Source: http://www.techlawjournal.com/alert/2012/04/16.asp
Timestamp: 2019-04-18 10:30:47+00:00

Document:
TLJ Daily E-Mail Alert No. 2,372, April 16, 2012.
Monday, April 16, 2012, Alert No. 2,372.
4/12. The U.S. Court of Appeals (9thCir) issued its divided opinion [49 pages in PDF] in Minority Television Project v. FCC, holding that the statutory ban on public issues and political candidate advertising by public radio and television violates their 1st Amendment rights.
The relevant statute, 47 U.S.C. § 399b, provides that "No public broadcast station may make its facilities available to any person for the broadcasting of any advertisement". It also defines "advertisement" to mean "any message or other programming material which is broadcast or otherwise transmitted in exchange for any remuneration, and which is intended -- (1) to promote any service, facility, or product offered by any person who is engaged in such offering for profit; (2) to express the views of any person with respect to any matter of public importance or interest; or (3) to support or oppose any candidate for political office."
The 1st Amendment provides that "Congress shall make no law ... abridging the freedom of speech, or of the press ..."
The Supreme Court construes "no law" to mean that the Congress can pass laws that meet the Supreme Court's constantly evolving rules and standards. What part of "no" informs the Courts' understanding is not explained.
Moreover, soon after the deployment of broadcasting, the Supreme Court accorded a lower level of Constitutional protection to broadcast speech than to print or pulpit speech. It based this on its understanding of spectrum scarcity. Whatever merits existed for this distinction during the Roosevelt administration, the advent of cable, satellite, and internet distribution technologies have long since rendered it obsolete.
The Courts have also relied upon "pervasive presence" of broadcasting as an alternative rationale. Nevertheless, the opinions of the Courts, including this just released opinion, continue to allow the Congress and FCC to regulate television content.
The Supreme Court has held that the Congress may pass laws that regulate broadcast speech if they satisfy its intermediate scrutiny standard. That is, they are Constitutional if they are "narrowly tailored to further a substantial government interest".
In the present case, the Court applied intermediate scrutiny, and concluded that, as to the bans on "public importance" ads and "candidate for political office" ads, the government has a substantial interest in noncommercial public broadcasting, and that Section 399b furthers this interest, but that this interest is not sufficiently tailored to survive broadcast scrutiny. Hence, Subsections 399b(a)(2) and (3) are unconstitutional.
Judge Carlos Bea wrote the opinion of the Court of Appeals.
Judge John Noonan wrote a concurring in judgment opinion. He hinted at the obsolescence of the Courts' interpretation of the 1st Amendment as applied to television. He wrote that "With the rapid flux of technologies transmitting television, there have come new forms of television that do not require use of the narrow spectrum employed by broadcast television. These new forms -- cable, satellite, cell phone, the Internet and the iPad -- have introduced a variety of ways of communicating on television and call at least for a new look at the government's substantial role in licensing and regulating speech on broadcast television."
He also pointed out the obvious. There already are products and services ads on public television. "As a viewer of Jim Lehrer NewsHour and its successor, I have seen announcements that to my mind are ads."
Judge Richard Paez dissented. He wrote that "For almost sixty years, noncommercial public broadcasters have been effectively insulated from the lure of paid advertising. The court's judgment will disrupt this policy and could jeopardize the future of public broadcasting. I am not persuaded that the First Amendment mandates such an outcome."
He wrote that the statute regulates broadcast media, that intermediate scrutiny applies, but that Section 399b satisfies this test.
Craig Aaron, head of the Free Press, stated in a release that "Polluting public broadcasting with misleading and negative political ads is not in keeping with the original vision of noncommercial broadcasting. And it’s certainly not the solution to funding public media. At a time when people are turning to public broadcasting to get away from the flood of nasty attack ads, viewers don’t want to see Sesame Street being brought to them by shadowy Super PACs."
This case is Minority Television Project v. FCC, U.S. Court of Appeals for the 9th Circuit, App. Ct. No. 09-17311, an appeal from the U.S. District Court for the Northern District of California, D.C. No. 3:06-cv-02699-EDL, Judge Elizabeth Laporte presiding. Judge Carlos Bea wrote the opinion of the Court of Appeals.
4/16. The Supreme Court of the U.S. granted certiorari in Kirtsaeng v. John Wiley & Sons, a case regarding whether the first sale doctrine of the Copyright Act applies to goods made abroad. See, April 16, 2012, Orders List [21 pages in PDF] at page 2.
Introduction. The Supreme Court's prior actions indicated that it would likely grant certiorari in this case, and that the Court is divided on this issue. It heard a similar case 2010, and affirmed in a one page order by an evenly divided vote 4 to 4. Justice Kagan recused herself.
That case was Omega v. Costco. See, story titled "Supreme Court Affirms in Costco v. Omega on 4-4 Vote" in TLJ Daily E-Mail Alert No. 2,178, December 14, 2010.
These cases involve construing jointly Sections 109 and 602 of the Copyright Act.
At issue for book publishers is their ability to charge different prices in different national markets. Secondary markets, and particularly online sales sites that enable third party sellers, undermine publishers ability to engage in such price discrimination.
Since publishers tend to charge more in the US market, there is an opportunity for intermediaries, such as Supap Kirtsaeng, to purchase books outside the US at the publishers' lower prices, import them into the US, and then resell them via internet platforms such as eBay's auction web site at a profit to consumers in the US.
At issue for US book consumers is the ability to purchase lower priced foreign printed books online from intermediaries like Kirtsaeng. At issue for companies like eBay is the fees that they collect from online sellers like Kirtsaeng.
There is also perhaps a bigger issue. Sections 109 and 602 apply to works, not merely to hardcopy books. Hence, if Wiley were to prevail, the Supreme Court would write an opinion that applies to works subject to copyright. Other copyright industries might then attempt to avail themselves of the ruling to curtail Section 109 rights by increasing their manufacturing operations outside of the US.
Statutes. 17 U.S.C. § 106 lists the exclusive rights of copyright. Subsection 106(3) is the exclusive right "to distribute copies or phonorecords of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease, or lending". However, the Copyright Act then provides numerous exceptions to the exclusive rights of copyright.
The first sale doctrine, which is codified at 17 U.S.C. § 109, provides, in part, that "Notwithstanding the provisions of section 106(3), the owner of a particular copy or phonorecord lawfully made under this title, or any person authorized by such owner, is entitled, without the authority of the copyright owner, to sell or otherwise dispose of the possession of that copy or phonorecord."
Section 109 allows book purchasers to resell the copies that they have purchased. However, the phrase "lawfully made under this title" gives rise to the interpretation that since US copyright law applies only in the US, and other nations' copyright laws apply in their nations, the Section 109 resale exception does not apply to works made in other nations. Section 602 is also in tension with the interpretation that Section 109 applies to works made outside the US and imported into the US. Hence, these two sections, taken together, do not provide clarity for the courts.
Moreover, this issue has been in the courts for many years, and the Congress could pass legislation that would clarify this issue, but it has not done so.
Proceedings Below. In the present case, John Wiley & Sons, is the plaintiff in the District Court, appellee in the Court of Appeals, and respondent in the Supreme Court. It publishes academic, scientific, and educational journals and books, including textbooks, for sale in domestic and international markets.
It makes outside of the US those copies for sale outside of the US. It makes in the US those copies for sale inside the US. Wiley's books for non-US sale include statements such as "Authorized for sale in Europe, Asia, Africa and the Middle East Only" and "This book ... may not be exported."
Supap Kirtsaeng is the defendant in the District Court, appellant in the Court of Appeals, and petitioner in the Supreme Court. He imported into the US Wiley books published outside the US, and sold them on websites such as eBay.
Kirtsaeng appealed the first sale doctrine ruling. Wiley also appealed on the issue of damages.
On August 15, 2011, the U.S. Court of Appeals (2ndCir) issued its divided opinion [28 pages in PDF] affirming the judgment of the District Court. It is published at 654 F.3d 210. See also, story titled "2nd Circuit Holds First Sale Doctrine Does Not Apply to Works Made Abroad" in TLJ Daily E-Mail Alert No. 2,295, August 28, 2011.
Certiorari Briefs. Kirstsaeng argued in his brief that his book selling activities were protected by the first sale doctrine, that the Court of Appeals incorrectly interpreted the statutes, and that the Supreme Court should grant certiorari.
Kirtsaeng is represented by Joshua Rosenkranz and others in the New York City office of the law firm of Orrick Herrington & Sutliffe.
Wiley argued in its brief the the Court of Appeals correctly interpreted the statutes, that there is no circuit split, and that certiorari should therefore be denied.
Wiley is represented by Ted Olson, a former Solicitor General, and other attorneys in the Washington DC office of the law firm of Gibson Dunn & Crutcher.
eBay is not a party to this case. However, it filed an amicus curiae brief, along with the Computer and Communications Industry Association (CCIA), Internet Commerce Coalition (ICC), Net Coaltion, NetChoice, Tech America, and Technology Network. They argued that the Supreme Court should grant certiorari.
They wrote that the Court of Appeals "imposed a place of manufacturing requirement on the first sale doctrine that lacks support in the text, structure, history or purposes of the Copyright Act."Also, "The Second Circuit’s rule also dangerously expands beyond the Ninth Circuit’s requirement" in Omega v. Costco.
These tech sector amici argued that "In stark tension with the policy against restraints on alienation, the Second Circuit’s rule affords copyright owners the ability to control the downstream sales of goods for which they have already been paid. The Second Circuit’s rule not only is inconsistent with the terms, structure, history and purpose of the copyright act, but it also allows for significant adverse consequences for trade, ecommerce, secondary markets, small businesses, consumers, and jobs in the United States."
"Reading section 109(a) to impose a place of manufacturing requirement on the first sale doctrine would negatively impact commerce in the United States. A place of manufacturing requirement will create incentives for off-shore manufacturing, stifle secondary markets, stifle e-commerce, and harm small businesses". They added that "The Second Circuit’s rule substantially threatens the increasingly important e-commerce sector of the economy, particularly secondary market e-commerce."
The Public Knowledge (PK), Electronic Frontier Foundation (EFF), and U.S. Public Interest Research Group also filed an amicus curiae brief urging the Court to grant certiorari. They argued that the Court of Appeals' opinion "threatens significant harm to consumers and businesses engaged in legitimate commerce involving goods manufactured abroad".
They cautioned that "The decision below could also encourage copyright owners to deliberately foreclose secondary markets by moving their manufacturing operations abroad."
This case is Supap Kirtsaeng v. John Wiley & Sons, Inc., Supreme Court of the U.S., Sup. Ct. No. 11-697, a petition for writ of certiorari to the U.S. Court of Appeals for the 2nd Circuit, App. Ct. No. 09-4896-cv. Judge Jose Cabranes wrote the opinion of the Court of Appeals, in which Judge Katzmann joined. Judge Garvan Murtha (USDC/DVermont, sitting by designation) wrote a dissent. The Court of Appeals heard an appeal from the U.S. District Court for the Southern District of News York, Judge Donald Pogue (U.S. Court of International Trade, sitting by designation) presiding.

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