Court Copyright Ruling Continues in First Sale Tradition

The Sony Betamax videocassette recorder allowed consumers to record TV shows and view later, marking the first time content creators were significantly concerned about the pirating and/or redistribution of television. It was a major concern of Hollywood, since it posed a serious threat to revenue. After a 5-4 Supreme Court decision, the technology was allowed to survive, launching a series of decisions that still affect the market today.

“Foiling another attempt by studios to control the emerging videocassette market, Congress refused to forbid the renting or reselling videotapes of movies for profit. Blockbuster, Netflix and Redbox would be protected by copyright law’s doctrine of ‘first sale.’ If they had bought it, they owned it,” writes The New York Times.

After the VCR came the DVD player and then the digital video recorder. “Videotape gave the kiss of life to the low-budget independent film. From ‘Rip. Mix. Burn.’ to YouTube, every step of the evolution of digital media has been affected by that decision,” adds the article.

And just last week, the Supreme Court made another decision that could have equally powerful and long-term implications. Though the ruling refers only to printed books, it is “likely to reshape the information economy in unexpected ways,” according to NYT.

In a 6-3 ruling, the Court sided with Supap Kirtsaeng, a Thai student at Cornell who sold textbooks sent from Thailand in the U.S. for a profit of around $900,000. “John Wiley & Sons had argued that Mr. Kirtsaeng was infringing on its copyright by importing the books without permission. The publisher said this short-circuited its ability to segment markets by price — selling the books more expensively to American students than to poorer Thai students who could otherwise not afford them,” notes the article.

But the Court didn’t buy it, holding that Kirtsaeng had the right to first sale. “He might not be allowed to make unauthorized copies of the books. But as with old library books or secondhand Gucci bags at a flea market, if the books had been bought legally, whether imported or sold originally in the United States, Mr. Kirtsaeng could sell them,” explains NYT. 

“Like the Betamax decision in 1984, the Supreme Court’s ruling last week underscores the challenges placed by globalization and information technology on the very idea of protecting intellectual property,” notes the article. “It adds to a maze of laws, legal decisions and technological barriers governing what companies and people can do with their stuff in the new economy. And it will probably change the way companies deliver media.”

Is this decision overall good or bad? That depends on your perspective, suggests the article. “Some potential changes are worrisome. If publishers drop market segmentation by price, revenue will decline and books may become unaffordable in many countries, reducing legal access and encouraging piracy,” it notes, adding that “on the bright side, resales of digital products could expand access to the digital economy for lower-income Americans. And the move toward licensing over sales will lead to more innovative, customized digital products and services that are not easily pirated or resold.”