Sunday, October 7, 2012

The End of Stuff?

Supreme Court case will decide whether you own your stuff
Sounds pretty serious, doesn't it? But maybe it's worse than that...
Your right to resell your own stuff is in peril
It could become illegal to resell your iPhone 4, car or family antiques
This is a major legal crisis! How did it go unnoticed? Well, for starters, because, like a lot of headlines, these are a bit... overblown.

To hear Mr. Doctorow and Ms. Waters tell it, the Supreme Court of the United States of America holds in it's hands the ability to decide if you can re-sell anything you own that was made overseas. But... that's not really quite the case.

What's really at stake here is which takes precedence, Section 602(a)(1) of the Copyright Act, which says that you can't import copyrighted items without the consent of the copyright holder, or Section 109(a) of the Copyright Act, which says that once you've purchased something, you may resell it or otherwise dispose of it as you wish.

The language around this case has become fairly dire:
“It means that it’s harder for consumers to buy used products and harder for them to sell them,” said Jonathan Band, an adjunct professor at Georgetown University Law Center, who filed a friend-of-the-court brief on behalf of the American Library Association, the Association of College and Research Libraries and the Association for Research Libraries. “This has huge consumer impact on all consumer groups.”

Another likely result is that it would hit you financially because the copyright holder would now want a piece of that sale.
And according to Mr. Doctorow:
Following Wiley's theory, you don't really own most of your possessions. You share ownership in your goods with the companies that made the goods you "bought" from them, and they get a veto over your disposal of them, and can also demand a cut of the proceeds.
But perhaps it's worth pointing out what started this all in the first place.

College student Supap Kirtsaeng came to the United States from Thailand to study mathematics at Cornell. When he got here, he realized something - textbooks in Thailand were much cheaper than the same book being sold here in the United States. So, he had his family buy and send him textbooks, which he then sold on eBay at a profit. He repaid his family members for their costs in buying and shipping him the books, and used the reminder to pay for school. There's a simple term for this in finance - arbitrage, and people do it all the time - it's called selling at retail. Here's an example - I go to Costco and buy a box of candy bars. I then take the candy bars to work and sell them to my co-workers for less than they would pay for the same candy bar, were they to buy it from the vending machine in the kitchen.

And this practice is perfectly legal, even for copyrighted materials like books. It's the model that Half-Price books works on when they deal in used books. They buy the books at a discounted price from the owner, and then turn around and sell them at a higher price. Mr. Kirtsaeng, wanting to be on the right side of the law, "sought advice from friends in Thailand and consulted 'Google Answers,' a website which allows web users to seek research help from other web users, to ensure that he could legally resell the foreign editions in the United States." Which he conceivably could - except for that pesky Section 602(a)(1). John Wiley & Sons, Inc., the publishers, sued, claiming that under that section, Kirtsaeng needed their permission to import the books into the United States. Now, they admit to the fact that the Thai versions of the books is less expensive than the domestic version - this is what created the arbitrage opportunity in the first place.

In this light, the question: How do Section 602(a)(1) of the Copyright Act, which prohibits the importation of a work without the authority of the copyright’s owner, and Section 109(a) of the Copyright Act, which allows the owner of a copy “lawfully made under this title” to sell or otherwise dispose of the copy without the copyright owner’s permission, apply to a copy that was made and legally acquired abroad and then imported into the United States? seems a lot less apocalyptic. After all, Mr. Kirtsaeng wasn't just selling his old books when he was done with them, like many college students do. Nor was a selling a family heirloom, brought over from the Old Country. He was racking up some $900,000 (at least) in gross revenues from systematically importing and selling textbooks.

Given all of this, I find it difficult to believe that if I sell the copy of "Gundam Senki" I picked up when I was in Japan a decade ago, that Sunrise, Bandai or T.O.Y International Inc/Aspect are going to come after me for a cut of the sale price. I suppose that they could, and this raises another interesting question - what's the difference between "bringing something back with you" and "importing?"

But honestly, the likely impact of this case (given my limited understanding of the law) is that if John Wiley & Sons, Inc. win, rather than the end of resale at we know it, the status quo will remain in place. To import things for sale, you'll need permission from the copyright holder. As I see things, it becomes interesting if Mr. Kirtsaeng wins in the Supreme Court. Because (again, in my layman's opinion), what I expect will happen is that you'll see an end to differential pricing in different markets for identical items. Whether that means that prices level off between countries (which will likely suck for some poorer nations) or you start seeing differences between items sold in various places, I don't know.

But I suspect that either way, I'll still be able to sell some stuff the next day.

H/T to George Williams.

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