[Infowarrior] - USTR Trying To Wipe Out Used Goods Sales With Secretive TPP Agreement

[Richard Forno]

How The US Trade Rep Is Trying To Wipe Out Used Goods Sales With Secretive TPP Agreement

from the trade-for-thee-but-not-for-me dept

For a while now, we've been covering the gradual legal assault on the First Sale doctrine and beyond.  The First Sale doctrine, of course, is what lets you resell a legally purchased book without having to first obtain permission from the copyright holder. Of course, copyright holders generally hate the First Sale doctrine, because it often means that their products have to compete against "used" versions of their own products as well. Of course, this view is very shortsighted and economically ignorant. A healthy used or resale market has been shown to increase the amount people will pay for new items -- because they recognize that there's a secondary market and they can recoup some of what they paid for the original. Thus a healthy secondary market, contrary to what some believe, can often improve the health of the primary market. 

But, there have been a few very questionable lawsuits that are chipping away at the first sale doctrine, starting with the infamous Omega case, in which the watchmaker exploited the phrase "made under this title" to argue that any goods made outside the US were not subject to first sale rights under copyright law, because they were not "made under this title." That 9th Circuit ruling (which remains in place after the Supreme Court split down the middle -- with Kagan abstaining due to her earlier involvement in the case) was one thing, in that there were some limitations. But then the 2nd Circuit went to loony town in suggesting that some books that were legally purchased in Asia could not be resold in the US without permission (i.e. an expensive license). While the district court who reviewed the Omega case on remand recently rejected Omega's claim as copyright misuse, there is a lot of fear over this issue as the courts sort things out. 

The risk of the Omega case goes even further, since it could wipe out the used goods market not just for "content," but for physical goods as well. That's because Omega didn't just exploit the "under this title" part of the law, it exploited copyright law itself. Remember, it sells watches. What do watches have to do with copyright? Absolutely nothing. But Omega's trick was to create a little design drawing, which it then got a registered copyright on... and then engraved that drawing in a tiny tiny spot on the back of the watch where almost no one will ever notice it. It serves absolutely no purpose... other than to make a physical object subject to the crazy excesses of copyright law. Thankfully the district court saw through that and recognized it was copyright misuse, but who knows what the higher courts (or other circuits) will say. 

Of course, all this fighting in the courts over this might be moot if the Trans Pacific Partnership Agreement (TPP) is approved. We've been covering the incredibly secretive negotiations over that agreement, including last year's leaked draft of the IP section. However, we didn't quite realize the extent to which the US Trade Representative (USTR) and the big industry interests were seeking to use the TPP process to wipe out the used goods market. 

In a fantastically detailed post, John Mitchell walks through how the USTR is seeking to effectively neuter any used goods sales by more or less locking in these rulings that makes it effectively against the law to resell copyrighted goods that were legally bought abroad back into the US without purchasing a new license to do so. He goes through (in much more detail than I did above) the history of first sale, as well as the two key cases above, but then digs into what the USTR is trying to do according to the leaked draft:


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http://www.techdirt.com/articles/20120224/03083617862/how-us-trade-rep-is-trying-to-wipe-out-used-goods-sales-with-secretive-tpp-agreement.shtml

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