A landmark copyright case in the US could see businesses manufacturing offshore.
Imagine you're on holiday in the US. You buy a book (yes, the old-fashioned paper kind) to read while you’re there. It’s a great read and when you get home you sell it on TradeMe or give it to friend. It’s something many of us will have done. But if you do sell it or give it away, are you breaching New Zealand’s Copyright Act? The US Supreme Court is considering the same question in the case of Kirtsaeng v John Wiley & Sons.
The case is about the first sale doctrine under the US equivalent of our Copyright Act. The first sale doctrine allows the first person who legally acquires a work protected by copyright to sell it or give it away. All following owners can do the same thing. The copyright owner has no power to stop that from happening. The purpose of the doctrine is to stop a copyright owner from controlling how second-hand goods are distributed.
In Kirtsaeng the US Supreme Court has to decide whether this doctrine should apply to copyright works that are made outside the US. In effect the court has to answer this question: If I buy a genuine copy of a book that is made in New Zealand, should I be allowed to sell it in the US? If the Supreme Court says ‘no’, then that could have a big impact in the US. For example, it could spell the end of parallel importation into the US as copyright owners could stop people from distributing second-hand goods that are not made in the US.
A ‘no’ from the US Supreme Court could even create an incentive for US businesses to send manufacturing offshore. Those businesses could then have control over distribution of copyright works in their domestic market.
Consumers are likely to be very unsympathetic to copyright owners because limiting the doctrine to products made in the US is likely to lead to price rises due to lessened competition.
However, for businesses that already make their goods outside the US (including New Zealand businesses) this ruling could allow control over the distribution of second-hand copyright works. That includes things such as movies, music and artworks.
So what about the law in New Zealand? As champions of free trade we take parallel imported goods for granted. Under our Copyright Act, if the copyright owner in the country where the goods are made has given the green light to make the goods, then any person can import and sell the goods here. There is nothing a copyright owner can do to control the later sale or giving away of those items once they are in New Zealand. For consumers, this means more choice and lower prices – and consumers will only see that as a good thing.
Simon Fogarty is a senior associate and intellectual property litigation specialist at AJ Park.