The Supreme Court is taking up a case that has the potential to destroy the second-hand sales market.
At issue in Kirtsaeng v. John Wiley & Sons is the first-sale doctrine in copyright law, which allows you to buy and then sell things like electronics, books, artwork and furniture, as well as CDs and DVDs, without getting permission from the copyright holder of those products.
Under the doctrine, which the Supreme Court has recognized since 1908, you can resell your stuff without worry because the copyright holder only had control over the first sale.
Put simply, though Apple Inc. AAPL -2.05% has the copyright on the iPhone and Mark Owen has it on the book “No Easy Day,” you can still sell your copies to whomever you please whenever you want without retribution.
That’s being challenged now for products that are made abroad, and if the Supreme Court upholds an appellate court ruling, it would mean that the copyright holders of anything you own that has been made in China, Japan or Europe, for example, would have to give you permission to sell it.
“It means that it’s harder for consumers to buy used products and harder for them to sell them,” said Jonathan Band, an adjunct professor at Georgetown University Law Center, who filed a friend-of-the-court brief on behalf of the American Library Association, the Association of College and Research Libraries and the Association for Research Libraries. “This has huge consumer impact on all consumer groups.”
Indeed it does. There are whole economies based on the freedom to sell stuff that you have already bought. Game Stop lives off of the secondary game and electronics market. Used car dealers live off of the secondary auto market. Autotrader and similar second-hand enterprises do too. What if there are foreign-made components in the home that you’ve owned for a few years but now need to sell?
One argument against allowing these kinds of sales, and one that has been levied against Game Stop, is that second-hand sales hurt retail. But that’s debatable. Many consumers fund their jumps to new stuff by selling old stuff. You sell the 10-year-old Toyota to get a newer one. You sell the iPhone 3GS to upgrade to the 5. You sell off the old game console to upgrade to a newer, better one. Without the ability to sell old stuff, many cannot afford to buy new stuff. Selling the old stuff does contribute to the buying of new stuff in that way. If you can’t sell the old stuff and can’t afford to buy new stuff without selling old stuff, then you don’t do either — you don’t buy new stuff or sell the old stuff. At least, not legally, as we can now. Ruling against the settled precedent here could end up creating a black market, criminalizing pretty much everyone in America who sells much of anything second-hand.
This case could kill all that. The lower court already ruled in favor of killing all that. Ebay must be nervously watching all this, since the courts have not been kind to private property and the individual’s relationship to government in recent times. It wasn’t too many years ago that SCOTUS granted government sweeping powers of eminent domain in Kelo vs. New London. Given the idiocy of a court upholding ObamaCare as a tax when it wasn’t sold as such at the time of passage, it’s not out of bounds to worry which side of the bed various justices wake up on the day they hand down their ruling.