to the mission of libraries. Cram also states support for the Supreme Court’s ruling last year in Kirtsaeng v. John Wiley & Sons, applying the first sale doctrine to a lawful physically copy of a work regardless of the place of manufacture or sale. He also discusses the issue of first sale in the context of the digital marketplace.

Importance of First Sale to Libraries

In his statement, Cram notes that throughout American history, even prior to the founding of the nation, libraries have promoted democratic values by lending books and other materials. In discussing the history of libraries providing access to information, Cram quotes Thomas Jefferson: “I have often thought that nothing would do more extensive good at small expense than the establishment of a small circulating library in every county, to consist of a few well-chosen books, to be lent to the people of the county under regulations as would secure their safe return in due time.”

Cram’s statement points out that Americans borrow books and other materials from libraries 4.4 billion times a year and that per capita circulation grew by 26.1% between 2000 and 2009. Between 2008 and 2012, NYPL saw a 44% increase in circulation with 28 million items circulated in 2012. The vast majority of library collections represent physical copies of works, highlighting the importance of the first sale doctrine, without which library lending would not be possible.

Kirtsaeng v. John Wiley & Sons

In his written testimony, Cram expresses support for the Supreme Court’s ruling in 2013 in Kirtsaeng v. John Wiley & Sons, an opinion which found in favor of international exhaustion, a rule applying the first sale doctrine to lawful copies of copyrighted works regardless of the place of manufacture or sale. Without a rule of international exhaustion, library lending would be seriously threatened as more than 200 million books in U.S. libraries have foreign publishers. Books published by U.S. publishers are often manufactured by printers in other countries, often without any indications on the copyright page of where they were printed. As a result, libraries have no way of knowing whether the books were manufactured domestically or abroad. With large portions of collections manufactured abroad, the Kirtsaeng decision is crucial in allowing libraries to continue their acquisition and circulation policies. Cram concludes, “This is the right rule for libraries and for American consumers, and Congress should not disturb it.”

Digital First Sale

Cram’s statement also explains the complexities of the use of digital resources as libraries increasingly license electronic resources. Licenses set the terms under which a library can make the content available and such terms can vary:

Often, the content is hosted on the server of the publisher or other intermediary, and the library is buying access to the server for its users. An authorized user might be able to download the content onto her computer or device, and digital rights management software will allow the content to reside there until it is automatically deleted in accordance with the license term … Currently, for most popular trade titles a library contracts with vendors to enable users to check out a licensed title based on the print “one copy, one user” model. Libraries must license additional e-book files in order to lend to more than one user at the same time. After a prescribed period, the book is automatically returned and becomes immediately available for digital check out by another user. Other licenses might not allow digital download, but instead permit a user to print out a limited number of pages, e.g., a journal article. Other licenses permit users to access content only when the user is connected to the Internet, e.g., streaming access.

While acknowledging that the digital marketplace has provided certain advantages over the traditional model (libraries no longer need to repair torn pages or place the books on a physical shelf), Cram also points out several drawbacks. Under the print model, a book can remain in a library’s collection until it wears out, but in the digital environment, a library can only provide access when it has paid the licensing fees and the terms of renewal licenses may vary. Cram explains that under some licensing models, arbitrary circulation limits are enforced and that license rates for e-books “can be more expensive than its print counterpart, and sometimes more than ten times the consumer e-book price.” Furthermore, some publishers do not license e-books to libraries at all. The current model also raises serious concerns regarding preservation of materials.

With respect to the digital marketplace, the Cram concludes:

Congress needs to consider whether to prohibit the enforcement of contractual limitations on copyright exceptions in certain circumstances. Significantly, the suite of statutory instruments for amending the UK copyright law that will come into force on June 1, 2014, prohibit the “contracting out” of many exceptions in the research and education context. Congress therefore needs to closely monitor the evolving digital marketplace to ensure that it is sufficiently competitive to provide widespread public access to works.

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LCA Issue Brief: Impact of Kirtsaeng Decision on Libraries

Today the US Supreme Court announced its much-anticipated decision in Kirtsaeng v. Wiley, a lawsuit regarding the bedrock principle of the “first sale doctrine.” The 6-3 opinion is a total victory for libraries and our users. It vindicates the foundational principle of the first sale doctrine—if you bought it, you own it. All who believe in that principle, and the certainty it provides to libraries and many other parts of our culture and economy, should join us in applauding the Court for correcting the legal ambiguity that led to this case in the first place. It is especially gratifying that Justice Breyer’s majority opinion focused on the considerable harm that the Second Circuit’s opinion would have caused libraries.

First Sale Fast Facts for Libraries

If you read this blog (or follow me on Twitter), you’ve probably at least heard of the “first sale doctrine.” Maybe you’ve heard about the Supreme Court case Kirtsaeng v. Wiley & Sons, and that it might affect library lending, but the details seem complex and technical. The Library Copyright Alliance has published a one-page summary, “First Sale Fast Facts for Libraries,” that gives you the key information you need to know to understand the first sale doctrine and what’s at stake in the Kirtsaeng case. Check it out here: First Sale Fast Facts for Libraries (PDF).

Justices Consider the Horribles in Kirtsaeng

On Monday the Supreme Court heard oral argument in the case of Kirtsaeng v. Wiley & Sons, a case in which the key issue is the proper scope of the “first sale doctrine” in copyright law. As you probably know if you’re reading this blog, the first sale doctrine is the part of the law ordinarily relied upon by libraries and many others to enable lending and re-selling copyrighted works without permission or payment to the copyright holder. The doctrine is well over 100 years old, and is codified at Section 109 of the Copyright Act. In this case, the first sale doctrine is being challenged by a publisher who seeks to block resale in the US of the cheap editions it authorized to be printed and sold abroad.

Three parties presented their cases to the Court at oral argument: Kirtsaeng, Wiley, and the US government. Each party argued for a different version of first sale. The overall impression from those in attendance, which is supported by the transcript, is that more justices voiced concerns about the consequences of Wiley’s arguments, which would abolish the first sale right for anything manufactured abroad, than were troubled by Kirtsaeng’s position, which would make it harder for rightsholders to control prices of their goods. No one seemed satisfied with the middle path described by the US solicitor general.

Utrecht: Toyota iQ
Justice Breyer is very concerned about whether you can re-sell this foreign Toyota.

The lawyer for Kirtsaeng argued that any sale of a lawfully made copy, anywhere in the world, is sufficient to provide the buyer with full ownership rights under the first sale doctrine. This is the view of the Owners’ Rights Initiative, the broad coalition of first sale supporters of which ARL is a member, and is the best case scenario for libraries. Justice Ginsburg was the only justice who seemed outwardly hostile to this view, saying that no other country has a principle that is as broad. The questioning from other justices, primarily Justices Breyer, Kagan, and Sotomayor, was much less pointed and seemed aimed primarily at fully understanding the argument.

The lawyer for Wiley (seasoned Supreme Court litigator Theodore Olson, former Solicitor General under President George W. Bush) argued that first sale rights do not apply to foreign made copies, period. Several of the justices expressed concern about the consequences of that view, with Justice Breyer leading Olson through several questions concerning used Toyotas as well as libraries and museums, and making reference to the millions of library books printed abroad. Tellingly, Olson had no theory or defense prepared that would reassure the Court that deciding in Wiley’s favor would not have absurd consequences. Olson avoided directly addressing what the justices called “horribles” for so long that Justice Kennedy even lectured Olson on the importance of considering such consequences for the Court, saying, “You’re aware of the fact that if we write an opinion with the — with the rule that you propose, that we should, as a matter of common sense, ask about the consequences of that rule. And that’s what we are asking.” Olson ultimately said Congress should address these concerns, rather than the Court.

The lawyer from the US Solicitor General’s office argued for a middle path that would apply first sale to works made abroad but imported and sold with rightsholder authorization in the US, but not to works made and sold abroad. While this position is not ideal for libraries, it is one of the options presented in the LCA brief as a better solution than the extreme holding in the Second Circuit, which sided with Wiley. Several justices expressed skepticism that the law could be interpreted in the complicated manner required for a middle path to work. Justice Alito all but ignored the US’s view and asked, instead, for the US attorney to choose which view—Wiley’s or Kirtsaeng’s—had the least bad policy consequences. The US attorney sided with Kirtsaeng.

It is notoriously difficult to predict outcomes based on oral arguments. That said, it is clear that several justices were deeply concerned about the parade of horribles, including harm to libraries, that would follow from the Wiley view becoming law. Perhaps most importantly, Justice Kagan was pointed in her questioning of Mr. Olson, restating the Kirtsaeng position persuasively and even asking pointedly whether Olson would admit that nothing in the text of Section 109 supports his view that the statute should exclude foreign-made works. Kagan’s opinion is especially important as she may be the “swing vote,” assuming the 4-4 result in the earlier Costco v. Omega first sale case, from which she recused herself, reflected a truly deadlocked court. There also did not seem to be much enthusiasm for the US government’s proposal of a middle path that would allow some first sale rights for foreign-made goods, but stop short of Kirtsaeng’s position. The most active questioners were the liberal justices, Breyer, Kagan, and Sotomayor, who seemed to be wrestling with the statutory language. Conservative justices Roberts, Scalia, and Alito said relatively little (although Alito’s question for the US about which side’s theory was least troubling was very telling). Swing Justice Kennedy was also relatively quiet, and justice Thomas kept his customary silence. The case has been submitted for decision and we can expect an opinion before June 2013, but perhaps as soon as January.

The complete transcript is available here: http://www.supremecourt.gov/oral_arguments/argument_transcripts/11-697.pdf.