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:

Here is where the aid of the U.S.T.R. in negotiating the Trans-Pacific Partnership Agreement (TPP) would come in, nullifying any potential adverse ruling by the Supreme Court while concurrently protecting against liability for copyright misuse. After all, if our own treaties require us to allow copyrights to be used to suppress price competition, it can hardly be a misuse of the copyright to do just that. The current draft would require the parties to codify the outcome from the 9th Circuit’s self-maligned interpretation. And, if the U.S.T.R. is successful, even if the Supreme Court were to reverse the Kirtsaeng holding, Congress would have an international obligation to amend Section 109(a) to apply only to copies either made in the U.S. or authorized by the U.S. copyright holder for sale here – authorized, no doubt, only at a minimum resale price rather than the true market price.

The current draft of the TPP has a provision that the major college textbook publishers could not have drafted any better themselves, as it mirrors the outcome advocated in their briefs. It would require treaty parties to codify the Ninth Circuit’s damaging ruling, thereby creating a huge loophole for U.S. copyright holders to take control all secondary markets for their works, as well as to control primary markets, by requiring all retailers to obtain a copyright owner’s “license to sell” in addition to outright ownership of noninfringing copies – if those copies are made abroad.

The fear, then, is that as companies recognize how this works, they can effectively ban almost any resale, just by having some of the product “made” outside the US. Mitchell highlights the case of the iPhone:

The iPhone, for example, comes pre-loaded with copyrighted computer programs, making it a noninfringing “copy” of many works, lawfully made in China (albeit by the U.S. copyright owner). Under the Ninth Circuit ruling, you may lend you iPhone to a friend without the copyright owner’s consent, because Apple sold it here (assuming Apple is the owner of all of the copyrights) in pre-installed works. Under the Second Circuit ruling, you cannot, simply because the copies were all made in China. Under the proposed TPP provision, the outcome might differ depending on whether there is a market for iPhones without the operating system (iOS) and related application software.

There is also a flip side to all of this which Mitchell only briefly touches on. Copyright holders might not want to be so excited about arguing that works made outside this country are not subject to US copyright law… because that could mean that all of these US copyright holders might not be able to make use of their copyrights abroad:

If a copy is not “lawfully made” under the U.S. Copyright Act solely because the Copyright Act does not apply abroad, then the other part of the exclusive right in Section 106(1) – to “authorize” the reproduction of the work into copies or phonorecords – would be limited to the exclusive right to authorize reproductions in the United States alone. In other words, anyone in the United States would be free to authorize reproductions abroad without infringing upon the U.S. copyright owner’s exclusive right to authorize reproductions.

Of course, I’m sure they would argue against that, or in a cognitively dissonant manner, seek to make use of the fact that various countries have agreed to recognize each others’ copyrights to argue that when abroad, those copyrights are automatically converted to the local copyrights within those countries (just don’t ask why first sale doesn’t then apply too…).

Either way, this is yet another reason to be quite worried about the USTR and TPP, and how seemingly “simple” changes to these rules and “international obligations” could have massive market-changing impact.

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

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kenichi tanaka says:

This will effectively wipe out eBay, Amazon Marketplace, Best Buy Marketplace, Walmart Marketplace, Flea Markets, Gamestop, EB Games and any venue, retailer or online website that allows you to sell off items or merchandise you no longer want or need.

So, the Obama Administration is going to be responsible, ONCE AGAIN, for wiping out jobs in the United States.

Thanks, Mr. President, for agreeing to even more stringent policies that will kill jobs in our country.

mrdarkrai (profile) says:

Sigh, petition him again

He wishes to be taken to task and he did waive the indefinite detention, he tries, i guess. That’s a far cry better than we’re used to in this generation. Just be relentless and take him to task. Call for the trade rep resignation maybe.

This whole march boycott thing won’t work unless we make sure of the list of those we need to boycott and make sure everyone participates, its rough, but long run effective. We may have issues lobbying congress, but we could ‘lobby’ their lobbyists.

Anonymous Coward says:

@ Alex Macfile

so how long do you expect it to be before something similar is introduced in the UK or EU? they did the same as the US with the DMCA, are doing the same with website blocking, letting UK citizens be extradited to the US for doing something that is legal in the UK. everything that happens, copyright wise at least, in the US happens in the UK. why? because the UK government, regardless of which party, is shit scared of the US. they will do what is wanted even when/if it goes against EU rulings. bunch of wankers!

Hephaestus (profile) says:


You fail to see that Anonymous isn’t a group it is an idea. There is no central leader or command structure. Every attempt to remove it only makes it more known. When people do research into Anonymous there is a romantic feel to it, like robin hood.

Every arrest only makes this movement grow. But police are stuck and have to show they are doing something about this. They are stuck in an ever escalating feedback loop.

V (profile) says:

At what point?

At what point do negotiators like this become domestic enemies? Some of these treaties directly undermine the US economy – sure not for the copyright holders – but for huge portions of the economy elsewhere… deliberately undermining the State sounds like treason to me.

And what does this mean for libraries? Used book stores? DVD rentals? Places like GameSpot, that do used books?

Anonymous Coward says:

your friends at Anonymous got locked up

Why does Techdirt have to comment on this?

They don’t. But this is the sort of thing (the kid) that usually would have Masnick fulminating with all of the contrived outrage he could summon. But to do so would point out that law enforcement is hitting back at his object of worship. That, along with many other recent developments would be contrary to the Masnick narrative and hence, is ignored.

Machin Shin (profile) says:


You know as hard as it might be for you to picture. There are people in this world who will stand up for what they believe. These people are often labeled terrorists or extremists.

Point is that they have arrested some of those they think are part of “Anonymous”. Well Anonymous is not an organization. There are no leaders, no structure, there is not “head of the snake” to be cut off. Anonymous is an Idea and ideas cannot be locked up or killed.

That being said, there are people who do things under the flag of Anonymous who are just punks that need arresting. Those that just want to be “cool”. These kids are not really who the government fears, they fear those who are standing up for what they truly believe.

The tighter the government squeezes, the harder they try and control the people, the more and more you will see Anonymous. This is because it is an idea and it is the belief that people should be free from oppressive government. That cannot ever be stopped.

Chargone (profile) says:


… has he got to the point of ‘you must go to work, even if the jobs don’t exist, when your kid is 3, despite the fact that there is no way in hell any job someone who is out of work and poor enough to need a government handout is going to pay enough for the necessary childcare to cover the fact that you’re NOT THERE, or we cut off your benefit so you, and the kid, can’t eat, then punish you AGAIN for failing to feed the kid’?

because NZ’s current administration is most of the way there already.

… of course, the USA never had as extensive a support network in the first place.

Chargone (profile) says:

your friends at Anonymous got locked up

… ‘object of worship’?

what are you referring to here?

’cause if he’s worshiping some random kid, there’s an Entirely different issue at hand.

(If you mean Anonymous, well… wow, gotta love those blatant falsehoods. all those ‘i do not approve this action’ posts would say other wise. (generally, “i do not approve this action, but the thing they’re acting against IS an issue” type statements, admittedly, but still.)

kenichi tanaka says:

Please! Anonymous is nothing more than a bunch of thugs committing computer crimes. Protest! Write your congressman. Write letters. Write to the media. You don’t act like a bunch of thugs.

Shutting down websites? These idiots give real hackers a bad name and it’s no wonder that U.S. Law Enforcement and the Department of Justice have been stepping up their efforts to shut down these file-sharing and copyright and trademark violating websites.

I don’t agree that they should be shut down but Anonymous just makes it worse and creates a bigger problem than it was.

Michael says:


Looks like our country is really being (intentionally) destroyed from within, doesn’t it? Fascism has hit our shores in a big way.

Are the trolls gonna go around telling people who sell used goods that they’re a bunch of thieves who profit off of others’ works? It’s funny to see people pretending to hold the moral high ground on the one hand while defending a bunch of ultra-rich, forceful, draconian corporate entities on the other.

Michael says:


“I don’t know. I think after a while, when people see others in similar situations head off for a long stretch in prison, they may change their ways. Seems to be the way its headed in the cyberlocker sector after Megaupload went down.”

Yeah, that’s the ticket: make an example out of people for using their computers in a manner contrary to whatever bribed-into-place laws were written up by corporations. After all, their word is law and we’re merely their unwitten subjects. Meanwhile, the government has no qualms about proting off the tax revenue from both the manufacturing and sale of PCs, disc burners, blank discs, etc.

Anonymous Coward says:

It is a wonderful discussion, but entirely one sided. You cannot look at used good sales without looking at the liability created for the manufacturing company. This is doubly important when you are looking at a grey market import scheme, where a product is purchased in another market and sold as “new” in another market.

If a company chooses not to offer a given product in a given marketplace, they have no liability in that marketplace. But if someone imports the product and sells it, and the product turns out to have recallable defect, who is stuck with the costs? The original manufacture. Now, if they are not actually in that country, their costs to do a recall could be huge. They didn’t want to be there, why should someone else be able to decide that they are?

Further, you have to look at warranted repairs, spare parts, or any number of other issues. If the product isn’t available and spare parts are scarce, will the end buyer be upset with the company and not buy other products from them, as a result of this “failure”?

Further, what happens if the imported products don’t match up to local safety standards, or perhaps local labeling requirements. Where does that liability go?

There is always the other side to the story – perhaps you might want to try telling that part for a change!

Michael says:


Because somebody somewhere purchases a faulty non-domestic product, that somehow translates to the corps being allowed to grant themselves the ability to throw out the first-sale doctrine and profit off of the second-hand market? I think not.

Do I get to write my own legislation/treaties and profit by changing the law around to suit my own agenda? After all, life isn’t fair and I deserve an easy break. Give me your money.

Anonymous Coward says:


Yeah, all the cyberlockers stopped everything! Woo! Woo! In no way shape or form is it still possible to find TV shows and movies before or immediately after they’re released in cyberlockers everywhere!

…So is it Thursday yet so I can download the newest episode of Archer in 720p yet or not? If not I might just have to grab all of Season 1 and the extras….

Oh, wait…I mean yeah! No more infringing content in any cyberlocker ever!

Anonymous Coward says:


You didn’t get it.

What is means if you want to keep your first sale doctrine in place, you need to change consumer protection laws to make the reseller liable, in the same manner that the original producer would have been. You might require these goods to be more clearly marked, you may require informational labeling, etc that explains why this is a “grey market” rather than home market product, etc.

With US liablity laws as they are a real issue. Say a coffee machine company in Italy makes machines only for their market. A grey market company buys a pallet full and sells them to the hoity toity coffee fans of San Francisco. One of them uses the product in an improper way, burns off their face, and sues… the manufacture. Suddenly this company in Italy which had no business in the US is liable for their product in a country they don’t even sell in. The grey market guy? He’s already out of business and moved on to something else, leaving an empty shell LLC and not much more.

It’s not particularly fair to companies who choose not to be in business in the US to be liable under US law because of the actions of someone else. Yet they would almost certainly have to defend themselves, and could very well lose.

Anonymous Coward says:


You fail to see that Anonymous isn’t a group it is an idea.

So in all of the Anonymous videos, they refer to “we”. The videos use the same format, they have a so-called spokesman. All of that suggests to me that there is an organizational structure and this is a group. These dipshits took down the White House, CIA, FBI websites. That took concerted, coordinated activity.

Now they reap the whirlwind. I’d wager that the NSA had a role in identifying those who were just arrested. And I’d further bet that there’ll be more to come as these cowards spill their guts to local police. Look at the countries where some of them were arrested. I’ll bet every last one receives substantial US foreign aid and isn’t about to jeopardize it over a bunch of hackers.

Anonymous Coward says:


“You fail to see that Anonymous isn’t a group it is an idea.”

Wrong. It’s a group trying to hide as an idea. At the end of the day, there are a few people at the top who call many of the shots. Yes, the underlings and wannabes are down there doing their own thing in the name of anonymous, but it’s all sort of part of the plan. When everyone claims to be anonymous, the real people at the top can hide in plain view.

It’s sneaky, but in the end, history will show that it was really the work of a very, very few people.

Michael says:


That all still doesn’t justify them getting dibs on the second-hand profits (which TPP is clearly trying to pull off). They only have the right to profit off the first sale. With TPP in effect, not only would corporations have the means to perpetuate copyright/IP into eternity but would then also have the right to perpetual profits from second-hand goods.

The word of the day is ‘greed’.

AzureSky (profile) says:


the war on drugs has been a great success at its intended purpose.

no, the intended purpose was NOT to stop illegal drugs, it was to make rich people richer, rich people sell the guns and other equipment to the govt to fight the war, they also run the prisons these people get locked up in, its all a big scam….its also why they keep pushing to make more and more things illegal to the point you can go to prison for them….hey make insane amounts of money per year housing non-violent drug offenders alone(pot heads who got caught with some weed for example)

bah….this govt…..

AzureSky (profile) says:


those videos you refer to are all copycats made by varous people, mostly for fun, Anon is not a set group and never has been/never will be, anybody who takes up a cause long with other anonymous users is part of anon at that given time.

example(one you will hate) is that anon was against sopa/pipa, and those of us who joined the fight by spredding the word and sending letters/making calls where all part of anon at that time.

the fact is, if it was a set group, they would have been hunted down and dissapeared long ago, but its hard to hunt down a group thats got no set membership and that is just made up on the fly depending on the situation.

it would be like trying to figure out who was at the mall for a flashmob and who just joined in for the fun….

AzureSky (profile) says:


quite wrong…if you want to see how alot of the anon stuff gets started visit 4chan, if you can stir enough outrage you can get anon users to take up your cause, its happened many times before and it will happen many times again.

if there where a set membership or leadership the govts of the world would have found and delt with them long ago, as anon(legion) has made them look bad more then a few times.

and for both AC’s here, the cia/fbi/exct websites being taken down is normally by using a program called low orbit ion cannon by thousands/tens of thousands/hundreds of thousands or even millions of users at once, its not hacking, its called a DDOS, distributed denial of service, you can even do it using a web browser set to refresh a page constantly(way it was done in the distant past)

again, you people need to learn about the net and people on it… legion(anon) is the collective cautiousness of the net no 2 times anon acts will the group have the same makeup

good luck trying to find the leaders of anon… will just endup arresting random people for ddos’ing…..

Mike Masnick (profile) says:


From the “Good News Department”: Looks like some of your friends at Anonymous got locked up. Don’t know how you keep missing these great developments MAsnick.

I’ve written about previous arrests of those accused of being in Anon before. This seemed like a minor story along those same lines, and there were other things that seemed more interesting to cover.

So not sure what you mean about how I “keep missing” these things. I’ve covered them in the past.

AzureSky (profile) says:


most of “these idiots” are teens who download low orbit ion cannon and just set it to read whatever the latest feed for attack is.

some however do take up the cause because they are sick of what they are seeing.

Let me be honest, I would install loic but…im to lazy to bother, and I prefer to deal with this kind of thing in a more mature way, like writing or calling those to blame for this kinda crap…..

I do applaud those who do help ddos sites of the mpaa/riaa/ice/exct….its not like its causing real harm but it also causes uproar and that helps spread the word…and hats a good thing.

AzureSky (profile) says:


I get what your saying, but I disagree.

1. if a company dosnt put their products into a set market, and somebody imports and sell them, they tend to take on a 1 year warr(if its a legit business)

2. if the company isnt interested in the market, why would they care if somebody gets mad and wont buy their products any more….they have no interest in that market….

3. I have bought and sold many imported products, many non-sourceable any other way other then living in the country of origin.
examples would be media players(mp3/dvd/video/exct), stereos, various random devices from sites like dealextreme.
never had a problem with anybody returning anything or being mad at me or the company who made the product just because they couldnt get easy support.

the funny part to me is, some HK and Korean companies have better support for us here in the U.S. then domestic options…I bought a video player for a friend, it acted up and he contacted the seller, they worked with him and the mfgr and got him a replacement, shipping was like 12bucks to HK (cheaper then had he sent the same exect package coast to

I have worked in businesses where we imported most of our goods direct from china, stuff you cant get here because enlarge the companies making it lack the money or market power/force to penetrate our markets on their own…..

also note: some of said devices dont meet specific state labeling laws, but thats mostly CA and their weird labeling laws….

Anonymous Coward says:


Yeah, that’s the ticket: make an example out of people for using their computers in a manner contrary to whatever bribed-into-place laws were written up by corporations.

do you hold the same view for phishing, spam, malware, scamming, criminal conspiracy and the like? Why is the law governing infringement different than any other law that implicates misuse of a computer?

Anonymous Coward says:


those videos you refer to are all copycats made by varous people, mostly for fun, Anon is not a set group and never has been/never will be, anybody who takes up a cause long with other anonymous users is part of anon at that given time.

and you know that how? So is the Anon spokesman a poseur? Are you suggesting that there’s no interrelationship between the 25 arrested?

Mike Masnick (profile) says:

your friends at Anonymous got locked up

They don’t. But this is the sort of thing (the kid) that usually would have Masnick fulminating with all of the contrived outrage he could summon. But to do so would point out that law enforcement is hitting back at his object of worship. That, along with many other recent developments would be contrary to the Masnick narrative and hence, is ignored.

Um. (1) Anon is hardly an “object of worship” here. (2) I’ve written about these arrests in the past and did not ignore it. (3) I’ve quite clearly talked about why I think what Anon has done is counterproductive.

(4) Why are you such a slimy liar?

Mike Masnick (profile) says:


Obviously you only get your tech news from Masnick’s echo chamber. There are a number of sites who have shut down completely. Others have taken measures to cut off downloads. Try “Google” before talking out of your ass.

I mean, it’s not like we wrote about that…

How much does your lobbying group pay you to spew such easily disproven bullshit?

Anonymous Coward says:


Anonymous is composed of 7 billion people today, anonymous is everyone, including you and those 25 that got jail time, anonymous include priests, pedophiles, terrorrists, presidents, law enforcement, cooks, drivers, mothers, fathers and sons.

What is your point exactly?

Anonymous is a coalescing of ideas and minds, because there is one Anonymous making videos it doesn’t make him the only one, there are thousands of them and they are all anonymous.

Anonymous Coward says:


Well the point was that if people got scared of prison then piracy would stop right?

That is why you don’t sue the pirates directly but are trying to stop others that are perceived as enabling actors, because you don’t want to actually have to deal with the people, because educating them means you lose much more money and they actually stop buying your crap and start making their own leaving you out.

Sneeje (profile) says:


“I don’t know. I think after a while, when people see others in similar situations head off for a long stretch in prison, they may change their ways. “

Holy crap! I didn’t realize that drug-use, speeding, and red-light running were completely wiped out by enforcement! Enforcement has once again had a transformational effect!

Whew, thank god they’ve done that, utopia here we come!

Anonymous Coward says:


Oh my god did you make up a completely unrealistic scenario and also demonstrate a lack of understanding of US liability to boot. Good luck suing a manufacturer in another country when they have no US presence. That means they are not incorporated here and are NOT subject to US liability.

Dumbass. Your same scenario would apply (and be equally laughable) if you flew to that country, purchased the item, and then used it in the US. The addition of the grey-market seller is a red-herring and irrelevant.

sabacat (profile) says:

Don't forget the REAL impact of this move....

Very true. Basically, when we’re finished with something and we want to get rid of it, we won’t be able to freely put it on eBay or Amazon, we’ll just have to throw it away, unless, we pay off the Cartel who are extorting money like a bunch of mob bosses. That’s going to get really messy and NOT be very green. Personally, I’ll shred my books for kitty litter and burn the other stuff as I dance naked around the fire chanting for their eternal damnation before I contribute anymore to their evil greed.

That Anonymous Coward (profile) says:


The front facing websites of these targets are just posters someone defaced with sharpie. While they are morons, they don’t put the real good secrets on them. Raspberry Pi launched and 3 websites buckled under the strain, no one was trying to DDOS them… they underestimated demand.

Because people who are good with computers with Government positions would never support a group that is fighting for what is actually right…

Its not all DDOS and hooker/pizza deliveries. Stratfor… huh I wonder how a paranoia den like that got hacked. I wonder how they are buying intel like a foriegn government could to subvert US policy and planning… which side are the terrorists again?

You yourself right now are most likely benefiting from the work of people who identify with or are a part of Anonymous.

You should turn off your computer, get rid of your smartphone, and move to Amish country where there is the slightest chance you will not encounter someone who could be part of Anonymous.

“We” are everywhere.

“We” are Anonymous.
“We” are Legion.
“We” do not forgive.
“We” do not forget.
Expect “us”.

Does this make me a card carrying member of Anonymous now?

If you answered yes, seek professional help.
Anonymous has no membership cards.

Does this mean I am now the voice for Anonymous?

Nope. I’m just a guy who supports most of what they are doing. They gave a vision and direction to what I felt was wrong, and felt powerless to stop. I fight the fight with the skills I have, along with many other Anons – some who don’t even consider themselves Anons.

That Anonymous Coward (profile) says:


“Martin Luther King gave Blacks a bad name by calling for boycotts of buses, and blockading lunch counters.”

When I frame your argument this way, do you feel like as ass yet?

Anonymous has nothing to do with filesharing (well others secret files maybe), copyright and trademark infringement shutdowns are courtesy of corporations. “We the people” are being screwed by our leaders to try and put a few more coins into the rich’s peoples pockets. Maybe that should be the bigger concern instead of getting a “bad name” because the media makes sheeple think Anonymous can turn off the water and power with a thought.

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