First Sale Under Siege: If You Bought It, You Should Own It

https://www.eff.org/deeplinks/2012/12/first-sale-under-siege-if-you-bought-it-you-should-own-it

by zoowar • 14 years ago

134 70 14 years ago

eff.org

ryan_s• 14 years ago

How does this currently apply to software? Specifically desktop software apps, and OSs.

meaty2• 14 years ago

Exactly the same way as other media. In fact sometimes worse.

I have tried to sell a few bits of software via eBay (used windows XP pro retail box) which have been uninstalled or replaced with partner action pack licenses. After a day or so, I get an email from eBay saying that the item has been withdrawn due to a complaint from the manufacturer.

This is what they want.

I'm in the UK btw and am concerned this may become an international issue.

SEMW• 14 years ago

That's ebay's choice, but they're certainly not obliged to do that by copyright -- in the EU, at least. First Sale has been upheld (in the context of software) by the ECJ pretty recently (even for software you've downloaded rather than bought in retail), in the UsedSoft case -- http://www.linklaters.com/Publications/Publication1403Newsle...

Choice quote: "This broad interpretation of Article 4(2) is necessary as otherwise the effectiveness of the rule of exhaustion would be undermined since suppliers would merely have to call the contract a “licence” rather than a “sale” in order to circumvent it."

IANAL.

justincormack2• 14 years ago

This article covers some of the case law http://www.lw.com/upload/pubContent/_pdf/pub4047_1.pdf but basically at least in the US software licenses as licenses not sales have been upheld. Other countries may differ.

meaty2• 14 years ago

The argument is actually about what you own. Is it the media or a license for one person to play it?

Most people I know are fed up with such word games and just plain old steal the bits and bytes (well duplicate them - whether or not that is stealing is another question). The media industries are just hanging themselves even more by the day. I don't see any tears being shed.

Joeri2• 14 years ago

I'm fine with first sale not applying to digital goods, but then you cannot call it buying but must call it renting instead. But of course, if amazon was honest and replaced the 'buy' button on a kindle book with a 'rent' button, people would be outraged at the price.

If i cannot leave something to my son in my will, it was never mine to begin with. You can't inherit kindle books, so it's obvious that you don't buy them either. There's no such thing as "buying a license", legally speaking that's called "renting".

nedwin• 14 years ago

"There's no such thing as "buying a license", legally speaking that's called "renting""

Is this your legal opinion as a lawyer?

Joeri2• 14 years ago

I'm a lawyer in common sense. "Buying a license" is what penn & teller call BS. There's a common sense understanding of what buying is, and kindle books don't fall into that category.

I will admit that "legally speaking" was perhaps not accurate. But is it really?

DannyBee• 14 years ago

Well, i'm a lawyer, and his position is at least defensible.

After all, the difference between leasing and buying is exactly right to use vs ownership.

Leasing/licensing have retention of ownership in the provider, buying does not.

Without having thought about it for more than 5 minutes, I can't think of any legal difference other than terminology.

Note that there is a difference in real property: Licensing is about giving someone the right to do something that would otherwise be unlawful, whereas leasing is generally about right to possess.

However, this is not the distinction software "licenses" are making.

hyperbovine• 14 years ago

I hope the publishers realize that they must tread lightly here. Even by the ridiculously low standards of music and movies, books are reaaally easy to pirate. The DRM is a joke and most of them comprise fewer bytes than a moderately complex webpage.

If we learned one thing from the music industry over the last 15 years, it's that the internet gives your customers the power to destroy you if you treat them with contempt for long enough.

I love to read and I happily buy many Kindle books at $9.99+ a pop on Amazon. I want to live in a world where authors can make a living by writing. But bogus restrictions on book sharing, complete lack of a resale market, etc. are already starting to rub me the wrong way. At some point, if pushed too far, I'm not going to feel much remorse about flouting the system.

icelancer• 14 years ago

>If we learned one thing from the music industry over the last 15 years, it's that the internet gives your customers the power to destroy you if you treat them with contempt for long enough.

Couldn't agree more with this sentiment.

mtgx• 14 years ago

I agree, and I think it should be illegal to call something "buying" when it's more like licensing or renting.

monochromatic• 14 years ago

It's really called licensing. "Buying" and "renting" are both not quite right.

tptacek5• 14 years ago

EFF is leaving very important details out about at least Kirtsaeng. What's happening in that case is not simply that publishers are trying to claw back rights from US consumers. Supap Kirtsaeng took advantage of discounted pricing that Wiley offered students in poorer countries to arbitrage prices. This trick is called "parallel importation" (or "grey market importation") and it's a legal grey area, especially where copyright is concerned, turning on whether owners exhaust the right to import on first sale.

In short, the defendant in Kirtsaeng is taking advantage of a discount program Wiley never intended to offer that defendant in the first place in order to subvert Wiley's whole pricing scheme. Whether Wiley can use a legal argument about first sale to stop this or not, it seems apparent that Wiley will one way or another prevent that from happening.

Knowing HN, these details probably don't do much to change your view of the case. But you should still want to know them! This is something the EFF used to be good at, but now is quite bad at, and despite the fact that EFF mostly supports causes I agree with, I urge you to direct your donations to ACLU or other civil liberties charities instead.

MichaelGG2• 14 years ago

I too wish that the EFF would be a bit more honest when it comes to such issues. I'm very much against anything that divides up globalization and adds region locks.

"Import rights" are a relic of old company structures. You see them in things like Nikon equipment going for much more money in the US, where Nikon USA is a separate company pretty much out of touch with Nikon Japan. But Nikon deals with it by only allowing servicing in country of purchase: hey, their right to lower customer service if they want. A more nefarious issue is e.g. Microsoft in other countries trying shakedown approaches, saying you licenses bought in one country are not legal in other countries.

But when the details emerge, the EFF looks bad and hurts everyone on their side by misrepresenting.

schoen7• 14 years ago

Hi,

As I mentioned in a reply above, an earlier EFF blog post (https://www.eff.org/deeplinks/2012/10/parade-horribles-supre...) on the Kirtsaeng case did describe what Supap Kirtsaeng was doing ("purchasing books at a reduced rate in his native Thailand and selling them below list price in the States").

glesica3• 14 years ago

In a global economy, restrictions on parallel importation are destructive and backward.

What happened to "free trade"? I see no difference between buying something in country A and selling it in country B and buying and selling within the borders of country A.

As borders continue to fade away, restrictions on importation will become restrictions on first sale rights. So I really draw no distinction, personally.

res0nat0r3• 14 years ago

How have borders continued to fade away when it comes to selling physical books in different parts of the world at different prices?

carbocation• 14 years ago

I'd be curious to hear your thoughts on this concept as it pertains to essential medicines.

czr80• 14 years ago

Recognize that your position may have the following implication: if the producer cannot segment prices regionally, they may choose to charge the US price globally - in this case they lose the marginal sales in poorer countries, and customers in poorer countries lose access to the product. No one wins in this scenario.

pinko• 14 years ago

"Free trade", despite the dishonest propaganda, has always been about freedom for companies, not consumers or workers. When was the last time you heard a free trade proponent advocate for unrestricted freedom of movement for workers across borders, similar to that of capital?

schoen7• 14 years ago

(I work for EFF.)

This article is a quick end-of-year summary of two issues that have been active during the year. The description of what Kirtsaeng was doing was likely omitted for brevity, not as a cover-up. (The person who asked my coworkers to write these end-of-year posts specifically asked for short, broad summaries instead of detailed analysis.)

If you follow the link given in the article (https://www.eff.org/deeplinks/2012/10/parade-horribles-supre...), you'll see another article from October by my colleague Parker, where he writes:

"Wiley claims that this doctrine only applies to goods that are manufactured in the U.S., and that the defendant, Supap Kirtsaeng, was infringing its copyright by purchasing books at a reduced rate in his native Thailand and selling them below list price in the States."

This description appeared on the same EFF blog (Deeplinks) where the item that you're concerned about did.

One of the most important aspects of the Kirtsaeng case that we've tried to get the Supreme Court to appreciate is that the plaintiff's theory would limit first sale in a wide range of situations. (One example is artworks, like paintings or manuscripts, that were produced outside of the U.S. and that were brought to the United States by their legitimate owners, who are not the copyright holders. As discussed elsewhere in this thread, there is also a question of whether publishers intending to sell works in the United States can choose the location of their manufacturing operations to make first sale a dead letter.) So even people who think that parallel importation as practiced by Supap Kirtsaeng is bad or should be restricted by law may have cause to be concerned about the Kirtsaeng case. Those consequences and concerns are the focus of this summary post.

tptacek5• 14 years ago

The majority of Wiley's revenue comes from western markets where their products sell at "full price". How would Wiley be able to offshore their publishing to exploit a ruling that first sale doesn't exist control over import? Most of their titles would already have been "imported"; Wiley couldn't prevent their resale within the US.

antoko• 14 years ago

The article doesn't really comment on the merits of the case for Kirtsaeng. The EFF isn't trying to convince people to support any position in that case, nor should they, I agree with you that it is definitely a legal grey area.

What the EFF is taking issue with in that case is the potential precedent that could be set depending how the case turns out that could undermine first sale. The only reason EFF is interested in the case is because the legal arguments being used could impact first sale.

What's happening in that case is not simply that publishers are trying to claw back rights from US consumers

True... but that's the part of the case that the EFF is concerned about.

In contrast, in the Capitol case the article very clearly takes a position, and while I'm not familiar with that case I give the EFF the benefit of the doubt and assume they're being truthful.

schoen7• 14 years ago

EFF did take a position in the Kirtsaeng case, in support of the petitioner (Kirtsaeng): https://www.eff.org/deeplinks/2012/01/eff-asks-supreme-court...

(The "urging" there is a link to EFF's amicus brief in the Supreme Court -- https://www.eff.org/sites/default/files/PKEFFCertAmicus_firs... if you'd like to read the brief, which was filed together with Public Knowledge and US PIRG, back in January of this year.)

Although I mentioned that there are reasons that people who oppose parallel importation or aren't sure if they support it should be concerned about the respondent's (Wiley's) view of the first sale doctrine, EFF's brief explicitly supports parallel importation (see section II(C) of the brief). Reasons to care even if you don't care about protecting parallel importation are found in sections II(A) and II(B).

ceol• 14 years ago

Be careful donating to the ACLU. I love them to death but I keep getting calls on my house phone (not the one I signed up with, mind you) at 8pm asking to donate.

tptacek5• 14 years ago

This is true of a lot of good charities. I assume it's because it works, and just deal with it.

tripzilch• 14 years ago

> This is something the EFF used to be good at, but now is quite bad at, and despite the fact that EFF mostly supports causes I agree with, I urge you to direct your donations to ACLU or other civil liberties charities instead.

I'm not sure if that line of logic actually follows, but a rather important distinction is that many causes the EFF supports (that are publicized) have an impact globally, while the ACLU, well the 'A' in the name already says it, no?

Now I still prefer to support my own local digital civil liberties groups (such as Bits of Freedom, that do great work on explaining tough computer/security/privacy subject to ancient politicians), but if we're going to be urging people to support this and not that, better give to the EFF because what they do is actually useful for more people.

jellicle2• 14 years ago

Bravo, EFF.

The Kirtsaeng case is quite important because, if lost, it would create a loophole to destroy "first sale" in the U.S. entirely. Just cease manufacturing any sort of copyright material in the U.S.; move ALL production to Mexico or China. If the Kirtsaeng case is lost, reselling any of those works would become illegal, eliminating used book stores and similar enterprises entirely. And indeed, this could apply to any product with writing on it or code in it - massive incentives to move all production of such things out of the U.S., since then you would be able to prevent ANY secondary sales of your product.

VERY important case, with massive implications for the future structure of U.S. society and the economy.

MichaelGG2• 14 years ago

Are you sure about that? I understood it to be ruling that disallows you from buying abroad and importing. So if they moved production to Mexico, but then they imported and sold it to you, it would not matter - you'd still have first sale. What you couldn't do is buy it in Mexico and bring it in yourself and sell it.

I'm against any erosion of first sale and believe all "grey market" stuff should be legal. Companies should find other ways to differentiate products rather than the meatspace equivalent of "region locks".

But let's be honest: this case isn't suddenly going to destroy first sale _within the US_.

anigbrowl6• 14 years ago

Region locks are not desired by copyright holders, but by the distributors in those regions who want exclusivity within their retail territory. Suppose you make a product and discover that someone in, say, Indonesia is faking and selling a counterfeit version. Are you equipped to sue them? Probably not unless you're a large global firm, so it makes more sense for you to sell your product through a distributor in that territory. Likewise, pricing is different because incomes and economies are different. You charge the price the market will bear in each territory.

None of this prevents individuals from buying something for themselves overseas and taking it home to use. But it does prevent bulk importation, which parties to a distribution agreement are contractually required to combat.

AnthonyMouse• 14 years ago

>I understood it to be ruling that disallows you from buying abroad and importing. So if they moved production to Mexico, but then they imported and sold it to you, it would not matter - you'd still have first sale.

The key word in that sentence is "they" -- who is "they"?

Here's the problem: The copyright holder manufactures the product abroad and sells it abroad to a nominally unaffiliated distributor who then imports it into the United States. In theory the distributor is doing what would not be allowed -- importing the foreign product without a license -- but the copyright holder gets to decide whether or not to sue them. And they don't sue them, this one unofficial distributor with whom they have an unspoken agreement. They only sue you when you go to resell the used product, claiming it was never sold by the copyright holder in the United States.

Maybe you could make some claim that the distributor had a de facto license based on the fact that the copyright holder implicitly allowed the importing to continue, but good luck proving it when they claim it was unsanctioned (and meanwhile they have a token official U.S. reseller with near-zero sales volume who sells at 5X the price, and a list of other unsanctioned importers who they've sued to shut down).

schoen7• 14 years ago

You should have a look at the gap between the Ninth Circuit's holding in Omega v. CostCo and the Second Circuit's holding here. :-)

In footnote 44, the Second Circuit agrees that its own "decision may allow a copyright holder to completely control the resale of its product in the United States by producing its goods abroad and then immediately importing them for initial distribution" but says that this "does not affect or alter our interpretation of the Copyright Act".

anigbrowl6• 14 years ago

Wrong. If it's sold in the US, first sale applies. That's why it's called the 'first sale' doctrine, not the 'first manufacture' doctrine. I already have books that were printed in Mexico and China, and you probably do too.

belorn• 14 years ago

Given the practice of tax dodging, how many items are really sold in the US by US webstores? Are you sure that all those amazon books are sold "in the US" and not from Ireland or some small island somewhere?

schoen7• 14 years ago

Please read the Second Circuit's decision, particularly pages 16 and 17. The Second Circuit did not agree with your intuition about this point.

You can find the decision at

https://www.eff.org/files/Wiley-v-Kirtsaeng_2ndCir_8-15-11.p...

jellicle2• 14 years ago

Hint: the case at hand is specifically asking the Supreme Court to overrule the first sale doctrine.

eriksank• 14 years ago

The copyright owners have a bigger problem than what they may consider unauthorized copying. Drawing attention to compositions in sound and vision has become so much more difficult because it has become so much easier to distribute them. The scarcity has gone and so has the price. Quite a bit of the value has now decisively shifted to compositions in touch, smell, and taste, which cannot be distributed digitally.

woah• 14 years ago

At what point do we realize that these people are simply trying to extract rent from our electronic communications, and we should circumvent them at any opportunity, and punish the politicians who are bought off to give them power?

dredmorbius• 14 years ago

I'm game with extracting reasonable rent under reasonable terms.

When we're talking about designed-obsolete college texts selling for hundreds of dollars for century-old wisdom .... Several lines have been crossed.

First Sale Under Siege: If You Bought It, You Should Own It

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