Ask a librarian how many books she has in her collection, and you will usually get a pretty accurate answer. But ask where those books were printed, and you will get a confused look. Notice I said printed, not published. Our catalog records contain place of publication, but that is not the same as place of printing. Most publishers have their books printed in different places, and even in other countries, from where their offices are located. And up until now, that has not been information that libraries have needed to know.
So what has changed? A court case out of the Second Circuit Court of Appeals held recently that the “doctrine of first sale,” which is the part of the copyright law that allows libraries to lend the materials they purchase, applies only to works that are manufactured in the United States. The Supreme Court has agreed to hear the case during its next term, and the decision they make could have a profound effect on the future of libraries.
First sale is a principle that says that a consumer (all of us, not just libraries) can dispose of the particular copy they buy of a copyrighted work however they see fit. Another way to say it is that the exclusive right of distributing a copyrighted work ends (or is “exhausted”) after the first authorized sale. First sale allows libraries to lend books, Netflix to rent DVDs, and all sorts of people to sell secondhand books, films, and recordings. Publishers do not like this last point, and they especially dislike the second-hand textbook market because it diminishes their sales of new textbooks. On the other hand, that market can be the only thing that makes an education possible for some students.
The particular case arose from a rather clever exploitation of the textbook market by a Thai graduate student in the U.S. named Supap Kirtsaeng, who asked his relatives to purchase some of the less expensive editions of common textbooks sold overseas and ship them to him. He then resold the books in the U.S. and made enough profit to finance his education. There seems to be some disagreement about how much money he made this way, but his profit was substantial. Publisher John Wiley sued Mr. Kirtsaeng and succeeded in convincing the trial court and the Second Circuit that the U.S. first sale should not apply to any materials made overseas. Other circuit courts have held differently, so the Supreme Court took the case to reconcile the conflict.
In July, the Library Copyright Alliance filed a “Friend of the Court” brief with the Supreme Court, supporting Mr. Kirtsaeng, and asking the Court to hold that the key phrase from the first sale provision, “lawfully made under this title,” should be understood to mean that any copy made and initially sold with the authorization of the rights holder should be subject to this exhaustion of the distribution right in the U.S., regardless of where it is made or first sold. To hold otherwise would create the anomalous situation where a rights holder who manufactures their works abroad actually would have more rights under U.S. copyright than those who print in the U.S.
The LCA brief is worth reading for two reasons. First, it is a salutary reminder of how important libraries have always been to the democratic system in the United States. Second, it begins to give us a glimpse of how bad the unintended consequences could be if the Supreme Court upholds the lower court ruling.
As the LCA makes clear, it is virtually impossible to know where individual books were “made.” The phenomenon of off-shore printing in order to take advantage of lower labor costs has been growing for years, so simply buying a book from a U.S. publisher does not mean it was “made in the U.S.A.” If the Supreme Court finds in favor of John Wiley, it could mark a transition to “public lending licenses” or other differential pricing of books sold to libraries. It could also shut down the used-book and secondhand textbook markets.
But those would just be the anticipated consequences, those expected and desired by the plaintiffs. Unintended consequences could be even more far-reaching. Museums are worried that they will not be able to display works of contemporary art from other countries. And your car, to pick just one example, probably contains copyrightable software, which could allow automobile manufacturers to take exclusive control of the used car market. Without really meaning to, it seems, the Second Circuit has raised the possibility of allowing copyright law to become the vehicle for a radical restructuring of the consumer economy in the U.S.
Indeed this story is almost entirely a saga of unintended consequences. If we read the multiple sections of the copyright law that the Second Circuit interpreted in their reading of the first sale doctrine, it is clear that they can support the very restrictive interpretation given to them by that court, but also that they were never intended to interact in that way. Congress could not have imagined or intended the reading that now prevails in the Second Circuit.
Why not? Because when the first sale doctrine was developed – it has its origins in another Supreme Court case, from 1908 – no one expected that copyright protection in the U.S. would extend automatically to any work created (nearly) anywhere in the world. We were copyright isolationists for much of our history; we radically restructured our law when we joined the Berne Convention in 1988, and this quirk being exploited by John Wiley is a leftover anomaly. So now we must anxiously wait to see if the Court will repair this potentially sweeping problem, or if they will focus on the specific circumstances of Kirtsaeng’s behavior and ignore the potential consequences of the ruling.
When the Supreme Court ruled on the Affordable Care Act this spring, their decision had long-term consequences for how we read both the Commerce Clause and the Tax and Spending clause of the U.S. Constitution. By and large, the Court seems to have been aware of the impact of their decision and to have made their ruling with their eyes clearly fixed on the legal and political consequences of their position. With Wiley v. Kirtsaeng, however, there is a real danger that the Court could be unaware of the far-reaching consequences that might result from an imprudent decision. As we often do, the library community has cause to be grateful to the Library Copyright Alliance for pointing out to the Court that libraries are one of the foundations of a democratic society and deserve to be protected by the Court from a variety of unpleasant outcomes, both expected and unanticipated.
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