Kirtsaeng v. John Wiley & Sons may solve the territorial issue of Patent Exhaustion

Patent Exhaustion is also known as first sale doctrine. Under the doctrine, the rights of the patent holders become exhausted after the sale. Therefore, the patent holder cannot sue anyone for the infringement for the sold patent. The drawback of the doctrine is that it did not clearly define the territorial status of the doctrine. Even the Court delivers the conflicting rulings in the territorial dispute. Therefore, the doctrine should be analyzed to set up a standard of territory status in patent exhaustion case. However, the recent arguments in the case of Kirtsaeng v. John Wiley & Sons, Inc. may find out permanent solutions on the territorial issue of Patent Exhaustion.
Kirtsaeng, a Thai national resold some books in the USA and earned millions of dollars. These books were purchased by his family from the Thailand bookstore. When these activities of Kirtsaeng were detected by John Wiley & Sons, a reputed textbook publisher of the USA, Wiley filed a suit against Kirtsaeng on the ground of copyright infringement. Kirsten defended him arguing that the books that he sold in America were published under the license of John Wiley & Sons to its Asian subsidiary. Therefore, John Wiley & Sons could not sue anyone for reselling the text books under 106(a), 602(a) and 109(a) of the US copyright acts. The case raised two issues related to provisions of US copyright acts. The first one is whether a copyright owner can file infringement of copyright suit against anyone after the legal sale of his work to another one. The second one is whether the permission is required to import the material in US if anyone legally acquires abroad the copyright of a material from US.
Both the parties seek the justice under the provision of section 109 of copyright act. The section 109 has mentioned the limitations on exclusive rights of copyright owners. According to the section 109, “Notwithstanding the provisions of section 106(3), the owner of a particular copy or phonorecord lawfully made under this title, or any person authorized by such owner, is entitled, without the authority of the copyright owner, to sell or otherwise dispose of the possession of that copy or phonorecord”. Kirtsaeng argued that as the books were published abroad under the license from John Wiley & Sons to its Asian subsidiary, reselling of the books in USA are exempted from punishment. In their counter argument, Wiley & Sons rejected the claim of exemption from punishment mentioning that the US Copyright Act is not applicable in Asia. Therefore, Kirtsaeng will not get impunity under the section 109 (a) of US Copyright Law. The District Court gives its verdict in favor of John Wiley & Sons imposing a damage charge of $600,000. The second circuit also affirmed the verdict.
Now, Supreme Court has heard the oral arguments of the case. The case has attracted the attention of the people related to copyright and patent acts. Both the parties had cited the examples of previous judgments of similar type of cases. The center of the attraction was the financial importance of 109(a) section; the rights of copyright holders to sell the copyrighted work at lower price in the foreign countries in the regime of globalization. A decision explicitly authorizing the importation into this country of low-cost foreign versions of copyrighted works would directly undermine the ability of content providers to maintain high prices for domestic versions of the works.

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