Absurd 'garage sale' law? Reselling your old stuff could become illegal if certain copyright companies have their way

Quick! What do the following have in common? 

• A cheap Omega brand wristwatch made in Hong Kong and sold at hundreds of Costco stores;
• 200 million library books borrowed by readers every day in the U.S, including Bibles printed in Italy;
• Your used Apple iPhone4 you want to sell on eBay;
• Your grandmother’s jewelry collection from France.

If you said, “the First Sale Doctrine” of the Copyright Act, give yourself a gold star and a pat on the back – you’re correct!   (And don’t yawn.)

An upcoming case in the US Supreme Court, Kirtsaeng vs. John Wiley & Sons, soon will shed light on a very unusual aspect of copyright law that could make it illegal for you to re-sell anything that is copyrighted here but which was originally made or manufactured overseas.

Here’s what happened: In 1997, Supap Kirtsaeng, a student from Thailand, came to America to study at Cornell University; he soon found that his textbooks here were cheaper to buy in Thailand.  So he asked his relatives to ship hundreds of textbooks to him so he could re-sell them independently, earning him about $5,000 through eBay under the username “BlueChristine999.“

The publisher, Wiley, sued him for infringing their copyright.  The Ninth Circuit US Court of Appeals ruled that a company that holds a patent or copyright on goods (such as jewelry, books, music, electronic, clothing, etc.) can refuse to allow the re-sale of items if the items were made overseas.   The court even slapped Supap Kirtsaeng with damages of $600,000 even though he had made less than $5,000 profit. 

This was a sharp change from the old rule, since 1908, called the “First Sale” defense doctrine - that a copyright holder only controls the “first sale” of an item but has no control over subsequent “re-sales.”

Theoretically, under the new interpretation of the law, you could hold a garage sale but would first have to get permission from Apple to sell your used Nano (assuming it was made in China); or, for example, you could not sell your heirloom jewelry unless you first checked with the gemologist in France that made it.

Sound absurd?  Sure.  But consider this: Librarians around the country are supporting the case against the publisher because they fear that even lending books printed outside the US might violate the copyright laws.

Naturally, the biggest impact of this case is for giant internet “re-sellers” such as eBay, Amazon, Craigslist, etc. - but it also affects stores like Costco, Target….and ultimately affects every consumer, since if the Appeals Court  decision stands, manufacturers and publishers will probably want a piece of the “pie“ i.e. some “royalty“ for the second hand re-sales.  “It means that it’s potentially harder for consumers to buy used products and harder for them to sell them,” said Jonathan Band, an adjunct professor at Georgetown University Law Center, who appeared in the case arguing for the rights of the American Library Association. “This has a huge impact on all consumer groups.”

In 2009 a court found that Costco illegally sold Omega brand wristwatches - even though Costco had legally bought the watches for a fair price overseas.   Costco claimed it was no different than someone re-selling stuff at a garage sale. (The court didn’t buy Costco’s argument that it was like “having a garage sale full of wrist-watches.”)

If the ruling stands, Band added, “Ironically it could lead companies to making  even more products overseas, since they could control the rights to the ‘downstream market,’ too, not just the initial sale.”  This would have dire consequences for the US economy.

The case of Kirtsaeng v Wiley is scheduled for argument before the Supreme Court on Monday, October 29th.   Check it out - before you sell your old Nikes, Sunbeam toaster, Pavarotti CDs, and Rossignol ski boots!

(Richard G. Marcil www.MarcilAttorney.com 586-412-0444 is an attorney in Clinton Township practicing in criminal defense, divorce and family law, civil rights, and personal injury cases, as well as juvenile, probate, real estate and business litigation.)