by Jeff Owen
Telecom Reseller doesn’t normally cover court cases; however this case was brought to our attention by our friends at AscdiNatd (Association of Service and Computer Dealers International- Association of Telecommunications Dealers) and will have far reaching consequences for our industry.
The Supreme Court of the United States (“SCOTUS”) has agreed to hear the case of John Wiley & Sons vs. Kirtsaeng regarding application of the First Sale Doctrine to goods made outside the US. The First Sale Doctrine is a defense to copyright infringement wherein the Copyright Act allows a valid purchaser of copyrighted work to freely resell the work once it has been purchased. The US Circuit Courts of Appeal are split on whether the First Sale Doctrine applies to goods made outside the US. Oral argument in the case is scheduled for Monday October 29, 2012. This case is about copyright law and revolves around three issues; copyright, importation, and property rights. After learning of the case I set out to read the court briefs submitted by the petitioner, respondent, and several Amicus Curiae (Friend of the Court) briefs including one from AscdiNatd. My reason was simple; to learn enough to inform you.
SCOTUS case #11-697, as with most Supreme Court cases, has been on a long journey through the legal system and has already received two Appellate Court rulings that, if left standing, will devastate commerce in the United States as we know it. In effect the Appellate Courts have ruled that any copyrighted product made outside of the United States cannot be imported and resold within the United States without the express permission of the copyright holder. The consequences of this ruling apply all products made outside the US, both new and used, imported without permission of the copyright holder, the electronics/telecommunications reseller industry is but one of many segments of the market adversely affected by the ruling if it is allowed to stand. What is not so obvious is the effect this ruling will have on everyday life.
Very little, if any, electronic devices are made within the U.S. Clock radios, TVs, stereo’s, microwaves, etc. are all imported. As consumers we acquire these products for our personal use and often resell them at garage sales or rummage sales after we update them with newer items. All of these items contain copyrighted software for their digital clocks and other operations. As such, we could not sell or otherwise dispose of them without the express permission of the various copyright holders, if we could even find out who they are; an onerous proposition at best. If you do sell something in conflict with this ruling, you could face a fine of up to $150,000 per infraction. Ramp this up to a telephony/Unified Communications system with all the sundry components and, well I think you get the picture.
Don’t get me wrong, I fervently believe in copyright protection and that the creator of copyrighted material should be justly compensated; be it an IP-PBX, book, painting, PC, smartphone, TV, automobile, or what have you. However, I also believe, as most Americans do, that once legally purchased the item is my property to do with as I please. That includes selling it or giving it to charity.
Of course, as with any complicated issue, there are unforeseen consequences and collateral damage lurking in the wings. One such potential victim is the financial industry who lends money for large acquisitions; be it a purchase or lease. Financiers rely on the fact that the collateral for a loan will have value that can be realized in the event of default or at the end of a lease. If they have to obtain the copyright holders permission to resell an item any residual or salvage value could easily vanish.
There are at least 13 amicus briefs filed in this case with SCOTUS from interested parties such as AscdiNatd, Costco, Ebay, 25 Intellectual Property Law Professors, the American Library Association, Association of Art Museum Directors, and Goodwill Industries. You can access these at http://tinyurl.com/cvrur3f
We will continue to monitor this case.