Critical Blow Strikes First Sale Doctrine

In a nutshell, the first sale doctrine means that if a library in the United States buys a book, it may lend the book, give it away, or—at least according to federal law—resell it.

Last week, Library Journal’s Michael Kelley reported on the Second U.S. Circuit Court of Appeals’ ruling inJohn Wiley & Sons Inc v. Supap Kirtsaeng that the first sale doctrine applies only to works manufactured in the United States. Kevin Smith expanded on the problems with this ruling, from creating economic disincentives to manufacture books in the United States to questioning whether U.S. libraries are allowed to lend books that were manufactured abroad.

When I first read the LJ article a week ago, I was shocked by such an overreaching decision. To think, a year or two ago at the Charleston Conference, it was suggested that the OMEGA SA v. Costco Wholesale Corp. ruling was the one to watch—pun intended—as an example of a seemingly unrelated copyright case’s impact on library lending practices. According to Kelley, the OMEGA SA ruling indicated “that the first sale doctrine applies to copies made outside the United States but only after the copyright owner has authorized a sale [in the U.S.]" The John Wiley & Sons Inc ruling goes farther in restricting the first sale doctrine, contradicting the COSTCO case, by saying first sale applies only for books manufactured in the United States, regardless of whether the copyright holder has authorized sale of that title in the U.S.

So, what are the potential implications of the more recent case? Kelley and Smith have cited the likely economic detriment to the U.S. of driving more manufacturing outside of the country for goods to be sold domestically, which runs counter to the stated intent of creating the first sale doctrine in the first place. Smith also mentions one possible approach by libraries, who “can demand manufacturing information and, for works manufactured outside the U.S., insist on a 'right to lend' being including in purchase agreements" as a way to protect our previously-guaranteed rights of first sale.

Suppose that this ruling stands and definitely means that U.S. libraries (and citizens, for that matter) cannot lend or sell books in the U.S.—without copyright holders’ permission—that were manufactured outside of the U.S. I work in a building that offers over a million volumes to lend. We could stop sharing our books until we figure out which ones were manufactured in the U.S. Maybe we should begin with the ACs, volume by volume, seeking manufacturing information and coding this into the MARC field 260 subfields e and f. Perfect timing! We’ve given up dozens of positions over the last couple years due to draconian budget cuts. I guess we’ll drop everything else and do a major inventory project for the forseeable future. Students, faculty and other researchers can use some of our e-resources, Wikipedia and Google anyway. Meanwhile, we’ll add to the list of demands from our book vendors that they sell us books manufactured in the U.S. or negotiate on our behalf with publishers to guarantee our right to lend their books once we buy them. I wonder how much more we’ll pay for this privilege, lending. Maybe we can negotiate blanket agreements with major publishers: then we could update all those aforementioned MARC records in batches by publisher with a note that says “OK to lend." Are we going to see convergence in print and electronic resources in the contract law realm instead of the copyright realm? Who saw this coming? I didn’t.

Or, maybe we don’t need libraries any more, since most of what they used to do is illegal now, not to mention expensive.

What will be the impact on the secondary print market? Alibris, Powell’s and others would probably be targeted for lawsuits before libraries would, because they’re profiting off the first sale doctrine. Would publishers enter the secondary market? (Are they allowed to buy back the copies they’ve already sold?)

Please excuse what I hope is proven to be hyperbole. These big questions are legitimate in the face of the ruling, for the purpose of illustrating its broad and probably unintentional impact. When dramatic changes to the publishing or bookselling landscape occur, I look not only to library supporters and colleagues for perspective, but to the publishers and vendors upon whom we rely to build our collections and serve our patrons. Our primary vendor’s email update this week had no mention of the ruling; nor is it addressed on their website that I can tell. A Google news search on “first sale doctrine" led me two only four articles about this case and only one with what can be construed as publisher perspective. Thomson Reuters portrays the Appeals Court’s decision as a victory for copyright owners and explores neither the implications for libraries’ lending practices nor for the secondary book market—including textbooks—in the U.S.

If the John Wiley & Sons Inc ruling arbitrarily diminishes the value of print resources to libraries and pushes the use of print to resemble the byzantine regulations of e-resources through myriad license agreements, publishers and vendors may see their library sales profits increase as libraries are compelled to adopt e-publishing wholesale (if you will). On the other hand, maybe libraries decide that their time and energy are better spent facilitating research with other resources and Open Access and Creative Commons licensing become the norm in research. Maybe university presses will seize the day and partner with libraries for the common interest of sharing knowledge.

I hope the almost total silence from the publishing and library vendor world indicates that libraries are not facing the crisis the Wiley ruling suggests. On the other hand, we could be experiencing collective denial.

Please share in the comments your thoughts and recommendations for where we go from here.