- The Washington Times - Friday, October 26, 2012

All eyes will be on Justice Elena Kagan on Monday, when the Supreme Court considers a copyright case that some fear could prevent people from reselling certain products they own such as the iPhone, as she may have the deciding vote.

In a case that tests the boundaries of copyright law, merchants and consumers say they have the right to resell what they own, but content creators argue they should be protected from shady deals that undercut retail prices.

The case, Kirtsaeng v. John Wiley & Sons, calls into question the first-sale doctrine, a rule in copyright law that allows the owner of any particular product to resell it. The principle behind it is that the manufacturer controls only the original sale of each copy. But the Supreme Court is considering an exception for products made overseas.

That means you could be stuck with everything from your outdated smartphone to the beat-up clunker you drive to the raggedy clothes you’ve out grown, if it’s made in China, or India, or anywhere else.

Most of the Supreme Court justices have made up their minds on similar cases in the past, and are split on this issue, experts say, but it will be the first such case Justice Kagan, who was nominated by President Obama, gets to consider as a member of the court.

“Most likely her vote will be the one that is one the winning side,” said Ronald Mann, professor of law at Columbia Law School. “We’ll know more after the arguments. The justices will ask questions, and often the questions will give you insight into what they think about it.”

Both sides will also be watching the other justices “to see if they are consistent with the past,” he said.

The case revolves around Thailand native Supap Kirtsaeng, who moved to the U.S. for college and found that it was cheaper to buy textbooks back home than here. So he plotted to have his family buy the less expensive textbooks and ship them tot he U.S., where he made about $900,000 on eBay undercutting the publisher’s prices here.

The Supreme Court will now review the case, after a lower court ordered him to pay John Wiley & Sons $600,000 for the scheme.

The outcome could be devastating.

Including this exception to the first-sale doctrine would hurt resellers – whether it be online retailers like eBay and Craigslist, thrift shops like Goodwill and Salvation Army, or regular people who want to hold a garage sale – because they would be required to get the manufacturer’s permission before they resell the products they own, and the manufacturer could potentially charge a portion of the resale.

Overstock.com, an online retailer that sells products at below-wholesale prices, has joined the Owners’ Rights Initiative in supporting the first-sale doctrine. President Jonathan Johnson said in an interview it’s not fair to make stores figure out which products can be resold and which products need permission to be resold.

“They will make retailers be the policemen for manufacturers,” Mr. Johnson said. “Of course, we’ll have to police it, unless we’re willing to spend our life mired in litigation. Retailers would be policing their own sales.”

It could also lead to higher prices for consumers, because the manufacturers would face less competition from the secondary market.

“The real loser is the American consumer,” Mr. Johnson said. He gave the scenario of a luxury watch that is sold at retail price in the U.S. for $300. “We can go buy that same watch in southeast Asia for $100, bring it back to the customers here and we won’t sell it for $300, we’ll sell it for a lot less.”

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