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Supreme Court case could make reselling items more difficult

Vince Kisalowner AuctiBay Online Chesterton. | Andy Lavalley~Sun-Times Media

Vince Kisala, owner of Auction Bay Online in Chesterton. | Andy Lavalley~Sun-Times Media

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Updated: November 11, 2012 10:16PM



Most people assume the right to sell your property is as American as apple pie, but a U.S. Supreme Court case puts that right in question when it comes to products made overseas.

Now the ability to resell a Toyota, a piece of art bought while on a European vacation or even possibly an iPhone will depend on how the Supreme Court justices rule in the case, Kirtsaeng vs. John Wiley & Sons Inc.

The decision could affect anyone who tries to sell second-hand goods, including local pawn shops, eBay sellers, not-for-profit groups such as Goodwill and even libraries.

“There is a craziness to it, and there’s a non-craziness to it,” Curt Cichowski, a law professor at Valparaiso University, said.

First-sale doctrine

The case deals with Supap Kirtsaeng, who moved from Thailand to the United States about 15 years ago to go to college. Kirtsaeng discovered he could buy his college textbooks for far less back home in Thailand. Instead of stopping at buying his own books, he had his family legally buy him more books that he would then sell on eBay to help pay for his eduction.

American law has long allowed for the concept of first-sale doctrine, which basically means that a copyright holder can control the first purchase of its controlled item. After that point, however, whoever buys the property has sole authority over what happens to that property.

This differs from European copyright law, Cichowski said, in which, for example, an artist of a painting still has some say in what happens to his work even if he sells it.

“(In America,) it’s my painting,” he said. “I can sell it to somebody else, I can destroy it, I can put a mustache on it.”

Ownership rights

Now publishing company John Wiley & Sons is challenging that right for products made and sold overseas. Copyright laws apply only to the country they’re granted in, so the idea of first-sale doctrine should apply only to products made in America, the company has argued. The 2nd Circuit U.S. Court of Appeals sided with Wiley, and Kirtsaeng appealed to the Supreme Court.

That means a company could keep someone from reselling an item they legally bought in another country.

“The whole resale market across cross-country borders goes away,” Cichowski said. “What does eBay do?”

For instance, some of the Supreme Court justices expressed concerns during arguments on Oct. 29 that because parts of a Toyota might have been purchased in another country, such as a GPS system or speakers, then a Toyota owner would have to get permission from any companies that contributed parts before putting a For Sale sign in the car window.

Justices also raised the issue of libraries buying books and other materials from foreign publishers that might then stop libraries from loaning out those items.

E. Joshua Rosenkranz, attorney for Kirtsaeng, argued that a ruling in favor of Wiley could open the matter up to the point that any product made overseas, even if bought in the United States, could bypass the first-sale doctrine.

Local concerns

Local resalers say they are concerned how they could be affected by the case. Rich Clousing, who owns Highland Jewelry and Loan, said that if the Supreme Court affirms the lower court’s ruling, it could affect not only his and other pawn stores but plenty of not-for-profits in the area, too.

“It could absolutely be devastating,” he said.

For instance, he would have to question whenever someone brought in a Sony TV if he had the full right to buy it and then resell it.

“I can’t see any good coming from this,” Clousing said.

An affirmative ruling could create an endless and likely impossible search for Vince Kinsala, owner of the Chesterton-based Auction Bay Online, which sells items people bring him on eBay. Kinsala said that he would likely have to verify for every item someone brings in that he wouldn’t face lawsuits if he tried to sell it.

“It would be a big Pandora’s box,” he said. “... It would make it so we can’t even function.”

Debie Coble, vice president of workforce development services for Goodwill Industries of Michiana, which oversees the Goodwills in Lake and Porter counties, said the not-for-profit organization will hope for now that the Supreme Court at least makes a distinction between people such as Kirtsaeng, who made a profit, and people who donate their items to groups like Goodwill.

“I guess at this stage I’ll have faith,” she said.

Coble said Goodwill has faced previous legal cases that could have had a large negative affect on the group but that so far none has been as bad as they first looked. For now, the group will keep an eye on the case.

“We learn to adapt and to change and to modify,” she said. “So while we hope this doesn’t have that kind of an effect, we’ll plan and prepare.”

Cichowski said he would be surprised if the Supreme Court rules entirely in Wiley’s favor. He said the line of the justices’ questioning showed they were concerned about the widespread affect a decision could have.

“It seems the court is being more swayed by the whole (picture),” Cichowski said.

He added that the cases is similar to one the court heard a few years ago. Justice Elena Kagan recused herself from that case, however, and the court split in a 4-4 decision. Cichowski said many people expect Kagan will be the deciding vote in this case.

A decision in the case will likely not come for several months.



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