March 19, 2013 United States Supreme Court opinions

Kirtsaeng dba Bluechristine99 v John Wiley & Sons, Inc.

Kirtsaeng had family members buy Wiley textbooks in Thailand and send them to him in the United States. He then sold them to students at a markup. Wiley sued for copyright infringement. The district court refused to allow the “first sale” defense. The jury returned a verdict for Wiley which the 2nd Circuit affirmed. Resolving a circuit split, the Court, 6-3, reversed. It held that copyrighted items made abroad with the domestic copyright owner’s permission are subject to the first sale rule which allows the purchaser of a work to sell or otherwise dispose of the copy because: 1. The operative phrase “lawfully made under this title” refers to works protected by the Copyright Act and has no geographic component the legislative context of the relevant section demonstrates there was no geographic component 2.The phrase which was intended to prevent first sale rights for lessees of works and was added in the context of the adoption of equality principles to give equal rights to domestic and foreign made works; 3. First sale is longstanding common law rule which congress is presumed to retain absent evidence to the contrary and there is no such evidence here; and 4. There would significant impacts on libraries, used book stores, the sale of cars with copyrighted software and goods with copyrighted instructions in the packaging plus museums and other industries which strongly suggest adopting the nongeographic interpretation of the first sale doctrine. The majority rejected arguments that precedent suggested the geographic interpretation is correct as the language relied upon was dicta. It also held the legislative history was inconclusive but tended to support applying the first sale doctrine. The fact that the nongeographic interpretation makes it difficult to segregate domestic and foreign markets does nto require a different outcome as there is no constitutional or statutory significance to that fact nor is there any indication Congress meant to prohibit the first sale rule to apply even if it was unprecedented. Two Justices concurred noting the difficulties facing Wiley were the result of earlier precedent narrowing the scope of an importation ban and Congress has the power to remedy any problems through amending the importation ban. The dissent argued the importation ban was created to protect copyright holders right to segregate markets and that “lawfully made under this title” only applies when the copy is made in the United states as otherwise some other country’s law would apply. The dissent also argued that the legislative history demonstrates that Congress meant to give copyright owners a cause of action against the unauthorized importation of copies even when the foreign made copies were create with the holder’s permission. The dissent argued that the majority’s position is inconsistent with the negotiating position of the United States on the issue of whether a foreign sale exhausts a holder’s rights and thereby undermines the United States’ position as a negotiator in the international arena. The dissent finally rejected the parade of horrible as unfounded in fat and highly unlikely given protections already in the copyright Act. Justice Scalia joined the dissent in part.

Standard Fire Insurance Co. v. Knowles

Knowles brought a state class action suit against Standard. Standard removed the case to federal court under the Class Action Fairness Act. Knowles stipulated he and the class he purported to represent would not seek more than $5 million and moved to remand for lack of subject matter jurisdiction. The district court granted the motion and the eighth circuit refused to review that decision. The court unanimously reversed. It held that the stipulation was not binding as the class had not been certified. Thus, the district court was required to aggregate the individual claims. Here, those claims totaled more than $5 million and the remand motion should have been denied.

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