Lipton, Weinberger & Husick

One of the exclusive rights in copyright granted to the creator of a work is the right to distribute it.  For instance, if you self-publish a book — a popular activity these days — you also have the exclusive right to make copies and distribute them to whomever you want.  The distribution right, however, is not unlimited.  If I were to purchase one of your self-published books, the law permits me to resell it to whomever I want without violating your exclusive right of distribution.  This is known as the “First Sale” doctrine — codified in Section 109 (a) of the Copyright Act.  The First Sale doctrine is important because it legitimizes the sales activities of used book stores, art galleries, and other establishments, which resell copyrighted works.  But what are the limits of the First Sale doctrine?  That was the question raised by a recent case before the U.S. Court of Appeals for the Second Circuit in John Wiley & Sons, Inc. v. Supap Kirtsaeng, No. 09-4896-cv (August 15, 2011, 2nd Cir).  It may have far-reaching implications.

In 2009, Supap Kirtsaeng, a Thai national, opened a used textbook business to support his educational studies in the United States. The business model was simple.  He enlisted his friends and family in Asia to buy textbooks and ship them to him in the United States for resale on e-Bay. To ensure that he was acting legally, Kirtsaeng asked the opinion of his friends in Thailand and consulted “Google Answers” (now defunct). Apparently, these sources gave him the green light because his textbook selling activities continued and prospered.  Kirtsaeng was so successful that he caught the eye of John Wiley & Sons, Inc. (“Wiley”) — the copyright owner — who sued him in federal court for copyright infringement.  Wiley based its lawsuit on Section 609(a) of the Copyright Act, which prohibits the importation of copyrighted works manufactured outside of the United States without the authorization of the copyright holder.  At trial, the federal district court prohibited Kirtsaeng from raising the first sale doctrine as a defense to copyright infringement and as a result, the jury found in favor of Wiley and awarded it damages for intentional copyright infringement.

On appeal, the United States Circuit Court of Appeals for the Second Circuit affirmed the decision of the lower court. The court of appeals acknowledged that there was a tension between the First Sale doctrine, which gives rights to owners of copyrighted works and Section 609(a) of the Act, which takes them away if the works were manufactured outside of the United States.  Nevertheless, it was persuaded by a recent decision of the United States Supreme Court in Quality King Distributors, v. L’anza Research International, Inc., which suggested that Section 609(a) was meant to give control to copyright owners over imported goods, which, by definition, are not “lawfully made” under the U.S. Copyright Act.  Under the First Sale doctrine, the law requires that the goods be “lawfully made” under the Act.

Although a decision by the U.S. Circuit Court of Appeals for the Second Circuit is not the law of the land, only decisions of the U.S. Supreme Court wear that title, it could potentially persuade other courts to decide cases in the same direction.  The end result may have important implications for used book sellers, art galleries, libraries and any other establishment that may resell copyrighted works manufactured abroad.    Of course the Kirtsaeng case also suggests that you shouldn’t make important business decisions based on advise from non-experts even if they bear the “Google” name.

– Adam G. Garson, Esq.

Dear Doc,

What ever happened to that “Copyright Troll” that was trying to sue anyone who quoted the Las Vegas newspaper?

Jus’ Wondrin’

Dear Jus:

Funny you should ask.  You will recall that Righthaven LLC (the “troll” you talked about) is a company that brought hundreds of law suits for copyright infringement against web sites, bloggers, and mainstream media companies that used content from the Las Vegas Review Journal.  More recently,  Righthaven  sued a website called the Democratic Underground. The Electronic Frontier Foundation, a digital rights nonprofit group, got into the case on the side of the defendant.  Its attorneys, wondering how Righthaven got the rights from the Las Vegas Review Journal, requested copies of agreements from Righthaven.

Righthaven said that its contracts were confidential, but the Federal judge ordered them to produce the documents, and guess what? It turned out the Righthaven did not own the copyrights, and was not even the exclusive licensee of the rights. Under the law, Righthaven did not have “standing” to sue for infringement. (Standing is the legal concept that a party to a law suit must have a genuine interest in the suit, so that only real “parties in interest” are allowed to participate in the action.)

The judge ordered the suit against Democratic Underground dismissed. Now many other victims of Righthaven have asked that their cases be dismissed on the same basis, and many have asked courts to order RIghthaven to pay their costs and attorney fees, too.

Does this mean the end of such suits? Obviously not, since others will now understand that a genuine transfer of rights is necessary before starting copyright law suits. Of course, the newspaper itself (or the company that owns it) could have brought suit in the first place, but since suing people is not the usual business of newspapers, the Doc does not expect a wave of such filings any time soon.

That said, the advice still stands repeating: short quotes from sources are fine, but for anything longer, a link to the original is still legally safer.

– Lawrence A. Husick, Esq.

Dear Dr. C,

I heard that a copyright troll died recently…what’s the scoop?

Sincerely,

Morbidly Interested

Dear Morbidly,

Righthaven LLC is a company that has brought hundreds of law suits for copyright infringement against web sites, bloggers, and mainstream media companies that have used content from the Las Vegas Review Journal.  Quotations as small as one sentence, even when properly attributed to the Review-Journal, have brought demands for payment and federal suit from Righthaven, which alleged that it owned the rights to the paper’s morgue (archive of past issues.)  Reportedly, Righthaven has received payments to settle these suits that total several hundred thousand dollars.

In a legal counterattack, Democratic Underground, a target of a copyright claim by Righthaven, used discovery to gain access to the agreement between the newspaper publisher and Righthaven.  (Righthaven LLC v. Democratic Underground LLC, Civ. Action No. 2:10-cv-01356, D. Nevada.)  That agreement granted Righthaven LLC only the right to sue, but not ownership of the copyrighted works.  United States District Judge Roger Hunt ordered publication of the agreement, and those that have been sued by Righthaven have now been given the tool to bludgeon the troll.  You see, under existing law, having a bare right to sue is not sufficient basis for standing before the court, and each defendant may now move to have cases dismissed on that ground.  Expect to see a LOT of motions filed.

This leaves the fundamental question of what constitutes fair use of a newspaper’s content in today’s digital world.  Is it sufficient to include the link (URL) with the text of the story posted or emailed?  Is it permissible only to post the link itself?  Is there some middle ground?  Unfortunately, Congress was very vague about what would be considered “fair use” when it wrote the Copyright Statute, and our courts have not provided much precision in the more than thirty years since.  This important question must be answered, but it may take many more cases, at great cost in time and expense, before we have a workable and consistent answer.  For now, the safe course is to quote only a few sentences, at most, and provide a reader with the opportunity to view the original article using a link (such as, “To read the rest, click here…”)

Is Righthaven LLC totally out of business?  Not yet, and our guess is that they will come up with a new agreement and be back in court before the ink is dry.  Word to the wise: quote carefully, and if at all possible, do not quote that paragon of journalistic excellence, the Las Vegas Review Journal.

– Lawrence Husick, Esq.