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Imported Books and Their Resale in the U.S.

21 August 2019

Yesterday, PG had a post about a Publishing Perspectives piece discussing a New York Times article condemning Amazon’s sale of “counterfeit books,” many of which originated overseas.

An alert commenter to that post mentioned a U.S. Supreme Court case that may be relevant, Kirtsaeng v. John Wiley & Sons, Inc., 568 U.S. 519 (2013)

PG won’t go into detail about the case, but the gravamen of the holding was that Mr. Kirtsaeng, who, through friends/family, purchased new English-language Wiley textbooks in his home country of Thailand, could legally resell those books in the United States.

The books purchased in Thailand were legitimate copies published and distributed by the Asian subsidiary of Wiley, WileyAsia. WileyAsia’s books stated that they were not to be taken (without permission) into the U.S.

The Supreme Court ruled in favor of Kirtsaeng, grounding its decision a provision of U.S. copyright law generally referred to as the “First Sale Doctrine.”

[S]ection 109(a)’s “first sale” doctrine, … provides that “the owner of a particular copy or phonorecord lawfully made under this title … is entitled, without the authority of the copyright owner, to sell or otherwise dispose of the possession of that copy or phonorecord.”

Without the First Sale Doctrine, there would likely be no used book stores in the United States.

A new book store acquires the right to sell new books via the publisher which has a publishing contract with the author, who is (or should be) the owner of the copyright to the book. Under the publishing contract, the author grants the publisher the right to make copies of the author’s book and sell them (directly or through distributors) to bookstores which, of course, can sell those new books to readers.

After a copy of the new book is sold to a reader, the author’s rights to that particular copy of the book are exhausted. The purchaser can lend it, resell it, donate it, etc., without violating the author’s copyright.

To be clear, the purchaser of a copy of the book cannot make copies of the book to give or sell to others, because the First Sale Doctrine applies only to that particular copy of the book the purchaser legally acquired.

So, when Mr. Kirtsaeng purchased multiple copies of the English language textbook in Thailand and resold them in the United States, the Court held that the Thai purchase was the First Sale of each textbook and Mr. Kirtsaeng was effectively in the same position as a used book store operating in the US.

Back to the NYT condemnation of Amazon for selling “counterfeit books,” it is possible that Amazon is doing so. However, it is also possible that Amazon (or third-party sellers on Amazon) is/are acquiring books from foreign publishers in the same way that Mr. Kirtsaeng was acquiring the Wiley textbooks.

If a U.S. publisher decides to permit foreign publishers to print, publish and sell books in the English language for a cost/royalty that is lower than the price the U.S. publisher charges its U.S. customers for the same text, that’s a business decision for the U.S. publisher to make (and, incidentally, that the author has no control over under typical publishing agreements).

If a foreign publisher decides to sell English language copies of a book at a much lower price than the price set for English language books in the U.S. and has a contract with the U.S. publisher that sets no price limits for the book (which might be a violation of antitrust laws somewhere), the foreign publisher can set the price and make the sale directly or through distributors or bookstores.

Under Kirtsaeng and the First Sale Doctrine, once the foreign publisher sells a copy of the book, under U.S. copyright law, the wholesaler, retailer or other purchaser of that copy can do anything with it that a purchaser of the same book from the U.S. publisher could do in the U.S., including resell the new book or ship it to the U.S. or any other destination for resale.

(A contract between a publisher and distributor could impose geographical limits on where the distributor could offer the book for resale, but once the book is sold at retail, First Sale definitely kicks in. PG has no idea what might happen legally if each bookstore required each purchaser of a book to sign a contract agreeing not to resell or give the book away. From a commercial standpoint, PG suspects such a requirement would dampen sales of the book.)

Is there a solution to counterfeit or unauthorized books?

In PG’s internationally-celebrated humble opinion, requiring Amazon to determine whether books that an Indian or Chinese publisher delivers directly to Amazon or via a U.S. book distributor or other intermediary are properly authorized by the party who owns or controls the copyright is an unreasonable burden to place upon Amazon or Barnes & Noble or Shirley’s Books located on Main Street, USA.

PG does think Amazon’s idea for the establishment of a central database that permits sellers to know if a publisher in the U.S. or anywhere else is authorized by the copyright holder to create and sell a particular book is a good idea. It’s not a complete solution, but a practice that would diminish the flow of improperly licensed books through commercial sales channels.

What organizations are in the best position to create such a database and populate it with accurate data?

Publishers.

And, in particular, large publishers, including large international publishers. They know who holds rights to the books they publish in various geographical areas. They know who has translation rights in those same areas. They and their authors bear the largest losses from pirated copies of their books in various nations and languages.

In conclusion (finally), PG asks a rhetorical question:

How likely is it that Penguin Random House will lead such an effort to create a central database of literary rights and permissions and put up a significant share of the costs necessary to do so?

Pearson? ThomsonReuters? Wolters Kluwer? Hachette Livre?

 

Amazon, Big Publishing

8 Comments to “Imported Books and Their Resale in the U.S.”

  1. Of course, there’s a distinct problem with allowing publishers to determine whether a foreign-territory competitor has an “allowable” competing edition:

    It assumes that the publishers (a) know their own rights, (b) know what would make an edition allowable in that foreign territory, and (c) are telling the truth when they assert that a particular edition is not allowable, let alone appropriate for import under Kirtsaeng. <sarcasm> Of course, the publishing industry is staffed only with honorable and trustworthy and thoroughly competent people, especially in upper management and among their counsel, so we should entirely ignore Judge Cote’s findings otherwise in United States v. Apple, Inc., and entirely ignore the publishers’ presentations at all stages of the Kirtsaeng litigation. Publishers would never assert rights that they don’t have. And I don’t have documentation otherwise of multiple such instances myself, either; nor of bullying, blacklisting, or overt violations of the Sherman and/or Clayton Antitrust Acts. </sarcasm> And if you really, really want to go down the rabbit hole and have a couple of weeks to spare, try to figure out the royalty and pricing systems at issue in the Harlequin “Swiss subsidiary” fiasco.

    Perhaps a database is a good idea. Letting the foxes count the eggs in the henhouse, though, is not a good implementation of that idea.

    • Good points, C.E.

    • I am not usually in favor of “there otter be a law,” but in this case I would set this database up as a government function. (It would actually, unlike much of the law these days, be unequivocally Constitutional under 8-8.)

      1) Go back to the practice of, in order to have a valid US copyright, it must be registered – including deposit of an electronic text form with the Registrar. (Yes, some big issues with grandfathering there, especially for items where nothing was ever in an electronic form.)

      2) The electronic text is placed into a Federally maintained database, with tools available for anyone to compare a text file to that database to see whether it is copyrighted – and that the registered copyright holder matches to the person / company that is claiming the reproduction rights.

      Now, of course, this does absolutely nothing for the one case mentioned in the OP. The one where the Orwell book copyright is expired in India, but not in the US. I don’t think any case has been decided under those particular circumstances. On first glance, under “first sale,” someone could print as many copies as they liked in India, sell them to a distributor in the US, and not violate the copyright in the US. (Probably only in the US, though – not many, if any, other countries subscribe to the first sale doctrine.)

      • That would provide a foudation upon which to add the various licenses and rights granted by US publishers in a variety of different jurisdictions, WO.

        My attitude would be that various national copyright registration entities in other countries should be able to add their own copyrighted works to this database with associated licenses and rights granted by non-US publishers.

        • No can do, I’m afraid. Registration cannot be a prerequisite for holding a copyright under a treaty to which the US is a party, meaning that Congress can’t change US domestic copyright law to make it so. (It’s even questionable whether the “you can have a copyright, but can’t get into court to enforce a US copyright without registration” regime that the US actually has passes scrutiny… but every time that has been litigated, it has either settled before a final decision or has been punted on other grounds without decided that issue.)

          I also think it a bad idea, for the simple reason that it encourages sloppy searches of copyright records and — on getting the hoped-for “couldn’t find it” result — pirate editions proceed forthwith. It also encourages extreme formalism over which form of a work is “registered,” which is especially annoying in the face of the administrative and financial barriers to registration of all versions of a work. Right, D___ E___, P___ G___, and other “publishers” that have flocked to the Sixth Circuit on the basis of never-repudiated decisions from the 1960s relating to musical compositions?

          Here’s an example; I wish it wasn’t real world. Not so long ago, there appeared a collection of three novels under a long-established pseudonym that corrected some printing errors in previous editions of the works… but was not separately registered for copyright within 90 days of publication. A pirate tried to put out its own edition of one of the three novels, claiming that (a) that edition hadn’t been registered, and (b) a search for the registration with the pseudonym as the claimant had failed to turn up any registration, and therefore any infringement was not willful. Umm, not so much… but the very fact of a registration system made it even possible to run up the attorney’s fees (which could not be recovered in the end because the pirate declared bankruptcy after an adverse judgment).

          • I’m not suggesting that registration be mandatory for copyright.

            I’m simply suggesting that a more robust version of the data that is already residing on the servers of various copyright agencies who would like to participate be duplicated on a different set of servers upon which licenses granted by the owners of the copyrights and other copyright information could be recorded for the benefit of those (lawyers doing a quick preliminary scan and non-lawyers who might benefit from the information or just be curious) who are interested in seeing the licensing status of different books in various jurisdictions.

            This database would not be an official record of any government agency and would carry appropriate warnings that it may not be relied upon for the purpose of determining if a work is subject to copyright protection in any of the participating nations.

            Like all other publicly available websites not maintained and locked down by responsible agencies, this is simply a place to start looking for licenses, one that might provide a signal that further, more detailed research from other sources would be necessary.

            Perhaps a useful conceptual model is Wikipedia for Copyrights.

            Although I once worked as an executive at LexisNexis, I never did like the idea of public records being locked down and accessible only to those who paid a substantial subscription fee to a private entity for the purpose of accessing those records easily and efficiently.

      • Perhaps publishers should take the responsibility themselves. If they don’t care enough to do it, why should the rest of us care enough to pay for it?

  2. “How likely is it that Penguin Random House will lead such an effort to create a central database of literary rights and permissions and put up a significant share of the costs necessary to do so?

    Pearson? ThomsonReuters? Wolters Kluwer? Hachette Livre?”

    Likely that they would spend money on a huge effort that would give them very little? I won’t say none, but the probability is much less than 1. MUCH less.

    If they think about it at all, they hope and pray that not too many people will be willing to go to the effort to buy in one country and sell in another without a huge pre-determined market (like for textbooks).

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