The U.S. Supreme Court spent this morning wrestling with an obscure section of copyright law that could curb listings of used DVDs, CDs, books, and even GPS devices through marketplaces including eBay and Amazon.com.
Large copyright holders -- including software companies, the Motion Picture Association of America, and the Recording Industry Association of America -- have urged the court to limit Americans' right to resell legally purchased products manufactured outside the United States.
Many of the justices seemed skeptical. Justice Stephen Breyer suggested that the copyright holders' reading of the law would invoke a parade of "horribles," slamming libraries that have "300 million books bought from foreign publishers" or "museums that buy Picassos" and must seek permission from the late artist's squabbling heirs before they can display the artwork.
Breyer also said that foreign-made Toyota cars, with copyrighted map data in GPS systems and copyrighted software in their sound systems, could be swept in under the resale restrictions: "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?"
Ted Olson, a former solicitor general who's representing a book publisher, replied by saying:
To a certain extent, if you're going to use the product created by someone else in a way that's contemplated by the copyright laws, maybe it's required that you actually comply with the copyright laws by going to the owner of the copyright and saying, "Look, here's what I propose to do -- can I have a license to do this? It's a nonprofit. It's a museum."
At issue in the case, brought by book publisher John Wiley and Sons against a textbook importer, is how Americans' long-standing right to resell legally purchased products (lawyers call it the "first sale doctrine") is overruled by another section of federal law that allows copyright holders to curb imports.
The reason for their interest in limiting so-called secondary markets is obvious: Used product sales compete with new sales. It's even more painful for copyright holders when they sell items overseas more cheaply than they do domestically, then find the same items legally purchased abroad and imported at a lower price.
"It seems unlikely to me that, if your position is right, that a court would say, it's a fair use to resell the Toyota, it's a fair use to display the Picasso," Chief Justice John Roberts told Olson.
The MPAA and RIAA told the court in a legal brief (PDF) that they "rely on the ability to divide rights across markets and to plan for and control the timing and manner of the release of their works in different markets around the world. Unauthorized importation of home video discs and CDs into the U.S. market could...undermine copyright owners' ability to recoup their investment in creative activity."
eBay, Google, TechAmerica, NetChoice (which includes Facebook, AOL, and Yahoo as members), and other groups countered by saying that if the law is expanded, far more copyrighted items would be made offshore. In addition, they said, the proposed expansion of copyright law "threatens the increasingly important e-commerce sector of the economy, particularly secondary market e-commere."
The justices also lobbed pointed questions at E. Joshua Rosenkranz, a partner at the Orrick law firm who represents the textbook importer.
After Rosenkranz suggested that manufacturing could move offshore, Justice Ruth Bader Ginsburg interrupted by asking: "Has that ever happened?... Has any manufacturer ever moved abroad?"
Rosenkranz replied: "The moment that a manufacturer learns that this court says you get what we've called the Holy Grail of manufacturing -- endless eternal downstream control over sales and rentals, you can ruin secondary markets that are competing with you. The moment that happens, that will be yet another reason for manufacturers silently to decide that...they're sending their manufacturing overseas."
A decision in the case, Docket No. 11-697, is expected by next summer.