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Supreme Court ruling on resale of items produced abroad could affect many

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By Thomas Olson
Saturday, Nov. 3, 2012, 9:03 p.m.
 

Auctioneer William “Tripp” Kline III has a question for the U.S. Supreme Court, if it rules in favor of a publisher whose case the justices heard on Monday.

“Am I supposed to find the surviving members of Paul Revere, who was a silversmith, to get permission to sell one of his silver spoons at auction?” said Kline, owner and president of Three Rivers Auction Co., Washington.

The unusual lawsuit — involving the resale in the United States of copyrighted works produced abroad — could raise troubling questions for all sorts of organizations. Affected could be used-book sellers, online service providers, auction houses and perhaps even museums, libraries and individuals.

“All a publisher would have to do is see a book that we've offered on our website that's (foreign-made) and possibly bring a lawsuit against me,” said John Schulman, co-owner of Caliban Books, a used-book seller in Oakland. He estimates about half his sales are produced abroad.

The case before the high court involves publisher John Wiley & Sons Inc., Hoboken, N.J. It sued an industrious California college student named Supap Kirtsaeng, who bought bundles of Wiley's textbooks at discount in his native Thailand, then shipped them to the States, where he sold them on eBay for about $900,000.

A federal court in Manhattan ruled in favor of Wiley and awarded the publisher $600,000. The decision was upheld by a federal appeals court but will now be decided by the Supreme Court.

Wiley declined to comment through its attorney in Washington, D.C.

“This is fundamental to the creative industries,” Charles Sims, an attorney speaking for the Association of American Publishers, told Bloomberg News.

“In the video industry, owners of the rights to movies would be concerned about their ability to protect their markets in the U.S.” against illicit copies, said attorney David Oberdick, head of the intellectual property department at Meyer Unkovic & Scott, Downtown.

The lawsuit centers on the so-called “first-sale” doctrine, a 1908 legal precedent that means a copyright holder can only profit from the initial sale of his or her product or work, not from subsequent resale.

“Right now, if you go to a flea market or a book sale at a local library or a fundraiser church sale, there's a number of books or CDs or videos you can purchase on a second-hand basis without providing any money or royalty to the copyright owner,” Oberdick said.

“In this case, you have people talking about a Pandora's box that could occur if the first-sale doctrine is limited to works created within the United States,” he said.

“Is Apple going to stop all the trade on eBay of iPhones?” Kline said. “Or will eBay have to halt all the sales of CDs and movies?”

A Supreme Court decision in 1998 said the “first-sale” doctrine applied to U.S.-made goods sold overseas. But the question in the Wiley case is whether someone can buy a U.S. company's goods made abroad and resell them in the States without the company's permission.

Many local businessmen doubt the Supreme Court will rule in a way that would strangle their operations, which largely or wholly depend on reselling used goods.

“If I had to deal with a ruling like that, it would be very bad for me,” said Jerry Weber, owner of Jerry's Records, a used-records store in Squirrel Hill.

“I think it would be absurd, and I also think it's unenforceable,” Weber said.

Jerry's Records derives about 5 percent of sales from recordings produced abroad, but that's out of more than 2 million records on the shelf and in inventory. Of Weber's 125,000 classical and operatic recordings, for instance, more than 40,000 are foreign-produced.

“A ruling for Wiley would fly in the face of 100 years of property law in the art market, if it were changed radically,” said Sam Berko-vitz, owner of Concept Art Gallery, Regent Square, Edgewood. About 30 percent of what his gallery sells is foreign-produced. But he does not feel a potential threat from the Wiley lawsuit.

“If I own a painting by Georgia O'Keeffe, it doesn't mean I have the right to duplicate that image,” Berkovitz said.

“But I can still sell the object.”

Still, even museums are concerned an adverse ruling could restrict some of their operations, according to Maria Bernier, general counsel for the Carnegie Museums of Pittsburgh, which includes the Carnegie Museum of Art and the Warhol museum.

“Under the Copyright Act, museums have a clear right to exhibit works of art that they own without owning the copyrights, regardless of whether those works of art were made inside or outside the U.S.,” Bernier wrote in an e-mail.

“The Second Circuit's decision has the unintended consequence of calling into question museums' right to continue to do so for foreign-made copyrighted works of art, which could affect great numbers of modern and contemporary art on display right now in museums across the country,” she said.

Attorney Oberdick said the Supreme Court is likely to issue a decision early next year.

Thomas Olson is a staff writer for Trib Total Media. He can be reached a 412-320-7854 or at tolson@tribweb.com.

 

 
 


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