The ‘First Sale’ Conundrum and Intellectual Property

In its next term, the Supreme Court will take up the case Supap Kirtsaeng v. John Wiley & Sons where Kirtsaeng purchased Wiley textbooks at their low price in Thailand, shipped them to the US, and resold them. While I do think that Wiley is overstepping its copyright prerogatives (if they want to stop this sort of thing, they should equalize pricing, not hide behind the skirts of the law), what interests me more about this is the questions it raises about the treatment of so-called “Intellectual Property” as, well, property.

In my chapter on Intellectual Property (IP) in Robert Leston and my Beyond the Blogosphere: Information and Its Children, I write about two instances where the line between physical property and intellectual property is clearly drawn, showing that the two types of property cannot be considered in the same ways. In the first, I quote Sherman Frederick, one of the founders of Righthaven, LLP, a so-called ‘copyright troll,’ a company dedicated to pursuing online copyright infringement. Frederick tries to argue that copying something without permission is the equivalent of stealing his car:

The Corvette may be his, but you can still take a picture of it and could even, in most cases, replicate it exactly without his having any recourse in law. Furthermore, Frederick didn’t design the Corvette in the first place but is displaying the creative work of someone else. Finally, the Corvette would have to be both driven away and still there, if this were a case of copyright theft. (66)

There is a confusion here between what it means to own physical property and intellectual property, a confusion deliberately furthered by Frederick in order to expand the rights over IP that his various companies hold. The car belongs completely to Frederick, just as any book he has bought might. And, in both cases, he has the right to resell the original in any manner or any state he may choose–but the same right does not apply to selling a copy:

The first sale doctrine, codified at 17 U.S.C. § 109, provides that an individual who knowingly purchases a copy of a copyrighted work from the copyright holder receives the right to sell, display or otherwise dispose of that particular copy, notwithstanding the interests of the copyright owner. The right to distribute ends, however, once the owner has sold that particular copy

Just so, someone who buys a Corvette can sell that particular Corvette–and without any consultation with General Motors. But ownership of that particular Corvette “copy” does not include the right to make new Corvettes and offer them for sale, too. Frederick is arguing, in part, that his ownership of the particular Corvette prohibits anyone else from making a new copy of the GM product. It does not, of course, though GM certainly does continue to hold certain IP rights over the design of the car.

Someone can take the particular car, however, and do anything they want with it. If they want to blow it up for a movie, fine. If they want to repaint it, that’s OK. They could even chop it down into a drag racer (though I can’t imagine why they would do that to a Corvette). The same rights hold for a particular copy of a book: if you want to make origami cranes of the pages, by all means do so. Our rights over the physical property we have bought, be it books or cars, are fairly extensive–but that is something other than IP ownership.

The second example concerns the successful effort by the Directors Guild of America to stop CleanFlicks (and similar companies) from purchasing copies of movies and altering them (removing sex and violence) before renting or reselling them:

The filmmakers, with reason, deplored the alterations of their work, especially as the movies continued to be represented as the movies they had created–which they no longer really were. The filmmakers were further incensed by the attempt to skirt the law by reselling or renting the legally purchased movie coupled with the altered version–as if that made altering the art of someone else legitimate. The film “sanitizers,” on the other hand, argued that they paid full price for teach copy before adding the edited version and reselling the two together–therefore never depriving the filmmakers of any profit. (70)

Here, the question gets a little more complex. We are no longer talking about an individual, physical copy, but a range of copies and copying–and ones that claim the status of the original. It is here, of course, that IP rights start to be applicable–rights that have nothing to do with those over the object of ‘first sale’ rights.

This is the problem with the term “Intellectual Property.” It implies rights over physical manifestations of property–or seems to, for the unwary. But it is something else completely. And it leads to problems such as the one Kirtsaeng v. Wiley case.

Kirtsaeng makes no alterations to the books he buys, quite legitimately, in Thailand, so evades the problems of the CleanFlicks case. He also is selling only the ‘originals’ (that is, copies sold by the copyright owner) and is not making his own copies. If traditional property rights are the only ones involved, he is doing nothing at all wrong–as long as he is conforming to import regulations, etc. ‘Buy cheap, sell dear,’ after all, is one of the basic tenets of capitalism. So, IP rights must be something else, something distinct from other property rights.

There are implications to this that are, to my mind, both positive and negative. What we have is a distinction between the physical manifestation of a product and its intellectual underpinnings. As ‘first sale’ rights apply only to the physical product, what are we to do when the sale is of an electronic version? Can there be ‘first sale’ rights to that? So far, it doesn’t seem so… something I am not particularly comfortable with. We are quite limited in what we can do with Kindle versions of books we buy. I’d like to see some of the rights to physical products extended to electronic ones (though I don’t believe that will happen anytime soon). On the other hand, this should (though I have no faith in the current Supreme Court) keep Wiley (and Righthaven, and others) from extending IP rights too far into the physical realm. If Wiley doesn’t want its books, printed in Thailand, sold at prices undercutting its books printed in the US, it should have only two choices: lower the price asked for its domestic product or produce all of its books in Thailand. Extending IP in the way Wiley seems to want to is, to me, taking things a bit too far.

IP and physical property are not the same thing, and should not be so considered.  Wiley has considerable means of countering Kirtsaeng without resorting to taking IP far beyond where it was ever meant to go. I don’t like the argument Frederick makes, and am not even comfortable with the Directors Guild position (though I do understand it, and sympathize). An object is not an idea, but a malleable manifestation or presentation of the idea. We need to keep the two separate both in law and, culturally, in how we view both “ownership” and “property.”

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