An American Tale: The Unclear Territorial Application of the First Sale Rule in United States Copyright Law (and Its Impact on International Trade)

This Chapter addresses a hotly debated topic in copyright law in the United States: the intricate relationship among Sections 106, 109(a), and 602(a)(1) of the Copyright Act and the impact of the decisions of the Supreme Court in Quality King and Costco on the application of the first sale rule with respect to gray market products and international trade. The Chapter proceeds as follows. Part II describes the scope of copyright protection and the copyright first sale rule in the United States. In particular, Part II outlines the provisions of Sections 106, 109(a), and 602(a)(1) of the Copyright Act, and addresses the controversy surrounding the interpretation of, and the interplay among these provisions. Part III recounts the Supreme Court’s attempts to resolve the conflicting judicial interpretation in this area first in Quality King v. L’anza in 1998 and later in Costco v. Omega in 2010. Notably, Part III highlights the Supreme Court’s failure to clarify the territorial application of Section 109(a) of the Copyright Act and the continuing uncertainty that surrounds the first sale rule in copyright law in the United States. Part IV concludes the Chapter and surveys an even more problematic decision that has been issued by the Second Circuit in John Wiley & Sons v. Kirtsaeng in 2011, after the Supreme Court’s decision in Costco. Ultimately, Part IV underscores the urgent need for the Supreme Court or Congress to resolve the ambiguity that continues to dominate the relationship between copyright protection, the first sale rule, and international trade in the United States.