OCTOBER TERM, 1997
Syllabus
QUALITY KING DISTRIBUTORS, INC.
v. L' ANZA RESEARCH
INTERNATIONAL, INC.
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE NINTH
CIRCUIT
No. 96-1470. Argued December 8, 1997-Decided March 9, 1998
Respondent Uanza, a California manufacturer, sells its hair care
products in this country exclusively to distributors who have
agreed to resell within limited geographic areas and only to
authorized retailers. Uanza promotes its domestic sales with
extensive advertising and special retailer training. In foreign
markets, however, it does not engage in comparable advertising or
promotion; its foreign prices are substantially lower than its
domestic prices. It appears that after Uanza's United Kingdom
distributor arranged for the sale of several tons of Uanza
products, affixed with copyrighted labels, to a distributor in
Malta, that distributor sold the goods to petitioner, which
imported them back into this country without Uanza's permission and
then resold them at discounted prices to unauthorized retailers.
Uanza filed suit, alleging that petitioner's actions violated
Uanza's exclusive rights under the Copyright Act of 1976 (Act), 17
U. S. C. §§ 106, 501, and 602, to reproduce and distribute the
copyrighted material in the United States. The District Court
rejected petitioner's "first sale" defense under § 109(a) and
entered summary judgment for Uanza. Concluding that § 602(a), which
gives copyright owners the right to prohibit the unauthorized
importation of copies, would be "meaningless" if § 109(a) provided
a defense, the Ninth Circuit affirmed.
Held: The first sale doctrine endorsed in § 109(a) is
applicable to imported copies. Pp. 140-154.
(a) In
Bobbs-Merrill Co. v.
Straus, 210 U. S. 339, 349-350,
this Court held that the exclusive right to "vend" under the
copyright statute then in force applied only to the first sale of a
copyrighted work. Congress subsequently codified
Bobbs-Merrill's first sale doctrine in the Act. Section
106(3) gives the copyright holder the exclusive right "to
distribute copies ... by sale or other transfer of ownership," but
§ 109(a) provides: "Notwithstanding ... [§ ]106(3), the owner of a
particular copy ... lawfully made under this title ... is entitled,
without the authority of the copyright owner, to sell or otherwise
dispose of the possession of that copy .... " Although the first
sale doctrine prevents Uanza from treating unauthorized resales by
its domestic distributors as an infringement of the exclusive right
to distribute, Uanza claims that § 602(a), properly construed,
prohibits its foreign distributors from reselling
136
Syllabus
its products to American vendors unable to buy from its domestic
distributors. Pp. 140-143.
(b) The statutory language clearly demonstrates that the right
granted by § 602(a) is subject to § 109(a). Significantly, § 602(a)
does not categorically prohibit the unauthorized importation of
copyrighted materials, but provides that, with three exceptions,
such "[i]mportation ... is an infringement of the exclusive right
to distribute ... under [§ ]106 ... " Section 106 in turn expressly
states that all of the exclusive rights therein granted-including
the distribution right granted by subsection (3)-are limited by §§
107 through 120. One of those limitations is provided by § 109(a),
which expressly permits the owner of a lawfully made copy to sell
that copy "[n]otwithstanding the provisions of [§ ]106(3)." After
the first sale of a copyrighted item "lawfully made under this
title," any subsequent purchaser, whether from a domestic or a
foreign reseller, is obviously an "owner" of that item. Read
literally, § 109(a) unambiguously states that such an owner "is
entitled, without the authority of the copyright owner, to sell"
that item. Moreover, since § 602(a) merely provides that
unauthorized importation is an infringement of an exclusive right
"under [§ ]106," and since that limited right does not encompass
resales by lawful owners, § 602(a)'s literal text is simply
inapplicable to both domestic and foreign owners of Uanza's
products who decide to import and resell them here. Pp.
143-145.
(c) The Court rejects Uanza's argument that § 602(a), and
particularly its exceptions, are superfluous if limited by the
first sale doctrine. The short answer is that this argument does
not adequately explain why the words "under [§ ]106" appear in §
602(a). Moreover, there are several flaws in Uanza's reasoning
that, because § 602(b) already prohibits the importation of
unauthorized or "piratical" copies, § 602(a) must cover
nonpiratical ("lawfully made") copies sold by the copyright owner.
First, even if § 602(a) applied only to piratical copies, it at
least would provide a private remedy against the importer, whereas
§ 602(b)'s enforcement is vested in the Customs Service. Second,
because § 109(a)'s protection is available only to the "owner" of a
lawfully made copy, the first sale doctrine would not provide a
defense to a § 602(a) action against a nonowner such as a bailee.
Third, § 602(a) applies to a category of copies that are neither
piratical nor "lawfully made under this title"; those that are
"lawfully made" under another country's law. Pp. 145-149.
(d) Also rejected is Uanza's argument that because § 501(a)
defines an "infringer" as one "who violates ... [§ ]106 ... , or
who imports ... in violation of [§ ]602," a violation of the latter
type is distinct from one of the former, and thus not subject to §
109(a). This argument's force is outweighed by other statutory
considerations, including the fact that
137
§ 602(a) unambiguously states that the prohibited importation is
an infringement "under [§ ]106," thereby identifying § 602
violations as a species of § 106 violations. More important is the
fact that the § 106 rights are subject to all of the provisions of
"[§§ ]107 through 120." If § 602(a) functioned independently, none
of those sections would limit its coverage. pp. 149-151.
(e) The Court finds unpersuasive the Solicitor General's
argument that "importation" describes an act that is not protected
by § 109(a)'s authorization to a subsequent owner "to sell or
otherwise dispose of the possession of" a copy. An ordinary
interpretation of that language includes the right to ship the copy
to another person in another country. More important, the Solicitor
General's cramped reading is at odds with § 109(a)'s necessarily
broad reach. The whole point of the first sale doctrine is that
once the copyright owner places a copyrighted item in the stream of
commerce by selling it, he has exhausted his exclusive statutory
right to control its distribution. There is no reason to assume
that Congress intended § 109(a) to limit the doctrine's scope. Pp.
151-152.
(f) The wisdom of protecting domestic copyright owners from the
unauthorized importation of validly copyrighted copies of their
works, and the fact that the Executive Branch has recently entered
into at least five international trade agreements apparently
intended to do just that, are irrelevant to a proper interpretation
of the Act. pp. 153-154.
98 F.3d
1109, reversed.
STEVENS, J., delivered the opinion for a unanimous Court.
GINSBURG, J., filed a concurring opinion,
post, p. 154.
Allen R. Snyder argued the cause for petitioner. With him
on the briefs were
Jonathan S.
Franklin, William
Raymond H. Goettsch argued the cause and filed a brief
for respondent.
Deputy Solicitor General Wallace argued the cause for the United
States as amicus curiae urging affirmance. With him on the brief
were Acting Solicitor General Waxman, Assistant Attorneys General
Hunger and Klein, Patricia A. Millett, Michael Jay Singer, and
Irene M. So let. *
*Briefs of
amici curiae urging reversal were filed for
the American Free Trade Association by
Gilbert Lee Sandler
and
Jorge Espinosa; for Cosco Companies, Inc., et al. by
Michael D. Sandler, Peter J.
Kadzik, Rich-
138
JUSTICE STEVENS delivered the opinion of the Court. Section
106(3) of the Copyright Act of 1976 (Act), 17 U. S. C. § 106(3),
gives the owner of a copyright the exclusive right to distribute
copies of a copyrighted work. That exclusive right is expressly
limited, however, by the provisions of §§ 107 through 120. Section
602(a) gives the copyright owner the right to prohibit the
unauthorized importation of copies. The question presented by this
case is whether the right granted by § 602(a) is also limited by §§
107 through 120. More narrowly, the question is whether the "first
sale" doctrine endorsed in § 109(a) is applicable to imported
copies.
I
Respondent, L'anza Research International, Inc. (L'anza), is a
California corporation engaged in the business of manufacturing and
selling shampoos, conditioners, and other hair care products.
L'anza has copyrighted the labels that are affixed to those
products. In the United States, L'anza sells exclusively to
domestic distributors who have agreed to resell within limited
geographic areas and then only to authorized retailers such as
barber shops, beauty salons, and professional hair care colleges.
Uanza has found that the American "public is generally unwilling to
pay the price charged for high quality products, such as L'anza's
products, when they are sold along with the less expensive lower
quality products that are generally carried by supermarkets and
ard Kelly, and Robert J. Verdisco; and for Jan-Bell Marketing,
Inc., by Michael J. Gaertner.
Briefs of
amici curiae urging affirmance were filed for
the American Intellectual Property Law Association by
Arthur
J.
Levine and
John N O'Shea; for the Beauty and
Barber Supply Institute Inc. et al. by
Deborah M. Lodge; for
the National Consumers League et al. by
Charles E. Buffon,
Caroline M. Brown, Jan S.
Amundson, Quentin Riegel, and
Daniel F.
O'Keefe, Jr.; for the Recording Industry
Association of America et al. by
Theodore B. Olson and
Preeta D. Bansal; and for Swarovski America Limited by
Werner Kronstein.
139
drug stores." App. 54 (declaration of Robert Hall). Uanza
promotes the domestic sales of its products with extensive
advertising in various trade magazines and at point of sale, and by
providing special training to authorized retailers.
L'anza also sells its products in foreign markets. In those
markets, however, it does not engage in comparable advertising or
promotion; its prices to foreign distributors are 35% to 40% lower
than the prices charged to domestic distributors. In 1992 and 1993,
L'anza's distributor in the United Kingdom arranged the sale of
three shipments to a distributor in Malta; 1 each shipment
contained several tons of L'anza products with copyrighted labels
affixed.2 The record does not establish whether the initial
purchaser was the distributor in the United Kingdom or the
distributor in Malta, or whether title passed when the goods were
delivered to the carrier or when they arrived at their destination,
but it is undisputed that the goods were manufactured by L'anza and
first sold by Uanza to a foreign purchaser.
It is also undisputed that the goods found their way back to the
United States without the permission of L'anza and were sold in
California by unauthorized retailers who had purchased them at
discounted prices from Quality King Distributors, Inc.
(petitioner). There is some uncertainty about the identity of the
actual importer, but for the purpose of our decision we assume that
petitioner bought all three shipments from the Malta distributor,
imported them, and then resold them to retailers who were not in
L'anza's authorized chain of distribution.
After determining the source of the unauthorized sales, L'anza
brought suit against petitioner and several other defendants.3 The
complaint alleged that the importation and
1 See App. 64 (declaration of Robert De Lanza). 2 See id., at
70-83.
3 Uanza's claims against the retailer defendants were settled.
The Malta distributor apparently never appeared in this action and
a default judgment was entered against it.
140
subsequent distribution of those products bearing copyrighted
labels violated L'anza's "exclusive rights under 17 U. S. C. §§
106, 501 and 602 to reproduce and distribute the copyrighted
material in the United States." App. 32. The District Court
rejected petitioner's defense based on the "first sale" doctrine
recognized by § 109 and entered summary judgment in favor of
L'anza. Based largely on its conclusion that § 602 would be
"meaningless" if § 109 provided a defense in a case of this kind,
the Court of Appeals affirmed.
98 F.3d
1109, 1114 (CA9 1996). Because its decision created a conflict
with the Third Circuit, see
Sebastian Int'Z, Inc. v.
Consumer Contacts (PTY) Ltd., 847 F.2d
1093 (1988), we granted the petition for certiorari. 520 U. S.
1250 (1997).
II
This is an unusual copyright case because L'anza does not claim
that anyone has made unauthorized copies of its copyrighted labels.
Instead, Uanza is primarily interested in protecting the integrity
of its method of marketing the products to which the labels are
affixed. Although the labels themselves have only a limited
creative component, our interpretation of the relevant statutory
provisions would apply equally to a case involving more familiar
copyrighted materials such as sound recordings or books. Indeed, we
first endorsed the first sale doctrine in a case involving a claim
by a publisher that the resale of its books at discounted prices
infringed its copyright on the books.
Bobbs-Merrill Co. v.
Straus, 210 U.
S. 339 (1908).4
In that case, the publisher, Bobbs-Merrill, had inserted a
notice in its books that any retail sale at a price under
4 The doctrine had been consistently applied by other federal
courts in earlier cases. See
Kipling v. G.
P. Putnam's
Sons, 120 F.6d
1, 634
(CA2 1903); Doan v.
American Book Co.,
105 F.7d
2, 776
(CA7 1901);
Harrison v.
Maynard,
Merrill &
Co., 61 F.6d
9, 691
(CA2 1894);
Bobbs-Merrill Co. v.
Snellenburg, 131 F.5d
0, 532 (ED Pa. 1904);
Clemens v.
Estes, 22 F.8d
9, 900 (Mass. 1885);
Stowe v.
Thomas, 23 F. Cas.
201, 206-207 (ED Pa. 1853).
141
$1 would constitute an infringement of its copyright. The
defendants, who owned Macy's department store, disregarded the
notice and sold the books at a lower price without Bobbs-Merrill's
consent. We held that the exclusive statutory right to "vend" 5
applied only to the first sale of the copyrighted work:
"What does the statute mean in granting 'the sole right of
vending the same'? Was it intended to create a right which would
permit the holder of the copyright to fasten, by notice in a book
or upon one of the articles mentioned within the statute, a
restriction upon the subsequent alienation of the subject-matter of
copyright after the owner had parted with the title to one who had
acquired full dominion over it and had given a satisfactory price
for it? It is not denied that one who has sold a copyrighted
article, without restriction, has parted with all right to control
the sale of it. The purchaser of a book, once sold by authority of
the owner of the copyright, may sell it again, although he could
not publish a new edition of it.
"In this case the stipulated facts show that the books sold by
the appellant were sold at wholesale, and purchased by those who
made no agreement as to the control of future sales of the book,
and took upon themselves no obligation to enforce the notice
printed in the book, undertaking to restrict retail sales to a
price of one dollar per copy." Id., at 349-350.
The statute in force when
Bobbs-Merrill was decided
provided that the copyright owner had the exclusive right to "vend"
the copyrighted work. 6 Congress subsequently cod-
5 In 1908, when
Bobbs-Merrill was decided, the copyright
statute provided that copyright owners had "the sole liberty of
printing, reprinting, publishing, completing, copying, executing,
finishing, and
vending" their copyrighted works. Copyright
Act of 1891, § 4952, 26 Stat. 1107 (emphasis added).
6 See n. 5,
supra.
142
ified our holding in
Bobbs-Merrill that the exclusive
right to "vend" was limited to first sales of the work.7 Under the
1976 Act, the comparable exclusive right granted in 17 U. S. C. §
106(3) is the right "to distribute copies ... by sale or other
transfer of ownership." 8 The comparable limitation on that right
is provided not by judicial interpretation, but by an express
statutory provision. Section 109(a) provides:
"Notwithstanding the provisions of section 106(3), the owner of
a particular copy or phonorecord lawfully made under this title, or
any person authorized by such owner, is entitled, without the
authority of the copyright owner, to sell or otherwise dispose of
the possession of that copy or phonorecord .... " 9
7 Congress codified the first sale doctrine in § 41 of the
Copyright Act of 1909, ch. 320, 35 Stat. 1084, and again in §27 of
the 1947 Act, ch. 391, 61 Stat. 660.
8The full text of § 106 reads as follows:
"§ 106. Exclusive rights in copyrighted works
"Subject to sections 107 through 120, the owner of copyright
under this
title has the exclusive rights to do and to authorize any of the
following: "(1) to reproduce the copyrighted work in copies or
phonorecords;
"(2) to prepare derivative works based upon the copyrighted
work;
"(3) to distribute copies or phonorecords of the copyrighted
work to the public by sale or other transfer of ownership, or by
rental, lease, or lending;
"(4) in the case of literary, musical, dramatic, and
choreographic works, pantomimes, and motion pictures and other
audiovisual works, to perform the copyrighted work publicly;
"(5) in the case of literary, musical, dramatic, and
choreographic works, pantomimes, and pictorial, graphic, or
sculptural works, including the individual images of a motion
picture or other audiovisual work, to display the copyrighted work
publicly; and
"(6) in the case of sound recordings, to perform the copyrighted
work publicly by means of a digital audio transmission." 17 U. S.
C. § 106 (1994 ed., Supp. I).
9The comparable section in the 1909 and 1947 Acts provided that
"nothing in this Act shall be deemed to forbid, prevent, or
restrict the transfer
143
The
Bobbs-Merrill opinion emphasized the critical
distinction between statutory rights and contract rights.10 In this
case, L'anza relies on the terms of its contracts with its domestic
distributors to limit their sales to authorized retail outlets.
Because the basic holding in
Bobbs-Merrill is now codified
in § l09(a) of the Act, and because those domestic distributors are
owners of the products that they purchased from Uanza (the labels
of which were "lawfully made under this title"), L'anza does not,
and could not, claim that the statute would enable Uanza to treat
unauthorized resales by its domestic distributors as an
infringement of its exclusive right to distribute copies of its
labels. Uanza does claim, however, that contractual provisions are
inadequate to protect it from the actions of foreign distributors
who may resell L'anza's products to American vendors unable to buy
from L'anza's domestic distributors, and that § 602(a) of the Act,
properly construed, prohibits such unauthorized competition. To
evaluate that submission, we must, of course, consider the text of
§ 602(a).
III
The most relevant portion of § 602(a) provides:
"Importation into the United States, without the authority of
the owner of copyright under this title, of copies or phonorecords
of a work that have been acquired outside the United States is an
infringement of the exclu-
of any copy of a copyrighted work the possession of which has
been lawfully obtained." Copyright Act of 1909, ch. 320, § 41, 35
Stat. 1084; see also Copyright Act of 1947, ch. 391, §27, 61 Stat.
660. It is noteworthy that § 109(a) of the 1978 Act does not apply
to "any copy"; it applies only to a copy that was "lawfully made
under this title."
10 "We do not think the statute can be given such a
construction, and it is to be remembered that this is purely a
question of statutory construction. There is no claim in this case
of contract limitation, nor license agreement controlling the
subsequent sales of the book."
Bobbs-Merrill Co. v.
Straus, 210 U.
S. 339, 350 (1908).
144
sive right to distribute copies or phonorecords under section
106, actionable under section 501. ... " 11
It is significant that this provision does not categorically
prohibit the unauthorized importation of copyrighted materials.
Instead, it provides that such importation is an infringement of
the exclusive right to distribute copies "under section 106." Like
the exclusive right to "vend" that was construed in
Bobbs-Merrill, the exclusive right to distribute is a
limited right. The introductory language in § 106 expressly states
that all of the exclusive rights granted by that section-including,
of course, the distribution right granted by subsection (3)-are
limited by the provisions of §§ 107 through 120.12 One of those
limitations, as we have noted, is provided by the terms of §
109(a), which expressly permit the owner of a lawfully made copy to
sell that copy "[n]otwithstanding the provisions of section
106(3)." 13
11 The remainder of § 602(a) reads as follows:
"This subsection does not apply to-
"(1) importation of copies or phonorecords under the authority
or for the use of the Government of the United States or of any
State or political subdivision of a State, but not including copies
or phonorecords for use in schools, or copies of any audiovisual
work imported for purposes other than archival use;
"(2) importation, for the private use of the importer and not
for distribution, by any person with respect to no more than one
copy or phonorecord of anyone work at anyone time, or by any person
arriving from outside the United States with respect to copies or
phonorecords forming part of such person's personal baggage; or
"(3) importation by or for an organization operated for
scholarly, educational, or religious purposes and not for private
gain, with respect to 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 or archival
purposes, unless the importation of such copies or phonorecords is
part of an activity consisting of systematic reproduction or
distribution, engaged in by such organization in violation of the
provisions of section 108(g)(2)."
12 See n. 8, supra.
13 See text accompanying n. 9, supra.
145
After the first sale of a copyrighted item "lawfully made under
this title," any subsequent purchaser, whether from a domestic or
from a foreign reseller, is obviously an "owner" of that item. Read
literally, § 109(a) unambiguously states that such an owner "is
entitled, without the authority of the copyright owner, to sell"
that item. Moreover, since § 602(a) merely provides that
unauthorized importation is an infringement of an exclusive right
"under section 106," and since that limited right does not
encompass resales by lawful owners, the literal text of § 602(a) is
simply inapplicable to both domestic and foreign owners of L'anza's
products who decide to import them and resell them in the United
States.14
Notwithstanding the clarity of the text of §§ 106(3), 109(a),
and 602(a), L'anza argues that the language of the Act supports a
construction of the right granted by § 602(a) as "distinct from the
right under Section 106(3) standing alone," and thus not subject to
§ 109(a). Brief for Respondent 15. Otherwise, Uanza argues, both
the § 602(a) right itself and its exceptions 15 would be
superfluous. Moreover, supported by various
amici curiae,
including the Solicitor General of the United States, L'anza
contends that its construction is supported by important policy
considerations. We consider these arguments separately.
IV
L'anza advances two primary arguments based on the text of the
Act: (1) that § 602(a), and particularly its three exceptions, are
superfluous if limited by the first sale doctrine; and (2) that the
text of § 501 defining an "infringer" refers
14 Despite Uanza's contention to the contrary, see Brief for
Respondent 26-27, the owner of goods lawfully made under the Act is
entitled to the protection of the first sale doctrine in an action
in a United States court even if the first sale occurred abroad.
Such protection does not require the extraterritorial application
of the Act any more than § 602(a)'s "acquired abroad" language
does.
15 See n. 11, supra.
146
separately to violations of § 106, on the one hand, and to
imports in violation of § 602. The short answer to both of these
arguments is that neither adequately explains why the words "under
section 106" appear in § 602(a). The Solicitor General makes an
additional textual argument: he contends that the word
"importation" in § 602(a) describes an act that is not protected by
the language in § 109(a) authorizing a subsequent owner "to sell or
otherwise dispose of the possession of" a copy. Each of these
arguments merits separate comment.
The Coverage of § 602(a)
Prior to the enactment of § 602(a), the Act already prohibited
the importation of "piratical," or unauthorized, copies.16
Moreover, that earlier prohibition is retained in § 602(b) of the
present ActP L'anza therefore argues (as do the Solicitor General
and other
amici curiae) that § 602(a) is superfluous unless
it covers nonpiratical ("lawfully made") copies sold by the
copyright owner, because importation nearly always implies a first
sale. There are several flaws in this argument.
First, even if § 602(a) did apply only to piratical copies, it
at least would provide the copyright holder with a private remedy
against the importer, whereas the enforcement of § 602(b) is vested
in the Customs Service.18 Second, because the protection afforded
by § 109(a) is available only to the "owner" of a lawfully made
copy (or someone authorized by the owner), the first sale doctrine
would not provide a de-
16 See 17 U. S. C. §§ 106, 107 (1970).
17 Section 602(b) provides in relevant part: "In a case where
the making of the copies or phonorecords would have constituted an
infringement of copyright if this title had been applicable, their
importation is prohibited .... " The first sale doctrine of §
109(a) does not protect owners of piratical copies, of course,
because such copies were not "lawfully made."
18 See n. 17, supra.
147
fense to a § 602(a) action against any nonowner such as a
bailee, a licensee, a consignee, or one whose possession of the
copy was unlawful.19 Third, § 602(a) applies to a category of
copies that are neither piratical nor "lawfully made under this
title." That category encompasses copies that were "lawfully made"
not under the United States Copyright Act, but instead, under the
law of some other country.
The category of copies produced lawfully under a foreign
copyright was expressly identified in the deliberations that led to
the enactment of the 1976 Act. We mention one example of such a
comment in 1961 simply to demonstrate that the category is not a
merely hypothetical one. In a report to Congress, the Register of
Copyrights stated, in part:
"When arrangements are made for both a U. S. edition and a
foreign edition of the same work, the publishers frequently agree
to divide the international markets. The foreign publisher agrees
not to sell his edition in the United States, and the U. S.
publisher agrees not to sell his edition in certain foreign
countries. It has been suggested that the import ban on piratical
copies should be extended to bar the importation of the foreign
edition in contravention of such an agreement." Copyright Law
Revision: Report of the Register of Copyrights on the General
Revision of the U. S. Copyright Law, 87th Cong., 1st Sess., 125-126
(H. R. Judiciary Comm. Print 1961).
19 In its opinion in this case, the Court of Appeals quoted a
statement by a representative of the music industry expressing the
need for protection against the importation of stolen motion
picture prints: "We've had a similar situation with respect to
motion picture prints, which are sent all over the world-legitimate
prints made from the authentic negative. These prints get into
illicit hands. They're stolen, and there's no contractual
relationship .... Now those are not piratical copies." Copyright
Law Revision Part 2: Discussion and Comments on Report of the
Register of Copyrights on General Revision of the U. S. Copyright
Law, 88th Cong., 1st Sess., 213 (R. R. Judiciary Comm. Print 1963)
(statement of Mr. Sargoy), quoted in
98 F.3d
1109, 1116 (CA9 1996).
148
Even in the absence of a market allocation agreement between,
for example, a publisher of the United States edition and a
publisher of the British edition of the same work, each such
publisher could make lawful copies. If the author of the work gave
the exclusive United States distribution rights-enforceable under
the Act-to the publisher of the United States edition and the
exclusive British distribution rights to the publisher of the
British edition,20 however, presumably only those made by the
publisher of the United States edition would be "lawfully made
under this title" within the meaning of § 109(a). The first sale
doctrine would not provide the publisher of the British edition who
decided to sell in the American market with a defense to an action
under § 602(a) (or, for that matter, to an action under § 106(3),
if there was a distribution of the copies).
The argument that the statutory exceptions to § 602(a) are
superfluous if the first sale doctrine is applicable rests on the
assumption that the coverage of that section is coextensive with
the coverage of § 109(a). But since it is, in fact, broader because
it encompasses copies that are not subject to the first sale
doctrine-e. g., copies that are lawfully made under the law of
another country-the exceptions do protect the traveler who may have
made an isolated purchase of a copy of a work that could not be
imported in bulk for purposes of resale. As we read the Act,
although both the first sale doctrine embodied in § 109(a) and the
exceptions in § 602(a) may
20 A participant in a 1964 panel discussion expressed concern
about this particular situation. Copyright Law Revision Part 4:
Further Discussion and Comments on Preliminary Draft for Revised U.
S. Copyright Law, 88th Cong., 2d Sess., 119 (H. R. Judiciary Comm.
Print 1964) (statement of Mrs. Pilpel) ("For example, if someone
were to import a copy of the British edition of an American book
and the author had transferred exclusive United States and Canadian
rights to an American publisher, would that British edition be in
violation so that this would constitute an infringement under this
section?"); see also id., at 209 (statement of Mr. Manges)
(describing similar situation as "a troublesome problem that
confronts U. S. book publishers frequently").
149
be applicable in some situations, the former does not subsume
the latter; those provisions retain significant independent
meaning.
Section 501's Separate References to §§ 106 and 602
The text of § 501 does lend support to L'anza's submission.
In relevant part, it provides:
"(a) Anyone who violates any of the exclusive rights of the
copyright owner as provided by sections 106 through 118 or of the
author as provided in section 106A(a), or who imports copies or
phonorecords into the United States in violation of section 602, is
an infringer of the copyright or right of the author, as the case
may be .... "
The use of the words
"or who imports," rather than words
such as
"including one who imports," is more consistent with
an interpretation that a violation of § 602 is distinct from a
violation of § 106 (and thus not subject to the first sale doctrine
set out in § 109(a)) than with the view that it is a species of
such a violation. Nevertheless, the force of that inference is
outweighed by other provisions in the statutory text.
Most directly relevant is the fact that the text of § 602(a)
itself unambiguously states that the prohibited importation is an
infringement of the exclusive distribution right "under section
106, actionable under section 501." Unlike that phrase, which
identifies § 602 violations as a species of § 106 violations, the
text of § 106A, which is also cross-referenced in § 501, uses
starkly different language. It states that the author's right
protected by § 106A is "independent of the exclusive rights
provided in Section 106." The contrast between the relevant
language in § 602 and that in § 106A strongly implies that only the
latter describes an independent right.21
21 The strength of the implication created by the relevant
language in § 106A is not diminished by the fact that Congress
enacted § 106A more
150
Of even greater importance is the fact that the § 106 rights are
subject not only to the first sale defense in § 109(a), but also to
all of the other provisions of "sections 107 through 120." If §
602(a) functioned independently, none of those sections would limit
its coverage. For example, the "fair use" defense embodied in §
10722 would be unavailable to importers if § 602(a) created a
separate right not subject to the limitations on the § 106(3)
distribution right. Under L'anza's interpretation of the Act, it
presumably would be unlawful for a distributor to import copies of
a British newspaper that contained a book review quoting excerpts
from an American
recently than § 602(a), which is part of the Copyright Act of
1976. Section 106A was passed as part of the Visual Artists Rights
Act of 1990 in order to protect the moral rights of certain visual
artists. Section 106A is analogous to Article
6bis of the
Berne Convention for the Protection of Literary and Artistic Works,
but its coverage is more limited. See 2 P. Goldstein, Copyright §
5.12, p. 5:225 (2d ed. 1996) (§ 106A encompasses aspects of the
moral rights guaranteed by Article
6bis of the Berne
Convention, "but effectively gives these rights a narrow subject
matter and scope").
22 Title 17 U. S. C. § 107 provides as follows:
"§ 107. Limitations on exclusive rights: Fair use
"Notwithstanding the provisions of sections 106 and 106A, the
fair use of a copyrighted work, including such use by reproduction
in copies or phonorecords or by any other means specified by that
section, for purposes such as criticism, comment, news reporting,
teaching (including multiple copies for classroom use),
scholarship, or research, is not an infringement of copyright. In
determining whether the use made of a work in any particular case
is a fair use the factors to be considered shall include-
"(1) the purpose and character of the use, including whether
such use is of a commercial nature or is for nonprofit educational
purposes;
"(2) the nature of the copyrighted work;
"(3) the amount and substantiality of the portion used in
relation to the copyrighted work as a whole; and
"(4) the effect of the use upon the potential market for or
value of the copyrighted work.
"The fact that a work is unpublished shall not itself bar a
finding of fair use if such finding is made upon consideration of
all the above factors."
151
novel protected by a United States copyright.23 Given the
importance of the fair use defense to publishers of scholarly
works, as well as to publishers of periodicals, it is difficult to
believe that Congress intended to impose an absolute ban on the
importation of all such works containing any copying of material
protected by a United States copyright.
In the context of this case, involving copyrighted labels, it
seems unlikely that an importer could defend an infringement as a
"fair use" of the label. In construing the statute, however, we
must remember that its principal purpose was to promote the
progress of the "useful Arts," U. S. Const., Art. I, § 8, cl. 8, by
rewarding creativity, and its principal function is the protection
of original works, rather than ordinary commercial products that
use copyrighted material as a marketing aid. It is therefore
appropriate to take into account the impact of the denial of the
fair use defense for the importer of foreign publications. As
applied to such publications, L'anza's construction of § 602 "would
merely inhibit access to ideas without any countervailing benefit."
Sony Corp. of America v.
Universal City Studios, Inc.,
464 U. S. 417, 450-451 (1984).24
Does an importer "sell or otherwise dispose" of copies as those
words are used in § 109(a)?
Whether viewed from the standpoint of the importer or from that
of the copyright holder, the textual argument advanced by the
Solicitor General25-that the act of "im-
23 The § 602(a) exceptions, which are substantially narrower
than § 107, would not permit such importation. See n. 11,
supra.
24 Uanza's reliance on § 602(a)(3)'s reference to § 108(g)(2),
see n. 11,
supra, to demonstrate that all of the
other limitations set out in §§ 107 through 120-inc1uding
the first sale and fair use doctrines-do not apply to imported
copies is unavailing for the same reasons.
25 See also Brief for Recording Industry Association of America
et al. 19-21.
152
portation" is neither a sale nor a disposal of a copy under §
l09(a)-is unpersuasive. Strictly speaking, an importer could, of
course, carry merchandise from one country to another without
surrendering custody of it. In a typical commercial transaction,
however, the shipper transfers "possession, custody, control and
title to the products" 26 to a different person, and L'anza assumes
that petitioner's importation of the L'anza shipments included such
a transfer. An ordinary interpretation of the statement that a
person is entitled "to sell or otherwise dispose of the possession"
of an item surely includes the right to ship it to another person
in another country.
More important, the Solicitor General's cramped reading of the
text of the statutes is at odds not only with § 602(a)'s more
flexible treatment of unauthorized importation as an infringement
of the distribution right (even when there is no literal
"distribution"), but also with the necessarily broad reach of §
l09(a). The whole point of the first sale doctrine is that once the
copyright owner places a copyrighted item in the stream of commerce
by selling it, he has exhausted his exclusive statutory right to
control its distribution. As we have recognized, the codification
of that doctrine in § l09(a) makes it clear that the doctrine
applies only to copies that are "lawfully made under this title,"
but that was also true of the copies involved in the
Bobbs-Merrill case, as well as those involved in the earlier
cases applying the doctrine. There is no reason to assume that
Congress intended either § l09(a) or the earlier codifications of
the doctrine to limit its broad scope.27
In sum, we are not persuaded by either L'anza's or the Solicitor
General's textual arguments.
26 App. 87.
27 See,
e. g., H. R. Rep. No. 1476, 94th Cong., 2d Sess.,
79 (1979) ("Section 109(a) restates and confirms" the first sale
doctrine established by prior case law); S. Rep. No. 473, 94th
Cong., 1st Sess., 71 (1975) (same).
153
V
The parties and their
amici have debated at length the
wisdom or unwisdom of governmental restraints on what is sometimes
described as either the "gray market" or the practice of "parallel
importation." 28 In
K mart Corp. v.
Cartier, Inc.,
486 U. S. 281
(1988), we used those terms to refer to the importation of
foreign-manufactured goods bearing a valid United States trademark
without the consent of the trademark holder.
Id., at
285-286. We are not at all sure that those terms appropriately
describe the consequences of an American manufacturer's decision to
limit its promotional efforts to the domestic market and to sell
its products abroad at discounted prices that are so low that its
foreign distributors can compete in the domestic market.29 But even
if they do, whether or not we think it would be wise policy to
provide statutory protection for such price discrimination is not a
matter that is relevant to our duty to interpret the text of the
Copyright Act.
Equally irrelevant is the fact that the Executive Branch of the
Government has entered into at least five international trade
agreements that are apparently intended to protect domestic
copyright owners from the unauthorized importation of copies of
their works sold in those five countries.30 The earliest of those
agreements was made in 1991; none has been ratified by the Senate.
Even though they are of course
28 Compare, for example, Gorelick & Little, The Case for
Parallel Importation, 11 N. C. J. Int'l L. & Comm. Reg. 205
(1986), with Gordon, Gray Market Is Giving Hair-Product Makers Gray
Hair, N. Y. Times, July 13, 1997, section 1, p. 28, col. 1.
29Presumably Uanza, for example, could have avoided the
consequences of that competition either (1) by providing
advertising support abroad and charging higher prices, or (2) if it
was satisfied to leave the promotion of the product in foreign
markets to its foreign distributors, to sell its products abroad
under a different name.
30 The Solicitor General advises us that such agreements have
been made with Cambodia, Trinidad and Tobago, Jamaica, Ecuador, and
Sri Lanka.
154
consistent with the position taken by the Solicitor General in
this litigation, they shed no light on the proper interpretation of
a statute that was enacted in 1976.31
The judgment of the Court of Appeals is reversed.
It is so ordered.
JUSTICE GINSBURG, concurring.
This case involves a "round trip" journey, travel of the copies
in question from the United States to places abroad, then back
again. I join the Court's opinion recognizing that we do not today
resolve cases in which the allegedly infringing imports were
manufactured abroad. See W. Patry, Copyright Law and Practice
166-170 (1997 Supp.) (commenting that provisions of Title 17 do not
apply extraterritorially unless expressly so stated, hence the
words "lawfully made under this title" in the "first sale"
provision, 17 U. S. C. § 109(a), must mean "lawfully made in the
United States"); see generally P. Goldstein, Copyright § 16.0, pp.
16:1-16:2 (2d ed. 1998) ("Copyright protection is territorial. The
rights granted by the United States Copyright Act extend no farther
than the nation's borders.").
31 We also note that in 1991, when the first of the five
agreements was signed, the Third Circuit had already issued its
opinion in
Sebastian Int'l, Inc. v.
Consumer Contacts
(PTY) Ltd., 847 F.2d
1093 (1988), adopting a position contrary to that subsequently
endorsed by the Executive Branch.
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