Lenders in the Courthouse

If the U.S. Supreme Court upholds the conviction of a Thai-born graduate student who allegedly made close to $1 million importing cheaply made foreign editions of textbooks and selling them to U.S. students on eBay, then academic libraries might not be allowed to lend certain books and electronic materials, according to library advocates who plan to file an amicus brief on the case today.

The Library Copyright Alliance, a consortium of three major library associations, argues that a lower court’s ruling in John Wiley & Sons, Inc. v. Supap Kirtsaeng could make libraries liable for copyright infringement if they lend out library books and other materials that were “not lawfully manufactured in the United States” without purchasing expensive “lending licenses.” (Libraries, the alliance asserts, tend to have large numbers of foreign-made books in their collections.)

Such an outcome could give publishers greater leverage to dictate the terms under which patrons may access copyrighted works, according to Brandon Butler, director of public policy initiatives for the Association of Research Libraries and co-author of the amicus brief.

In 2008, Wiley, one of the world’s largest textbook publishers, sued Supap Kirtsaeng, a graduate student at the University of Southern California, for coordinating with friends and family in Thailand on a lucrative ploy to sell low-quality editions of Wiley textbooks manufactured by the company’s Asia division to customers in the United States, where Wiley was selling prettier, sturdier editions of the same textbooks for substantially higher prices. A district court found Kirtsaeng guilty of copyright infringement and ordered him to pay $600,000 in damages to Wiley. An appellate court upheld the decision. In April the Supreme Court agreed to hear the case, which it will decide sometime within the year.

The legal issue at hand is whether the “first sale doctrine,” which says copyright holders may only control the price of a textbook the first time it is sold, applies to textbooks that are assembled outside the United States. The language of the first-sale doctrine, which is part of the U.S. Copyright Act of 1976, refers to works “lawfully made under this title.” But does that phrase means “manufactured in the United States,” or “manufactured with the lawful authorization of the holder of a work’s U.S. reproduction and distribution rights”?

The Second Circuit Court of Appeals went with the former reading. Now the library associations are saying a Supreme Court affirmation would mean disaster for libraries.

“Many of the materials in the collections of U.S. libraries were manufactured overseas,” wrote Butler and Jonathan Band, a Washington-based copyright attorney who frequently represents libraries, in a draft of the brief. “Indeed, U.S. publishers now print an increasing number of books in China and other countries with lower labor costs.

“Thus, an affirmance of the decision below could jeopardize the ability of libraries to lend a substantial part of their collection to the public,” they write.

Publishers will no doubt argue that the library associations’ concerns are overblown. There is an exception in U.S. copyright law that permits libraries to import “no more than one copy of an audiovisual work solely for its archival purposes, and no more than five copies or phonorecords of any other work for its library lending” purposes. Band and Butler admit in their brief that “an exception to the distribution right is implied… It would make no sense for Congress to allow importation for the purpose of lending, but then not allow the lending itself.”

Nevertheless, they argue that there is enough room for interpretation within the legalese to make libraries skittish. On the subject of audiovisual library content in particular, the library advocates point out that the exception only applies to foreign-made works imported “solely for archival purposes” and does not mention lending at all.

Publishers have argued that the implications of an alternative reading — one that enables importing and reselling by third-party entrepreneurs like Kirtsaeng — would be dire for the publishing industry. In Costco Wholesale Corporation v. Omega, S.A., a 2010 case with similar implications for the first-sale doctrine, the Association of American Publishers (AAP) filed an amicus brief of its own, forecasting apocalyptic fallout for publishers if the High Court blessed such a reading. (It didn’t.)

“Copies of foreign editions [of textbooks] would be imported en masse, by large campus-based bookstores, Internet resellers, and others,” the AAP wrote at the time. “The loss of revenue from domestic editions would drastically reduce the ability of publishers to compensate authors for their work and lead to significant changes in the publishers’ business models which, in turn, will cause ripple effects beyond the publishing industry.”

A spokeswoman for the publishing industry said textbook publishers would not try to crack down on libraries lending foreign-made books and materials. "A positive outcome in Wiley v. Kirtsaeng would not put libraries at risk for lending books in their collections that were imported from abroad," she said. "Publishers have also stated they have no intention of combing library stacks and databases to identify such publications; their stated objectives have been to influence future purchases, strengthen legitimate channels and discourage gray goods transactions."

In an interview with Inside Higher Ed, Butler, the co-author of the brief, said he thought the sort of upheaval foretold by the AAP was unlikely, given how difficult it was to successfully run the sort of reselling operation Kirtsaeng had managed to set up.

Asked if he thought it was likely that a publisher would sue a library for lending foreign-made copies of its books, Butler said it was improbable but not implausible. Recent legal wrangling between publishers and libraries has made it clear that publishers are willing to be bold about asserting their copyrights, he says.

“If a publisher can decide whether to allow lending,” Butler said, “sometimes they might decide they would rather not.”