This week’s Supreme Court ruling upholds the first-sale doctrine, allowing the owner of copyrighted material to sell that material or dispose of it as they please. This means that books or other material copyrighted in the United States may be purchased abroad at low prices, brought into the United States and legally sold, thus undermining the ability U.S. copyright holders to sell their materials at profits.

Justice Breyer, delivering the opinion of the court, wrote, “The owner of a particular copy or phonorecord lawfully made under this title. . . is entitled, without the authority of the copyright owner, to sell or otherwise dispose of the possession of that copy or phonorecord.”

According to Justice Kagen, however, the Kirtsaeng decision destroys the copyright owner’s ability to engage in market segmentation and price differentiation. She called on Congress to resolve the problem.

The case, Kirtsaeng v. John Wiley & Sons, No. 11-697, explored the situation of a Thai student who helped pay for his education at Cornell University and the University of Southern California by selling textbooks purchased at low prices in Thailand  and shipped to him by friends and relatives. Although publisher John Wiley & Sons won damages of $600,000 for copyright infringement in the lower courts, the Supreme Court sided with Kirtsaeng, saying that imported copyrighted goods were subject to the same regulations as goods purchased in the United States.

Wiley, in the copyright section of each book, clearly delineates its rights. “This book is authorized for sale in Europe, Asia, Africa, and the Middle East only and may be not exported out of these territories. Exportation from or importation of this book to another region without the Publisher’s authorization is illegal and is a violation of the Publisher’s rights….”

According to the Software & Information Industry Association (SIIA), “The ruling threatens U.S. publishers by enabling importers to exploit pricing models that are meant for students in undeveloped nations and flood local markets.”

Keith Kupferschmid , general counsel and SVP, intellectual property at SIIA cites section 602(a) of the Copyright Act, “Importation into the United States, without the authority of the owner of copyright under this title, of copies ... of a work that have been acquired outside the United States is an infringement of the exclusive right to distribute copies under section 106.”

 The case, however, hinged on “whether the first sale doctrine applies to copyrighted products that were legally manufactured abroad and then imported into the United States without the authority of the publisher,” Kupferschmid explains. The Court ruled that it did.