Supreme Court Justices Worry About 'Parade Of Horribles' If They Agree You Don't Own What You Bought

from the can't-resell-that-toyota dept

As we were discussing, on Monday, the Supreme Court heard the oral arguments in the Wiley v. Kirtsaeng case over whether or not you have the right to resell (or even display) a product you bought that was made outside of the country, which contains content covered by copyright. First off, a big caveat that needs to be mentioned every single time we write about oral arguments in a court case: it is not uncommon for what is discussed, and the questions asked, to really have almost nothing to do with the final decision. Everyone loves to read the tea leaves based on the questions the Justices ask, but, quite often, the questions (and answers) don't necessarily have much bearing on the final decision. The written briefs usually have a much bigger impact. That said, it doesn't mean the questions are meaningless, or that we can't learn a little bit from them.

It shouldn't be much of a surprise that the Justices were pretty pointed in their questions (pdf) for all three presenters (Wiley gave some of its time to the US government, who actually argued for a "middle ground" interpretation between the positions of both Wiley and Kirtsaeng). Justice Ginsburg, who in my opinion tends to get awfully confused when it comes to copyright cases, definitely led the attack on the lawyer representing Kirtsaeng, Joshua Rosenkranz, though he appeared to handle himself well. Still, there were clear concerns by Ginsburg and some of the other Justices over how far Kirtsaeng's interpretation of copyright law might go. The key issue there was the definition of "lawfully made under this title." If you haven't followed the case closely, that line is a key part of the first sale doctrine -- with Wiley (and various copyright holders) arguing it means that the first sale doctrine only applies to works made in the US, but not to those made elsewhere and imported. Kirtsaeng argues, instead, that the important part is "lawfully made" -- such that works, that are legally made elsewhere and which fit under the general characteristics of US copyright law, get first sale doctrine support when imported into the country. That is infringing copies (the Justices refer to "piratical" copies) wouldn't get such rights, but "lawfully made" products would.

What really comes up is that, depending on how you read it, there could be a significant conflict between two parts of copyright law: Section 109, which discusses first sale rights and Section 602, which talks about importation of copyright covered works. The argument is what to do when those two collide. Kirtsaeng argues that 109 is the key, and when it comes to first sale, we allow it. Wiley argues that 602 is more important since Congress wanted to allow for market segmentation and stop gray markets. The government advocated for a bizarre middle ground based on effectively ignoring the actual language of 109 and going all the way back to a century old ruling, from which the language in 109 eventually came (sort of).

The reality appears to be that Congress really did not think much about the possibility of this issue being a problem. In the one case where the possibility of a conflict was discussed, the discussion was that thought needed to be put into how to deal with it... but none really was. And that brings us to the arguments by Wiley's lawyer, former Solicitor General Ted Olson (a favorite lawyer for copyright maximalists). The Justices hit him pretty hard on a number of points, focusing mainly on a "parade of horribles" that might occur should his interpretation be accepted by the Court, and Olson seemed woefully unprepared to deal with these questions. Seriously, Wiley should be pretty upset by Olson's handling of the case here. The Justices kept bringing up examples, and Olson hit back weakly with "well, perhaps fair use fixes that" as an argument for why some absolutely ridiculous scenario might not apply should he win. This happened over and over again. There's a discussion on giving a book bought overseas to family members, and then a bunch of other examples. In one key exchange, Justice Breyer pointed out that under Wiley's interpretation, people wouldn't be able to resell their own Toyotas, since they have software covered by copyright:

JUSTICE BREYER: Imagine Toyota, all right? Millions sold in the United States. They have copyrighted sound systems. They have copyrighted GPS systems. When people buy them in America, they think they're going to be able to resell them. Now, under your reading -- now, this is one of their horribles, I gather, and I want to know your answer to it. Under their reading, the millions of Americans who buy Toyotas could not resell them without getting the permission of the copyright holder of every item in that car which is copyrighted?

MR. OLSON: There may be -

JUSTICE BREYER: Is that right?

MR. OLSON: There may be just -

JUSTICE BREYER: Am I right or am I wrong? Am I off base or am I wrong -- am I right?

MR. OLSON: There are other defenses, but that is not this case. This case is not

-JUSTICE BREYER: Well, how do you distinguish? How do you distinguish?

MR. OLSON: The government -- the government would argue for a broader interpretation under what was made under this statute, whether that would include the importation or the distribution in commerce. That's an argument that the government makes, but it's not necessary to decide this case.

JUSTICE BREYER: Now, explain to me, because they're horribles if I summarize them, millions and millions of dollars' worth of items with copyrighted indications of some kind in them that we import every year; libraries with three hundred million books bought from foreign publishers that they might sell, resale, or use; museums that buy Picassos that now, under our last case, receive American protection as soon as that Picasso comes to the United States, and they can't display it without getting permission from the five heirs who are disputing ownership of the Picasso copyrights.

Those are some of the horribles that they sketch. And if I am looking for the bear in the mouse hole, I look at those horribles, and there I see that bear.

So I'm asking you to spend some time telling me why I'm wrong.

MR. OLSON: Well, I'm -- first of all, I would say that when we talk about all the horribles that might apply in cases other than this -- museums, used Toyotas, books and luggage, and that sort of thing -we're not talking about this case. And what we are talking about is the language used by the statute that does apply to this case. And that -

JUSTICE BREYER: But we need -

JUSTICE SOTOMAYOR: Don't those horribles -

JUSTICE BREYER: -- interpretation -

JUSTICE KENNEDY: But you have to look at those hypotheticals in order to decide this case.

MR. OLSON: Well, and that's -

JUSTICE KENNEDY: 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.

That feels like the key exchange here, because the Justices recognize that Wiley's interpretation can lead to some really crazy results. Olson's repeated attempts to argue that such concerns are overblown because we haven't seen that "parade of horribles" yet doesn't seem to have convinced the justices. Later in the conversation, Justice Breyer explained that there's a plausible explanation for not seeing the "parade of horribles:" the fact that companies haven't yet seen a bright line from the Supreme Court that allowed them to commence said "parade of horribles:"

JUSTICE BREYER: The main point is that horribles haven't occurred. Right?

MR. OLSON: The main -- main -

JUSTICE BREYER: Sometimes horribles don't occur because no one can believe it.

Now, for example, I believe there is going to be a storm, but it hasn't started yet.

So I would like to know -- I would like to know, if you were the lawyer for the Toyota distributor, and if you were the lawyer for the Metropolitan Museum of Art, or you are the lawyer for a university library, and your client comes to you and says, my God, I just read the Supreme Court opinion. It says that we can't start selling these old books or -- or lending them or putting them in our word processor or reselling the Toyota without the -- without looking -- displaying the Picasso without the permission of the copyright holder, who may or may not be Toyota itself.

What, as their lawyer, do you tell them? Do you tell them, hey, no problem; or, do you tell them, you might become a law violator; or, do you tell them, I better litigate this? What do you tell them?

Olson responded that each scenario has different sets of facts, and then went back to his "well, there's fair use" routine, which Chief Justice Roberts finally called him on, asking Olson to expand on what else there is besides fair use, and wondering if it makes sense for all of these kinds of situations (i.e., displaying a Picasso or reselling your Toyota should rely on fair use law). Olson stammered around for a bit before trying out "implied license" also, which doesn't seem like a very strong answer. And, from there, much of the Justices' concern appeared to be that Wiley/Olson's reading of the law just doesn't make much rational sense. As per the clash between sections 109 and 602, Justice Sotomayor pointed out that since it seems obvious there's a conflict, shouldn't the court look for what makes the most sense, rather than come out with an obviously ridiculous ruling and leave Congress to fix it?

Isn't it incumbent upon us to give the statute what is plainly a more rational plain meaning than to try to give it a meaning and then fix it because we understand that the meaning doesn't make sense?

Justice Kagan also pointed out that Olson keeps going back to Section 602 (about importation of copyrighted goods) as the crux of his argument, but that's actually not the part of the law up for discussion. The whole point of the case is the interpretation of Section 109, and Justice Kagan pointed out that Wiley/Olson's interpretation there leaves much to be desired:

I mean, I -- you spend a lot of time talking about the legislative history and the purposes behind 602. But the language that we're supposed to be interpreting is the language in section 109. And the language in section 109, as far as I can see, there's really nothing to support your argument that that language was intended to address this gray market problem.

Olson hit back by saying that 109 and 602 were passed together in the same law (1976 Copyright Act), but that ignores the fact that most of 109 is actually just a holdover from the 1909 Act, and thus it's not like the two pieces were written together. And, as noted earlier, there was at least some awareness that the two might conflict and something should be done to clarify that.

One final interesting tidbit. Wiley gave some of its time over to the US government, whose brief in the case tried to chart out this "middle ground" between the two sides. Wiley must have felt that the government's argument would favor it in the end, since it gave over its time to the US government, but when the US's lawyer, Malcolm Stewart, was asked point blank which would be worse, he was finally pushed into a corner and admitted that things would probably be worse if Wiley got its way.

Once again, you shouldn't read too much into what's said at the oral arguments, as the final decisions often turn on very different issues, but at least there is some clear skepticism of Wiley's argument that you can't possibly really own anything purchased overseas.

Filed Under: copyright, first sale, kirsaeng
Companies: wiley