The highest court in the land has decided to hear a case that will help clarify how the first-sale doctrine applies to international trade. This decision will then, in turn, impact future intellectual property disputes affected by the doctrine. The Supreme Court will hear arguments on the case this October and will likely issue a ruling in early 2013.

The First-Sale Doctrine

The first-sale doctrine allows the owner of a lawfully made copy of a trademarked or copyrighted good to sell or dispose of that copy without obtaining the permission of the copyright owner. For example, a mother who purchases a DVD of a popular children’s movie can sell that DVD at a yard sale a few years later without the permission of whoever owns the copyright.

The main question the Supreme Court will consider is whether or not the first-sale doctrine applies to American goods assembled and purchased abroad and imported into the United States for sale. In other words, could the same mother ask her family abroad to purchase the same DVD and send it to the U.S., and then turn around and sell it in the American market?

The Case in Question

The Supreme Court will explicitly review the decision of the Second U.S. Court of Appeals in New York, which ruled that foreign-made copies of goods copyrighted in the United States cannot be resold within the United States without the permission of copyright owners.

The Court of Appeals decision upheld a prior trial court ruling that awarded publisher John Wiley & Sons $600,000 in damages for infringement. The publisher sued a student from Thailand studying in the U.S. who sold imported John Wiley & Sons textbooks on eBay to fund his education. The student asked his family in Thailand to purchase the books and send them to him in the United States, where he auctioned them off without the permission of the publisher.

Why this Case Matters

Reaching a decision on whether or not the first-sale doctrine applies to imported, American goods will affect the rather large “gray market” in the United States, in which brand-name goods are imported and resold in the U.S. without permission of trademark owners. The gray market drives down costs for discount sellers and consumers, but may violate the intellectual property rights of copyright and trademark owners.

If you hold intellectual property rights to a product that is commonly imported and then sold in the United States, contact an experienced intellectual property attorney as soon as possible to ensure that you understand how the protections of current copyright law may apply to your situation.