10 Judges, 135 Pages Of Ruling About Software Patents... And Zero Clarification

from the wtf? dept

Okay, we know that the Court of Appeals for the Federal Circuit (CAFC) has quite the reputation for mucking up rulings concerning patents over the years. In fact, there's a strong argument to be made that CAFC is a key reason that our patent system is so screwed up today. So, leave it to CAFC to issue one of the most bizarre and useless rulings ever concerning software patents. The specific case is CLS Bank v. Alice Corp, and we had noted this was a chance for CAFC to actually fix the software patents problem, though the oral hearings suggested a very conflicted court, and that's certainly what came out in the ruling. Or, rather, I should say: rulings.

The document is 135 pages... but the only part that actually matters is one single paragraph that was issued "per curiam" (i.e., by the whole court, but without anyone being named):

Upon consideration en banc, a majority of the court affirms the district court’s holding that the asserted method and computer-readable media claims are not directed to eligible subject matter under 35 U.S.C. § 101. An equally divided court affirms the district court’s holding that the asserted system claims are not directed to eligible subject matter under that statute.

Basically, a majority of the court agreed with the district court that the "invention" in the patent in question -- about using a computer to basically do "shadow transactions" to net out a deal to make sure that all funds are available -- was patent ineligible subject matter. This is what the district court had found, saying that it was just an "abstract idea." The original CAFC appeal had overturned that, saying that it was patentable subject matter. This was a rehearing "en banc" with 10 CAFC judges. Notice that 10 is an even number. Meaning, you could have a split court. Or, you could have a court in total disarray, which is what came out here. Even though they (mostly) agreed that the specific claims here are not eligible for a patent, the court disagreed on why or how or what color the sky is, basically.

There are seven (count 'em) different opinions issued in the document, none of them meaning anything, because none of them -- other than that one paragraph above, have more than the majority in agreement.

Even where they agree, they disagree, and make something of a mockery of the whole system. Dennis Crouch at Patently-O summarizes it thusly:

All of the judges recognized that the test for patent eligibility under section 101 should be “a consistent, cohesive, and accessible approach” that provides “guidance and predictability for patent applicants and examiners, litigants, and the courts.” However, the judges hotly disagree as to the pathway that will lead to that result.

That's kind of funny (or ridiculously distressing) when you think about it. The court is saying we need a clear and consistent approach to figuring out what is patentable, and the court feels that it needs to give very clear guidance to everyone about it... and then goes on to absolutely disagree on every key point within that. The end result is that while they agree we need consistent, cohesive and accessible guidance, they fail to offer any, and actually do the opposite, providing a huge mess.

Five of the judges did make a fairly interesting ruling, which would greatly limit software patents. It notes that:

... simply appending generic computer functionality to lend speed or efficiency to the performance of an otherwise abstract concept does not meaningfully limit claim scope for purposes of patent eligibility.... At its most basic, a computer is just a calculator capable of performing mental steps faster than a human could. Unless the claims require a computer to perform operations that are not merely accelerated calculations, a computer does not itself confer patent eligibility. In short, the requirement for computer participation in these claims fails to supply an “inventive concept” that represents a nontrivial, nonconventional human contribution or materially narrows the claims relative to the abstract idea they embrace.

Basically, just adding "on a computer" shouldn't make a general idea patentable. That's good. If only they could have found a sixth judge to support it. Instead, you get the following table of contents:

Opinion for the court filed PER CURIAM.

Concurring opinion filed by LOURIE, Circuit Judge, in which DYK, PROST, REYNA, and WALLACH, Circuit Judges, join.

Concurring-in-part and dissenting-in-part opinion filed by RADER, Chief Judge, LINN, MOORE, and O’MALLEY, Circuit Judges, as to all but part VI of that opinion. RADER, Chief Judge, and MOORE, Circuit Judge, as to part VI of that opinion.

Dissenting-in-part opinion filed by MOORE, Circuit Judge, in which RADER, Chief Judge, and LINN and O’MALLEY, Circuit Judges, join.

Concurring-in-part and dissenting-in-part opinion filed by NEWMAN, Circuit Judge.

Dissenting opinion filed by LINN and O’MALLEY, Circuit Judges.

Additional reflections filed by RADER, Chief Judge.

And, basically, all of this means nothing. It doesn't help to wipe out or clarify software patents at all. It doesn't really help anyone. It probably doesn't make anyone on any side of this issue happy. It just leads to more confusion.

However, as Julie Samuels at the EFF notes, hopefully this will help make it clear to the Supreme Court that it finally needs to issue a clear ruling on software patents, after completely punting the last time it had a chance.

Filed Under: cafc, patents, software patents, supreme court
Companies: alice corp., cls bank

Is Anybody Shocked That Americans Trust TV Judges More Than Supreme Court Justices?

from the time-to-televise-the-hearings dept

I suppose that’s a rhetorical question. When you live in a nation that’s been reduced to an army of mindless reality-TV-watching drones, it’s not exactly surprising that the average citizen is more inclined to trust a television judge than a jurist who’s been appointed to the highest court in the land.

We care more about the matching camouflage wedding couture Honey Boo Boo’s parents, Mama June and Sugar Bear, wore when they tied the knot this past weekend than the next round of controversial decisions that will be soon be handed down by the Supreme Court. We care more about the Kimye baby bump than the very existence of the Supreme Court, much less the names of the justices sitting on its esteemed bench.

No one who’s been paying any attention is taken aback by the fact that Americans care more about the people they see on television on a daily basis than names they once read in a textbook. That’s why the results of the latest Reader’s Digest Trust Poll as to this country’s judges are expected, and sad, and not at all surprising….

Before we start discussing the names of the judges who ranked the highest in the trust poll, we’ll break down the magazine’s methodology for you. Reader’s Digest rounded up the names of 200 “opinion shapers, leaders and headline makers” across 15 professions and showed the list to more than 1,000 Americans, who then ranked each name based on how trustworthy they thought they were. Here, trustworthiness was defined as “integrity and character, exceptional talent, drive to personal excellence, internal moral compass, message, honesty and leadership.”

All that being said, famous actors — Tom Hanks, Sandra Bullock, and Denzel Washington — were the most trusted people in America. Our own president was in the bottom half of the list, behind people like Tim Tebow and Adam Sandler. Again, this isn’t at all surprising, because we bring these people into our homes on DVD and pay exorbitant fees to see them in theaters while we eat our overpriced popcorn.

So when it comes to American’s most trusted judges, it’s no surprise that we all love Judge Judy. She was #28 on the Reader’s Digest list. She’s snarky and laypeople love it when she lays down the law in little sound bytes that actually make sense. Plus, her show is only half an hour long, which is about the amount of time it would take for the average citizen with an Adderall prescription to put aside the Supreme Court’s 193-page Obamacare opinion before deciding to use it to papercut their eyeballs.

But how do the Supreme Court justices stack up against our nation’s preeminent television jurist?

• No. 36: Ruth Bader Ginsburg
• No. 43: Stephen Breyer
• No. 44: John Roberts
• No. 49: Anthony Kennedy
• No. 53: Sonia Sotomayor
• No. 62: Elena Kagan
• No. 60: Samuel Alito
• No. 66: Antonin Scalia
• No. 88: Clarence Thomas

So again, I’m going to implore the Supreme Court to start televising its arguments — or better yet, give them all their own television shows, reality or otherwise. Seriously, give us a reason to watch C-SPAN.

Perhaps if something like “Keeping Up With Klarence” existed, the only black member of our country’s high court wouldn’t have been beaten out by Judge Joe Brown, who was ranked as the 39th most trustworthy person according to the Reader’s Digest poll. How about a talk show with Sonia Sotomayor? “It’s Her Beloved World (And We’re Just Living in It)” — she could be the next Oprah!

You want a comedy? “Kagan and Scalia: The Really Odd Couple”. If you’re into shows about buying other people’s expensive old things, you can watch “Antiques Roadshow with Ruth Bader Ginsburg,” where she’d star as a host and as an antique. If you want a late night talk show, you could watch “The John Roberts Show,” with Sam Alito standing in as the witty sidekick. Last, but not least, for some action, why not watch “I Survived” with Stephen Breyer? His calamities could fill out an entire season.

Just think about the ratings, network execs. Please help make American less… stupid.

Reader’s Digest Trust Poll: The 100 Most Trusted People in America [Reader's Digest]
Reader’s Digest Trust Poll: Here’s What Shocked Us the Most [Reader's Digest]
Justice Ginsburg is close behind Judge Judy on most trusted list [ABA Journal]

More stories from Above The Law

• The High Price of the Federal Bench
• It’s Her Beloved World, And We’re Just Living In It: Justice Sotomayor Speaks on Free Speech
• You Stay Classy, Mississippi Supreme Court Justice Mike Randolph

Filed Under: supreme court, supreme court justices, trust, tv judges

Supreme Court Says Out Of State Residents Have No Constitutional Right To Virginia's FOIA Law

from the really-now? dept

A few months back, I mentioned that we had joined in an amicus brief in a challenge to Virginia's freedom of information act (FOIA) law, which limited the ability of non-Virginia residents to make use of the law. In particular, we were extra concerned about how the law seemed to treat different types of requests in different ways -- such as allowing out of state newspapers to file FOIA requests, but not allowing other publications like blogs to file. We ended up joining with a large number of publications and other interested parties in asking the Supreme Court to declare the limitations in Virginia's law unconstitutional.

On Monday, the Supreme Court went the other way, saying that the law and its restrictions are legal, and that the Constitution does not guarantee a right to FOIA requests. It also basically said that these restrictions weren't that big of a deal. That seems unfortunate, given how important transparency is to good governance, and how key FOIA requests have been in increasing transparency. Just because you don't live in a state, it doesn't mean that you can't help investigate and report on happenings in that state.

As someone who has filed regional and federal FOIA requests for quite some time now, such restrictions are somewhat worrisome. Of course, where the state of Virginia and the Supreme Court seek to hoard such information from out of state requests, others are already working on ways to tackle the problem. Muckrock, the platform for filing FOIA requests (who was a part of the coalition on the amicus brief) has already started building a list of volunteers in each state (especially in Virginia and the six other states with similar laws) to file requests locally in that state standing in for those out of state. They're looking for more volunteers, so if you're interested, click that link and sign up.

Filed Under: foia, freedom of information act, limitations, supreme court, virginia

Supreme Court Seems Skeptical As Myriad Claims Gene Patents Should Exist, Because It Put A Lot Of Work Into Finding Them

from the sweat-of-the-brow dept

As many people know, on Monday, the Supreme Court finally heard the Myriad Genetics case, to look at whether or not genes are patentable subject matter. For the past few decades, the USPTO has generally argued that you can patent genes, which just seems crazy to most folks who point out that it's nuts to patent something that exists in your body. Supporters argue that they're trying to patent the process of isolating the gene, but that's just semantics. As you may recall, the appeals court, CAFC, had decided that genes are patentable because they're separate from your DNA. After that, the Supreme Court disallowed patents on medical diagnostics, and asked CAFC to reconsider the Myriad case with that as a guide. In response, CAFC stuck by its guns, insisting that genes are patentable.

With the big caveat that oral hearings are often meaningless in terms of how the Supreme Court eventually rules, the transcript and the various reports from those who were there suggest that there is at least some good skepticism about patenting genes. First off, we should point out that Myriad's CEO, Peter Meldrum posted a ridiculous op-ed at USA Today over the weekend, in which he argued that Myriad should be allowed to get patents because it worked hard to get them.

To create tests for hereditary breast cancer and ovarian cancer, our company and its investors spent more than $500 million over 17 years before we were able to recoup this investment.

Except, of course, patents aren't about the sweat of your brow and how much work you put into something. Nor -- despite Meldrum's silly claims -- are they about letting companies "own" their findings:

We think it is right for a company to be able to own its findings, just as pharmaceutical and other companies do all the time.

Except, of course, that's wrong. Because Meldrum does not want any other companies, who came up with the same thing independently, to "own" their "findings." Instead, he wants them to pay up or go out of business. For all of those companies, who may have spent even more money, that, apparently, doesn't matter at all, which highlights the complete hypocrisy of Meldrum's position. His argument only applies to his company, and not any other.

Furthermore, Myriad's critics made clear to point out that other labs were working on the same thing and were happily foregoing patent protection. The clear suggestion: it wasn't the patent that created the incentive, and the end result was that all of those other businesses were harmed. So Myriad's argument that it's helping researchers is doubtful.

We know that there were other labs looking for the BRCA genes and they had announced that they would not patent them if they were the first to find it. We also know that prior to the patent actually being issued, there were other labs doing BRCA testing and Myriad shut all that testing down. So we know in this particular case that problem would not have arisen.

But the point of the whole -- the whole point of the product of nature doctrine is that when you lock up a product of nature, it prevents industry from innovating and -- and making new discoveries. That's the reason we have the product of nature doctrine, is because there may be a million things you can do with the BRCA gene, but nobody but Myriad is allowed to look at it and that is impeding science rather than advancing it.

Justice Scalia followed that up by asking why would anyone invent anything if they can't get a patent. Of course, he might want to ask all of those labs that invested in the same process, but can't do anything about it. It seems they lose out, too.

In the end, there was clear skepticism from the Justices, but also a suggestion that they might try to punt the issue (again!) by ruling narrowly on particular issues, rather than by taking on the big question. We'll see how it all comes out in a few months...

Filed Under: gene patents, patentable subject matter, patents, supreme court, sweat of the brow
Companies: myriad genetics

Indian Supreme Court Rejects Trivial 'Evergreening' Of Pharma Patents

from the saving-lives dept

Back in October last year, in the context of India showing itself increasingly sceptical about pharma patents that drive up drug prices beyond the reach of its citizens, we wrote about an important court battle over Novartis's drug Gleevec, sold as Glivec in India. The definitive judgement from India's Supreme Court was announced today, reported here by The Guardian:

The Indian supreme court has refused to allow one of the world's leading pharmaceutical companies to patent a new version of a cancer drug, a decision campaigners hailed as a major step forward in enabling poor people to access medicines in the developing world.

Novartis lost a six-year legal battle after the court ruled that small changes and improvements to the drug Glivec did not amount to innovation deserving of a patent. The ruling opens the way for generic companies in India to manufacture and sell cheap copies of the drug in the developing world and has implications for HIV and other modern drugs too.

The key issue at stake is a practice known as "evergreening": making small changes to a drug, often about to come off patent, in order to gain a new patent that extends its manufacturer's control over it. It's a way of cheating on the implicit bargain of patents: that a government-backed monopoly is granted in exchange for the invention entering the public domain at the end of the patent's lifetime.

That's what makes today's decision so important. It's not just about allowing Indian generics manufacturers to offer Glivec for a fraction of the Novartis price; it's equally about establishing the principle that "evergreening" patents won't be as easy in India as it is elsewhere, where the practice is common. This will allow India's pharma companies to produce a wide range of drugs at low prices that can then be sold to emerging countries unable to afford Western prices.

Doubtless, many lives will be saved as a result, but that doesn't seem to be any comfort to the head of Novartis in India, who is quoted in a press release as saying:

"We strongly believe that original innovation should be recognized in patents to encourage investment in medical innovation especially for unmet medical needs," said Ranjit Shahani, Vice Chairman and Managing Director, Novartis India Limited. "We brought this case because we strongly believe patents safeguard innovation and encourage medical progress, particularly for unmet medical needs. This ruling is a setback for patients that will hinder medical progress for diseases without effective treatment options."

That's pretty much what you'd expect him to say, since we've heard it here on Techdirt so many times before: without patents that allow monopoly pricing and big profits, there will be no investment in new drugs, and everyone will suffer etc. etc. But this simply isn't true. Much of the fundamental research that leads to important new drugs is done in public laboratories, paid for by taxpayers around the world, not by pharma companies.

Here, for example, is the story of how Novartis came to gain its highly-lucrative monopoly on Gleevec/Glivec, as told by the key researcher who actually developed it: Brian Druker, chair of Leukemia Research and professor of medicine at the Oregon Health and Science University Cancer Institute. He explained how the crucial initial research was carried out in an opinion piece published on the Livemint site in 2007:

The basic research that led to the identification of enzyme inhibitors for CML [Chronic Myeloid Leukaemia -- the main condition that Glivec is designed to treat] dates back to 1960 with the identification of the Philadelphia chromosome in patients with CML by researchers at the University of Pennsylvania, Peter Nowell and David Hungerford. In 1973, Janet Rowley at the University of Chicago determined that the abnormal chromosome was due to a translocation of genetic material.

No pharmaceutical companies seem to have been involved in this early work, and they were also minor players in the crucial move out of the laboratory, into product development, as Druker explains:

In 1993, I moved to Oregon Health Sciences University in Portland and had a single goal of finding a company that had the best inhibitor for Bcr-Abl [the cancer-causing protein] and to bring it into clinical trials. My work in Oregon on a therapy for CML was primarily funded by public sources, particularly the National Cancer Institute. My persistence with scientists at Ciba-Geigy (now Novartis) helped to keep the development of imatinib on their agenda despite uncertainty from product managers.

So not only was the drug developed largely thanks to public funds, but the pharma company that ended up making all the profits from it wasn't even hugely enthusiastic about the project initially: it was only Druker's "persistence" that led to the drug being approved. And if you're wondering about his views on the current world of pharma, with its stratospheric prices and a habitual recourse to evergreening to extend patents way beyond their original life-span, here's what he wrote back in 2007:

Pharmaceutical companies that have invested in the development of medicines should achieve a return on their investments. But this does not mean the abuse of these exclusive rights by excessive prices and seeking patents over minor changes to extend monopoly prices. This goes against the spirit of the patent system and is not justified given the vital investments made by the public sector over decades that make the discovery of these medicines possible.

The fact that many key drugs have only been possible thanks to those "vital investments made by the public sector" is nearly always overlooked by defenders of the pharma patent system. It's another reason why the Indian Supreme Court's decision is not only right, but just.

Follow me @glynmoody on Twitter or identi.ca, and on Google+

Filed Under: drugs, evergreening, gleevec, glivec, india, patents, pharma, pharmaceuticals, small improvements, supreme court
Companies: novartis

People Who Have Actually Heard of the Supreme Court Don't Like It Very Much

from the whozzat? dept

In August, we lamented the fact that nearly two-thirds of Americans couldn’t name a single member of the Supreme Court. At the time, we blamed it on the perceived stupidity of our nation’s population, calling for televised oral arguments in the hopes that they’d someday compete in the ratings with reality shows like Keeping Up With the Kardashians. Unfortunately, given the high court’s resistance to change and the burgeoning evidence that we live in a country that’s overflowing with Honey Boo Boos, neither is going to happen any time soon.

But that’s really beside the point, because even if SCOTUS arguments were televised, they’d likely appear on C-SPAN, a channel that some people have probably never heard of before. Another thing that some people have never heard of before is the Supreme Court itself. That was a serious statement….

According to the latest Pew Research Center survey of 1,501 adults, conducted between March 13 and 17, approximately two percent of respondents claimed that they had “never heard of” the Supreme Court, which is the highest percentage that response category’s seen since 2007. Really? Really?!

Unlike the names of our nine Supreme Court justices, knowledge of the fact that the Supreme Court exists in the first place isn’t mere trivia question fodder. This is something that people learn in grade school, and considering that many of the Court’s high-profile cases have received hours upon hours of television coverage on basic cable, it’s shocking — nay, mortifying — that some can claim they’ve never heard of highest court in all the land. In sum: America, F**K YEAH!

Among the people who have heard of the Supreme Court, the justices’ favorability ratings are near an all-time low. Here’s more info (people who’ve never heard of SCOTUS should read this S-L-O-W-L-Y):

A national survey by the Pew Research Center, conducted March 13-17 among 1,501 adults, finds that 52% view the court favorably, while 31% view it unfavorably. Those ratings have changed only modestly since last July, shortly after the court’s ruling to uphold most of the Affordable Care Act.

The WSJ Law Blog (sub. req.) notes that in years prior, between 1987 and 2010 in particular, the Supreme Court’s favorability rating never fell below 57%, and oftentimes was higher than 70%.

Are people just pissed off that “nine unelected people from a narrow legal background” have been responsible for many of our major democratic decisions (e.g., health care reform, immigration enforcement, affirmative action, and gay marriage)? That’s apparently what Justice Kennedy thinks, so it’s probably safe to assume that laypeople feel the exact same way.

But hey, at least these people have an opinion about the Supreme Court and know that it’s not some sort of a fictitious entity like the Justice League. We’re probably better off this way.

Supreme Court’s Favorable Rating Still at Historic Low [Pew Research Center]
A Hardening Opinion of the Supreme Court [WSJ Law Blog (sub. req.)]

More stories from Above The Law

• Things Oliver Wendell Holmes Didn’t Say
• 3D Printers Don’t Kill People, Guns Made With 3D Printers Kill People.
• Career Alternatives for Attorneys: Disney World Guru

Filed Under: knowledge, opinion, supreme court

Taiwan Supreme Court Says Porn Not Covered By Copyright

from the we-know-it-when-we-see-it dept

The awkward question of whether porn can be covered by copyright (and not much else, amirightgents?) has been debated a time or two on this side of the world. In 2011, some discussion revolved around the protection of "obscene materials," namely the protection extended to porn by the Fifth Circuit Court in a 1979 case involving a porn producer and a chain of adult theaters. This decision was cited in a lengthy footnote appended to a lawsuit filed by Liberty Media against 18 John Does.

In 2012, the argument was made that pornography doesn't "promote progress," therefore it should not be entitled to copyright protection. This particular argument is a rather dangerous one (and composed almost entirely of slope grease) as it puts the extension copyright protection in the hands of the court and allows it to determine whether a piece of erotica is art or "just porn." (The case was closed before this conversation could really get started.)

On the other side of the world, Japanese porn producers are finding themselves battling this very argument.

For years producers of porn movies in Japan have bemoaned the lack of protection their content has received in Taiwan.

In 2010 things came to a head. The leading producers of the 20,000+ adult movies released in Japan each year warned Taiwan that if it didn’t get tough on pirates selling their content on websites and even airing it on TV, legal action would follow.

These producers took their complaints to Taiwan's legal system and received this response.

Taiwan's prosecutors said Wednesday that Taiwanese firms that use Japanese-made pornographic films to make profits online have not violated Japanese producers' copyrights.

The Taipei District Court's Prosecutors Office therefore announced it will not press charges against Elta Technologies Co. Ltd, and 10 other Taiwanese firms that the Japanese studios accused of violating their copyrights.

Despite the producers' arguments that each film was unique and expressed singular artistic vision, prosecutors refused to budge, stating that Taiwan's Supreme Court affords copyright protection only to "works of literature, science and arts." According to the court, porn is not included, therefore it has no "copyright" to be infringed.

This disappointing decision prompting the Japanese porn producers to take another approach, and start calling the kettle black... for litigious reasons.

In a sign of how desperate they had become, the Japanese companies added that if they had no remedy under copyright law, they would sue the pirates for spreading obscene material and damaging the health of Taiwan’s children.

As crazy as it sounds this approach had the potential to work. While authorities have done nothing to protect copyrights of adult material, they do arrest people for distributing obscene material.

Ah, the "for the children" tactic. It's been used here before as justification for SOPA and various computer-snooping plans. This is a bit different, however, as it flips the script on the pirates, turning them from enemies of porn producers to enemies of the state. It's an approach that takes a very oblique angle, but when the usual stuff isn't working, it's time to bust out the "just-crazy-enough-to-work" options.

Unfortunately, it didn't work. (Not crazy enough??)

[T]he adult producer’s claims that the pirates were spreading obscene material and damaging children didn’t gain any ground either. The prosecutors decided that since the pirate sites displayed warnings and blocked minors from accessing their websites then there was no case to answer there either.

At this point, it looks as if Japan's porn producers are out of options, at least in terms of preventing piracy in Taiwan. The court tells them their work is too dirty to protect. They counter by saying their work is too dirty to distribute. The court says (paraphrasing) "It's ok, these sites are using protection." I doubt these producers really want to push the issue of having porn declared a protectable art form and leave the defining line between protectable art and unprotected obscenity in the hands (and minds) of government officials. Perhaps these producers should just concede the battle and focus on areas where they have the protection, or at least, paying customers.

Filed Under: copyright, porn, supreme court, taiwan

Supreme Court Won't Hear Jammie Thomas Appeal

from the but-of-course dept

We didn't think that the Supreme Court would grant cert to hear the appeal in Jammie Thomas' case and now it's been confirmed. As we've said for a while, neither Jammie Thomas's case nor Joel Tenenbaum's case,were ideal cases to take to trial, and both people mounted questionable defenses, which massively harmed their credibility. There are serious issues that could have and should have been covered in these kinds of cases, including the Constitutionality of certain levels of statutory damages. However, the way they went about this case made sure that it was doomed from the start. And, unfortunately, now it's just more bad precedent out there.

Filed Under: copyright, jammie thomas, jammie thomas-rasset, statutory damages, supreme court

Supreme Court Gets It Right In Kirtsaeng: You Can Resell Things You Bought Abroad Without Infringing

from the phew dept

For a few years now, we've been following the Kirtsaeng case, in which a student was sued by publisher John Wiley & Sons for buying cheap (legal) textbooks abroad, and then reselling them in the US for profit. Wiley claimed this was copyright infringement, while the student, Sudap Kirtsaeng, argued that the first sale doctrine applied. First sale gives you the right to resell, say, a book that you legally bought without having to get permission from the copyright holder. Under copyright law, it says that the first sale doctrine applies to any product "legally made under this title." Wiley argued that goods made abroad were not legally made under US law since they were made abroad (even though, obviously, it wanted the rest of copyright law to apply to it once those works came to the US). We were guardedly optimistic after the oral hearings at the Supreme Court, in which the Justices explored the "parade of horribles" that might happen if Wiley won. And while what happens at oral arguments frequently doesn't seem to have any bearing on the eventual situation, in this case, the Supreme Court has ruled in favor of Kirtsaeng, saying that it is silly to interpret the first sale doctrine the way Wiley does, and that there is no evidence that such "geographical restrictions" make sense, or that Congress intended such a result.

In our view, §109(a)’s language, its context, and the common-law history of the “first sale” doctrine, taken together, favor a non-geographical interpretation. We also doubt that 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.... We consequently conclude that Kirtsaeng’s nongeographical reading is the better reading of the Act.

To get technical, the key issue in the dispute was that two different sections of copyright law could be read to conflict. Section 109 defines the First Sale doctrine while Section 602 defines importation of works. Kirtsaeng focused on 109, while Wiley insisted that 602 is more important. The Supreme Court -- by a six to three margin -- side strongly with Kirtsaeng. The majority was written by Justice Breyer, who is consistently good on intellectual property issues, while the dissent was led by Ginsburg, who is consistently bad on copyright issues (Scalia and Kennedy sided with Ginsburg). Thankfully the "good" side won out today.

The language of §109(a) read literally favors Kirtsaeng’s nongeographical interpretation, namely, that “lawfully made under this title” means made “in accordance with” or “in compliance with” the Copyright Act. The language of §109(a) says nothing about geography. The word “under” can mean “[i]n accordance with.” 18 Oxford English Dictionary 950 (2d ed. 1989). See also Black’s Law Dictionary 1525 (6th ed. 1990) (“according to”). And a nongeographical interpretation provides each word of the five-word phrase with a distinct purpose. The first two words of the phrase, “lawfully made,” suggest an effort to distinguish those copies that were made lawfully from those that were not, and the last three words, “under this title,” set forth the standard of “lawful[ness].” Thus, the nongeographical reading is simple, it promotes a traditional copyright objective (combatting piracy), and it makes word-by-word linguistic sense.

The geographical interpretation, however, bristles with linguistic difficulties. It gives the word “lawfully” little, if any, linguistic work to do. (How could a book be unlawfully “made under this title”?) It imports geography into a statutory provision that says nothing explicitly about it. And it is far more complex than may at first appear.

To read the clause geographically, Wiley, like the Second Circuit and the Solicitor General, must first emphasize the word “under.” Indeed, Wiley reads “under this title” to mean “in conformance with the Copyright Act where the Copyright Act is applicable.” Brief for Respondent 15. Wiley must then take a second step, arguing that the Act “is applicable” only in the United States. Ibid. And the Solicitor General must do the same. See Brief for United States 6 (“A copy is ‘lawfully made under this title’ if Title 17 governs the copy’s creation and the copy is made in compliance with Title 17’s requirements”). See also post, at 7 (GINSBURG, J., dissenting) (“under” describes something “governed or regulated by another”).

One difficulty is that neither “under” nor any other word in the phrase means “where.” See, e.g., 18 Oxford English Dictionary, supra, at 947–952 (definition of “under”). It might mean “subject to,” see post, at 6, but as this Court has repeatedly acknowledged, the word evades a uniform, consistent meaning. See Kucana v. Holder, 558 U. S. 233, 245 (2010) (“‘under’ is chameleon”); Ardestani v. INS, 502 U. S. 129, 135 (1991) (“under” has “many dictionary definitions” and “must draw its meaning from its context”).

A far more serious difficulty arises out of the uncertainty and complexity surrounding the second step’s effort to read the necessary geographical limitation into the word “applicable” (or the equivalent). Where, precisely, is the Copyright Act “applicable”? The Act does not instantly protect an American copyright holder from unauthorized piracy taking place abroad. But that fact does not mean the Act is inapplicable to copies made abroad. As a matter of ordinary English, one can say that a statute imposing, say, a tariff upon “any rhododendron grown in Nepal” applies to all Nepalese rhododendrons. And, similarly, one can say that the American Copyright Act is applicable to all pirated copies, including those printed overseas. Indeed, the Act itself makes clear that (in the Solicitor General’s language) foreign-printed pirated copies are “subject to” the Act.

The ruling goes on to lay out historical and logical reasons why first sale should apply. It's a good read. It looks like Breyer relied, in part, on the American Library Association's concern for how a ruling against First Sale would cause serious harm to libraries, which would have to somehow figure out ways to get permission on any book they had that was printed outside the US. He similarly cites concerns of used book dealers and the tech industry that this would get in the way of all sorts of reasonable transactions.

Technology companies tell us that “automobiles, microwaves, calculators, mobile phones, tablets, and personal computers” contain copyrightable software programs or packaging. Many of these items are made abroad with the American copyright holder’s permission and then sold and imported (with that permission) to the United States. A geographical interpretation would prevent the resale of, say, a car, without the permission of the holder of each copyright on each piece of copyrighted automobile software. Yet there is no reason to believe that foreign auto manufacturers regularly obtain this kind of permission from their software component suppliers, and Wiley did not indicate to the contrary when asked. Without that permission a foreign car owner could not sell his or her used car.

Breyer dismisses the idea, presented by Wiley, that because this "parade of horribles" hasn't happened yet, it won't happen in the future if the ruling had gone the other way. The ruling notes that this is still somewhat unsettled law, but that large parts of the economy clearly rely on the first sale doctrine, and upsetting that apple cart could have dramatic impact. It also rejects other spurious arguments, including a favorite of copyright maximalists, that the first sale doctrine on such works prevents copyright holders from doing differential pricing. The court rightfully questions what this has to do with copyright:

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. A publisher may find it more difficult to charge different prices for the same book in different geographic markets. But we do not see how these facts help Wiley, for we can find no basic principle of copyright law that suggests that publishers are especially entitled to such rights.

[....] the Constitution’s language nowhere suggests that its limited exclusive right should include a right to divide markets or a concomitant right to charge different purchasers different prices for the same book, say to increase or to maximize gain. Neither, to our knowledge, did any Founder make any such suggestion.We have found no precedent suggesting a legal preference for interpretations of copyright statutes that would provide for market divisions.

To the contrary, Congress enacted a copyright law that (through the “first sale” doctrine) limits copyright holders’ability to divide domestic markets. And that limitation is consistent with antitrust laws that ordinarily forbid market divisions.

The dissent obsesses over this issue of differential pricing, despite it having little to do with copyrights and simple serves to reinforce the idea -- as seen in previous copyright rulings, including Eldred -- that Justice Ginsburg seems to have a bit of a blindspot in copyright cases, such that anything that helps copyright maximalists is automatically seen as "good."

But, perhaps more importantly, Justice Ginsburg repeatedly cites various international trade agreements in arguing that her position is the correct one. With this ruling decided as is, copyright maximalists will no doubt seek to have Congress change the law in their favor -- especially now that comprehensive copyright reform is back on the table. But, as a part of that, you can absolutely expect to see this issue pop up in various international trade agreements as well. Copyright maximalists will seek to force Congress' hand in suggesting that first sale rights do not transfer over for goods made in foreign countries. This is something that we're all going to have to pay close attention to in the coming years.

Filed Under: copyright, first sale, foreign goods, international exhaustion, kirtsaeng, resale rights, sudap kirtsaeng, supreme court
Companies: john wiley

Two And A Half Minute Video Explains How The Ability To Sell Stuff You Legally Purchased Is At Risk

from the you've-been-owned dept

As we wait patiently for the Supreme Court to decide the Kirtsaeng case, concerning whether or not you can resell goods that were made outside the US but that can be covered by copyright inside the US, the folks at Demand Progress have put together a nice two and a half minute video highlighting the possible consequences of a ruling that goes against first sale rights and limits your ability to freely sell items you legally purchased. While it may seem premature to be discussing this before the eventual ruling, having more people understand why this is a vitally important issue is helpful, so that we can either push for legislation to fix a bad ruling, or (hopefully) resist a push in the other direction by companies seeking to stomp out first sale rights.

Filed Under: copyright, first sale, kirtsaeng, supreme court