First Sale: Congressional hearing and Kornrumpf decision

This week there were two big events concerning the first sale doctrine. The House Subcommittee on Courts, Intellectual Property and the Internet held a field hearing in New York on the topic, and the Ninth Circuit issued its decision in Adobe v. Kornrumpf.

The Congressional Hearing in New York

On Monday, June 2 the Subcommittee on Courts, Intellectual Property and the Internet held the hearing “First Sale Under Title 17” at the Daniel Patrick Moynihan U.S. Courthouse in New York City. Representatives Holding, Chaffetz, Nadler, Deutch and Jeffries attended the hearing. Chairman Goodlatte presided over the session.

The witnesses on this occasion were Stephen Smith (Wiley & Sons); Greg Cram (NY Public Library); John Ossenmacher (ReDigi); Sherwin Siy (Public Knowledge); Ed Shems (edfredned illustration & design); John Villasenor (UCLA & Brookings Institution); Jonathan Band (Owners’ Rights Initiative); Emery Simon (BSA|The Software Alliance); and Matthew Glotzer (Media Consultant). In addition, Copyright Alliance CEO Sandra Aistars prepared written remarks on first sale which can be read here.

Smith’s opening remarks focused on the effects of last year’s Supreme Court Kirtsaeng decision, which held that the Copyright Act does not prohibit the importation of nonpiratical copyrighted works, on the book publishing market domestically and globally. He explained that publishers have changed their policies to reflect a new scenario where market segmentation is no longer feasible. Smith explained that they have stopped operating in many emerging markets and have begun implementing parity pricing and restricted access in several countries around the world. He added that the Kirtsaeng decision does not comply with the spirit of the law, has not had any price benefits in the U.S., and has effectively reduced importation revenue for publishers. Smith then turned to explaining that the expansion of the first sale into the digital space would be detrimental to the business practices of educational publishers.

Ossenmacher opening remarks focused on supporting the notion that the right to sell what you purchase lives into the digital age. In his opinion, licensing arrangements take away consumers’ option to own a good. He analogized copyright protected content to diamonds. He explained that each diamond, just like each copyrighted work, is indeed unique and that does not justify banning a secondary market for diamonds.

Shems, an illustrator and graphic designer, spoke about his experience as a professional illustrator and graphic designer. Licensing is important not only to his ability to make a living but also to his ability to retain control of his artistic perspective. He also explained that licensing enables him to come up with different price points according to the need of each client. If each client were to have the right to alter or resale his work, Shems would be forced to increase his prices.