Presented By -Aishwarya Bedekar and Ritvik Kulkarni

“Millions of men have lived to fight, build palaces and boundaries, shape destinies and societies; but the compelling force of all times has been the force of originality and creation profoundly affecting the roots of human spirit.” -Ansel Adams

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Copyright is a negative right granted by the government of a country to the creator of an original work. It is purely a creation of statute and its application is territorial in nature. An original work does not need to be novel (as is required to be an invention), it is only required to be an original creation by the author as a direct result of her intellectual effort. Copyright holder gets the exclusive right to inter alia reproduce, distribute, sell and give for hire the copyrighted work She can also license or assign all these rights to another person(s) in exchange for royalty or for a lump sum amount

Literary Works Photographs Artistic Works Cinematograph Films

When a person engages her intellectual ability in the creation of a work, may it a book or a motion picture, it has the potential to benefit all the others who might need to refer or rely on that work for their respective purposes. “Benefit” is not only limited to the academic sense or practical applicability; it can also be simply entertaining like an episode of Comedy Nights with Kapil. The need to grant this right arises in the fear that the creative genius will not continue to create in the absence of a strong incentive(s). Therefore in exchange for all the intellectual effort invested, the state grants a copyright to a creator for a limited period of time, after which the work falls into the public domain for free universal access.

Supap Kritsaeng, a Thai student of the Cornell University in the US, imported from Thailand copies of textbooks published by John Wiley into the US. He sold the books for an amount far less than that charged by the Publisher and hence made huge profits which he intended to utilize to support his education in the US. The Publisher filed suit against the defendant claiming that he violated the plaintiff’s copyright by importing and selling in the US those books which were meant to be sold only in the countries of South Asia. In June (check) 2013, after the case stood at the doors of the American Supreme Court, everyone awaited a judgment which would have a huge impact on both the public as well as the Publishing Industry.

A copyright holder inter alia has the exclusive right to distribute and sell copies of her work to the public. Section 14 of the Indian Copyright Act, 1957 reads as follows: 14.(a) in the case of a literary, dramatic or musical work, to do and authorize the doing of any of the following acts, namely:- (ii) to issue copies to the public not being copies already in circulation This right is exercised when the copyright owner puts up a book for sale in the (global) market through (local) distributors. After the consumer purchases a copy, she acquires the ownership of that copy.

But does the purchaser also acquire the right to resell the copyrighted book to any other person? Does she acquire the right to export the book to any other country for the purpose of re-selling it?

Even though a copyright gives the author a monopoly right over her work, this right is not absolute (just the way fundamental rights are accompanied with reasonable restrictions) The exclusive right to distribute and sell copies of the copyrighted work is limited to the first sale of a particular copy. The copyright owner cannot control any subsequent sales of a copy that has already been sold once in the market. In this way the copyright owner is restrained from exacting profit from a single copy more than once as such an act would constitute an abuse of copyright.

Types of Exhaustion National Exhaustion India Regional Exhaustion Pakistan and Bangladesh The European Union International Exhaustion New Zealand The United States of America

When a lawfully purchased copyrighted work is imported to another country for the purpose of reselling it, such an act is termed as parallel import. State policy and law on parallel import of copyrighted works is different from country to country. As decided in the two Indian cases, the First-Sale Doctrine applies only to the territorial extent of India. Export of copyrighted works is therefore likely to constitute an infringement of the copyright owner’s right to distribute and sell copies of her work outside the India. This has been affirmed by the courts in both Warner Bros. and in John Wiley v. Prabhat Chander Kumar.

Warner Bros. v Santosh (2009) was the first case which dealt with the issue of international exhaustion. MIPR 2009 (2) 175 The plaintiffs were film producers who carried out their business from the US. The Defendants were a DVD store/rental who lawfully purchased DVDs in the US of a film which had yet to be released in India and subsequently imported those copies in India for sale and/or rental. The plaintiffs claimed that they would have to face heavy losses as the film was yet to be released in theatres in India and that such importation without their consent was an infringement of their copyright

The defendants claimed that once a copy is sold, the copyright owner does not have the right to control its resale and therefore claimed the validity of their actions under the first-sale doctrine The court relied on section 14(d)(ii) which clearly reads in contrast with the first sale doctrine and allows the copyright owner to perpetually control the sale and resale of a cinematograph film. This is because if a DVD of an unreleased film is put up for sale, the producers would have to face heavy losses as any ordinary person would opt to buy the DVD than to visit the cinema and pay more for watching it once. Thus, a film and computer software is only rented, leased or licensed but not sold. Therefore the ownership in the work is not completely relinquished and thus the doctrine of first sale cannot be applied to films.

The plaintiffs carried on the business of book publishing and having their origin in the US. The remaining plaintiffs were their Indian subsidiaries who were distributors licensed to sell copies in the Indian Sub-continent only. The copies were not to be sold or exported to in any other territory apart from those permitted by the license. The defendants carry on the business of selling books through internet websites. They bought Low-Priced Editions of the plaintiffs’ text-books and put them for sale worldwide by means of export The plaintiffs contended that such export of their books was an infringement of their copyright and lead to heavy losses and deprivation from royalty.

The court came to the conclusion that an act of exporting copyrighted books without the consent of the copyright owner is a violation of the owner’s right held that the first sale doctrine can be applied only to exhaust the copyright against the licensee and not the owner. A purchaser from the licensee cannot get a better title than the licensee and therefore will be bound by the terms of license. This means that the territorial restrictions that are imposed upon the licensee will also be placed upon the purchaser so as to restrict him from selling or exporting copies to any other territory to distribute and communicate her copies. The defendants put up copies for sale worldwide and thereby exposing (or communicated) them to new markets in which copies were not “already in circulation”. This was held an infringement of copyright under section 14 read with section 51.

In the case of John Wiley v. Kirtsaeng, which was mentioned earlier, The US Supreme Court passed a judgment in favor of Kirtsaeng by legally recognizing the Doctrine of First Sale. Once the copies were sold in Thailand and Kritsaeng became their lawful owner, he had the freedom to import them into the US and resell them at profit without the consent of the copyright owners. The Supreme Court upheld the doctrine of international exhaustion by a 6-3 majority and set a national precedent on the said matter.

The Parliamentary Standing Committee report on the Copyright Amendment Bill, 2012 advised the amendment of Section 2(m) of the Indian Copyright Act, It sought to change the definition of “infringing copy” to not include copies that have been lawfully purchased anywhere in the world. Even though they were inclined in its favor, the lawmakers were successfully dissuaded by the powerful Publishing lobby to act on this suggestion; and this amendment could not see the light of the day. Now that the US has recognized the International Exhaustion of copyright, it would be pertinent for lawmakers to reconsider their stand on exhaustion on copyright in the interest of the Indian public.