Legally Bought Some Books Abroad? Sell Them In The US And You Could Owe $150k Per Book For Infringement
from the first-sale-insanity dept
Last year, we wrote about the Supreme Court's deadlocked tie over whether or not the "first sale doctrine" applies to goods made outside the US in the Omega v. Costco case (Justice Kagan recused herself due to her involvement in the case while she was Solicitor General). Because of that the ruling from the 9th Circuit effectively remains the law. The basic issue is that the US has long had a "first sale" doctrine when it comes to works covered by copyright. The basic idea is that if you buy a book, you can resell it. This is important, because without the first sale doctrine, any time you wanted to resell a product that had any parts covered by copyright, you'd have to go back and involve the copyright holder. That would, of course, strangle commerce in many areas. Imagine having to get permission (and probably pay a cut) every time you wanted to sell a book you had.While the Omega case involved some additional sneakiness involving Omega figuring out a way to "copyright" a watch (don't ask), we noted at the time that this ruling could have horrifying consequences, such as making anyone who resells a book made outside the US liable for huge damages awards under copyright law.
And, now we have our first case testing that exact theory... and, indeed, the court has ruled that selling a book made outside of the US is copyright infringement and there's no first sale defense. In this case, the bookseller was found guilty of willful infringement, because he was selling textbooks legally bought in Asia in the US, and told to pay $75,000 per infringement (in this case, eight books: $600,000), though it could have been as high as $150,000.
Applying these principles to the facts of this case, we conclude that the District Court correctly decided that Kirtsaeng could not avail himself of the first sale doctrine codified by § 109(a) since all the books in question were manufactured outside of the United States. In sum, we hold that the phrase “lawfully made under this Title” in § 109(a) refers specifically and exclusively to works that are made in territories in which the Copyright Act is law, and not to foreign-manufactured works.The court basically says, hey, that's the law, pointing to the specifics in the statute, as well as the Omega ruling and a previous Supreme Court ruling. And, technically, the court may be right, as the law is drafted in an awkward way (the court says "ambiguous," but it's really just awkward), such that you can (but don't have to) read it to apply only to works first made in the US. But it's hard to see how this is not an insane result that should be fixed by Congress as quickly as possible. In an age when books (and other products) travel over borders all the time, the fact that you could risk $75,000 punishment for selling what you legally bought... is out and out crazy.
Thankfully, at least one judge on the panel felt similarly. Judge Garvan Murtha dissented from the ruling, saying that first sale should apply to works made outside the US. Murtha's argument is that the judges (and other courts perhaps) are misreading the section of Copyright Law that everyone relies on here, the part that says that First Sale applies to works "lawfully made under this title." The argument that has prevailed so far is that a work made outside of the US doesn't get US copyright protection, and thus isn't "lawfully made under this title." Murtha claims that this is a misreading, and since a US copyright holder authorized the production of this work, it was legally made under US copyright law:
The statutory text does not refer to a place of manufacture: It focuses on whether a particular copy was manufactured lawfully under title 17 of the United States Code. 17 U.S.C. § 109(a). The United States law of copyrights is contained in title 17. Accordingly, the lawfulness of the manufacture of a particular copy should be judged by U.S. copyright law. A U.S. copyright owner may make her own copies or authorize another to do so. 17 U.S.C. § 106(1). Thus, regardless of place of manufacture, a copy authorized by the U.S. rightsholder is lawful under U.S. copyright law. Here, Wiley, the U.S. copyright holder, authorized its subsidiary to manufacture the copies abroad, which were purchased and then imported into the United States.Murtha goes all the way back to the original Supreme Court ruling on the First Sale Doctrine, in pointing out that the court first allowed the First Sale Doctrine so as not to restrict trade -- which this new ruling clearly does. Furthermore, Murtha notes the ridiculous results here, in which works made outside the US now have more strict copyright controls inside the US, and that the incentive now is for publishers to make all their books elsewhere:
Economic justifications also support applicability of the first sale doctrine to foreign made copies. Granting a copyright holder unlimited power to control all commercial activities involving copies of her work would create high transaction costs and lead to uncertainty in the secondary market. An owner first would have to determine the origin of the copy -- either domestic or foreign -- before she could sell it. If it were foreign made and the first sale doctrine does not apply to such copies, she would need to receive permission from the copyright holder. Such a result would provide greater copyright protection to copies manufactured abroad than those manufactured domestically: Once a domestic copy has been sold, no matter where the sale occurred, the copyright holder’s right to control its distribution is exhausted. I do not believe Congress intended to provide an incentive for U.S. copyright holders to manufacture copies of their work abroad.Either way this is a mess, and makes it ridiculously dangerous to sell products under the First Sale Doctrine in the US unless you're absolutely sure where the product was first made, and if it's been authorized for sale in the US. It's going to hit hard against libraries especially, who often get books whose provenance isn't entirely known. One would hope that Congress would fix the ridiculously awkward language in the Copyright Act and make it clear that First Sale applies across the board, but since when has Congress ever done anything right with copyright law?
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Filed Under: books, copyright, first sale, foreign books
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Works made outside US are unlawful
Works made outside US are unlawful!
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Manufactured in China
First Sale does not apply. It was made in China so the whole messy authorization, payment, etc applies if you try to sell it in the US.
I guess book manufacturing is still safe from outsourcing...
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So, let's say you bought a book at a yard sale. Let's say it is a German translation of a US work, so the copyright is US, but the book was printed in Germany 25 years ago. It has been through numerous resales. You are still potentially in violation if you sell that book on Ebay.
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Re: Copyright
I'll give you an example of a book I now have in my lap.
It is a children's book. The author holds the copyright. The book was published by Houghton Mifflin, NYC. BUT, the book was printed in China.
As it stands now, Houghton Mifflin or any bookstore, Amazon, or myself, if I wanted to sell it on Ebay, would have to get permission from the author or risk being in violation.
However, if that book had been printed in the US, then there'd be no problem.
So the question that faced the judges was... since author and publisher are in the US, does that make it a legal product of the US under US law... or because it was printed in China, does that make it a product of China?
The ruling was that it's a product of China.
That's a bummer for the publishing company. Maybe they'll bring their printing back to the US. On the other hand, if the publishing company held the copyright rather than the author, then it would theoretically benefit the publishers because they could rake in money from the resale businesses.
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Mike, the guy is a book seller. He isn't some joe on the street who bought a single book in Germany and now is selling it on ebay. It's a guy trying to try to profit by importing books (grey market, as it were), and selling them here.
It's not really the same thing, is it?
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There are indeed differences. So what?
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With this precedent now, if you're overseas, you purchase a book, bring it home, and later decide to sell for reasons other than profit seeking? Yup. You just broke the law.
How is that sane in any way shape or form? The only legal way to rid yourself of that book is to trash it, or give it away. And I don't think it's a huge stretch for them to start saying giving these books away would be a copyright infringement as well.
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The august court does not have to justify its sanity to peons.
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That would still be distribution, so it wouldn't surprise me. Perhaps they would let you will the book to your heir?
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Wow, a "Book Importer". How is that in any way "grey"?
Note that there is no suggestion here that the copies were pirated, or that there was any legal restriction on them in the place where they were made.
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Black market would be pirated, these books are not pirated. They are grey market, they were made to a lower standard, for a market that either wants the lower price point or has other needs.
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I think that kind of restriction would be a violation of GATT.
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If that overseas market has first sale rights similar to the US then such a specific license would not be legal.
If that overseas market does NOT have first sale rights then clearly the violation could only be prosecuted there and not in the US>
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price point
The market in the USA wants the lower price point, too. Otherwise no one would buy them.
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Are you proposing that there is any market anywhere that doesn't want a lower price point?
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Will you be happy when literally everything except a few monopolized products are illegal to sell anywhere? The concept of "gray legal area" changes every day and people like you seem to be welcoming it with open arms as your world becomes legal gray area.
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Re: Misleading?
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Book Copyright
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Re: Book Copyright
I think you'll find that re-distributing your downloaded material is illegal - and downloading is only legal in the sense that you can't possibly know which "offered" files are legal and which aren't. If you ARE aware that the distribution is not legal - then downloading IS illegal.
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I guess people could always just download it instead...
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Re: I guess people could always just download it instead...
The best part? Half the "international editions" are printed in the USA (and thus covered by first sale).
I get a book at a third of the US price and the publisher still makes a profit. Everyone's a winner!
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No, it's quite accurate. If you buy some books overseas, the US considers is copyright infringement to sell them here. Nothing misleading about that.
What does that have to do with anything? Are you trying to argue that first sale applies to some people depending on what their profession is??!!? How on earth would that be fair?
It absolutely is the same thing - you haven't provided any argument or evidence that it's not.
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None of us risk a $150,000 fine for selling a single book. Mike knows that, but wants to scare you with FUD.
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But even if it didn't, what's the difference between selling one, or selling a hundred or a million books? A crime is a crime, independently of scale.
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Yeah, you need to sell 8.
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Because this has nothing to do with "unfair" profits (boo hoo emo) or the law, just beating people up because you can. So if you piss them off, a single book will be more than enough to litigate.
The real solution should be obvious: If you dont want a cheaper (and inferior) product on the marker, then don't release one.
/rant
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I agree. Mike's article could be clearer that this person did not just sell 8 books, but rather multiple copies of 8 books.
>It's a guy working a profit motive by buying cheaper (and inferior) products overseas
Okay, those "inferior" products were made by the publisher of the book. Your language is implying that there is something shady about the products themselves. These are not like drugs that have been poorly manufactured and less effective by a unethical company. It is possible that some students who bought these books might have been displeased with the quality, that fact is not mentioned anywhere, but that is a different issue than copyright.
> and selling them without permission in the US marketplace, against copyright and against the copyright holder.
And here is the main problem. You appear to have a common but unsophisticated understanding of what copyright law means. You have an exclusive right to publish additional copies and sell them. It does NOT mean you get to control all copies of the work and what people do with them after they are purchased. If I have bought a copy of a book you wrote I can pee on it, burn it, or sell it again for a million billion dollars to the pope and not share the profit with you. However, it would be illegal for me to make a photocopy of your urine-enriched work and sell it for $.02 on ebay.
There might be laws regarding import restrictions which DO apply in this case. But copyright laws are supposed to stop you from making your own copies of a given work, not to stop you from selling copies you bought from the legitimate copyright holder. That case is exactly what the doctrine of "first sale" is all about.
This reminds me of the arguments that happen when candidates use music at rallies and the composers then complain that "they weren't asked." People always express the naïve position that the music is the composer's "property" (http://www.guardian.co.uk/music/2011/jun/29/tom-petty-michele-bachmann). Then the public is shocked to hear that after a musician publishes a CD and gets money for it and then a theater pays additional money to license it the musician can't just run up on stage and break the CD in half whenever they want.
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You keep saying this, but offer absolutely no reason or evidence to back it up. Repeating your talking points is neither evidence or logic, it's just spam.
As I said, provide proof or STFU.
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eBay is okay? They PROFIT on each and every sale, regardless of the material so it falls under the SAME issue. Now eBay has to ban used books to protect themselves from a law passed by mentally retarded ppl who smoked 3 tons of pot and then proceeded to lobby and pass insane laws (but profitable for them) that SCREW your rights towards your OWN PROPERTY.
And WOW, the very reason why an used books re-seller is a business is to PROFIT OVER THE DAMN TRADE OF USED BOOKS. Or other goods. Notice that they don't profit on selling the book itself. They profit over PROVIDING A SERVICE WHERE PPL CAN SELL AND BUY THEIR BOOKS. They couldn't care less if the book is public domain, about how smoking weed is good or about blowing yourself up to get virgins in heaven. All they care is helping the process of trading used books.
So, Mr AC, grow some brains before you post.
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And that wouldn't be commercial resale?
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> cheaper (and inferior) products overseas,
> and selling them without permission in the
> US marketplace, against copyright and against
> the copyright holder.
Once again, SO WHAT?
The law makes no such distinction. It doesn't say, "First Sale Doctrine only applies to non-commercial single purchases."
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> applies to some people depending on what
> their profession is??!!? How on earth would
> that be fair?
Or more to the point, where in THE LAW is any such distinction made?
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that doesn't make any sense to me. can anyone clarify?
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Dumb question - if works made outside the US don't get US copyright protection, how could he be found guilty of copyright infringement?
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Read the fine opinion. And the dissent.
You can read for yourself the bullshit reasoning that the majority uses.
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It's a commercial venture against a US publisher, and...
The reference you provide that gives crucial details you left out more than tips me away from your conclusion. Obviously this "student" is a grifter out to make some extra cash and knowingly circumventing /US/ copyright law.
And again, people, this is NOT a good time to make yourself a "test case"!
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Re: It's a commercial venture against a US publisher, and...
Actually, he's circumventing import restrictions, and there are other laws that can be used to punish him for those transgressions. Those are the laws that should have been used against this person, not twisting copyright beyond all recognition.
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What import restrictions would those be? I personally don't see anything wrong with what he did, so I'd be curious if there were some law or regulation in place which expressly prohibited it.
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Re: It's a commercial venture against a US publisher, and...
obviously any commercial venture agaist a US publisher is illegal? I'm afraid not. Copyright was never intended to protect publishers from legal competition. How does the publisher's own low standards abroad have any baring on this case? What makes it 'obvious' that this case has anything to do with copyright when nothing is being copied.
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This is what was wrong with the original Omega ruling. Omega put the stupid globe icon on their watches. The reseller, Costco, didn't copy the icon. Copyright should have nothing to do with the importation and sale of the watches.
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They already GOT PAID. Transaction completed. Their involvement is done.
I don't understand the world anymore.
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Re: It's a commercial venture against a US publisher, and...
This may work for a while, but as history has shown time and again (and again, and again) people don't care about laws that don't benefit individuals and society as a whole (regardless of how many times you tell them it's "for their own good"). One only has to pick up a good history book on the American Colonies in the 1750s and 1760s to see how well that works.
Saying selling something made outside the US is copyright infringement because it is not covered by copyright law is irrational.
Saying that paying MORE money for LESS choice, LESS utility, and LESS flexibility is a BETTER alternative is irrational.
Laws protecting irrational ideas are only followed by irrational people. Everyone else just goes about their business.
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"Once a domestic copy has been sold, no matter where the sale occurred, the copyright holder’s right to control its distribution is exhausted."
That seems extremely relevant and would supersede everything else, yet it is steamrolled by...gah, I've read it and still don't get it.
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First Music, then Movies, now Books
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I actually like this law...
At least one industry, book manufacture, has some semblance of protecting from predatory foreign trade practices!
Yeah, I said it; countries like China are siphoning off our manufacturing base as we speak. What will we be left with?
Nothing by a welfare state totally dependent on the generosity of foreigners.
Maybe we will all go to work for book manufaturers...
But wait! Apple and Amazon are going to buy all of the book manufacturers and shut them down so they can sell more ipads and kindles...
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*confused*
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Re: I actually like this law...
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Not under this title?
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Another way it affects libraries
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Lower standard?
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Do you have to sell a book to be breaking this law?
So all those people who had bought books overseas could now be sued for hundreds of thousand of dollars of copyright infringement.
I feel sorry for every second hand bookseller in the US. How can they do business without risking vast fines if the don't check the status of every book they sell?
I know they say these bad laws will never be used in that way but as Mike has said on here, governments and corporations seem willing to try to crush the individual when it suites them.
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Re: Do you have to sell a book to be breaking this law?
Most of the second hand stores I'm familiar with buy the books from the first (sometimes even the second) owner of the book.
Is "first sale" a misnomer, or is the law applied only to the first person to "sell" the book after the purchase?
Anyone know?
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http://en.wikipedia.org/wiki/Regional_lockout
I would thinks books would be able to curb the international resale by only selling their "cheaper and inferior" copies in the native language of the country. But more to the point, if they can sell a book at a profit at a lower price that only shows how overpriced it is in other markets. If people are willing to get the cheaper product and are happy with its inferior quality then maybe they dont need to make the superior version for richer countries. Or maybe they should offer both versions in all markets, or better yet maybe they should stop charging 250$ for a text book in the US that I can buy internationally for 20$ for no other reason than students don't have a choice. Reducing monopoly markup is a good thing.
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But more to the point, if they can sell a book at a profit at a lower price that only shows how overpriced it is in other markets.
But what if the only reason they can sell it at that low price is because the higher prices in other territories make up for the difference? You definitely have a point in that there's a market problem if they're offering a more affordably produced product in one market and not another, but when it's the same product in each market, it seems like they're screwed either way: if they offer a lower price in one market but not another, they incentivize bleeding imports [absent legal restrictions] and hurt their bottom lines. If they keep prices equal across the board, they either operate at a loss or inhibit the ability of poorer nations to afford their works.
Don't get me wrong, as a law student, I abhor the rates that many textbooks go for and fully take advantage of the first sale doctrine -- almost all my books for the upcoming semester were purchased secondhand. But those were books offered to this economy with full knowledge of the first-sale doctrine's reach. As the court in this case noted, copyright law is structured with a tension between the first sale doctrine and importation restrictions; an expansive reading of the former would relegate the latter to near uselessness, and it's doubtful that Congress would have passed both provisions into law with that outcome in mind. The dissent's reading of the relevant language in the first sale doctrine is very reasonable in isolation, but less so in light of prior case law, coexisting statutory law, and arguably some policy considerations as well. Congress should definitely do something to clarify the issue, though, as Mike's discussion brings up numerous legitimate concerns.
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I can't think of any company that sells their product at a loss in a poorer country and subsidizes it by higher margins in a richer country. No US corporation is so altruistic that it losses money by selling something just because it would benefit the consumer in that market. They just make less per unit in poorer markets. Maybe its just my cynicism.
Usually when this topic comes up on techdirt its something like Microsoft selling Office in China for 200$ per copy and us saying no shit everyone in China steals your product, they can't afford it. If we wanted to craft a special law preventing the import of "sold for loss" products I would be all for it. If a company wanted to sell to a market because it feels everyone deserves the ability to use their product but their is no way people could buy it without the company selling it under-margin. For example if they wanted to sell Tylenol in Africa for 5 cents a bottle, then they should be able to restrict the resale of that product outside the "for loss" market(or I guess sticking on topic this could be done with textbooks or classic works of lit.) But again what company does this?
I don't think laws should protect a company that increases their margins based on the wealth of a populace. If they sell the exact same product with a 10% markup in Nigeria and a 70% markup in the US, I don't think any laws should restrict some third party from taking advantage of that dissonance. If the product is inferior let the market decide what it wants. If the product is the same then the original company can easily run the third party out of business by reducing its margins enough that it is not worth the cost of him importing it. Obviously the third party would have to stay in compliance with import laws (which I am grossly ignorant of) and should advertise the product as imported (and inferior if that is the case) but if the marginal dissonance is so great that he can profit from doing this then the company should probably reduce its rents anyway.
I would agree it would be horrible if allowing this to happen drove some company out of existence or forced them to stop selling at a loss to a market the needs their goods but I need an example of a company that does this before I can start to feel bad. Major corporations love to take advantage of the savings the global market place provides them (cheap labor, lower industry standards ect ect) but hate when they have to pass those savings onto their customers.
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Just wanted to highlight this part in case of a tl;dr reaction.
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"if anyone can import and resell goods purchased in a territory of lowest cost, then manufacturers have no incentive to offer variable pricing"
To quote the esteemed Jennifer Granick, that's unfortunate but it's not a copyright problem.
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This certainly seems to be the direction we're already going with digital materials.
(Which is also a huge problem for libraries: when you buy a print book from the publisher or distributor, you retain that physical book for as long as you care to own it. When you buy digital editions or when you subscribe to database offerings, in most cases you later have no access to any "archive" of that material -- whether through licensing restrictions or proprietary technology. See HarperCollins' attempt to require a 26-circulation limit for libraries that buy HC e-books. That, in turn, is followed by mandatory repurchase if they want 26 more recircs, rinse and repeat.)
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Simple test should be ...
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Copyrightousness
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"we hold that the phrase “lawfully made under this Title” in § 109(a) refers specifically and exclusively to works that are made in territories in which the Copyright Act is law"
This line of reasoning is completely asinine. The proper interperatation should obviously be that "lawfully made" means not unlawfully made; not made in violation of the title.
In fact if you continue with their line of reasoning, if the books were printed here and sold overseas, they were still "lawfully made". Do they realize this would mean that even works that are sold in the US, if they are made elsewhere, even if just a component is, are no longer subject to first sale?
Any activity that could be done outside the US could then be described as having "not been done lawfully". It's an absurd conclusion.
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My first thought was..
Seems like this ruling would pretty well decimate that market as well, which would adversely affect the NEW car market. hmmm...
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This is, of course, an impossible situation.
Since there are lending libraries outside the US, and used books are sold in countries other than the US, countries other than the US must have doctrines that allow books be passed from hand to hand without securing the permission (making payment to) the copyright holder. I think this will end up being a stronger ban against book importation, which is silly enough in this so-called global economy, but it's too bad the court didn't recognize and set limits on the expanses of Absurdistan to which the implications of this opinion extend.
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Selling at a loss to subsidize
Isn't this true of US prescription medications?
Or is your argument that the lower price in the non-US market is the 'true' profitable price of the commodity and, thus, the higher price within the US is pure profit only?
(Just clarifying, not attacking.)
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