Internet Advocacy Groups Launch Coalition as eBay Supreme Court Case Looms

A group of digital-rights organizations has formed a coalition to advocate for stronger ownership rights protections ahead of the U.S. Supreme Court’s consideration of a case involving an eBay seller who was sued by a publisher for reselling textbooks that he imported from his native Thailand.

The case, which could have sweeping implications for e-commerce and the broader Internet sector, stems from a copyright lawsuit that John Wiley & Sons brought against Supap Kirtsaeng, a graduate student who arranged for friends and family members living in Thailand to purchase books that the publisher was selling at a discount in that country, which he imported into the United States and resold at a profit on eBay.

When Wiley sued for copyright infringement, Kirtsaeng contended that his actions were lawful under the so-called “first-sale doctrine,” which permits the resale of lawfully acquired merchandise without the permission of the rights holder, what is sometimes referred as the gray market.

At issue in Kirtsaeng vs. Wiley is not whether the purchase of the merchandise was legal, but rather if the goods, once brought into the United Stats, can then be resold without obtaining the permission of the copyright owner.

The new advocacy group, Citizens for Ownership Rights, is collecting signatures for a petition it plans to deliver to the president and U.S. attorney general asserting the legitimacy of secondary markets for goods that are imported, a crucial issue for the viability of online marketplaces such as eBay, which is supporting the petition drive.

“When Americans purchase legitimate goods, they should be assured that the goods can be resold, given away and used in any legal manner they see fit,” the petition reads.

The group is warning that if the Supreme Court upholds Wiley’s victory in a lower court, and delivers a strict interpretation of the limitations on the resale of imported merchandise, any item with a component that was produced overseas — say, an iPhone or a Kindle — could potentially be restricted from resale or even donation.

The consequences could be far-reaching. Selling used items without something like a licensing agreement on eBay, Amazon or Craigslist could be illegal, according to the coalition. It even suggests that “donating clothes to charitable organizations would be considered unauthorized distributions.”

Those fears are “not hyperbolic,” according to Sherwin Siy, vice president of legal affairs at the digital rights group Public Knowledge, one of the advocacy organizations backing the petition.

“First sale doctrine is the only thing that allows us to do that,” Siy said of activity on secondary markets. “Without that in place every single transfer of ownership of a copy of a copyrighted work is an infringement.”

In its petition to the Obama administration, the group is asking for an affirmation of ownership rights that would provide for any legal use of a good once it is purchased. Siy explained that the coalition is not seeking any specific legislative remedy, at least not yet. That could change, however, if the high court should uphold the decision of the Second Circuit Court that sided with Wiley and rejected Kirtsaeng’s first-sale doctrine defense.

“The Supreme Court could rule in a way that it could solve some of these problems,” he said. “I think if the Supreme Court upholds the Second Circuit we would definitely want to see a legislative solution.”

Wiley has argued that overseas purchases, where market conditions can be dramatically different than the United States, cannot constitute the first sale, after which the manufacturer loses the right to control pricing. The publisher won a jury award of $600,000 in its copyright infringement case against Kirtsaeng.

The Supreme Court last evaluated first-sale doctrine in 2010, when it split 4-4 in Costco vs. Omega, with Justice Elena Kagan having recused herself because she had previously been involved in the case while working as an attorney in the Obama administration.

The court is expected to hear oral arguments in the case in the fall.

Siy explained that rather than championing a specific policy proposal, the petition aims to “make sure that the administration recognizes that these issues exist, that they’re only going to get more and more prominent.”

Those issues will only be magnified with the increasing flow of digital goods, Siy warned. An unqualified rejection of first-sale doctrine “could make the vast majority of Americans copyright infringers without touching much more than an e-reader,” he suggested.

“The secondary market is at risk of disappearing,” Siy said. “We’re at the risk of not owning the stuff we own.”

Kenneth Corbin is a Washington, D.C.-based writer who covers government and regulatory issues for CIO.com.

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