Source: http://www.copyhype.com/2012/10/what-kirtsaeng-wont-answer/
Timestamp: 2019-04-26 00:25:17+00:00

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posted October 30, 2012 by Terry Hart.
On Monday, the Supreme Court heard oral arguments in Kirtsaeng v John Wiley & Sons, a case dealing with the impact of copyright’s first sale doctrine — 17 USC § 109(a) — on the Copyright Act’s importation prohibition — 17 USC § 602(a)(1). I’ve previously written about the case here, with more thoughts here.
A decision is months away, but before closing the book on this case until then, I wanted to look at one other aspect of the legal issues involved. While Kirtsaeng involves textbooks, one of the traditionally copyright protected works, other cases, including the two previous cases involving these provisions to reach the Supreme Court (Costco v Omega and Quality King v L’anza Research), involve consumer goods, goods that we don’t typically think of as within the subject matter of copyright. Those cases generally rely on an assertion of copyright protection over the goods’ packaging or labels, rather than the good itself. Generally, we would think of such products as relying on trademark law rather than copyright law for any protection.
Trademark law does provide effective protection against grey market goods, but this protection is curtailed in several respects that explains why some companies have turned to the importation provisions of the Copyright Act. 1Parker A. Howell, Cheaper Watches and Copyright Law, 7 Washington Journal of Law, Technology & Arts 237, 244 (2012). Perhaps most importantly, trademark law does not prohibit unauthorized importation of goods that had been manufactured by a foreign subsidiary of a US company. 2K Mart v Cartier, 486 U.S. 281, 295 (1988) (Brennan, J., concurring).
Whether overlap between copyright and trademark law creates concerns is an interesting academic question. 3See, for example, Viva R. Moffat, Mutant Copyrights and Backdoor Patents: The Problem of Overlapping Intellectual Property Protection, 19 Berkeley Technology Law Journal 1473 (2004). Whether it matters in the real world, especially in the context of parallel imports, is also, I think, a legitimate question. 4For example, Moffat notes that one of the main concerns with extending trademark protection into the copyright arena is that trademark’s potentially perpetual duration runs counter to copyright’s limited term. When the situation is reversed, as here, and copyright protection is extended into the trademark arena, this concern vanishes.
Regardless, I think it’s worth examining the use of copyright law to police importation of non-piratical goods which aren’t customarily considered within the scope of copyright subject matter. I’ve done so by first surveying §602 case law and then examining several of the defenses raised in actions involving consumer goods.
Columbia Broadcasting v Scorpio Music, 569 F.Supp. 47 (ED Pa. 1983), aff’d without op, 738 F.2d 421 (3d Cir. 1984) (phonorecords).
These cases are a mix between the situation where, as in Quality King, a good was first manufactured in the US and, as in Kirtsaeng, a good was first manufactured overseas. Though I haven’t indicated which is which, I will note that, before Quality King, courts were split on whether the first sale doctrine applied to goods first manufactued in the US and then re-imported without authorization. Where goods were first manufactured overseas, however, courts have been virtually unanimous in holding that the first sale doctrine does not apply — I’ve only been able to find one case in the past 30 years that has held otherwise.
Out of these 35 cases, 24 involved traditionally copyrighted works: books, phonorecords, software, and sculptural works. The eleven remaining cases involved situations where the goods themselves would not be copyrightable — instead, copyright protection on labels or packaging was asserted. These cases include everything from perfume, to watches, to diapers.
The first thing you note from this survey is the small usage of this provision, roughly 30 reported cases in 30 years. Compare this to, say, the fair use provision in §107, which has generated over 300 published opinions in the same time-frame. 6Barton Beebe, An Empirical Study of US Copyright Fair Use Opinions, 1978-2005, 156 University of Pennsylvania Law Review 549 (2008), surveying 306 published opinions on fair use from 1978 to 2005. And less than one-third of these involved consumer goods.
Next, I’ll look at some of the defenses that may be raised when the Copyright Act’s importation provisions are used to protect such consumer goods.
The bar for originality is low; it requires only a “modicum of creativity.” 8Feist Publications v Rural Telephone Service, 499 US 340, 346 (1991). It is well established that product labels and packaging can be protected by copyright. 9Kitchens of Sara Lee v Nifty Foods Corp, 266 F.2d 541, 544 (2nd Cir. 1959).
This avenue, then, would be a non-starter for defending against including consumer goods in the importation provision — indeed, it is precisely because of the low bar for copyrightability that such goods are within its scope. This argument was raised in one case dealing with §602, and the court, confronted with the argument against plaintiff’s hair care product labels, said, “Catch phrases, mottos, slogans and short advertising expressions are not copyrightable. But, of course, the length of a sentence is not dispositive of whether it is subject to protection. … While this text tries the limits of the modicum of creativity necessary for a work to be copyrightable, I find that taken as a whole it comes within the purview of the Copyright Act.” 10664 F.Supp. at 913.
Next, one might argue that any copyrightable matter in consumer goods is inseparable from their function and thus unprotectable. The Copyright Act says of pictorial, graphic, and sculptural works, “Such works shall include works of artistic craftsmanship insofar as their form but not their mechanical or utilitarian aspects are concerned; the design of a useful article, as defined in this section, shall be considered a pictorial, graphic, or sculptural work only if, and only to the extent that, such design incorporates pictorial, graphic, or sculptural features that can be identified separately from, and are capable of existing independently of, the utilitarian aspects of the article.” Courts have interpreted this to mean that copyrightable elements of works must be physically or conceptually separable from utilitarian aspects. Easier said than done — if you think this inquiry could lead you into a metaphysical quandary, you’d be correct.
The Koosh Ball, for example, had its registration for copyright rejected by the Copyright Office, and on appeal, the DC Circuit held that the Office had not abused its discretion. 11OddzOn Products v Oman, 924 F.2d 346 (DC Cir. 1991). But in most cases, separability would not be an issue since plaintiffs would be asserting copyright protection over labelling or packaging rather than the good itself.
Moreover, the Amarige Box Design is physically separable from the perfume with which it is associated and thus does not even raise an issue of ‘conceptual separability.’ Section 101 of the Copyright Act provides that “the design of a useful article” or a work of art that embellishes a useful article is copyrightable to the extent that it is capable of existing independently of the utilitarian aspects of the article. The legislative history specifies that the design or embellishment may be separable from the useful article either physically or conceptually. The Amarige Box Design is a two-dimensional artistic design, which is physically separable from the utilitarian aspects of Amarige perfume. Thus, the issue of conceptual separability does not even arise. 12832 F.Supp. at 1391-92.
In the same way that Congress did not intend to cabin section 602’s application to copies from countries with a shorter term or compulsory licenses, the legislative record provides no evidence that it intended its application to situations where a trademark owner adds a copyrightable insignia or label on goods to protect against their parallel importation into the United States. Amicus SIIA believes that the better way to address the concern raised by these cases is through the fair use defense contained in section 107 of the Act.
The fair use doctrine requires that a market for a work be “traditional, reasonable, or likely to be developed” when examining and assessing the effect that a secondary use of a copyrighted work may have on the potential market for or value of that work. In the case of products such as shampoo and watches, there is no economic value severable from the product to which the work is affixed, and no actual or potential market that can be harmed. For example, there is likely no separate licensing market for shampoo labels as the expressive work – the label – has no economic value severable from the product.
This argument is interesting on its surface, though somewhat novel. I’ve been unable to find any cases where fair use has been applied outside the exclusive right of reproduction. There have been cases where a defendant has raised the defense when he was engaged in distribution, but this is always in combination with alleged reproduction. 13See, for example, Kelly v Arriba Soft (336 F.3d 811 (9th Cir. 2003), fair use where defendant engaged in display, reproduction, and distribution. The language of the fair use provision in the Copyright Act itself does not expressly preclude application outside of reproduction, 1417 USC § 107, which, in part, reads, “the fair use of a copyrighted work, including such use by reproduction in copies or phonorecords or by any other means specified by that section.” I just don’t know if any court has ever been confronted with its application where there hasn’t been an unauthorized reproduction, as would be the case with an unauthorized importation of a non-piratical work under §602.
Whether the defense of copyright misuse exists at all is an open question. It is a court-created doctrine that has only emerged within the past 30-some years. Only a minority of federal circuit courts have even recognized its existence, with some remaining skeptical, and even less have actually applied the doctrine. 15See Michael E. Rubenstein, Extending Copyright Misuse to an Affirmative Cause of Action, 5 Akron Intellectual Property Journal 111 (2011). But when it is recognized, copyright misuse is typically defined as using a copyright to secure control over something not protected by the copyright in a way which is contrary to public policy. 16See, for example, Lasercomb America v Reynolds, 911 F.2d 970, 977 (4th Cir. 1990), the first Circuit Court decision to recognize and apply a defense of copyright misuse.
But despite its shaky foundation as a doctine, the defense of copyright misuse is one of the only defenses to actually defeat a claim of unauthorized distribution under §602 for non-piratical consumer goods.
Here, Omega concedes the purpose of the copyrighted Omega Globe Design was to control the importation and sale of its watches containing the design, as the watches could not be copyrighted. Accordingly, Omega misused its copyright of the Omega Globe Design by leveraging its limited monopoly in being able to control the importation of that design to control the importation of its Seamaster watches.
Omega argues that the Omega Globe Design had multiple purposes. While Omega concedes that one purpose was to control the importation of watches, it argues that another purpose was to promote the creativity and aesthetics of the Omega Globe Design, itself, and to increase the value that the design gives to a watch. While the Omega Globe Design might have its own independent creative and aesthetic values, those aspects of the design are protected by its copyright and are not a defense to copyright misuse.
1. ↑ Parker A. Howell, Cheaper Watches and Copyright Law, 7 Washington Journal of Law, Technology & Arts 237, 244 (2012).
2. ↑ K Mart v Cartier, 486 U.S. 281, 295 (1988) (Brennan, J., concurring).
3. ↑ See, for example, Viva R. Moffat, Mutant Copyrights and Backdoor Patents: The Problem of Overlapping Intellectual Property Protection, 19 Berkeley Technology Law Journal 1473 (2004).
4. ↑ For example, Moffat notes that one of the main concerns with extending trademark protection into the copyright arena is that trademark’s potentially perpetual duration runs counter to copyright’s limited term. When the situation is reversed, as here, and copyright protection is extended into the trademark arena, this concern vanishes.
6. ↑ Barton Beebe, An Empirical Study of US Copyright Fair Use Opinions, 1978-2005, 156 University of Pennsylvania Law Review 549 (2008), surveying 306 published opinions on fair use from 1978 to 2005.
7. ↑ 17 USC § 102.
8. ↑ Feist Publications v Rural Telephone Service, 499 US 340, 346 (1991).
9. ↑ Kitchens of Sara Lee v Nifty Foods Corp, 266 F.2d 541, 544 (2nd Cir. 1959).
10. ↑ 664 F.Supp. at 913.
11. ↑ OddzOn Products v Oman, 924 F.2d 346 (DC Cir. 1991).
12. ↑ 832 F.Supp. at 1391-92.
13. ↑ See, for example, Kelly v Arriba Soft (336 F.3d 811 (9th Cir. 2003), fair use where defendant engaged in display, reproduction, and distribution.
15. ↑ See Michael E. Rubenstein, Extending Copyright Misuse to an Affirmative Cause of Action, 5 Akron Intellectual Property Journal 111 (2011).
16. ↑ See, for example, Lasercomb America v Reynolds, 911 F.2d 970, 977 (4th Cir. 1990), the first Circuit Court decision to recognize and apply a defense of copyright misuse.
It’s a minor point, but I think that Sofa Entertainment Inc. v. Dodger Productions, Inc., (782 F. Supp. 2d 898; 2010 U.S. Dist. LEXIS 114684) would qualify as a fair use case which does not involve the exclusive right to reproduction. I suppose there was probably an unauthorized reproduction (which is your point) in this case, but my recollection of the opinion is that it discussed only the exclusive right to perform the work; the actual reproduction wasn’t at issue.
Interesting, thanks. Reading the case, I would think the issue involves a performance, though the complaint and court opinion glosses over which exclusive right is at issue (the complaint alleges that Dodger “copied, reproduced, recorded, and displayed” the work).
On a side note, I’d point out that this case is currently in front of the Ninth Circuit where the court’s fair use decision is being appealed.
Excellent post! There is nothing fair about “fair use”.
In all candor, I found much of Mr. Olson’s argument to border on unintelligible babble. His reliance on the term “fair use” in responding to the “horribles” hypotheticals made me cringe and left me wondering if he truly had a handle on all of the issues associated with this case. Even so, while predicting the eventual outcome of a Supreme Court decision is usually a fool’s errand, I do happen to believe that the limitations associated with “importation” should weigh in the Respondent’s favor regarding the First Sale Doctrine codified at Section 107.
Why does Fair Use not strike a responsive chord with me? Primarily because it has long been associated with the uses recited in the statute, uses that were originally incorporated as a matter of federal common law in order to address the “tension” between copyright and the First Amendment. The verbosity of all argument aside, I simply do not see a meaningful relationship between the facts in the case at bar and the First Amendment.
What about First Sale? While this is the linchpin question being considered by the court, it is difficult to reconcile the First Sale doctrine with the sale in a foreign jurisdiction by a third party, even a subsidiary of the US rights holder, when the relevant statutory language comprises “made under this title”. Had the work first been authored within the US, and then a reproduction and distribution license granted for foreign reproduction and distribution (market segmentation), the doctrine may have vitality. Unfortunately, nowhere in this case could I find any factual recitation that this is what transpired. Why this important fact is not revealed eludes me since I believe it does have relevancy in any First Sale analysis.
Copyright misuse? While it is a matter of federal common law, it does have several distinguishing characteristics that are not easily cabined in circumstances such as here unless it is clear that a copyright claim is being used in a manner that effectively extends the substantive rights secured within Section 106 to other subject matter, as was the case in Omega v. Costco. Omega added a miniscule symbol/logo, admittedly secured by copyright, that bore no relationship to the underlying product other than the product being used as a symbol/logo bearing “canvass”. This was, in my view, the twisting of copyright law as it was a nose of wax. Quite frankly, I was surprised that the Justices on the Supreme Court split 4-4.
In a more practical vein that more closely approximates what I believe to be your question, i.e., the use of copyright in association with ordinary articles of commerce, it seems to me that there are several, more relevant, bodies of law that should be added to any practitioner’s checklist of potentially applicable rights under US law. Obviously, trademark law quickly comes to mind when the goods have acquired secondary meaning in the eyes of consumers. Less obvious, but very closely related to both copyright and trademark law, is that body of law pertaining to patent law, and specifically design patents. Each of these bodies of law may potentially be usefully employed in the case of ordinary consumer goods. It is not at all unusual for a client to place on your desk for analysis products that are simultaneously available for protection under trademark, copyright and patent law.
My comment here is not to explore each of these possibilities in detail, but only to note that Mr. Olson’s “feeble” response was off the mark by virtue of its underinclusiveness. Yes, Fair Use may have some merit depending upon the facts, but then again so may the importation provision of copyright law, as well as related provisions under both trademark and patent law.
There is a symmetry to so-called IP law, and it disappoints me when this symmetry goes unnoticed…especially when a client is sitting in your office looking for advice on how to proceed. All the more reason why I hew to the position that calling oneself an IP lawyer is terribly misleading to an unsuspecting client unless such a lawyer it thoroughly schooled in all IP disciplines. I guess you can call me “old school”, but this is largely how the practice of IP law was conducted prior to the law being “discovered” by general practice firms in the early to mid 80’s.
Great stuff. I too cringed at Olson’s answers to the “parade of horribles” questions. I’m quite surprised he didn’t have better responses prepared.

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