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Not to mention, creating an exception to the first-sale doctrine could encourage U.S. manufacturers to close up shop and build their products in other countries – at a time when President Obama continues to pound Republican challenger Mitt Romney for his time with Bain Capital, a company that sent jobs overseas.
But manufacturers complain that resellers are taking advantage of them and say there needs to be an exception to the first-sale doctrine. Particularly in the book publishing, electronics, and movie industries, the content creators say some scammers will buy their products from other countries at lower rates, then bring them back to the U.S. for resale, and undercut their prices.
The Motion Picture Association of America and the Recording Industry Association of America filed a joint brief with the Supreme Court in favor of an exception to the first-sale doctrine.
“Copyright protection is essential to the health of the motion picture and music industries and the U.S. economy as a whole,” they wrote. “Like the sale of ‘pirated’ copies, unauthorized importation of copies of protected works made overseas and intended only for sale in a foreign market can undercut or eliminate the economic benefit that Congress intended to provide under the Copyright Act.”
The Supreme Court, which will hear arguments on Monday, has repeatedly, but unsuccessfully dealt with this issue before, and is looking to put it to rest once and for all.
“It keeps coming back to the Supreme Court and they haven’t resolved it,” Mr. Mann said.
In 2010, the court considered a similar case, Omega vs. Costco, after Costco was sued for reselling Omega’s luxury watches in the U.S. without the Switzerland-based company’s authorization.
Costco, which purchased the watches through a long line of distributors, argued that the first-sale doctrine allowed them to do so, because the watchmaker had already made the original sale.
The trial court sided with Costco, but the Ninth Circuit Court of Appeals reversed the ruling on the grounds that the first-sale doctrine only applies to products made in the U.S. That decision applies only to the west coast states that are located within the court’s reach.
The Supreme Court then agreed to hear Omega vs. Costco, but newly-appointed Justice Kagan had to recuse herself from the case, and it resulted in a 4-4 tie.
Shortly before being nominated for the Supreme Court, Justice Kagan participated in the same case as U.S. solicitor general, filing a brief for the Obama administration in favor of Omega and against Costco.
This time around, she faces no conflict of interest in Kirtsaeng v. John Wiley & Sons and figures to be the deciding vote.
Overstock’s Mr. Johnson agreed.
“She is the swing vote in this case,” Mr. Johnson said. “So that’s why a lot of people think this case is a jump ball. It just depends on which way Justice Kagan goes.”
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By Andrew P. Napolitano
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