MPAA & RIAA: If People Can Sell Foreign Purchased Content Without Paying Us Again, US Economy May Collapse

from the a-bit-of-an-exaggeration dept

We've written a few times about the upcoming Kirtsaeng case before the Supreme Court concerning first sale rights. If you don't recall, the 2nd Circuit appears to have wiped out the first sale doctrine for content purchased outside the country that you want to resell within the US. As we noted, there are significant worries about how such a ruling could really harm innovation. At issue was a guy who bought textbooks abroad and resold them in the US (for less than the cover price that the publishers wanted students to buy). The courts basically found that because the textbooks were made outside the US, they weren't "lawfully made under this title," which is some clumsy phrasing that's at issue here.

Of course, thanks to our copyright maximalism, under Kirtsaeng, if a product is made outside the US and then imported, US copyright law appears to apply to almost everything that's copyrightable... except that first sale rights go away. If that seems dangerous, you get a sense of how important the Supreme Court's ruling in Kirtsaeng can be, hopefully by bringing back some sanity, and showing that if you legally purchase some digital content you have the right to resell it.

It appears that the RIAA and MPAA are pretty scared about this possibility. They've filed quite the amicus brief in the case claiming that buying goods overseas and selling them in the US is the equivalent of piracy. No joke:
Copyright protection is essential to the health of the motion picture and music industries and the U.S. economy as a whole. Like the sale of “pirated” copies, unauthorized importation of copies of protected works made overseas and intended only for sale in a foreign market can undercut or eliminate the economic benefit that Congress intended to provide under the Copyright Act.
Oh, and it gets worse. You see, if that darned first sale is allowed on foreign goods, why (*gasp*) the MPAA and RIAA might actually have to deal with people buying goods in one market and selling them elsewhere. Horrors!
Extending the first sale doctrine to copies made abroad for distribution in a foreign market could impede authors’ ability to control entry into distinct markets, limit their flexibility to adapt to market conditions, or undermine territorial licensing agreements. If accepted, Kirtsaeng’s view of the first sale doctrine could thus prevent U.S. copyright holders from obtaining the economic reward Congress intended to provide under U.S. law to motivate investment in creative activity.
Now that's an interesting interpretation of copyright law. The RIAA and MPAA are arguing that if they can't block people from importing the versions they sell overseas, it will somehow motivate less investment in creative activity. Really?

Here's the real problem: the RIAA and MPAA want to have their cake and eat it too. If products bought abroad and then imported into the US don't get first sale rights, then it seems only reasonable that they shouldn't get US copyright protection either. Part of the deal with copyright protection in the US is that as part of it, you accept that buyers have first sale rights that allow them to resell what they legally purchased. What the RIAA and MPAA are attempting to do here is to take away the public's right to resell what they've legally purchased, because it might interfere with one aspect of their preferred business model.

Of course, what this really comes down to is that the RIAA and MPAA absolutely hate the idea that they might have to compete in a global market. They more or less admit this in the brief, suggesting that prices are cheaper elsewhere in the world because copyright law sucks in other places... and allowing cheap goods into the US means that they don't get the "separate benefit" of expansive US copyright law:
When copyright owners distribute tangible copies of creative works in a foreign market, they recoup the economic benefit made possible by the copyright law of that country, which may be substantially less generous or well enforced than U.S. copyright law. They do not realize the separate benefit Congress intended them to derive from their U.S. copyright. If those copies are imported into the United States without permission, the copyright owner might never obtain that full benefit.
Boohoo. You sell into one market, people buy, they sell into a different market. Every other business in the world has to deal with exactly that. Why should the RIAA/MPAA get special treatment?

Oh, and of course, they rush to play up how much "harm" this would do if they can't overprice content in the US (what this is really about) by trotting out the same debunked stats about just how important they are -- even to the point of suggesting that allowing people to resell goods they legally bought elsewhere would have deleterious consequences for the entire US economy.
Those harms, in turn, could have deleterious consequences for the U.S. economy as a whole. As of 2010, the motion picture and television industry supported 2.1 million jobs and nearly $143 billion in total wages in the United States.... In addition to the major motion picture studios, the industry supports a nationwide network of nearly 95,000 businesses throughout the 50 States. Id. The music industry employed over 25,000 paid employees as of 2004.... The industry supports many smaller businesses such as retail stores, distribution companies, recording studios, and music professionals. The retail trade alone generates over $7 billion from the sale of sound recordings... Maintaining robust copyright protection is thus crucial to preserving not only the health of these creative fields themselves, but also their substantial contributions to the national economy.
That the actual evidence suggests something quite different is, of course, not mentioned. That the overall music and movie industries have been growing quite nicely, even as copyright is more and more ignored, is not mentioned. That more content is being produced and more money is being made... is not mentioned. Inconvenient facts are not allowed.

The filing at one point gets so snarky that it claims that those arguing the other side are using the word "arbitrage" as a euphemism (for what?!), rather than as an accurate description of what happens to normal economies that can't set up protectionist tariffs on importation of goods.

The whole thing shows the same myopic thinking of the RIAA and MPAA -- that anything that threatens their chosen obsolete business model simply must be illegal. Because having the courts and Congress prop up old business models must be better than actually innovating and (*gasp*) letting people resell what they legally bought.

Filed Under: copyright, economy, first sale, foreign works, kirtsaeng
Companies: mpaa, riaa


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  1. identicon
    Anonymous Coward, 21 Sep 2012 @ 1:44pm

    Re: Re: Re: Re: Re: Re: Re: Re:

    Gorilla-

    I usually don't engage in debate with such obvious wackjobs, but yourambling fit of pique is so delicious, I can't resist.


    1. NO, ninja -and all of techdirtia- is right: we don't give a SHIT what something -ANYTHING- costs the producer...
    (and -in your few-and-far-between moments of humanity- YOU don't either...)

    NO ONE goes shopping and compares whether they should get a widget from Brand A or Brand X based on whether Brand A or Brand X has lower/higher production costs... *that* is insane...

    we shop on features, price, and convenience...
    besides the fact that all the other information regarding their production costs is simply not available, NO ONE gives that crap a second thought...

    (NOT that i would trust your average korporation to give honest numbers regarding their production costs, anyway...)

    IF i spot a great price on a widget i want/need, i don't start wringing my hands and hoping the producers have low enough production costs to make sufficient profit; NO ONE does that for ANY products/services...

    (IN FACT, that is prezactly how the -mythical- free market economy *should* work: you price your widgets too low, you go out of bidness, and another competitor steps up to replace you...)


    Lots of ground to cover here. A producer's cost in but one of a myriad of factors affecting price. But affect the price it will. Masnick and his merry band of sycophants, suck ups and nincompoops continually ignore the role of fixed cost in their many screeds against legacy industries. The free market fact of life is that these costs have to be covered in order reward companies and incent them to continue to invest their capital in this market segment. Piracy has the same affect, as you so eloquently put it: "you price your widgets too low, you go out of bidness..."

    2. you are a thoroughly disagreeable character; chances are you're a lawyer, amirite ? ? ?
    dog damn, i can't wait for the revolution, you fuckers will be the first invited to the necktie party...


    I think you'd find me disagreeable no matter what degree I had. And good luck with your "revolution". I've seen the glassy-eyed stoners; unhygienic hippie chicks; effeminate, Communist pseudo-intellectuals; bums and other rabble on the cutting edge of your "movement". Quite frankly, it looks more like a bowel movement to me. So let me know when to expect to hear from the dictatorship of the proletariat. Until then, I'll be here laughing at you.

    it really astounds me how you think insulting EVERYONE is going to win friends and influence people on these issues you supposedly care about...
    (i'm thinking the only reason you 'care' about these issues, is because you are -directly or indirectly- paid to do so...)


    I do care about these issues. But most (not all) of the Techdirtbags are drones. Usually failed creators or professional malcontents who revel in shouting into the TD echo chamber and content with the validation of their fellow zealots and the occasional pat on the head from the Lord High Piracy Apologist.

    oh, and for the record, i have NEVER pirated ANYTHING; BUT, i have stopped buying ANY music, movies, etc that are a product of the MAFIAA, because i despise them...

    More likely is that you're homeless or live in some sort of flophouse without electricity, etc.

    BUT, because of unrepentant MAFIAA apologists like you, i am seriously toying with going FULL PIRATE...

    Who cares? from the sound of things you're headed for prison, a shelter or rehab before long anyway.

    don't you get it, YET ? ? ?
    it is not pirate king mike the torrent freak who is pushing me to full blown piracy, it is YOU AND YOUR FIENDS at the MAFIAA who are turning me pirate...
    none so blind...


    Right. Blame the people you steal from. I must say you have the whole victim thing down pretty well. Maybe instead of taking other people's stuff you could get a library card or simply do without.

    Have a good weekend Gorilla.

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