Landmark win for consumer’s rights - Supreme Court rules Grey Market Goods are Legal!

by Todd Bone on March 19, 2013
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March 19, Washington, D.C. - The Supreme Court ruled 6-3 today in favor of Supap Kirtsaeng vs. John Wiley & Sons, Inc. after hearing oral arguments on October 29th, 2012 on a widely followed case of whether the First-Sale Doctrine covers products manufactured overseas. The First-Sale Doctrine allows the “owner” of a lawfully made product the right to sell or otherwise dispose of a product they own without the authority of the copyright holder.

Wiley argued the First-Sale Doctrine did not apply to products manufactured overseas. The Supreme Court disagreed, and now it is law.

This means if you own it, you can resell it. There are no restrictions on reselling your books, iPhones, Cisco routers, supercomputers, cars, clothes, antiques, and any other goods.

The Owners’ Rights Initiative (ORI) with members including Goodwill Industries, American Library Association, eBay, Overstock.com, XS International and our IT association AscdiNatd, were on the right side of the issue and have prevailed on behalf of consumers, small businesses, online marketplaces, retailers, libraries and government buyers. This decision definitively affirms the first sale doctrine, cementing the right of consumers and organizations to sell, lend and give away goods that they bought and own, regardless of where those goods were made.consumer rights

Also, “the majority opinion, authored by Justice Breyer, clearly affirmed that the Copyright Act was not intended, and cannot be misconstrued, to limit the distribution of authentic goods”, Andrew Shore, Executive Director of ORI said.

To boot, the ruling covers goods termed “Grey Market”. These are products manufactured overseas, sold legally by the manufacturer or distributor but outside of "their authorized channel”, then legally imported into the US for legal resale. The key word here is “legally”. Grey Market Goods are not illegal and are not counterfeit. Far from it. The manufacturer has already profited once from the First-Sale and the law now says the manufacturer cannot control the downstream market for the products.

Sure, it’s the manufacturer’s right not to honor original warranties on those products or accept them under a maintenance contracts. But consumers have the right to repair products they own or chose a company to do it for them.

Manufacturer’s Brand Protection Departments will be hard at work morphing previous implications that Grey-Market equipment is counterfeit or illegal. But, owner’s now have the Supreme Court ruling to assure them they can legally buy Grey-Market products and they don’t have to worry about the legality of reselling the goods they own which were manufactured overseas.

Stephen Colbert probably had the most entertaining segment on what manufacturers were asking the Supreme Court to do. Click here for the 5 minute segment.

Since this ruling removes the ability of manufacturers to control the downstream market for products it additionally removes one incentive for manufacturers, which is to outsource manufacturing overseas.

While we are energized by this decision, we know some manufacturers will continue attempts to eliminate owners’ rights, reduce competition and restrict global trade of authentic goods. We will continue working with ORI and other coalitions including the Digital Right to Repair Coalition in order to protect owners’ rights, lower the cost of IT ownership, and extend the life of our customer’s IT infrastructure.

View Tech Law Journal's article Supreme Court Holds First Sale Doctrine Applies Regardless of Location for more background information on the history of the case.

Read the ruling here:

Opinion: Kirtsaeng v. John Wiley & Sons, Inc.

 

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Topics: Cisco, consumer rights, First sale doctrine, router, grey market, ebay, copyright act

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