Source: https://www.bloomberglaw.com/public/desktop/document/John_Wiley__Sons_v_Kirtsaeng_654_F3d_210_99_USPQ2d_1641_2d_Cir_20?1469371187
Timestamp: 2016-07-24 14:39:49
Document Index: 314528219

Matched Legal Cases: ['§109', '§602', '§109', '§109', '§109', '§602', '§504', '§ 109', '§ 109', '§ 501', '§ 1114', '§ 502', '§ 504', '§ 504', '§ 109', '§ 602', '§ 109', '§ 602', '§ 109', '§ 602', '§ 109', '§ 106', '§ 109', '§ 109', '§ 106', '§ 602', '§ 109', '§ 109', '§ 602', '§ 109', '§ 602', '§ 602', '§ 109', '§ 602', '§ 106', '§ 109', '§ 109', '§ 109', '§ 109', '§ 109', '§ 109', '§ 104', '§ 104', '§ 109', '§ 109', '§ 109', '§ 1006', '§ 109', '§ 109', '§ 602', '§ 109', '§ 107', '§ 602', '§ 109', '§ 109', '§ 602', '§ 109', '§ 109', '§ 602', '§ 109', '§ 602', '§ 109', '§ 109', '§ 109', '§ 109', '§ 504', '§ 109', '§ 101', '§ 202', '§ 41', '§ 27', '§ 109', '§ 109', '§ 602', '§ 109', '§ 109', '§ 109', '§ 501', '§ 501', '§ 502', '§ 502', '§ 504', '§ 602', '§ 602', '§ 105', '§ 4952', '§ 41', '§ 109', '§ 106', '§ 104', '§ 602', '§ 109', '§ 1006', '§ 109', '§ 401', '§ 602', '§ 109', '§ 602', '§ 602', '§ 602', '§ 109', '§ 109', '§ 106', '§ 106', '§ 109', '§ 602', '§ 602', '§ 106', '§ 602', '§ 106', '§ 109', '§ 109', '§ 602', '§ 109', '§ 109', '§ 109', '§ 106', '§ 104', '§ 105', '§ 106', '§ 601', '§ 601', '§ 104', '§ 104', '§ 109', '§ 109', '§ 601', '§ 109', '§ 109', '§ 109', '§ 106', '§ 602', '§ 602', '§ 602', '§ 106', '§ 109', '§ 109', '§ 602', '§ 109', '§ 602']

Bloomberg Law - Document - John Wiley & Sons, Inc. v. Kirtsaeng, 654 F.3d 210, 99 U.S.P.Q.2d 1641, 2011 ILRC 2481, 34 ILRD 723 (2d Cir. 2011), Court Opinion
654 F.3d 210
99 U.S.P.Q.2d 1641
2011 BL 211086
John Wiley & Sons, Inc. v. Kirtsaeng, 654 F.3d 210, 99 U.S.P.Q.2d 1641, 2011 ILRC 2481, 34 ILRD 723 (2d Cir. 2011) [2011 BL 211086]
Dissenting Opinion > United States Court of Appeals, Second Circuit.
JOHN WILEY & SONS, INC., Plaintiff-Appellee, v. Supap KIRTSAENG,
doing business as Bluechristine99, Defendant-Appellant.
Argued: May 19, 2010.
Decided: August 15, 2011.
[1] First sale defense doesn't reach books manufactured overseas, sold on eBay. ►IP.1.6.6 [Show Topic Path]
The first sale doctrine, codified in 17 U.S.C. §109(a), does not apply to copyrighted works produced outside of the United States but imported and resold in the United States. Thus, the district court correctly concluded that an individual who imported foreign-made editions of U.S. textbooks into the United States and then sold them on eBay could not avail himself of the first sale doctrine, since all the books in question were manufactured outside of the United States. Section 109(a) provides in relevant part: “Notwithstanding the provisions of section 106(3) [of the Copyright Act], the owner of a particular copy … 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 ….”
(Emphasis added.) Section 602(a)(1), however, prohibits the importation into the United States of copyrighted works acquired abroad without the authorization of the copyright holder. In light of its necessary interplay with §602(a)(1), §109(a) is best interpreted as applying only to works manufactured domestically. This interpretation comports with instructive dicta found in Quality King Distributors, Inc. v. L'anza Research International, Inc., 523 U.S. 135 (1998), which said that copies lawfully made under the law of another country are not subject to the first sale doctrine. Thus, the phrase "lawfully made under this title" in §109(a) refers specifically and exclusively to works that are made in territories in which the Copyright Act is law, and not to foreign-manufactured works. [One judge dissents.]
[2] Rights in copyright; infringement — Right to distribute copies — First sale ►213.0903 [Show Topic Path]
Copyrighted works manufactured abroad are not works “lawfully made under” Copyright Act within meaning of 17 U.S.C. §109(a), and thus are not subject to first-sale doctrine, since 17 U.S.C. §602(a)(1), which provides that importation, without authority of copyright owner, of copies of work acquired outside United States is infringement of owner's exclusive right to distribute copies, is intended to allow copyright holders some flexibility to divide or treat differently international and domestic markets for particular copyrighted item, and if Section 109(a) is interpreted to apply only to copyrighted copies manufactured domestically, copyright holders would still have free hand to control circumstances in which copies manufactured abroad could be legally imported, and since U.S. Supreme Court has indicated that works “lawfully made” under laws of foreign country, although not produced in violation of U.S. law, are not necessarily “lawfully made” as that phrase is used in Section 109(a); thus, phrase “lawfully made under this Title” in Section 109(a) refers specifically and exclusively to works that are made in territories in which Copyright Act is law, and not to foreign-manufactured works.
[3] Rights in copyright; infringement — Right to distribute copies — First sale ►213.0903 [Show Topic Path]
Procedure — Jury trials ►410.42 [Show Topic Path]
Federal district court did not err in declining to instruct jury that it could consider unsettled state of law regarding applicability of first-sale doctrine to imported works in determining whether defendant willfully infringed plaintiff’s copyrights, since defendant’s counsel did not object to final jury instructions during trial, and district court’s refusal to give proposed instruction is therefore reviewed for plain error, since district court was free to allow jury to consider unsettled state of law in determining whether defendant’s conduct was willful, but court was not required to do so, and since defendant had ample opportunity to introduce evidence at trial and to argue to jury that his internet research led him to believe that his conduct was lawful.
[4] Procedure — Evidence — In general ►410.3701 [Show Topic Path]
Monetary — Damages — Copyrights — Statutory ►510.0509.03 [Show Topic Path]
Federal district court did not err or abuse its discretion by admitting evidence of defendant’s gross revenues in copyright infringement action, in which jury awarded $75,000 in statutory damages per copyrighted work for defendant's willful infringement of eight works, since, under 17 U.S.C. §504(c), jury could have awarded damages of up to $150,000 per work, since abundant evidence was available to support jury's finding of willfulness, and since admission of information about defendant’s revenues therefore was not prejudicial, in that jury could have imposed same amount of damages without knowledge of defendant’s gross revenues.
Southern District of New York, Donald C. Pogue, Judge.
[*211] William Dunnegan (Laura Scileppi, on the brief), Dunnegan
LLC, New York, NY, for plaintiff-appellee.
Sam P. Israel, New York, NY, for defendant-appellant.
John T. Mitchell, Interaction Law, Washington, DC, for amici
curiae Entertainment Merchants Association and National
Association of Recording Merchandisers.
Norman H. Levine (Aaron J. Moss, on the brief), Greenberg
Glusker Fields Claman & Machtinger LLP, Los Angeles, CA,
for amicus curiae Costco Wholesale Corporation.
Charles A. Weiss, Kenyon & Kenyon LLP, (Mark A. Abate,
Goodwin Proctor LLP, on the brief), New York, NY, for amicus
curiae New York Intellectual Property Law Association, in
support of plaintiff-appellee.
Before: CABRANES and KATZMANN, Circuit Judges, and MURTHA,
District Judge.[fn*]
[fn*] The Honorable J. G. irvan Murtha, of the United States
District Court (or the District of Vcrmont, sitting by
Judge MURTHA dissents in a separate opinion.
[**1642] The "first sale doctrine" in copyright law permits the
owner of a lawfully purchased copy of a copyrighted work to
resell it without limitations imposed by the copyright
[*212] holder.[fn1] The existence of the doctrine dates to 1908,
when the Supreme Court held that the owner of a copyright could
not impose price controls on sales of copies of a copyrighted
work beyond the initial sale.[fn2] Congress codified the
doctrine in successive Copyright Acts, beginning with the
Copyright Act of 1909.[fn3]
The principal question presented in this appeal is whether the
first sale doctrine, 17 U.S.C. § 109(a), applies to copies
of copy-righted works produced outside of the United States but
imported and resold in the United States. Under another basic
copyright statute, it is ordinarily the case that "[i]mportation
into the United States, without the authority of the owner of
copy-right under [the Copyright Act], of copies . . . of a work
that have been acquired outside the United States is an
infringement of the [owner's] exclusive right to distribute
copies. . . ."[fn4]
Defendant contends, however, that individuals may import and
resell books manufactured abroad pursuant to
17 U.S.C. § 109(a), which provides that "the owner of a particular copy . . .
lawfully made under [the Copyright Act], 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."
Defendant's claim is an issue of first impression in our
Court.[fn5]
Plaintiff-appellee John Wiley & Sons, Inc. ("plaintiff or
"Wiley") is the publisher of academic, scientific, and
educational journals and books, including textbooks, for sale
in domestic and international markets. Wiley relies upon a
[*213] subsidiary, John Wiley & Sons (Asia) Pte Ltd. ("Wiley
Asia"), to manufacture books for sale in foreign
countries.[fn6] While the written content of books for the
domestic and international markets is often similar or
identical, books intended for international [***2] markets can differ
from the domestic version in design, supplemental content (such
as accompanying CD-ROMS), and the type and quality of materials
used for printing, including "thinner paper and different
bindings, different cover and jacket designs, fewer internal
ink colors, if any, [and] lower quality photographs and
graphics." Joint App'x at 18. The foreign editions, moreover,
are marked with a legend to designate that they are to be sold
only in a particular country or geographic region. One example
of such a designation reads as follows:
Authorized for sale in Europe, Asia, Africa and
This book is authorized for sale in Europe, Asia,
Africa and the Middle East only [and] may not be
exported. Exportation from or importation of this book
to another region without the Publisher's
authorization is illegal and is a violation of the
Publisher's rights. The Publisher may take legal
action to enforce its rights. The Publisher may
recover damages and costs, including but not limited
to lost profits and attorney's fees, in the event
legal action is required.
[**1643] Joint App'x at 406 (emphasis in original).
Defendant Supap Kirtsaeng ("defendant" or "Kirtsaeng") moved to
the United States from Thailand in 1997 to pursue an
undergraduate degree in mathematics at Cornell University.
According to Kirtsaeng, he later moved to California to pursue
To help subsidize the cost of his education, Kirtsaeng
allegedly participated in the following scheme: Between 2007
and September 8, 2008, Kirtsaeng's friends and family shipped
him foreign edition textbooks printed abroad by Wiley Asia. In
turn, Kirtsaeng sold these textbooks on commercial websites
such as Bay.com. Using the revenues generated from the sales,
Kirtsaeng would reimburse his family and friends for the costs
that they incurred during the process of acquiring and shipping
the books and then keep any remaining profits for himself.
Kirtsaeng claims that, before selling the textbooks, he sought
advice from friends in Thailand and consulted "Google Answers,"
a website which allows web users to seek research help from
other web users, to ensure that he could legally resell the
foreign editions in the United States.
On September 8, 2008, Wiley filed this action against Kirtsaeng
of New York (Donald C. Pogue, Judge of the United States Court
of International Trade, sitting by designation), claiming,
among other things, copyright infringement under
17 U.S.C. § 501, [fn7]
[*214] trademark infringement under 15 U.S.C. § 1114(a), and
unfair competition under New York state law.[fn8] Wiley sought
a preliminary and permanent injunction under
17 U.S.C. § 502(a), [fn9] and statutory damages under
17 U.S.C. § 504(c).[fn10]
C. Relevant Pre-Trial Proceedings
In anticipation of trial, Kirtsaeng submitted proposed jury
instructions charging that the first sale doctrine was a
defense to copyright infringement. By Order dated October 9,
2009, the District Court prohibited Kirtsaeng from raising this
defense and rejected the applicability of the first sale
doctrine to [***3] foreign editions of text-books, holding that
"[t]here is no indication that the imported books at issue here
were manufactured pursuant to the U.S. Copyright Act . . .
[and,] [t]o the contrary, the textbooks introduced as evidence
purport, on their face, to have been published outside of the
United States."[fn11]
[**1644] On October 23, 2009 and November 3, 2009, Kirtsaeng filed
motions in limine to preclude the introduction at
trial of (1) his online "PayPal" sales records, and
specifically, evidence of his gross revenues from the sales of
the foreign editions of Wiley's books, and (2) the profits he
earned on unrelated sales activities. From the bench during a
pre-trial conference on November 3, 2009, the District Court
granted the motions in part and denied them in part. The Court
explained that Wiley could not introduce evidence of profits
earned by Kirtsaeng from the sales of textbooks produced by
other publishers, but "in . . . anticipation that the net worth
testimony [would indicate] that [Kirtsaeng did not have]
significant net worth . . . [Wiley's counsel had the] right to
inquire about additional revenue s and the profits there
[*215] from and where they went in order to make sure that we had
an accurate record about [Kirtsaeng's] net worth." Joint App'x
at 195. The Court further stated that Wiley's counsel "must be
careful not to refer to these [unrelated] sales in any way as
infringing sales, because that would be entirely improper."
D. Events at Trial
At trial, during direct examination, Wiley's counsel asked
Kirtsaeng, "Now sir, if we were to go back and look at January
1st of 2008, what were your financial assets at that point in
The District Court sustained an objection by Kirtsaeng's
counsel and a sidebar discussion followed.
After the sidebar conference and a recess, the first question
by Wiley's counsel to Kirtsaeng was: "Mr. Kirtsaeng, before the
break we were talking about your net worth during the period of
1999, correct? Excuse me. 200.9." Kirtsaeng answered "yes."
Wiley's counsel proceeded to ask Kirtsaeng a series of
questions about his "net worth" in an attempt to impeach his
previous statements. Specifically, he attempted to enter into
evidence a record of Kirtsaeng's PayPal revenues, showing $1.2
million in revenues, in contrast to Kirtsaeng's previous
testimony that he had earned only $900,000 in revenues. Joint
App'x at 295-97.
At a second sidebar conference, during which the jury was
excused from the courtroom, the District Court excluded the
record of the PayPal evidence as "confusing and unfairly
prejudicial." Id. at 298.
When the jury reentered the courtroom, Wiley's counsel
continued to ask Kirtsaeng about his revenues from eBay sales.
Although Kirtsaeng's counsel immediately objected to the line
of questioning on the basis that it had already been "asked and
answered" — an objection the District Court initially
sustained — the Court subsequently allowed the
questioning, explaining that it was uncertain whether the same
questions had in fact been asked of the witness earlier in the
At the end of the trial, the District Court charged the jury to
determine whether [***4] Kirtsaeng had infringed the copy-rights of
each of eight works and whether any such infringements had been
willful. The District Court explained that, under the statutory
damages scheme found at 17 U.S.C. § 504(c), see
note 10, ante, if the jury found that Kirtsaeng had
infringed Wiley's copyright, it could award no less than $750
and no more than $30,000 in damages for each infringed work.
The District Court identified two exceptions to this rule.
First, the District Court instructed the jury that, if it found
that Wiley had proved by a preponderance of the evidence that
the infringement was willful, under the statutory scheme the
jury had the option of awarding up to $150,000 in damages per
infringed work. Second, if the jury found that Kirtsaeng had
proved by a preponderance of the evidence "that he was not
aware and had no reason to believe that his acts constituted an
infringement of copyright," the jury could choose to impose an
award of statutory damages as low as $200 per infringed work.
The jury ultimately found Kirtsaeng liable for willful
copyright infringement of all eight works and imposed damages
of $75,000 for each of the eight works.
Kirtsaeng filed a timely notice of appeal. He claims that (1)
the District Court erred in holding that the first sale
doctrine was not an available defense in the circumstances
presented; (2) the District Court should have advised the jury
of the first sale doctrine as a defense to the claim of willful
infringement; and (3) with respect to the jury's assessment of
[*216] the admission into evidence of testimony regarding the
amount of Kirtsaeng's gross receipts was unduly prejudicial.
[**1645] DISCUSSION
A. The first sale doctrine does not apply to goods
produced outside of the United States.
The threshold question is whether, pursuant to § 109(a) of
the Copyright Act, see note 1, ante, the
District Court correctly determined that the phrase "lawfully
made under this title" does not include copyrighted goods
manufactured abroad.
Where the decision of a district court "presents only a legal
issue of statutory interpretation . . . [w]e review de
novo whether the district court correctly interpreted the
statute."[fn12]
2. Interpreting the First-Sale Doctrine
In the Copyright Act of 1976, Congress enacted what is now
17 U.S.C. § 602(a)(1).[fn13] That section provides:
Importation into the United States, without the
authority of the owner of copyright under this title,
of copies or phonorecords of a work that have been
acquired outside the United States is an infringement
of the exclusive right to distribute copies or
phonorecords under section 106, actionable under
Even if the conduct at issue in this case is otherwise covered
by this statutory language, Kirtsaeng contends that he is
shielded from any liability under the Copyright Act by
§ 109(a), see note 1, ante. Again, in relevant
part, that section provides: "Notwithstanding the provisions of
section 106(3) [of the Copyright Act], the owner of a
particular copy . . . 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 [***5] dispose
of the possession of that copy." Section 109(a) is a
codification of the longstanding "first sale doctrine."[fn14]
[*217] There is at least some tension between § 602(a)(1), which
seemingly seeks to give copyright holders broad control over
the circumstances in which their copyrighted material may be
imported (directly or indirectly) into the United States, and
§ 109(a), which limits the extent to which the copyright
holder may limit distribution following an initial sale. The
Supreme Court first had occasion to address the interplay
between § 602(a)(1) and § 109(a) in Quality King
Distributors, Inc. v. L'anza Research International,
Inc.[fn15]
Quality King involved the sales practices of L'anza
Research International, a California [**1646] corporation engaged in the
business of manufacturing and selling shampoos, conditioners,
and other hair care products. L'anza sold its products
domestically and internationally, but its prices to foreign
distributors were 35% to 40% lower than the prices charged to
its domestic distributors. Lanza brought suit against Quality
King Distributors, Inc., which had purchased shipments of
L'anza's products from one of L'anza's foreign distributors and
then reimported the products into the United States for resale.
L'anza alleged that Quality King's actions violated its
"exclusive rights under 17 U.S.C. §§ 106, 501 and 602 to
reproduce and distribute the copyrighted material in the United
States."[fn16] The Supreme Court heard the case in order to
decide the question of "whether the `first sale' doctrine
endorsed in § 109(a) is applicable to imported
copies."[fn17]
In a unanimous opinion, the Supreme Court held that
§ 109(a), operating in combination with § 106(3), does in
fact limit the scope of § 602(a).[fn18] However, there was
a key factual difference at work in Quality King that
is of critical importance to our disposition of the instant
appeal. In Quality King, the copyrighted items in
question had all been manufactured in the United States.
Indeed, this important fact provided the basis for Justice
Ginsburg's brief concurring opinion, in which she explained:
"This case involves a `round trip' journey, travel of the
copies in question from the United States to places abroad,
then back again. I join the Court's opinion recognizing that we
do not today resolve cases in which the allegedly infringing
imports were manufactured abroad."[fn19]
Although the majority opinion did not directly address the
question of whether § 109(a) can apply to items
[*218] abroad, the opinion contains instructive dicta
that guides our disposition of the issue. In particular, the
Court took pains to explain ways in which § 109(a) and
§ 602(a) do, and do not, overlap. As the Court stated:
"[A]lthough both the first sale doctrine embodied in
§ 109(a) and the exceptions in § 602(a) may be applicable in
some situations, the former does not subsume the latter; those
provisions retain significant independent meaning."[fn20] For
instance, § 602(a) "encompasses copies that are not subject
to the first sale doctrine — e.g., copies that are
lawfully made under the law of another country[.]"[fn21] The
Court even pondered the following hypothetical:
If the author of [a] work gave the exclusive United
States distribution rights — enforceable [***6] under
the Act — to the publisher of the United States
edition and the exclusive British distribution rights
to the publisher of the British edition, . . .
presumably only those made by the publisher of the
U.S. edition would be `lawfully made under this title'
within the meaning of § 109(a). The first sale
doctrine would not provide the publisher of the
British edition who decided to sell in the American
market with a defense to an action under § 602(a)
(or, for that matter, to an action under § 106(3),
if there was a distribution of the copies).[fn22]
In these passages, the Court suggests that copyrighted material
manufactured abroad cannot be subject to the first sale
doctrine contained in § 109(a).
The Supreme Court recently seemed poised to transform this
dicta into holding when it granted a writ of
certiorari to review the Ninth Circuit's decision in
Omega S.A. v. Costco Wholesale Corp.[fn23] That case
involved the importation into the United States of Omega-brand
watches by unidentified third parties without the permission of
Omega; the watches were ultimately purchased and resold by
Costco Wholesale Corporation. The Ninth Circuit maintained its
well-settled position that § 109(a) does not apply to items
manufactured outside of the United States unless they were
previously imported and sold in the United States with the
copyright holder's permission.[fn24] After hearing oral
argument, an equally divided Supreme Court (with Justice Kagan
recused) was obliged to affirm the judgment rendered by the
Ninth Circuit.[fn25]
Without further guidance from the Supreme Court, we now
consider the extent to which the protections set forth in
§ 109(a) may apply to items manufactured abroad. In doing so, we
rely on the text of § 109(a), the structure of the
Copyright Act, and the Supreme Court's opinion in Quality
King.[**1647] 3. Textual Analysis
We start, of course, by turning to the statutory language
enacted by Congress. "Statutory interpretation always begins
with the plain language of the statute, assuming the statute is
unambiguous."[fn26] In the instant case, we are principally
called upon to give meaning to the
[*219] phrase "lawfully made under this title" contained in
§ 109(a).[fn27]
In arriving at a satisfactory textual interpretation of the
statutory language at issue, we focus primarily on the words
"made" and "under," but this task is complicated by twa
factors: (1) the word "made" is not a term of art in the
Copyright Act, [fn28] and (2) "[t]he word `under' is [a]
chameleon" and courts "must draw its meaning from its
context."[fn29] Wiley contends that we must interpret "lawfully
made under this title" to mean "lawfully made in the United
States." This view of the law — which was also adopted by
the United States in its amicus brief before the
Supreme Court in Costco[fn30] — is certainly
consistent with the text of § 109(a).[fn31] It is also the
logical consequence, Wiley submits, of the general presumption
against the extraterritorial application of statutes, [fn32] a
presumption which we have specifically applied to the copyright
laws.[fn33] Wiley argues that Title 17 only applies in the
United States, and thus, copyrighted items can only be "made"
under that title if they were physically made in this country.
[***7] But the extraterritorial application of Title 17 is more
complicated than Wiley allows, since certain provisions in
Title 17 explicitly take account of activity occurring abroad.
Most notably, § 104(b)(2) provides that "[t]he works
specified by sections 102 and 103, when published, are
subject to protection under this title if the work is
first published in the United States or in a foreign
nation that, on the date of first publication, is a treaty
party[.]"[fn34] Indeed, because § 104(b)(2) provides that
copyright protection can apply to works published in foreign
nations, it is possible to interpret § 109(a)'s "lawfully
[*220] made under this title" language to mean, in effect, "any
work that is subject to protection under this title."
There are other reasons why a textual analysis alone is not
sufficient to support Wiley's preferred reading of
§ 109(a). Most obviously, if Congress had intended the first sale
doctrine — at least as codified by § 109(a) —
to apply only to copies of works made in the United States, it
could have easily written the statute to say precisely
that.[fn35] Moreover, "lawfully made under this title" appears
in other provisions of Title 17 where it is at least arguable
that Congress intended this language to apply to copies of
works manufactured outside of the United States. For instance,
§ 1006(a)(1) of the Audio Home Recording Act provides for
applicable royalty payments to be made to "[**1648] any interested
copyright party whose musical work or sound recording has been
embodied in a digital musical recording or an analog musical
recording lawfully made under this title that has been
distributed. . . ."[fn36] It is the view of the U.S. Copyright
Office that distribution of royalty payments under this Act is
not limited to those recordings manufactured in the United
States.[fn37]
But while a textual reading of § 109(a) does not compel the
result favored by Wiley, it does not foreclose it either. The
relevant text is simply unclear. "[L]awfully made under this
title" could plausibly be interpreted to mean any number of
things, including: (1) "manufactured in the United States," (2)
"any work made that is subject to protection under this title,"
or (3) "lawfully made under this title had this title been
applicable."[fn38]
4. Section 602(a)(1) and Quality King
[2] Confronted with an utterly ambiguous text, we think it best to
adopt an interpretation of § 109(a) that best comports with
both § 602(a)(1) and the Supreme Court's opinion in
Quality King.[fn39]
[*221] Section 602(a)(1) prohibits the importation into the United
States of copies of copyrighted works acquired abroad without
the authorization of the copyright holder. This provision is
obviously intended to allow copyright holders some flexibility
to divide? or treat differently the international and domestic
markets for the particular copyrighted work. If the first sale
doctrine codified in § 109(a) only applies to copyrighted
copies manufactured domestically, copyright holders would still
have a free hand — subject, of course, to other relevant
exceptions enumerated in Title 17, such as those in §§ 107,
108, and 602(a)(3) — to control the circumstances in
which copies manufactured abroad could be legally imported into
the United States. On the other [***8] hand, the mandate of
§ 602(a)(1) — that "[i]mportation into the United States,
without the authority of the owner of copyright under [the
Copyright Act], of copies . . . of a work that have been
acquired outside the United States is an infringement of the
[owner's] exclusive right to distribute copies" — would
have no force in the vast majority of cases if the first sale
doctrine was interpreted to apply to every copy manufactured
abroad that was either made "subject to protection under
Title 17," or "consistent with the requirements of Title 17 had
Title 17 been applicable."[fn40] This reading of the Copy-right Act
militates in favor of finding that § 109(a) only applies to
domestically manufactured works. While the Ninth Circuit in
Omega held that § 109(a) also applies to
foreign-produced copies of works sold in the United States with
the permission of the copyright holder, that holding relied on
Ninth Circuit precedents not adopted by other courts of
appeals. Accordingly, while perhaps a close call, we think
that, in light of its necessary interplay with § 602(a)(1),
§ 109(a) is best interpreted as applying only to copies
manufactured domestically.
In adopting this view, we are comforted by the fact that our
interpretation of § 109(a) is one that the Justices appear
to have had in mind when deciding Quality King. There,
the Court reasoned, admittedly in dicta, that
§ 602(a)(1) had a broader scope than § 109(a) [**1649] because, at
least in part, § 602(a)(1) "applies to a category of copies
that are neither piratical nor `lawfully made under this
title.' That category encompasses copies that were `lawfully
made' not under the United States Copyright Act, but instead,
under the law of some other country."[fn41] This last sentence
indicates that, in the Court's view, copies "lawfully made"
under the laws of a foreign country — though perhaps not
produced in violation of any United States laws
— are not necessarily "lawfully made" insofar as that
phrase is used in § 109(a) of our Copyright Act.[fn42]
[*222] Applying these principles to the facts of this case, we
conclude that the District Court correctly decided that
Kirtsaeng could not avail himself of the first sale doctrine
codified by § 109(a) since all the books in question were
manufactured outside of the United States.[fn43] In sum, we
hold that the phrase "lawfully made under this Title" in
§ 109(a) refers specifically and exclusively to copies that are
made in territories in which the Copyright Act is law, and not
to foreign-manufactured works.[fn44]
We freely acknowledge that this is a particularly difficult
question of statutory construction in light of the ambiguous
language of § 109(a), but our holding is supported by the
structure of Title 17 as well as the Supreme Court's opinion in
Quality King. If we have misunderstood Congressional
purpose in enacting the first sale doctrine, or if our decision
leads to policy consequences that were not foreseen by Congress
or which Congress now finds unpalatable, Congress is of course
able to correct our judgment.
B. The District Court did not err in its instructions to
"We review jury instructions de novo, and reverse only
when the charge, viewed as a whole, constitutes prejudicial
error."[fn45] Kirtsaeng [***9] claims that the District Court erred by
rejecting proposed jury instructions that acknowledged that the
applicability of the first sale doctrine to foreign-produced
goods was an unresolved question in the federal courts.
Specifically, Kirtsaeng argues that he was prejudiced by the
Court's failure to charge that the first sale doctrine was an
unsettled area of law because the charge was
[*223] essential to his argument that he had performed presak
internet research regarding the legality of his sales and
therefore had not "willfully" infringed the copyrights.
[3] It is undisputed that Kirtsaeng's counsel did not object to the
final jury instructions during trial. "[F]ailure to object to a
jury instruction . . . prior to the jury retiring results in a
waiver of that objection."[**1650] [fn46] Nonetheless, under Federal
Rule of Civil Procedure 51(d)(2), we "may consider a plain
error in the instruction that has not been preserved as
required [under Rule 51] if the error affects substantial
"To constitute plain error, a court's action must contravene an
established rule of law."[fn47] Kirtsaeng does not meet his
burden under this stringent standard. Although the District
Court was free to permit the jury to consider the unsettled
state of the law in determining whether Kirtsaeng's conduct was
willful, [fn48] we can find no binding authority for the
proposition that it was required to do so.[fn49] Furthermore,
Kirtsaeng was provided ample opportunity to introduce evidence
at trial and to argue to the jury that his internet research
had led him to believe that his conduct was not unlawful.
Accordingly, we cannot conclude that the District Court plainly
erred in declining to give Kirtsaeng's proposed instruction.
C. The District Court did not err in allowing into
evidence the amount of defendant's gross revenues.
Kirtsaeng argues that admission of evidence regarding his gross
revenues prejudiced him by confusing the jury as to the amount
of damages that should have been awarded to Wiley. He suggests
that the majority of his revenues came from the sale of other
publishers' used volumes, many of which were produced in the
United States, and claims that because of the evidence of
revenues that the judge permitted to be presented to the jury,
he was inappropriately forced to pay high statutory damages.
To determine whether evidence of the amount of defendant's
gross revenues was properly admitted, ordinarily we first
determine the appropriate standard of review. As stated above,
where a party does not contemporaneously object to an
evidentiary ruling, that party must demonstrate that the
District Court committed "plain error."[fn50] However, even if
a proper objection was asserted in a timely fashion, we accord
"considerable deference to a district court's decision to admit . . .
evidence" pursuant to Federal Rule of Evidence
403(b)[*224] [fn51] and will reverse a district court's
evidentiary ruling only if it constitutes an abuse of
discretion.[fn52] When we review a district court's "judgment
regarding the admissibility of a particular piece of evidence
under [Federal Rule of Evidence] 403, we generally maximize its
probative [***10] value and minimize its prejudicial effect."[fn53]
Here, however, we need not reach the question of whether
Kirtsaeng's counsel properly objected to the admission of
evidence regarding his gross revenues because we hold that
admission of the evidence by the District Court was not error
or an abuse of discretion, and certainly not plain error.
[4] At trial, the jury awarded $75,000 in statutory damages per
copyrighted work for Kirtsaeng's willful infringement of eight
works. Under the relevant statutory provision,
17 U.S.C. § 504(c), see note 10, ante, the jury could
have awarded damages of up to $150,000 per copyrighted work.
Because abundant evidence was available to support the jury's
finding of willfulness, the admission of information about
Kirtsaeng's revenues was not prejudicial — that is, the
jury could have imposed the same amount of damages without
knowledge of Kirtsaeng's revenues. For example, the books in
question clearly stated the following:
This book is authorized for sale [in a foreign region]
only and may not be exported out of this region.
Exportation from or importation of this book to
another region [**1651] without the Publisher's authorization,
is illegal and is a violation of the Publisher's
rights. The Publisher may take legal action to enforce
its rights. The Publisher may recover damages and
costs, including but not limited to lost profits and
attorney's fees, in the event legal action is
In these circumstances, it does not seem anomalous or
extraordinary that the jury made the findings it did, and we
see no reason to conclude that the District Court's decision
was improper under Rule 403(b).
To summarize, we hold that (1) the first sale doctrine does not
apply to copies manufactured outside of the United States; (2)
the District Court did not err in declining to instruct the
jury regarding the unsettled state of the first sale doctrine;
and (3) the District Court did not err in admitting evidence of
Kirtsaeng's gross revenues.
[fn1] The first sale doctrine is codified at
17 U.S.C. § 109(a) which reads, in relevant part:
Notwithstanding the provisions of section 106(3) [of
the Copyright Act], the owner of a particular copy . . .
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. . . .
As defined in the Copyright Act, a "cop[y]" is the "material
object[] . . . from which [a] work can be perceived,
reproduced, or otherwise communicated." Id. § 101.
As one commentator has explained, "the physical object `copy'
is distinct from the incorporeal `work of authorship' that the
copy embodies." Jane C. Ginsburg, Essay: From Having Copies
to Experiencing Works: The Development of an Access Right in
U.S. Copyright Law, 50 J. Copyright Soc'y U.S.A. 113, 126
(2003); see also 17 U.S.C. § 202 (distinguishing
the copy from the work).
[fn2] See Bobbs-Merrill Co. v. Straus, 210 U.S. 339,
350, 28 S.Ct. 722, 52 L.Ed. 1086 (1908).
[fn3] See Copyright Act of 1909, ch. 320, § 41,
35 Stat. 1075, 1084 (1909); Copyright Act of 1947, ch.
391, § 27, 61 Stat. 652, 660 (1947); Copyright Act of 1976, ch.
1, § 109, 90 Stat. 2541, 2548 (codified at
17 U.S.C. § 109(a)) (1976).
[fn4] 17 U.S.C. § 602(a)(1).
[fn5] District courts within our Circuit have addressed this
issue. See Pearson Educ, Inc. v. Liu,
656 F.Supp.2d 407, 416 (S.D.N.Y. 2009) (Holwell, J.) (holding "dubitante" that
§ 109(a) does not apply to foreign manufactured goods
imported into the United States); Pearson Educ, Inc. v.
Liao, No. 07-Civ-2423 (SHS), [2008 BL 106783], 2008 WL 2073491, at *3-4
(S.D.N.Y. May13, 2008) (Stein, J.) (holding that § 109(a)
does not apply to foreign manufactured goods imported into the
United States). In addition, the Ninth Circuit recently held
that § 109(a) does not apply to foreign-manufactured goods
unless they were previously imported and sold in the United
States with the copyright holder's permission. See Omega
S.A. v. Costco Wholesale Corp., 541 F.3d 982 (9th
Cir. 2008), aff'd by an evenly divided Court, Costco
Wholesale Corp. v. Omega, S.A., ___ U.S. ___,
131 S.Ct. 565, 178 L.Ed.2d 470 (2010).
[fn6] As a standard practice, Wiley obtains from its authors
the assignment of U.S. and foreign copyrights of reproduction
and distribution. The assignment of these copyrights allows
Wiley to produce and distribute its works in both domestic and
[fn7] 17 U.S.C. § 501(a) provides, in relevant part:
Anyone who violates any of the exclusive rights of the
copyright owner as provided by sections 106 through
122 [of the Copyright Act] or of the author as
provided in section 106A(a), or who imports copies . . .
into the United States in violation of section 602,
is an infringer of the copyright or right of the
author, as the case may be.
17 U.S.C. § 501(a).
Wiley holds registered United States copyrights for the
American editions of the works at issue in this case. Although
the foreign editions probably would not be protected by United
States copyright law if infringement occurred abroad, see
Robert Stigwood Grp. Ltd. v. O'Reilly,
530 F.2d 1096 (2d Cir. 1976), the sale of the foreign editions in the
United States allegedly infringes the U.S. copyrights held by
Wiley on its American editions.
[fn8] Wiley later abandoned its trademark and unfair
competition claims.
[fn9] 17 U.S.C. § 502(a) provides, in relevant part:
Any court having jurisdiction of a civil action
arising under this title may, subject to the
provisions of section 1498 of title 28, grant
temporary and final injunctions on such terms as it
may deem reasonable to prevent or restrain
infringement of a copyright.
17 U.S.C. § 502(a).
[fn10] 17 U.S.C. § 504(c)(1)-(2) provides, in relevant
Except as provided by clause (2) of this subsection,
the copyright owner may elect, at anytime before final
judgment is rendered, to recover, instead of actual
damages and profits, an award of statutory damages for
all infringements involved in the action, with respect
to any one work, for which any one infringer is liable
individually, or for which any two or more infringers
are liable jointly and severally, in a sum of not less
than $750 or more than $30,000 as the court considers
just. . . . In a case where the copyright owner
sustains the burden of proving, and the court finds,
that infringement was committed willfully, the court
in its discretion may increase the award of statutory'
damages to a sum of not more than $150,000.
We have recently observed that "the total number of awards of
statutory damages that a plaintiff may recover in any given
action depends on the number of works that are infringed . . .
regardless of the number of infringements of those works."
WB Music Corp. v. RTV Commc'n Grp., Inc.,
445 F.3d 538, 540 (2d Cir. 2006) (internal quotation marks
[fn11] See John Wiley & Sons, Inc. v. Kirtsaeng,
No. 08 Civ. 7834, [93 U.S.P.Q.2D 1432], 2009 WL 3364037, at *9 (S.D.N.Y. Oct. 19,
2009) (DCP).
[fn12] Perry v. Dowling, 95 F.3d 231, 235 (2d
Cir. 1996) (citing White v. Shalala, 7 F.3d 296, 299
(2d Cir. 1993)).
[fn13] In 2008, Congress amended the statute, resulting in the
redesignation of what had been § 602(a) as § 602(a)(1).
Act of October 13, 2008, Pub.L. 110-403, Title I,
§ 105(b)-(c)(1), 122 Stat. 4259.
[fn14] The first sale doctrine was first endorsed by the
Supreme Court in the landmark 1908 case of Bobbs-Merrill
Co. v. Straus, 210 U.S. 339, 350-51, 28 S.Ct. 722,
52 L.Ed. 1086 (1908). In that case, the publishers of The
Castaway, a popular novel, inserted the following notice
after the title page of the book: "The price of this book at
retail is $1 net. No dealer is licensed to sell it at a less
[sic] price, and a sale at a less [sic] price will be treated
as an infringement of the copyright." Id. at 341,
28 S.Ct. 722. The publishers subsequently sued a department store
that had purchased copies of the books at wholesale and sold
them each at retail for eighty-nine cents. The Supreme Court
The purchaser of a book, once sold by authority of the
owner of the copyright, may sell it again, although he
could not publish a new edition of it.
In our view the copyright statutes, while protecting
the owner of the copyright in his right to multiply
and sell his production, do not create the right to
impose, by notice, such as is disclosed in this case,
a limitation at which the book shall be sold at retail
by future purchasers, with whom there is no privity of
Id. at 350, 28 S.Ct. 722.
The Supreme Court made clear that the matter before it "was
purely a question of statutory construction." Id. The
relevant statute provided that copyright owners had "the sole
liberty of printing, reprinting, publishing, completing,
copying, executing, finishing, and vending "their
copyrighted works. Copyright Act of 1891, § 4952,
26 Stat. 1107 (emphasis added). Congress promptly codified the holding
in Bobbs-Merrill — which became known as the
first sale doctrine — in the
1909 Copyright Act. Copyright Act of 1909, ch. 320, § 41, 35 Stat. 1075, 1084
(1909) ("[N]othing in this Act shall he deemed to forbid,
prevent, or restrict the transfer of any copy of a copyrighted
work the possession of which has been lawfully obtained.").
The current version of the first sale doctrine — as
codified in § 109(a) — differs in two noticeable
respects from the version Congress first passed in 1909. First,
under current copyright law, the exclusive right to "vend"
granted to copyright holders has been replaced by the exclusive
right to "distribute." See § 106(3). However, the
Supreme Court has indicated that, at least for purposes of the
first sale doctrine, nothing of consequence turns on this
alteration. See Quality King v. L'anza Research Int'l,
523 U.S. 135, 152, 118 S.Ct. 1125, 140 L.Ed.2d 254 (1998). The
second change is that the first sale doctrine no longer applies
to "any copy of a copyrighted work," but rather, only to any
copy "lawfully made under this title."
[fn15] 523 U.S. 135, 118 S.Ct. 1125,
140 L.Ed.2d 254 (1998).
[fn16] Id. at 140, 118 S.Ct. 1125 (quotation marks
[fn17] Id. at 138, 118 S.Ct. 1125.
[fn18] Id. at 145, 118 S.Ct. 1125.
[fn19] Id. at 154, 118 S.Ct. 1125 (Ginsburg, J.,
[fn20] Id. at 148-49, 118 S.Ct. 1125 (majority
[fn21] Id. at 148, 118 S.Ct. 1125.
[fn22] Id.
[fn23] 541 F.3d 982 (9th Cir. 2008).
[fn24] Id. at 990.
[fn25] Costco Wholesale Corp. v. Omega, S.A.,
___ U.S. ___, 131 S.Ct. 565, 178 L.Ed.2d 470 (2010).
[fn26] Universal Church v. Gehzjer,
463 F.3d 218, 223 (2d Cir. 2006).
[fn27] Again, § (09(a), in relevant pari, provides:
dispose of the possession of thai copy. . . .
[fn28] A simple and authoritative dictionary definition of
"made" s "artificially produced by a manufacturing process."
Webster's Third New International Dictionary 1356
[fn29] Kucana v. Holder, ___ U.S. ___, 130 S.Ct. 827,
835, 175 L.Ed.2d 694 (2010).
[fn30] Brief for the United States as Amici Curiae in
Support of Respondent, at 5, Costco Wholesale Corp. v.
Omega, S.A., ___ U.S. ___, 131 S.Ct. 565, 178 L.Ed.2d 470
(2010) (No. 08 1423).
[fn31] The Supreme Court has previously defined "under" to mean
`subject to" and "governed by." Ardestani v. INS,
502 U.S. 129, 135, 112 S.Ct. 515, 116 L.lid.2d 496 (1991) (defining
the meaning of the word "under" in the Equal Access to Justice
[fn32] See Morrison v. Nat'I Austl. Bank
Ltd., ___ U.S. ___, 130 S.Ct. 2869, 2877, 177 L.Ed.2d 535
(2010) ("It is a longstanding principle of American law that
legislation of Congress, unless a contrary intent appears, is
meant to apply only within the territorial jurisdiction of the
United States." (quotation marks omitted)).
[fn33] See, e.g., Update Art, Inc. v. Modiin Pub.,
Ltd., 843 F.2d 67, 73 (2d Cir. 1988) ("It is well
established that copyright laws generally do not have
extraterritorial application.").
[fn34] 17 U.S.C. § 104(b)(2) (emphasis added). Quality
King also explained how certain provisions of Title 17
might apply to activity occurring abroad. 523 U.S. at 145
n. 14, 118 S.Ct. 1125 ("[T]he owner of goods lawfully made under
the Act is entitled to the protection of the first sale
doctrine in an action in a United States court even if the
first sale occurred abroad. Such protection does not require
the extraterritorial application of the Act any more than
§ 602(a)'s `acquired abroad' language does.").
[fn35] At oral argument before the Supreme Court in
Costco, the United States tried to argue that its
interpretation of § 109(a) (which, again, is also Wiley's)
is not perfectly interchangeable with "lawfully made in the
United States," "because at least in theory, it would be
possible for the creation of a copy to entail a violation of
environmental laws, workplace safety laws, minimum wage laws,
et cetera." Transcript of Oral Argument at 38, Costco
131 S.Ct. 565, 178 L.Ed.2d 470 (2010) (No. 08-1423). This argument,
while clever, is unpersuasive.
[fn36] 17 U.S.C. § 1006(a)(1)(A).
[fn37] See Digital Audio Recording Technology (DART)
Factsheet on Filing Claims for Royalty Distribution, U.S.
Copyright Office, http://www.copyright.gov/carp/dartfact.html
(last visited June 23, 2011).
[fn38] Kirtsaeng would prevail if we adopted either of the
latter two definitions, but these definitions, like Wiley's,
are at best merely consistent with a textual reading of
§ 109(a). To further complicate the matter, both of these
possible formulations are explicitly employed elsewhere in
Title 17. See 17 U.S.C. § 401 ("Whenever a
work protected under this title is published in the
United States or elsewhere by authority of the copyright owner,
a notice of copyright as provided by this section may be placed
on publicly distributed copies from which the work can be
visually perceived. . . ." (emphasis added));
17 U.S.C. § 602(b) ("In a case where the making of the copies and
phonorecords would have constituted an infringement of
copyright if this title had been applicable, their
importation is prohibited." (emphasis added)). Once again, if
Congress had intended § 109(a) to reflect either one of
those formulations, it could have employed their language with
[fn39] See Davis v. Mich. Dep't of Treasury,
489 U.S. 803, 809, 109 S.Ct. 1500, 103 L.Ed.2d 891 (1989) ("It
is a fundamental canon of statutory construction that the words
of a statute must be read in their context and with a view to
their place in the overall statutory scheme.").
[fn40] Under Kirtsaeng's definition, § 602(a)(1) would only
permit U.S. copyright holders to control the importation of
copies of their works into the United States when (i) the
individual importing the copy of the work does not legally
"own" the copy in question, or (ii) the work in question was
produced in a country where United States copyright is not
protected. While these remaining categories would ensure that
§ 602(a)(1) would not be rendered useless, copyright
holders would have little control over the importation of
copies of their works under Kirtsaeng's theory. Specifically in
order to exclude certain copies from entering the United
States, copyright holders would be required either to (i) not
sell their goods, or (ii) produce them in countries that may
not honor their copyright in the first place.
[fn41] 523 U.S. at 147, 118 S.Ct. 1125.
[fn42] This interpretation seems to be confirmed by language
later in the opinion explaining that § 602(a) has a broader
scope than § 109(a) "because it encompasses copies that are
not subject to the first sale doctrine — e.g.,
copies that are lawfully made under the law of another
country[.]" Id. at 148, 118 S.Ct. 1125.
[fn43] We do note, however, that while all the books in
question were printed abroad, they all bore American copyright
notices. The same was true of the watches at issue in
Costco. See Omega S.A. v. Costco Wholesale
Corp., 541 F.3d 982, 983 (9th Cir. 2008). One difference
between the two cases is that at least two of the foreign
editions at issue in the instant case contain explicit warnings
invoking Title 17. For example, the back cover of
Fundamentals of Heat and Mass Transfer (Sixth Edition)
states: "No part of this publication may be reproduced, stored
in a retrieval system, or transmitted in any form or by any
scanning, or otherwise, except as permitted under Section 107 or
108 of the
1976 United States Copyright Act. . . ." Joint App'x at 387. Since this book was "[p]rinted in Asia," and
prohibited from ever being imported into the United States, we
are admittedly somewhat puzzled as to why Title 17 is invoked.
Nevertheless, to the extent Title 17 governs at all, we have no
reason to conclude that every provision, including
§ 109(a), applies to the manufacture of worksmade
[fn44] Kirtsaeng argues that this holding is undesirable as a
matter of public policy because it may permit a plaintiff to
vitiate the first sale doctrine by "manufactur[ing] all
of its volumes overseas only to then ship them into the U.S.
for domestic sales." Defendant-Appellant's Br. at 21. Phrased
differently, it is argued that any such decision may allow a
copyright holder to completely control the resale of its
product in the United States by producing its goods abroad and
then immediately importing them for initial distribution. In
this sense, the copyright holder would arguably enjoy the
proverbial "best of both worlds" because, in theory, the
consumer could not rely on the first sale doctrine to resell
the imported copy. In other words, the copyright holder would
have an incentive to "outsource" publication to foreign
locations to circumvent the availability of the first sale
doctrine as a defense for consumers wishing to resell their
copies in the domestic market. The result might be that
American manufacturing would contract along with the
protections of the first sale doctrine. Kirtsaeng argues that
this could not possibly have been Congress's intent. We
acknowledge the force of this concern, but it does not affect
or alter our interpretation of the Copyright Act.
[fn45] United States v. Amato, 540 F.3d 153, 164 (2d
[fn46] Jarvis v. Ford Motor Co. . 283 F.3d 33, 57 (2d
Cir. 2002) (quotation marks omitted); see also
Fed.R.Civ.P. .51.
[fn47] Lavin-McEleney v. Marist Coll., 239 F.3d 476,
483 (2d Cir. 2001).
[fn48] See N.A.S. Import, Corp. v. Chenson Enters.,
Inc., 968 F.2d 250. 252 (2d Cir. 1992) (holding that
infringement is "willful" for the purpose of awarding enhanced
statutory damages only if the defendant had "knowledge that
[his] actions constitute[d] an infringement" or if the
defendant exhibited "reckless disregard of the copyright
holder's rights" (quotation marks omitted)); cf. LNC Invs.,
Inc. v. First Fid. Bank, N.A., 173 F.3d 454, 468
(2d Cir. 1999) (holding that the jury was properly instructed
to consider the unsettled state of the law in determining
whether the defendants' actions were prudent).
[fn49] But cf., e.g., Hearst Corp. v. Stark,
639 F.Supp. 970, 980 (N.D.Cal. 1986) (holding that there could be no
finding of willful copyright infringement as a matter of law
where the wrongfulness of the defendant's actions depended on
an unsettled question of law).
[fn50] Fed.R.Civ.P. 51(d)(2).
[fn51] SEC v. DiBella, 587 F.3d 553, 571 (2d Cir. 2009)
(quotation marks omitted). Rule 403(b) provides: "Although
relevant, evidence may be excluded if its probative value is
substantially outweighed by the danger of unfair prejudice,
confusion of the issues, or misleading the jury, or by
considerations of undue delay, waste of time, or needless
presentation of cumulative evidence." Fed.R.Evid. 403(b).
[fn52] DiBella, 587 F.3d at 571; cf. Sims v.
Blot, 534 F.3d 117, 132 (2d Cir. 2008) (explaining the
term of art "abuse of discretion").
[fn53] United States v. Downing, 297 F.3d 52,
59 (2d Cir. 2002) (quotation marks omitted).
J. GARVAN MURTHA, District Judge, dissenting:
As noted by the majority, the application of the first sale
doctrine when a copy is manufactured outside the United States
is an issue of first impression in this Circuit. The Supreme
Court has recently considered the issue but unfortunately
provided no specific guidance. See Costco Wholesale Corp.
v. Omega, S.A., ___ U.S. ___,
[*225] 131 S.Ct. 565, 178 L.Ed.2d 470 (2010), affg by an
equally divided court 541 F.3d 982 (9th Cir. 2008) (holding
the first sale doctrine does not apply to foreign manufactured
copies unless previously imported and sold with the copyright
holder's authorization). Unlike the majority, I conclude the
first sale defense should apply to a copy of a work that enjoys
United States copyright protection wherever manufactured.
The Copyright Act sections that are pertinent to this appeal
— 17 U.S.C. §§ 106(3), 109(a), and 602(a)(1) —
are set out in the opinion of the majority. The distribution
right of § 106(3) primarily protects a copyright owner's
ability to control the terms on which her work enters the
market. The first sale doctrine of § 109(a) limits the
scope of this distribution right. Finally, § 602(a)(1)
addresses [***11] the extent to which the distribution right allows a
copyright owner to also control importation of copies of her
The Supreme Court has held a copyright owner's § 602(a)
right to control the importation of copies of her work is
derivative of § 106(3)'s distribution right, which is
subject to the first sale doctrine. Quality King Distrib.,
Inc. v. L'anza Research Int'l Inc., 523 U.S. 135, 149,
118 S.Ct. 1125, 140 L.Ed.2d 254 (1998). The Court noted "the text
of § 602(a) itself unambiguously states that the prohibited
importation is an infringement of the exclusive distribution
right `under section 106, actionable under section 501.'"
Id., Because the rights granted in § 106(3) are
"subject to sections 107 through 122," the copyright owner's
power to limit importation is qualified by the first sale
doctrine of § 109(a). Id. at 144, 118 S.Ct. 1125.
The issue is whether this holding can be extended to copies
manufactured outside the United States. The Quality
King Court held the first sale doctrine applies to
imported copies that were made in the United States. Here, the
district court held — and the majority affirms —
the doctrine does not apply to imported copies that were made
abroad because § 109(a) applies only to copies that are
"lawfully made under this title," and that means physically
manufactured in the United States. See John Wiley
& Sons, Inc. v. Kirtsaeng, No. 08 Civ 7834, [2009 BL 224971], 2009 WL 3364037,
at *9 (S.D.N.Y. Oct. 19, 2009). The court's decision is based
on the following dicta in Quality King:
Even in the absence of a market allocation agreement
between, for example, a publisher of the United States
edition and a publisher of the British edition of the
same work, each such publisher could make lawful
copies. If the author of the work gave the exclusive
United States distribution rights-enforceable under
the Act-to the publisher of the United States edition
and the exclusive British distribution rights to the
publisher of the British edition, however, presumably
only those made by the publisher of the United States
edition would be `lawfully made under this title'
market with a defense to an action under § 602(a). . . .
523 U.S. at 148, 118 S.Ct. 1125 (footnote omitted).
I respectfully disagree with the court's analysis. To apply,
§ 109(a) requires (1) the person claiming protection be the
owner of the copy, and (2) the copy was "lawfully made under
this title." 17 U.S.C. § 109(a). Courts have split over the
meaning of "lawfully made under this title," with some holding
[**1652] it means "legally manufactured . . . within the United States,"
CBS v. Scorpio Music Distrib., 569 F.Supp. 47, 49
(E.D.Pa. 1983), aff'd
[*226] without opinion, 738 F.2d 424 (3d Cir. 1984); see
also Omega S.A. v. Costco Wholesale Corp., 541 F.3d 982,
987 (9th Cir. 2008), aff'd by an equally divided court
___ U.S. ___, 131 S.Ct. 565, 178 L.Ed.2d 470 (2010), and others
"confess[ing] some uneasiness with this construction" and
suggesting "lawfully made under this title" refers not to the
place a copy is manufactured but to the lawfulness of its
manufacture as a function of U.S. copyright law. Sebastian
Int'l Inc. v. Consumer Contacts (PTY) Ltd.,
847 F.2d 1093, 1098 n. 1 (3rd Cir. 1988).
The statutory text does not refer to a place of manufacture: It
focuses on whether a particular copy was manufactured lawfully
under title 17 of the United States Code.
17 U.S.C. § 109(a). The United States law of copyrights [***12] is contained in
title 17. Accordingly, the lawfulness of the manufacture of a
particular copy should be judged by U.S. copyright law.
Pearson Educ. v. Liu, 656 F.Supp.2d 407, 412
(S.D.N.Y. 2009) (John Wiley & Sons, Inc. was a plaintiff in
this action as well). A U.S. copyright owner may make her own
copies or authorize another to do so. 17 U.S.C. § 106(1).
Thus, regardless of place of manufacture, a copy authorized by
the U.S. rightsholder is lawful under U.S. copyright law. Here,
Wiley, the U.S. copyright holder, authorized its subsidiary to
manufacture the copies abroad, which were purchased and then
This interpretation of "lawfully made" is supported by the
language of the Copyright Act as a whole. For example, Congress
used the phrase "under this title" in multiple sections of the
Act to describe the scope of rights created by the Act.
See, e.g., 17 U.S.C. § 104(a) (providing certain
works, "while unpublished, are subject to protection under this
title without regard to the nationality or domicile of the
author"); id. § 105 (providing "copyright
protection under this title is not available for any work" of
the U.S. government); id. § 106 (providing "the
owner of copyright under this title has the exclusive rights
to. . . ."). However, "[w]hen Congress considered the place of
manufacture to be important, . . . the statutory language
clearly expresses that concern." Sebastian,
847 F.2d at 1098 n. 1. For example, § 601(a), the "manufacturing
requirement," provides:
Prior to July 1, 1986, and except as provided by
subsection (b), the importation into or public
distribution in the United States of copies of a work
consisting preponderantly of nondramatic literary
material that is in the English language and is
protected under this title is prohibited
unless the portions consisting of such material have
been manufactured in the United States or
17 U.S.C. § 601(a)(1) (emphasis added). Also, as the
majority points out, § 104(b)(2) provides "[t]he works
specified by sections 102 and 103, when published, are subject
to protection under this title if the work is first published
in the United States or in a foreign nation . . . ."
17 U.S.C. § 104(b)(2) (emphasis added). If Congress intended
§ 109(a) to apply only to copies manufactured in the United
States, it could have stated "lawfully manufactured in the
United States under this title." As Congress did not include
"manufactured in the United States" in § 109(a), though it
was clearly capable of doing so as demonstrated by
§ 601(a), the omission supports the conclusion that Congress did
not intend the language "lawfully manufactured under this
title" to limit application of § 109(a) to only copies
[*227] in the United States.[fn1]
As noted in the majority opinion, supra note 14, the first sale
doctrine originated in Bobbs-Merrill Co. v. Straus,
210 U.S. 339, 28 S.Ct. 722, 52 L.Ed. 1086 (1908). There the
Supreme Court held defendantretailer's sales of a copyrighted
book for less than the price noted on the copyright page was
not a copyright violation. Id. at 341, 28 S.Ct. 722.
"The purchaser of a book, once sold by authority of the owner
of the copyright, may sell it again, although he could not
publish a new edition of it." Bobbs-Merrill,
210 U.S. at 350, 28 S.Ct. 722. Once the copyright holder has controlled
the terms on which the work enters the market, i.e., the
purpose of the distribution right, "the policy favoring a
copyright monopoly [***13] for authors gives way to the policy opposing
restraints of trade and restraints on alienation."
Pearson, 656 F.Supp.2d at 410 (citation and quotation
marks omitted). Accordingly, the Bobbs-Merrill Court
held the copyright owner did [**1653] not have the right to control the
terms of subsequent sales. 210 U.S. at 351, 28 S.Ct. 722.
The common law policy against restraints on trade and
alienation is not limited by the place of manufacture.
Pearson, 656 F.Supp.2d at 413. Under the 1909
(codifying the Bobbs-Merrill holding) and 1947
Copyright Acts, the first sale doctrine applied to
"any copy of a copyrighted work the possession of
which has been lawfully obtained'' Pub.L. No. 60-349,
35 Stat. 1075, 1084 (1909); Pub.L. No. 80-281, 61 Stat. 652, 660
(1947) (emphasis added). The Supreme Court noted "[t]here is no
reason to assume Congress intended either § 109(a) or the
earlier codifications of the doctrine to limit its broad
scope." Quality King, 523 U.S. at 152, 118 S.Ct. 1125.
The changed wording in the current version of § 109(a)
— "lawfully made under this title" — from the prior
versions — "possession of which has been lawfully
obtained" — should likewise not be presumed to do so.
Economic justifications also support applicability of the first
sale doctrine to foreign made copies. Granting a copyright
holder unlimited power to control all commercial activities
involving copies of her work would create high transaction
costs and lead to uncertainty in the secondary market. An owner
first would have to determine the origin of the copy —
either domestic or foreign — before she could sell it. If
it were foreign made and the first sale doctrine does not apply
to such copies, she would need to receive permission from the
copyright holder.[fn2] See 17 U.S.C. § 106(3).
Such a result would provide greater copyright protection to
copies manufactured abroad than those manufactured
domestically: Once a domestic copy has been sold, no matter
where the sale
[*228] occurred, the copyright holder's right to control its
distribution is exhausted. I do not believe Congress intended
to provide an incentive for U.S. copyright holders to
manufacture copies of their work abroad.
The Ninth Circuit has attempted to circumvent this perpetual
right when a copy is made abroad by holding the first sale
doctrine can apply to copies made outside the United States but
only after there has been one authorized sale here.
Denbicare U.S.A. Inc. v. Toys R Us, Inc.,
84 F.3d 1143, 1150 (9th Cir. 1996). This precedent carried over into the
reasoning in Omega S.A., 541 F.3d at 986-90. The
Supreme Court, however, provided no guidance as to its views on
the Ninth Circuit's imperfect solution, which is judicially
created. This interpretation finds no support in the statutory
text and is in direct conflict with the portion of the Supreme
Court's Quality King decision which noted that where a
sale occurs is irrelevant for first sale purposes. See
523 U.S. at 145, 118 S.Ct. 1125.
Supporters of limiting the application of the first sale
doctrine to domestically manufactured copies rely on the
argument that applying the doctrine to foreign made copies
would render § 602(a) "virtually meaningless." (Appellee's
Br. at 15-17.) However, § 602(a) will always apply to
copies of a work that have not been sold or are piratical
copies. It also applies to copies of a work not lawfully
manufactured under [***14] title 17 but lawfully manufactured under
some other source of law, as in the Quality King
dicta, and to copies not in the possession of the "owner,"
e.g., a bailee, licensee, consignee or one whose possession of
the copy was unlawful. Quality King,
523 U.S. at 147-48, 118 S.Ct. 1125. Further, § 602(a) itself states
unauthorized importation is an infringement of the exclusive
distribution right of § 106, which as noted above is
subject to the first sale doctrine of § 109(a).
Nothing in § 109(a) or the history, purposes, and policies
of the first sale doctrine limits it to copies of a work
manufactured in the United States. That leaves the question
whether the Quality King dicta "sp[eaks] directly to
whether the first sale doctrine applies to copies manufactured
abroad." Pearson, 656 F.Supp.2d at 414. That dicta,
however, makes no reference to the place of manufacture,
Quality King, 523 U.S. at 148, 118 S.Ct. 1125, and
therefore does not speak directly to the issue of applicability
of the doctrine to foreign made copies.[fn3] Further, the dicta
states the first sale [**1654] doctrine would not provide a defense
to the publisher who sold copies in the American
market. Quality King, 523 U.S. at 148, 118 S.Ct. 1125.
Of course, because in that situation there has been no first
sale unlike here, where the issue is whether the first sale
doctrine is available as a defense to the subsequent purchaser.
In Quality King, Justice Ginsburg, in a concurrence
joined by no other justice, noted: "I join the Court's opinion
recognizing that we do not today resolve cases in which the
allegedly infringing imports were manufactured abroad."
Quality King, 523 U.S. at 154, 118 S.Ct. 1125
(Ginsburg, J., concurring). That issue, however, was squarely
before the Supreme Court in Omega and four justices
presumably did not agree the Quality King dicta
directly addresses it or constitutes the Court's current view.
In light of the above analysis, I agree with the majority
[*229] that it is a "close call," supra p. 221, and I would
conclude the first sale doctrine applies to foreign
manufactured copies.
[fn1] Congress also demonstrated it could differentiate based
on the place a copy was "acquired," see § 602(a)
(applying to copies "acquired outside the United States"),
further supporting the conclusion that its omission of a phrase
indicating the place of manufacture was not accidental.
[fn2] Wiley argues its interpretation of § 109(a) would not
lead to perpetual control over imported works because once the
U.S. copyright owner imports its copies into the United States,
they are lawfully within the United States and, as § 602
applies only to "importations without the authority of the
copyright owner," any further sales would not be covered.
Appellee's Br. at 24-25. This argument is not persuasive
because the copyright holder seeking to prevent its copies from
entering the United States retains exclusive control no matter
how many foreign sales may have been made. Wiley's rule allows
it to protect the disparity in its pricing structure despite
free market forces. Indeed such a rule, by differentiating
based on place of manufacture, would encourage the
manufacturing of copies abroad to the detriment of American
[fn3] The Amici argue, based on the discussion at oral argument
of Quality King, the Court was actually discussing the
situation where the copy is made — presumably abroad, but
could be domestically — by someone other than the U.S.
copyright holder, for example, a British copyright holder who
manufactures under British law. Entm't Merch. Assoc. Amici Br.
at 10-12.
Kirtsaeng v. John Wiley & Sons, 133 S. Ct. 1351, 185 L. Ed. 2d 392, 106 U.S.P.Q.2d 1001, 2013 ILRC 1487, 35 ILRD 648, 35 ITRD 1049, 41 Med. L. Rptr. 1441, 81 U.S.L.W. 4167 (2013)
09-04896 (2d Cir.)