ASCDINATD members offer for sale a wide array of computer products produced abroad and imported for resale in the United States. As product manufacturing increasingly moves offshore, members need confidence that lawfully produced goods they purchase from offshore distributors and vendors can be resold in United States commerce free from unknown and unknowable claims of copyright infringement and constraints on consumer rights. A major part of the value proposition that members offer their customers is the right, if they choose, to lend, give away, or resell the goods they purchase.
The first sale doctrine is a time-honored rule of trademark and copyright law that enables products to be bought and sold throughout the world. The doctrine provides that once an item is sold with authority from the U.S. trademark or copyright holder, thereafter the item can be freely bought and sold.
For example, a clock radio carries a trademark and also has copyrighted embedded software. Under the first sale doctrine, once the manufacturer sells the clock radio the owner can later resell it – the owner doesn’t need to go back and seek permission.
Two federal appellate courts interpreted the first sale doctrine in a manner that would severely limit trade in goods manufactured abroad. In Omega v. Costco, the Ninth Circuit Court of Appeals held that the Copyright Act’s first sale doctrine doesn’t apply to products that were manufactured and first sold abroad. In the example above, if the radio was manufactured in Japan and first sold in Canada, the owner couldn’t sell it on eBay to a buyer in the U.S. without the manufacturer’s permission.
In John Wiley & Sons v. Kirtsaeng, the Second Circuit court of Appeals went even farther. That court held that the Copyright Act’s first sale doctrine never applies to goods that were manufactured abroad. In the example above, if the radio was manufactured in Japan and sold, for example, at Walmart, the owner couldn’t resell it at a garage sale, or on Craigslist, or anywhere else in the U.S. without the manufacturer’s permission. So the Ascdi sprang into action and filed a brief in the case in favor of free trade. When the Kirtsaeng case went before the U.S. Supreme Court on March 19, 2013 the Supreme Court issued a ruling in favor or Kirtsaeng siting the ASCDI amicus brief which we filed with the Court in its ruling. The Supreme Court reaffirmed the first sale doctrine as it has been understood by merchants and consumers for more than a century: If you buy something you own it and are free to resell it – regardless of where the item was manufactured or originally sold.