Quality King Distributors, Inc. v. L'anza Research International, Inc.

United States Supreme Court
523 U.S. 135 (1998)

ELI5:

Rule of Law:

The first sale doctrine, codified at 17 U.S.C. § 109(a), provides a defense to copyright infringement claims under § 602(a) for lawfully manufactured, copyrighted goods that are first sold abroad and subsequently imported into the United States without the copyright holder's permission.

Facts:

L’anza Research International, Inc. (L'anza) manufactures and sells hair care products in the United States with copyrighted labels affixed to them.
L'anza sells its products exclusively to domestic distributors who agree to resell them only within limited geographic areas to authorized retailers.
L'anza also sells the same products in foreign markets at prices 35% to 40% lower than its domestic prices.
L'anza's distributor in the United Kingdom arranged the sale of several tons of L'anza products to a distributor in Malta.
These products, which were manufactured by L'anza in the U.S. and first sold to a foreign purchaser, were then imported back into the United States without L'anza's permission.
Quality King Distributors, Inc. (Quality King) purchased these imported products and resold them in California to unauthorized retailers at discounted prices.

Procedural Posture:

L'anza Research International, Inc. sued Quality King Distributors, Inc. in the U.S. District Court, alleging copyright infringement.
Quality King asserted the first sale doctrine as a defense.
The District Court rejected the defense and granted summary judgment in favor of L'anza.
Quality King, as appellant, appealed to the U.S. Court of Appeals for the Ninth Circuit.
The Ninth Circuit affirmed the trial court's decision, siding with L'anza, the appellee.
The U.S. Supreme Court granted Quality King's petition for a writ of certiorari to resolve a circuit split on the issue.

Premium Content

Subscribe to Lexplug to view the complete brief

You're viewing a preview with Rule of Law, Facts, and Procedural Posture

Issue:

Does the first sale doctrine, codified in § 109(a) of the Copyright Act, apply as a defense to copyright infringement claims under § 602(a) for lawfully manufactured goods that are first sold abroad and then imported back into the United States without the copyright owner's permission?

Opinions:

Majority - Justice Stevens

Yes, the first sale doctrine applies as a defense. Section 602(a), which prohibits unauthorized importation, defines such an act as an infringement of the exclusive distribution right granted 'under section 106.' The text of § 106 explicitly states that all rights granted therein are subject to limitations found in §§ 107 through 120. Section 109(a) is one such limitation; it codifies the first sale doctrine, which provides that the owner of a copy 'lawfully made under this title' is entitled to sell or dispose of that copy. Because the products here were lawfully made in the U.S. and L'anza sold them, it exhausted its exclusive right to control their distribution. The Court reasoned that § 602(a) does not create a freestanding right separate from the § 106 distribution right but is merely a species of it, and is therefore subject to the same § 109(a) limitation. This interpretation avoids rendering other limitations, such as the fair use doctrine in § 107, inapplicable to importation cases, an outcome Congress would not have intended.

Concurring - Justice Ginsburg

Yes, the first sale doctrine applies in this case. I write separately to emphasize the limited scope of the Court's holding. This case involves a 'round trip' journey of goods: they were manufactured in the United States, exported for sale abroad, and then re-imported. The holding does not resolve the distinct question of whether the first sale doctrine would apply to goods that are manufactured abroad and then imported into the United States. The statutory language of § 109(a), which applies to copies 'lawfully made under this title,' may well be interpreted to mean 'lawfully made in the United States,' making the doctrine inapplicable to foreign-manufactured goods.

Analysis:

This decision solidifies the power of the first sale doctrine to limit a copyright owner's control over goods after they are sold, even across international borders. It prevents copyright holders from using copyright law to enforce geographic market segmentation and price discrimination for U.S.-made goods, thereby legitimizing the 'gray market' or 'parallel importation' for such products. The ruling clarifies that the right to block importation under § 602(a) is not absolute but is a subset of the general distribution right and subject to its limitations. However, as Justice Ginsburg's concurrence highlights, the decision leaves open the critical question of its applicability to goods manufactured outside the United States, a scenario that would be addressed by the Supreme Court in the later case of Kirtsaeng v. John Wiley & Sons, Inc.

Gunnerbot

AI-powered case assistant

Loaded: Quality King Distributors, Inc. v. L'anza Research International, Inc. (1998)

Try: "What was the holding?" or "Explain the dissent"

Premium Feature