Made in the USA: Using Copyright to Protect U.S. Publisher From Imports

In his Memorandum Opinion and Order in the case of Pearson Education, Inc. v. Ganghua Liu, 1:08-cv-06152-RJH, September 25, 2009, Judge Holwell of the Southern District Court of New York has ruled that the import and sale of books published and first sold abroad with the authority of the copyright holder infringes the U.S. copyright of the publisher. The result is in accord with the recent decision in Omega S.A. v. Costco Wholesale Corp., 541 F.3d 982 (9th Cir. 2008), which held that copyright exhaustion – the “first sale doctrine” – does not apply to articles manufactured outside the United States. Holwell’s opinion is notable in that he first engages in an analysis of the Copyright Act and the history, purposes and policies of the first sale doctrine and concludes that there is no justification for limiting the exhaustion doctrine to domestically manufactured articles. But in Quality King Distribs., Inc. v. L’anza Research Int’l, Inc., 523 U.S. 135 (1998), the case in which the Supreme Court held that authorized foreign sales of copyrighted products that were manufactured in the United States did exhaust the U.S. copyright in them, the Court in dicta suggested that the statutory first sale doctrine would not apply in the case of copies manufactured abroad, even if manufactured with the copyright holder’s authorization. Judge Holwell reluctantly considered himself to be constrained to rule in accordance with the Supreme Court’s dicta. His considered opinion on the merits of this rule, however, could end up being more fuel for the fire as the Supreme Court considers whether to grant Costco’s petition for certiorari, which was filed on May 21st of this year.