Gray Market, or is it Grey Market – Copyright

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Gray Market, or is it Grey Market – Copyright

I’m not sure which could put me to sleep faster, reading a text book or reading a legal opinion about copyright infringement of text books. The United States Supreme Court in Kirtsaeng v. John Wiley & Sons, Inc. settled the hot topic of whether copyright law prohibits the unauthorized importation and sale of copyrighted goods manufactured outside the United States.  The answer is YES, as long as the manufacturing of the copyrighted goods was authorized by the copyright holder.

Here’s the skinny on the situation.  The publisher, John Wiley manufactures and sells textbooks outside the United States, often at prices well below what they charge for the same books inside the United States.  To segment its distribution markets Wiley prohibits importation of the less expensive foreign editions.  Enter business opportunity.  Kirtsaeng imported the less expensive Wiley foreign editions and resold them on eBay.  Wiley sued for copyright infringement and won on the District Court and Circuit court levels.

The Supreme Court rescued Kirtsaeng by applying the “first sale” doctrine.  The first sale doctrine is what allows you to purchase a book from Barnes & Noble and then resell it on eBay or to your local used book store.  Just think, without this doctrine, all of your favorite second hand book stores would be gone…..

The lingering issue for the Supreme Court to decide was whether the first sale doctrine extended outside the United States.  In a 6-3 decision, it was decided that the first sale doctrine does extend to foreign made copyrighted goods imported to the United States.

Another industry that is flourishing under the gray market is the sale of cars overseas.  Often it is cheaper for someone in Russia or China to import a new car from the United States than to buy that same car in their own country, because of the price controls the auto manufacturer or foreign country places on the foreign dealers.

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