Kirtsaeng v. Wiley: First Sale Goes Global and the Gray Market Comes Home

Kirtsaeng v. John Wiley & Sons, Inc., 568 U.S. 519 (2013), No. 11-697, decided March 19, 2013, is the Supreme Court’s definitive statement on the geographic reach of the first-sale doctrine. Writing for a 6-3 majority, Justice Breyer held that 17 U.S.C. § 109(a) — which lets the owner of a lawfully made copy resell or otherwise dispose of it without the copyright owner’s permission — applies to copies manufactured abroad, so long as they were made in accordance with the Copyright Act. The decision resolved a question the Court had deadlocked on three years earlier and reshaped the economics of the gray market for everything from textbooks to luxury goods.

At a glance

• Case: Kirtsaeng v. John Wiley & Sons, Inc., 568 U.S. 519 (2013), No. 11-697
• Decided: March 19, 2013; opinion by Justice Breyer (joined by Roberts, Thomas, Alito, Sotomayor, and Kagan); dissent by Justice Ginsburg (joined by Kennedy and, in part, Scalia)
• Holding: The phrase “lawfully made under this title” in § 109(a) imposes no geographic limitation; the first-sale doctrine exhausts the § 106(3) distribution right in copies lawfully manufactured abroad
• Disposition: Reversed and remanded; the Court adopted a “non-geographical” reading of the statute

How a textbook reseller reached the Supreme Court

Supap Kirtsaeng came to the United States from Thailand to study mathematics. He noticed that John Wiley & Sons sold English-language textbooks abroad — printed by a wholly owned Asian subsidiary and marked for sale outside the United States — at far lower prices than the domestic editions. Family and friends bought copies in Thailand and shipped them to him; he resold them to American students, reimbursed his suppliers, and kept the spread. Wiley sued for infringement of its § 106(3) exclusive right to distribute copies, and a jury awarded statutory damages. The Second Circuit affirmed, reading § 109(a) to protect only copies made in the United States.

The case landed at the Court against an awkward backdrop. In Costco Wholesale Corp. v. Omega, S.A. (2010), the Justices had split 4-4 on essentially the same question (Justice Kagan recused), affirming the Ninth Circuit without an opinion and leaving the circuits in disarray. Kirtsaeng gave the Court a clean vehicle to decide the issue for the nation.

The textual fight over “lawfully made under this title”

The entire dispute turned on five words. Section 109(a) permits “the owner of a particular copy … lawfully made under this title” to dispose of that copy. Wiley urged a geographic reading: a copy is “lawfully made under this title” only if it was made in a place where the U.S. Copyright Act governs — that is, in the United States. On that view, the foreign-printed textbooks were never subject to § 109 at all, and Wiley retained an unbroken right to control their importation and resale.

Justice Breyer rejected the geographic reading as both linguistically strained and practically unworkable. “Under this title,” he reasoned, most naturally means “in accordance with” or “in compliance with” the Copyright Act — a measure of legality, not a measure of location. The phrase asks whether a copy was made lawfully, not where the printing press sat. Because Wiley’s subsidiary made the copies with Wiley’s authorization, they were lawfully made under the Act, and the first authorized sale exhausted Wiley’s distribution right wherever that sale occurred.

The majority reinforced the textual point with the common-law pedigree of first sale, which traces to Bobbs-Merrill Co. v. Straus (1908) and has never carried a geographic qualifier. A doctrine rooted in the ancient hostility to restraints on alienation of chattels, the Court suggested, should not be read to fracture along national manufacturing lines absent clear statutory command.

The “parade of horribles” and the limits of literalism

Much of the opinion’s force comes from its catalog of consequences. If first sale stopped at the border, the Court warned, a vast range of ordinary commerce would require the copyright owner’s permission. Libraries hold millions of books printed abroad and lend them freely; used-book dealers and resale platforms move foreign-made copies daily; museums display foreign-manufactured works; and countless consumer goods — cars, electronics, watches — embed copyrighted software, labels, or manuals that were made overseas. Under Wiley’s reading, the holder of the underlying copyright could assert downstream control over the resale or lending of all of them.

Justice Ginsburg’s dissent answered that this parade was overstated and that Congress had deliberately built a strong importation right into § 602(a)(1) to protect market segmentation — the long-standing practice of selling the same work at different prices in different countries. Reading § 109 to swallow that protection, she argued, defeated Congress’s evident purpose and put the United States out of step with the “national exhaustion” rules of many trading partners. The majority’s response was institutional: where the statute’s text and the deep roots of first sale point one way and a contested inference about legislative purpose points the other, the text and the common-law tradition prevail. Concerns about price discrimination, Breyer noted, are arguments to make to Congress.

Open questions

Kirtsaeng settled international exhaustion for tangible copies, but it left adjacent questions for later cases. It did not decide how first sale interacts with purely digital transmissions, where resale necessarily entails reproduction — the problem the Second Circuit confronted in Capitol Records v. ReDigi. It did not address copies made abroad without the copyright owner’s authorization, which are not “lawfully made” and remain outside § 109. And it left untouched the licensing workaround: rights holders responded by recharacterizing transactions as licenses rather than sales, betting that a licensee is not an “owner” entitled to invoke first sale at all — a strategy whose limits the courts continue to police.

Implications

• For resellers and the gray market: Goods lawfully made and first sold abroad can be imported and resold in the United States without infringing the distribution right. Arbitrage across national price tiers is lawful as to genuine, authorized copies.
• For publishers and brand owners: Geographic price discrimination cannot be enforced through U.S. copyright law once an authorized first sale has occurred. Segmentation must be maintained through contract, licensing structures, or pricing — not the § 106(3) distribution right.
• For libraries, retailers, and museums: The decision protects the everyday lending, resale, and display of foreign-manufactured copyrighted works, removing a cloud the geographic reading would have created.
• For statutory interpretation: The case is a leading modern example of the Court privileging ordinary textual meaning and common-law tradition over contested inferences about congressional purpose.

Frequently asked questions

What did Kirtsaeng actually decide? That the first-sale doctrine in § 109(a) applies to copies lawfully manufactured outside the United States. Once the copyright owner authorizes the making and first sale of a copy, it cannot use the distribution right to block that copy’s later importation or resale.

Does this mean any imported copy is fair game? No. First sale protects copies that were lawfully made — that is, made with the copyright owner’s authorization or otherwise in compliance with the Act. Pirated or otherwise unauthorized copies are not covered.

Can companies still enforce different prices in different countries? Not through copyright’s distribution right. Many rights holders turned instead to licensing arrangements and contractual restrictions, which raise separate questions about whether the recipient is an “owner” able to invoke first sale.

Authorities and sources

• Kirtsaeng v. John Wiley & Sons, Inc., 568 U.S. 519 (2013), No. 11-697 (Mar. 19, 2013). Opinion and holding via Justia and Cornell LII.
• Case background and 6-3 lineup: SCOTUSblog case file and Wikipedia summary.
• Doctrinal analysis: Stanford Copyright & Fair Use Center.