`================================================================
`
`In The
`Supreme Court of the United States
`--------------------------------- ---------------------------------
`
`SUPAP KIRTSAENG d/b/a BLUECHRISTINE99,
`Petitioner,
`
`v.
`
`JOHN WILEY & SONS, INC.,
`Respondent.
`
`--------------------------------- ---------------------------------
`
`On Writ Of Certiorari To The
`United States Court Of Appeals
`For The Second Circuit
`
`--------------------------------- ---------------------------------
`
`BRIEF OF AMICI CURIAE PUBLIC KNOWLEDGE,
`ELECTRONIC FRONTIER FOUNDATION,
`AMERICAN ASSOCIATION OF LAW LIBRARIES,
`SPECIAL LIBRARIES ASSOCIATION, AND U.S.
`PUBLIC INTEREST RESEARCH GROUP
`IN SUPPORT OF PETITIONER
`
`--------------------------------- ---------------------------------
`
`HAROLD FELD
`Counsel of Record
`JODIE GRIFFIN
`SHERWIN SIY
`PUBLIC KNOWLEDGE
`1818 N Street, NW
`Suite 410
`Washington, DC 20036
`(202) 861-0020
`hfeld@publicknowledge.org
`CORYNNE MCSHERRY
`ELECTRONIC FRONTIER FOUNDATION
`454 Shotwell Street
`San Francisco, CA 94110
`(415) 436-9333 x 122
`
`================================================================
`COCKLE LAW BRIEF PRINTING CO. (800) 225-6964
`OR CALL COLLECT (402) 342-2831
`
`
`
`i
`
`TABLE OF CONTENTS
`
`Page
`TABLE OF AUTHORITIES .................................
`iii
`INTEREST OF THE AMICI CURIAE .................
`1
`SUMMARY OF ARGUMENT ..............................
`3
`ARGUMENT ........................................................
`4
`
`I. The Second Circuit’s erroneous interpre-
`tation of section 109(a) will impair trade,
`innovation, the public interest, and the
`free market
`for copies of copyright-
`protected goods ..........................................
`A. Sections 109 and 602 should be inter-
`preted to avoid manifestly absurd re-
`sults .....................................................
`B. The Second Circuit’s decision permits
`copyright owners to indefinitely con-
`trol the distribution of all foreign-
`manufactured copies ...........................
`1. New impediments to the resale of
`lawfully purchased goods harm
`U.S. consumers and businesses ......
`2. Copyright owners may attempt to
`seize indefinite control over distri-
`bution by moving their manufac-
`turing activities abroad .................. 13
`3. The lower court’s interpretation of
`“lawfully made under this title”
`could preclude consumers
`from
`displaying their lawfully acquired
`copies .............................................. 14
`
`8
`
`7
`
`4
`
`4
`
`
`
`ii
`
`TABLE OF CONTENTS – Continued
`
`Page
`C. The decision below would authorize
`copyright owners to enjoin parallel
`imports, contrary to Congress’s intent
`and consumers’ interest ....................... 15
` II. The Ninth Circuit’s
`interpretation of
`section 109(a) does not mitigate the ill ef-
`fects of interpreting section 602 to trump
`section 109 ................................................. 19
`A. The Ninth Circuit’s “authorized sale”
`exception is not firmly rooted in the
`text or legislative history of the Copy-
`right Act ............................................... 19
`B. The Ninth Circuit recognized that its
`own reading of section 602 could pro-
`duce an “untenable” policy result ........ 22
` III. The Second Circuit’s untenable results
`and the Ninth Circuit’s need for a novel
`exception can both be avoided through
`proper interpretation of section 109 .......... 26
`A. Neither section 602 nor presumptions
`against extraterritoriality require “un-
`der this title” to be read as a geo-
`graphic restriction ............................... 27
`B. Non-geographic interpretations of “un-
`der this title” prevent absurd results,
`while still giving force to section 602 ..... 31
`CONCLUSION ..................................................... 35
`
`
`
`iii
`
`TABLE OF AUTHORITIES
`
`Page
`
`CASES
`BMG Music v. Perez, 952 F.2d 318 (9th Cir.
`1991) ............................................................ 22, 23, 24
`Cariou v. Prince, 784 F. Supp. 2d 337 (S.D.N.Y.
`2011) ........................................................................ 14
`Church of the Holy Trinity v. United States, 143
`U.S. 457 (1892) .......................................................... 5
`Conn. Nat’l Bank v. Germain, 503 U.S. 249
`(1992) ....................................................................... 32
`Denbicare U.S.A. Inc. v. Toys “R” Us, Inc., 84
`F.3d 1143 (9th Cir. 1996) ............................. 10, 24, 25
`Fox Film Corp. v. Doyal, 286 U.S. 123 (1932) ........... 17
`Hasbro Bradley, Inc. v. Sparkle Toys, Inc., 780
`F.2d 189 (2d Cir. 1985) ............................................ 12
`Hoepker v. Kruger, 200 F. Supp. 2d 340
`(S.D.N.Y. 2002) ........................................................ 14
`John Wiley & Sons, Inc. v. Kirtsaeng, 654 F.3d
`210 (2d Cir. 2011) ........................................ 30, 31, 32
`Mass. Museum of Contemporary Art Found.,
`Inc. v. Buchel, 593 F.3d 38 (1st Cir. 2010) .............. 14
`Omega S.A. v. Costco Wholesale Corp., 541 F.3d
`982 (9th Cir. 2008), aff’d by an equally divid-
`ed Court, 131 S. Ct. 565 (2010) ................... 19, 25, 27
`Parfums Givenchy, Inc. v. Drug Emporium,
`Inc., 38 F.3d 477 (9th Cir. 1994) ....................... 23, 24
`Pub. Citizen v. United States Dep’t of Justice,
`491 U.S. 440 (1989). .................................................. 4
`
`
`
`iv
`
`TABLE OF AUTHORITIES – Continued
`
`Page
`
`Quality King Distributors, Inc. v. L’anza Re-
`search International, Inc., 523 U.S. 135
`(1998) ............................................................... passim
`Sebastian Int’l, Inc. v. Consumer Contacts,
`Ltd., 847 F.2d 1093 (3d Cir. 1988) ............................ 7
`Stevens v. Gladding, 57 U.S. 447 (1855) ...................... 5
`Twentieth Century Music Corp. v. Aiken, 422
`U.S. 151 (1975) ........................................................ 17
`United States v. Wilson, 503 U.S. 329 (1992) .............. 4
`
`STATUTES AND LEGISLATIVE HISTORY
`17 U.S.C. § 104 ........................................................... 28
`17 U.S.C. § 106 ................................................. 6, 11, 35
`17 U.S.C. § 109 ................................................... passim
`17 U.S.C. § 202 ............................................................. 5
`17 U.S.C. § 602 ................................................... passim
`18 U.S.C. § 2319A ....................................................... 34
`Copyright Act of 1909, Pub. L. No. 60-349, § 41,
`35 Stat. 1075 ........................................................... 20
`Council Directive 96/9 on the Legal Protection
`of Databases, 1996 O.J. (L77) ................................. 33
`Prioritizing Resources and Organization for
`Intellectual Property Act of 2008 (“PRO-IP
`Act”), Pub. L. No. 110-403, § 105 (2008) ...... 28, 29, 30
`
`
`
`
`
`
`v
`
`TABLE OF AUTHORITIES – Continued
`
`Page
`
`Stop Counterfeiting in Manufactured Goods
`Act, Pub. L. No. 109-181, § (b)(3)(B), 120
`Stat. 285 (codified as amended at 18 U.S.C.
`§ 2320(e)(b) (2006)) ................................................. 18
`H.R. REP. NO. 60-2222 (1909) ....................................... 5
`S. REP. NO. 94-473 (1975) ........................................... 20
`H.R. REP. NO. 94-1476 (1976) ............................... 6, 20, 21
`H.R. REP. NO. 98-987 (1984) ......................................... 5, 7
`151 Cong. Rec. S12714-01 (2005) (statement of
`Rep. Lofgren) ........................................................... 18
`Copyright Law Revision Part 5: 1964 Revision
`Bill with Discussions and Comments .................... 21
`
`
`OTHER AUTHORITIES
`1 Goldstein on Copyright § 5.6.1.2.a (1989) .............. 22
`2 M. NIMMER, THE LAW OF COPYRIGHT § 8.12
`(1987) ................................................................... 7, 22
`Romana Autrey & Francesco Bova, Gray Mar-
`kets and Multinational Transfer Pricing,
`Harv. Bus. School Working Paper No. 09-098,
`at 1 (Feb. 25, 2009), available at http://www.
`hbs.edu/research/pdf/09-098.pdf ............................. 16
`Richard Colby, The First Sale Doctrine – The
`Defense That Never Was?, 32 J. COPYRIGHT
`SOC’Y U.S.A. 77, 89 (1984) ........................................ 7
`
`
`
`vi
`
`TABLE OF AUTHORITIES – Continued
`
`Page
`
`Stephen W. Feingold, Parallel Importing Under
`the Copyright Act of 1976, 17 N.Y.U. J. INT’L
`L. & POL. 113 (1984) ................................................ 22
`Olga Kharif, The Global Economy’s Gray-
`Market Boom, BUSINESSWEEK ONLINE (Nov.
`30, 2000), available at http://www.business
`week.com/bwdaily/dnflash/nov2000/nf20001130_
`555.htm .................................................................... 16
`Michael J. Meurer, Copyright Law and Price
`Discrimination, 23 CARDOZO L. REV. 55,
`(2001) ....................................................................... 17
`U.S. GOVERNMENT ACCOUNTABILITY OFFICE,
`COLLEGE TEXTBOOKS: ENHANCED OFFERINGS
`APPEAR TO DRIVE PRICE INCREASES (July
`2005), available at http://www.gao.gov/assets/
`250/247332.pdf .......................................................... 9
`Origin and Evolution of Toys for Tots, MARINE
`TOYS FOR TOTS FOUNDATION (last visited July
`4, 2012), http://www.toysfortots.org/about_
`toys_for_tots/toys_for_tots_program/origin_and_
`evolution.asp ........................................................... 12
`
`
`
`1
`
`INTEREST OF THE AMICI CURIAE
`Public Knowledge, the Electronic Frontier Foun-
`
`dation, U.S. PIRG, the American Association of Law
`Libraries, and the Special Libraries Association
`respectfully submit this brief to urge the Court to
`preserve the protections of the first sale doctrine
`and reject an interpretation of the Copyright Act that
`would significantly burden the public interest in
`the free flow of information.1 Public Knowledge is
`a nonprofit public interest organization devoted to
`protecting citizens’ rights in the emerging digital in-
`formation culture and focused on the intersection of
`intellectual property and technology. Public Knowl-
`edge seeks to guard the rights of consumers, innova-
`tors, and creators at all layers of our culture through
`legislative, administrative, grassroots, and legal ef-
`forts, including regular participation in copyright and
`other intellectual property cases that threaten con-
`sumers, trade, and innovation.
`
`The Electronic Frontier Foundation (EFF) is a
`
`nonprofit civil liberties organization working to pro-
`tect consumer interests, innovation, and free expres-
`sion in the digital world. EFF and its more than
`
`
`
`1 No counsel for a party authored this brief in whole or in
`
`part, nor made a monetary contribution intended to fund the
`preparation or submission of this brief. No person other than
`amici curiae, or their counsel, made a monetary contribution to
`its preparation or submission. All parties have granted consent
`to the filing of this brief.
`
`
`
`2
`
`19,000 dues-paying members have a strong interest
`in assisting the courts and policy-makers in striking
`the appropriate balance between intellectual property
`and the public interest.
`
`The American Association of Law Libraries
`
`(“AALL”) is a nonprofit educational organization with
`over 5,000 members nationwide. Its members serve
`the information needs of the legal community and the
`public at more than 1,900 academic, firm, state, court
`and county law libraries nationwide. AALL’s mission
`is to promote and enhance the value of law libraries,
`to foster law librarianship, and to provide leadership
`and advocacy in the field of legal information and
`information policy.
`
`The Special Libraries Association (“SLA”) is a
`
`non-profit global organization for innovative infor-
`mation and knowledge professionals and their strate-
`gic partners. SLA serves some 10,000 corporate,
`academic, government, and other information special-
`ists in seventy-five countries. SLA promotes and
`strengthens its members through learning, advocacy,
`and networking initiatives.
`
`U.S. PIRG, the federation of state Public Inter-
`
`est Research Groups, is a national, nonprofit, non-
`partisan consumer advocacy organization that stands
`up to powerful special interests on behalf of the
`American public. U.S. PIRG has long worked to pro-
`mote the public interest on issues of consumer protec-
`tion and affordable higher education, and believes an
`
`
`
`3
`
`expansive interpretation of the first sale doctrine is in
`the best interest of students and consumers.
`
`--------------------------------- ---------------------------------
`
`SUMMARY OF ARGUMENT
`To the extent that the Court faces a split between
`
`the interpretations offered by the Second and Ninth
`Circuits, it faces two relatively unappealing options.
`The Second Circuit’s decision below could be inter-
`preted to require the blessing of the copyright holder
`for every distribution of every foreign-manufactured
`copy of a copyrighted work. On the other hand, the
`Ninth Circuit’s “authorized sale” exception, while
`allowing the free alienability of copies after an au-
`thorized sale in the United States, is not easy to
`square with either the plain text of the Copyright Act
`or its legislative history.
`
`Both of these problematic outcomes can be avoid-
`
`ed. Rather than embracing either interpretation, the
`Court can and should read the phrase “lawfully made
`under this title” as a comment on the lawfulness of a
`copy’s creation, and not on the location of its manu-
`facture. Such a reading will both adhere to the text of
`the Copyright Act and embrace the Act’s purpose by
`allowing consumers to freely dispose of their personal
`property, regardless of where it was assembled.
`
`
`
`--------------------------------- ---------------------------------
`
`
`
`
`
`4
`
`ARGUMENT
`I. The Second Circuit’s erroneous interpre-
`tation of section 109(a) will impair trade,
`innovation, the public interest, and the
`free market for copies of copyright-
`protected goods.
`The Second Circuit’s interpretation of sections
`
`109 and 602, if affirmed, creates enormous problems
`for secondary markets and for consumers. Contrary
`to the established principle that statutes should be
`interpreted to avoid absurd results, the Second Cir-
`cuit’s decision effectively gives copyright owners the
`right to control future redistributions of copies of
`works that were manufactured abroad, for the re-
`maining decades of the copyright term. This errone-
`ous reading imposes a variety of harms on consumers
`and retailers alike.
`
`
`
`A. Sections 109 and 602 should be inter-
`preted to avoid manifestly absurd re-
`sults.
`Courts have long recognized the principle that a
`
`statute’s language should be interpreted to avoid ab-
`surd results. See, e.g., United States v. Wilson, 503
`U.S. 329, 334 (1992). Courts appeal primarily to the
`words of a statute, while recognizing that “statutes
`always have some purpose or object to accomplish,
`whose sympathetic and imaginative discovery is the
`surest guide to their meaning.” Pub. Citizen v. United
`States Dep’t of Justice, 491 U.S. 440, 455 (1989)
`
`
`
`5
`
`(quoting Cabell v. Markham, 148 F.2d 737, 739 (2d
`Cir.) (Hand, J.), aff ’d, 326 U.S. 404 (1945)). As a
`matter of statutory interpretation, the practical ram-
`ifications of a particular reading may suggest to a
`court whether Congress was likely to have intended
`that interpretation when it enacted the law. See
`Church of the Holy Trinity v. United States, 143 U.S.
`457, 459 (1892) (“[F]requently words of general mean-
`ing are used in a statute, words broad enough to in-
`clude an act in question, and yet a consideration of
`the whole legislation, or of the circumstances sur-
`rounding its enactment, or of the absurd results
`which follow from giving such broad meaning to the
`words, makes it unreasonable to believe that the
`legislator intended to include the particular act.”).
`
`The first sale doctrine, codified at 17 U.S.C.
`
`§ 109, embodies Congress’s intent to prevent copy-
`right owners from exercising authority over physical
`copies after they have exhausted their ownership
`interest in those copies. See H.R. REP. NO. 60-2222, at
`19 (1909) (“[I]t would be most unwise to permit the
`copyright proprietor to exercise any control whatever
`over the article which is the subject of copyright after
`said proprietor has made the first sale”). This follows
`from the well-established principle that ownership of
`the physical object containing a copyright-protected
`work is distinct from ownership of the copyright
`itself. See 17 U.S.C. § 202 (2006); Stevens v. Glad-
`ding, 57 U.S. 447, 452-53 (1855). See also H.R. REP.
`NO. 98-987, at 2 (1984) (“the first sale doctrine has its
`
`
`
`6
`
`roots in the English common law rule against re-
`straints on alienation of property”).
`
`As this Court noted in Quality King Distributors,
`
`Inc. v. L’anza Research International, Inc., “[t]here is
`no reason to assume that Congress intended either
`§ 109(a) or the earlier codifications of the [first sale]
`doctrine to limit its broad scope.” 523 U.S. 135, 152
`(1998). The House Report from Congress’s enactment
`of the current version of the first sale doctrine does
`not even mention place of manufacture. In fact, the
`Report states that “Section 109(a) restates and con-
`firms the principle that, where the copyright owner
`has transferred ownership of a particular copy . . . of
`a work, the person to whom the copy . . . is trans-
`ferred is entitled to dispose of it by sale, rental, or any
`other means.” H.R. REP. NO. 94-1476, at 79 (1976).
`
`The decision below, in particular, interprets sec-
`
`tion 109 so narrowly that sections 106 and 602 would
`entirely preclude secondary markets for all works
`that have been manufactured abroad. This leads to a
`manifestly absurd result that would both interfere
`with individuals’ personal property rights and impose
`substantial transaction costs on consumers and busi-
`nesses that operate in resale markets across many
`different commercial industries, contrary to the pur-
`poses of the Copyright Act and decades of legal inter-
`pretation.
`
`
`
`
`
`
`7
`
`B. The Second Circuit’s decision permits
`copyright owners to indefinitely con-
`trol the distribution of all foreign-
`manufactured copies.
`Like the Ninth Circuit, the Second Circuit has
`
`concluded that the first sale doctrine does not allow
`buyers to distribute copies if the copies were origi-
`nally manufactured abroad. Unlike the Ninth Circuit,
`however, the Second Circuit has declined to create
`an exception to sections 109 and 602 for foreign-
`manufactured goods that are sold within the United
`States with the permission of the copyright owner.
`As a result, absent the permission of the copy-
`right holder, any distribution or redistribution of any
`foreign-manufactured copy could infringe copyright.
`This result undoes 150 years of common and statu-
`tory law establishing that the rightful owner of a
`physical copy of a work can dispose of that copy as he
`or she wishes. See Sebastian Int’l, Inc. v. Consumer
`Contacts, Ltd., 847 F.2d 1093, 1096 (3d Cir. 1988)
`(“The first sale rule is statutory, but finds its origins
`in the common law aversion to limiting the alienation
`of personal property.”) (citing Burke & Van Heusen,
`Inc. v. Arrow Drug, Inc., 233 F. Supp. 881, 883 (E.D.
`Pa. 1964); Richard Colby, The First Sale Doctrine –
`The Defense That Never Was?, 32 J. COPYRIGHT SOC’Y
`U.S.A. 77, 89 (1984); H.R. REP. NO. 98-987, at 2
`(1984); 2 M. NIMMER, THE LAW OF COPYRIGHT § 8.12
`(1987)).
`
`Additionally, nearly any goods can have copies of
`
`copyrighted works affixed to them or incorporated
`
`
`
`8
`
`into the goods’ packaging, making the consequences
`of the Second Circuit’s interpretation difficult to
`understate. See, e.g., Quality King Distribs., Inc. v.
`L’anza Research Int’l, Inc., 523 U.S. 135 (1998) (copy-
`right lawsuit over labels affixed to hair care prod-
`ucts). Thus, the Second Circuit’s interpretation in this
`case would have a practical impact on, for example, a
`non-copyright-protected toy that is packaged in a box
`with copyright-protected visual art affixed to it, so
`long as the consumer desires to resell or give away
`the toy inside the original packaging.
`
`
`
`1. New impediments to the resale of
`lawfully purchased goods harm U.S.
`consumers and businesses.
`The Second Circuit’s interpretation of sections
`
`109 and 602 is likely to have dangerous consequences
`for both consumers and businesses that operate in
`resale markets. The court’s reading of section 109 ef-
`fectively removes a vast swath of copyright-protected
`goods from the well-established protections of the
`first sale doctrine. This precludes secondary markets
`for many goods entirely and creates substantial un-
`certainty for many other goods if the owner does not
`know where every copyrightable component of the
`product was manufactured. By extending liability for
`selling, lending, or otherwise disposing of lawfully
`purchased copies of copyright-protected works, the
`Second Circuit has exposed to legal risk a wide swath
`of activities, from holding a weekend garage sale, to
`selling a used car, to lending books to friends or
`
`
`
`9
`
`patrons, to providing online platforms for reselling
`goods.
`
`The decision below has a particular impact on the
`
`market for used textbooks. Students in the United
`States have suffered from price discrimination by
`textbook publishers for years, and only recently have
`tools like more efficient shipping technology and the
`Internet enabled students to access lawfully pur-
`chased textbooks at more affordable prices. In 2005,
`the United States Government Accountability Office
`found that college textbook prices in the United
`States have risen 186% in the last two decades –
`more than twice the rate of inflation. U.S. GOVERN-
`MENT ACCOUNTABILITY OFFICE, COLLEGE TEXTBOOKS:
`ENHANCED OFFERINGS APPEAR TO DRIVE PRICE IN-
`CREASES (July 2005), available at http://www.gao.gov/
`assets/250/247332.pdf. In the 2003-2004 school year,
`the average estimated cost of textbooks for full-time
`students at four-year public institutions in the United
`States was $898 per year. Id. at 2. Industry repre-
`sentatives and public interest groups have expressed
`concern that publishers unnecessarily raise textbook
`prices by revising textbooks frequently, publishing
`custom textbooks, issuing books in loose-leaf form,
`and making material available online through the use
`of a temporary password. Id. at 18-21. Publishers
`maintain these high prices, in part, by taking steps to
`isolate the United States market, where market
`conditions allow them to extract higher prices from
`students, while selling textbooks just above cost to
`students in other countries. Id. at 21-22. If the
`
`
`
`10
`
`Second Circuit’s decision is reversed, publishers will
`still be free to engage in the same marketing prac-
`tices they currently use, but may also face legitimate
`competition from the books they have sold at lower
`prices in other parts of the world.
`
`To be clear, however, the potential impact of the
`
`decision reaches well beyond the redistribution of
`textbooks, or even classic copyright-protected works
`like sound recordings, audiovisual works, composi-
`tions, paintings, drawings, and sculptures. Today, a
`wide range of other commercial products also con-
`tain copyright-protected computer programs, such as
`automobiles, microwaves, calculators, mobile phones,
`tablets, and personal computers. Moreover, the pack-
`aging for a product often contains copies of copyright-
`protected visual art. See, e.g., Denbicare U.S.A. Inc. v.
`Toys “R” Us, Inc., 84 F.3d 1143, 1145 (9th Cir. 1996)
`(plaintiff ’s lawsuit based in part on copyright in-
`fringement of the packaging for its non-copyrighted
`product).
`
`Further, since the Second Circuit’s interpretation
`
`hinges upon the place of manufacture and not upon
`the occurrence of a first sale completed with the
`permission of the copyright owner, individuals or
`entities may be liable for infringement even if they
`purchased the product in the United States, and even
`if the product has already been sold and re-sold
`several times. Service providers that provide online
`platforms for resale marketplaces, such as eBay or
`Amazon.com, could be threatened with secondary
`liability for hosting offers for infringing sales on their
`
`
`
`11
`
`websites. Such websites would have a strong incen-
`tive to stop hosting the sale of many used books and
`other products entirely. Similarly, physical second-
`hand shops, like the Salvation Army, would be effec-
`tively prohibited from selling used goods that contain
`copies of copyright-protected works.
`
`Notably, given that the distribution right of sec-
`
`tion 106(3) covers far more than sales, the ramifi-
`cations of the decision below are not limited to
`commercial transactions. Thus, an interpretation of
`section 109(a) that allows the distribution right to be
`resurrected at any point in the chain of ownership
`would also inhibit actors from lending or giving away
`copies of copyright-protected works that were manu-
`factured abroad. Libraries, which rely heavily upon
`the first sale doctrine to lend copies of books to the
`public, are especially vulnerable. Without the protec-
`tion of section 109(a) for foreign-printed books, librar-
`ies could be forced to affirmatively research the place
`of manufacture for every book they acquire, even
`if that acquisition is completed within the United
`States, and either refuse to stock foreign manufac-
`tured copies of books or seek countless licenses from
`copyright owners to offer those books to the public.
`Similarly, individuals would be unable to loan a book,
`magazine, or newspaper to a friend if the copy was
`created abroad. This would have a particularly harsh
`effect on individuals who speak and read foreign
`languages, because foreign-language products are
`more likely to come from foreign publishers.
`
`
`
`12
`
`By inhibiting the public’s ability to transfer own-
`
`ership, even gratuitously, of foreign-manufactured
`copies, the Second Circuit’s interpretation could even
`impair charitable giving. For example, the very popu-
`lar and successful Marine Toys for Tots Foundation
`collects presents for economically disadvantaged chil-
`dren in the weeks surrounding Christmas. For sixty-
`three years, Toys for Tots has collected donated toys
`from the public and distributed more than 400 mil-
`lion toys to more than 188 million children. Origin
`and Evolution of Toys for Tots, MARINE TOYS FOR TOTS
`FOUNDATION (last visited July 4, 2012), http://www.
`toysfortots.org/about_toys_for_tots/toys_for_tots_program/
`origin_and_evolution.asp. Under the Second Circuit’s
`interpretation of section 109(a), both Toys for Tots
`and the individuals donating toys to Toys for Tots are
`liable for copyright infringement for all copyrightable
`toys or toy packages that were manufactured outside
`of the United States.2
`
`The Second Circuit’s decision has enormous
`
`impact upon a wide variety of product industries, and
`imposes tangible harms on consumers who would
`
`
`2 Toys may be subject to copyright protection in a number of
`
`ways, so long as they are not uncopyrightable as useful articles.
`See, e.g., Hasbro Bradley, Inc. v. Sparkle Toys, Inc., 780 F.2d 189,
`192 (2d Cir. 1985) (holding that transforming robotic action
`figure qualifies for copyright protection). An action figure may
`receive copyright protection as a sculptural work, a coloring
`book may contain copyright-protected graphic or pictorial works,
`or a doll may sing a copyright-protected song via a copyright-
`protected sound recording.
`
`
`
`13
`
`otherwise participate in the resale market for lawful-
`ly purchased goods.
`
`
`
`2. Copyright owners may attempt to
`seize indefinite control over distri-
`bution by moving their manufac-
`turing activities abroad.
`The decision below could also encourage copy-
`
`right owners to deliberately foreclose secondary
`markets by moving their manufacturing operations
`abroad. As discussed above, copyright owners would
`gain substantial new control over the distribution of
`copies of their works if they could exercise exclusive
`authority over a copy every time it changes hands.
`This power is potentially very lucrative for manufac-
`turers that wish to prevent consumers from buying
`used copies or borrowing copies from friends. If a
`consumer has no access to a used or borrowed copy of
`a work, she must purchase a new copy at a substan-
`tially higher cost than she would have otherwise
`faced, or go without the good. This liability attaches
`regardless of how many times that particular copy
`has been sold, re-sold, and given away before it
`reached the consumer. The Second Circuit’s decision
`thus gives copyright owners a perverse incentive to
`move manufacturing or other production activities
`out of the United States to retain indefinite control
`over copies of their works.
`
`Put another way, the decision below encourages
`
`at least two perverse outcomes: American consumers
`
`
`
`14
`
`lose access to affordable used copies of products, and
`companies move American manufacturing and re-
`lated jobs overseas. It is difficult to imagine that
`Congress intended these results.
`
`
`
`3. The lower court’s interpretation of
`“lawfully made under this title” could
`preclude consumers from display-
`ing their lawfully acquired copies.
`The Second Circuit’s interpretation of the phrase
`
`“lawfully made under this title” for the purposes of
`section 109(a) could also have far-reaching conse-
`quences for other provisions of the Copyright Act that
`use the same phrase. If future court decisions follow
`the Second Circuit’s interpretation of this phrase, the
`application of all of these provisions could be limited
`to copies manufactured in the United States.
`
`For example, section 109(c) of the Copyright Act
`
`also uses the phrase “lawfully made under this title”
`to grant the owner of a copy the right to publicly
`display that copy. 17 U.S.C. § 109(c). Courts have
`repeatedly interpreted this phrase to preclude apply-
`ing section 109(c) to copies “created in violation of the
`artist’s rights,” not merely copies made outside of the
`United States. See Mass. Museum of Contemporary
`Art Found., Inc. v. Buchel, 593 F.3d 38, 63-64 (1st Cir.
`2010); Cariou v. Prince, 784 F. Supp. 2d 337, 356
`(S.D.N.Y. 2011) (paintings may not be publicly dis-
`played under section 109(c) because the paintings
`infringed plaintiff ’s copyrights); Hoepker v. Kruger,
`
`
`
`15
`
`200 F. Supp. 2d 340, 342 (S.D.N.Y. 2002) (defendant
`may publicly display a lawfully owned copy of a
`photograph under section 109(c) despite the fact that
`the photograph was made in Germany). If “lawfully
`made under this title” in section 109(c) is interpreted
`identically to the Second Circuit’s reading of “lawfully
`made under this title” in section 109(a), every owner
`of a copy of a copyright-protected work, particularly
`visual artworks, would need to obtain a license to
`display that copy if the work was created outside of
`the United States. Museums, particularly those with
`substantial collections of foreign paintings, photo-
`graphs, drawings, and sculptures, would need to ob-
`tain a new license for every piece of foreign-made
`art in their collections, or hide those collections from
`the public indefinitely. Businesses, libraries, and any
`other entity with a physical space open to the public
`would need to remove all foreign artworks from their
`lobbies, hallways, and other public spaces. Again,
`Congress could not have intended a result that so
`manifestly contravenes sound public policy and com-
`mon sense.
`
`
`
`C. The decision below would authorize
`copyright owners to enjoin parallel
`imports, contrary to Congress’s intent
`and consumers’ interest.
`Parallel imports benefit both consumers who rely
`
`upon affordable access to goods and businesses that
`routinely bring lawfully purchased goods into the
`United States for resale. Contrary to Congress’s
`
`
`
`16
`
`broader intent, the decision below could allow copy-
`right owners to unilaterally block nearly all parallel
`imports for goods they had already sold and parted
`with.
`
`The increase in parallel importation in recent
`
`years is a result of cost reductions from new and
`improved technologies. This means that, when im-
`porters market their products at inflated prices in
`some geographical markets but not others, they face
`competition from their own products sold at lower
`prices elsewhere. This is not a new phenomenon:
`historically, new technology has consistently broken
`down barr